UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended May 31, 1999.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from _____________ to _____________.
Commission file number 33-21481-FW
INTERNET STOCK MARKET RESOURCES, INC.
(Name of small business issuer in its charter)
Delaware 76-0246940
(State or other jurisdiction I.R.S.Employer
or incorporation) Identification No.)
405 Central Avenue, Fifth Floor, St. Petersburg, Florida 33701
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (727) 896-9696
Securities registered pursuant to Section 12(b) of the Exchange Act:
Name of each exchange Title of each class
on which registered
None None
Securities registered pursuant to Section 12(g) of the Exchange Act:
COMMON STOCK, $.0001 Par Value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes__X__ No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
The issuer's revenues for its most recent fiscal year: $214,175.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the average bid and asked prices of such stock as of
July 16, 1999: $494,846.69
There were 586,445 total shares outstanding of the issuer's common stock,
$.0001 par value per share, as of July 16, 1999, after giving effect to a
one-for-nine reverse split.
<PAGE>2
INTERNET STOCK MARKET RESOURCES, INC.
FORM 10-KSB
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Item 6. Management's Discussion and Analysis or Plan of Operation
Item 7. Financial Statements
Item 8. Change in and Disagreements with Accountants on
Accounting and Financial Disclosure
PART III
Item 9. Directors, Executive Officers, Promoters, and Control
Persons; Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and
Management
Item 12. Certain Relationships and Related Transactions
PART IV
Item 13. Exhibits and Reports on Form 8-K
Consolidated Financial Statements Beginning at Page F-1 are
Incorporated by Reference
<PAGE>3
Part I
Forward-looking information
This Form 10-KSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose, any statements contained in this Form 10-KSB that are not statements
of historical fact may be deemed forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve
substantial risks and uncertainties, and actual results may differ materially
depending on a variety of factors, many of which are not within the Company's
control. These factors include but are not limited to economic conditions
generally and in the industries in which the Company's customers participate;
competition within the Company's industry, including competition from much
larger competitors; technological advances which could render the Company's
products less competitive or obsolete; failure by the Company successfully
to develop new products or services or to anticipate current or prospective
clients' needs; price increases or supply limitations for services purchased
by the Company for use in its products or services; and delays, reductions,
or cancellations of service previously placed with the Company.
Item 1. Description of Business.
BUSINESS DEVELOPEMENT
The Company filed with the United States Securities and Exchange Commission a
registration statement on Form S-18, effectively causing the corporation to
become a reporting entity under Section 12(g) of the Securities Exchange Act
of 1934. On February 9, 1989, the Company was merged with Sea Venture Cruises,
Inc., a close, Delaware corporation, in a tax-free reorganization which
resulted in the re-domiciling of the corporation from Texas to Delaware. Trans
America Enterprises, Inc., the specifically-named surviving corporation of the
merger, changed its name to Sea Venture Cruises, Inc., and conducted business
as such until last year.
Because of a lack of success in the cruise business, the Company began to seek
a merger partner in a new line of enterprise. Determining that substantial
opportunities existed in the burgeoning area of Internet information services,
certain principals of the Company began developing a separate, private,
Florida corporation called Internet Stock Market Corp., which was engaged in
providing information on the World Wide Web through a Web site with the URL
http://www.internetstockexchange.com. (That Web address was later revised to
www.internetstockmarket.com.) On March 26, 1998, the Company's name was
changed by amendment to the (Amended) Articles of Incorporation to Internet
Stock Exchange Corp. On April 14, 1998, the Company executed a reverse-split
of all shares of Common Stock of the corporation on a one for one thousand
(1-for-1000) basis, with fractional shares being canceled. This reverse-
split resulted in the total number of shares issued and outstanding becoming
487,001.
On August 17, 1998, the Company changed its name to Internet Stock Market
Resources, Inc. and subsequently announced that it had merged with the
private, closely-held Florida corporation Internet Stock Market Corp. The
financial statements of the Surviving Corporation herewith presented reflect
the effect as if the merger were accounted for as if it were a "pooling of
interests" (because of the common control) of the private corporation (the
<PAGE>4
"Non-surviving Corporation") with that of the Company (the "Surviving
Corporation" of the merger/acquisition). The effective date of the merger
coincides with the first day (September 1, 1998) of the second quarter of the
Company's just-ended fiscal year. All future discussions in this Annual
Report on Form 10-KSB will exclusively address the financial statements of
the "pooled," Surviving Corporation.
BUSINESS OF ISSUER
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS The Company is in the
business of providing business and advertising information about client
companies to end users via the Internet. The information posted is provided
by the companies, and may include information about goods and services
offered as well as other information. End users are also able, through the
Company's Website, to hyperlink to other information services which carry
data about a specific client company; these hyperlinks may include the
Securities and Exchange Commission's EDGAR database, PR Newswire, the client
company's own Website, etc.
DISTRIBUTION METHODS OF PRODUCTS OR SERVICES The Company provides its primary
service by taking information provided by client companies and preparing it in
such a manner that it is viewable by end users using industry standard
Internet browsers such as Microsoft Internet Explorer and Netscape Navigator.
The preparation process generally entails translating the client company's
information into hypertext markup language (HTML). In the case of a client
that elects for the more expensive "banner listing," the HTML will be
supplemented with client company-provided graphics, formatted in one of the
industry standards of GIF or JPEG. All client companies are presented,
alphabetically by industry, in the "Listed Members" section of the Company's
Website, where end users can go to review a company by name and by graphic
(when applicable) and then hyperlink to more detailed information if desired.
The more detailed information consists of a selection including the company's
core, summary profile, as well as, where applicable, EDGAR database
information, press releases from the company on PR Newswire, etc. The Company
supports its Website complex with its own server.
STATUS OF ANY NEW PUBLICLY ANNOUNCED PRODUCT OR SERVICE The Company has not
pubicly announced any new services, although the Websites front page has a
hypelink button to an on-line trading service that the Company contemplates
launching at a future date when and if capital and necessary regulatory
approvals are obtained.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS
The Company's business does not rely on raw materials in the traditional sense
other than the human resources required for maintenance of its Website complex
it does, however, depend upon access to telephonic communications lines for
the transmittal of data, primarily under hypertext transfer protocol ("http"),
as well as for communication by voice and data with customers. The Company's
primary long distance carrier is AT&T.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION The Company holds no patents, trademarks,
licenses, franchises, concessions, or royalty agreements, nor does it have any
labor contracts.
<PAGE>5
NEED FOR ANY GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES The
Company currently offers no services for which government approval is
required.
COMPETITION The corporate information storage and retrieval aspect of the
Internet is intensely competitive, with firms and other entities of all sizes
offering Internet exposure for corporate clients, and offering end users a
variety of types of information. The well-known search engine companies like
Yahoo! and AltaVista offer end users access to company information via
hyperlinks to the companies' own Websites, as well as hyperlinks to private
and public repositories of corporate information such as, in the private case,
the National Association of Securities Dealers' Website complex, which consists
of pages for Disclosure, Inc., OTC, etc., and, in the public case, the
Securities and Exchange Commission's massive EDGAR database. Furthermore, a
number of Websites featuring corporate information profiles, stock guides and
tips, and investment advice are appearing each month. The result of this
competition is that end users of the Internet has available to them a virtual
panoply of information. The result for the company attempting to carve out a
profitable niche in the business is that it must offer features to end users of
such magnitude as to attract them to its Website in such numbers that
prospective clients will pay the company to be profiled there. This is
difficult, and there can be no assurance that the Company will not be
overwhelmed by competitors offering similar, or possibly even better,
corporate information access, and at prices to clients below that of the
Company.
EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
Although the Internet itself is largely unregulated except for certain federal
and state laws pertaining to purveying pornography and allowing minors access
thereto, the Company's operations necessarily have certain aspects which
intersect with state and federal securities laws in that client companies may
be seeking to raise funds through the sales of certain of their securities,
and those clients may use their own Websites, with hyperlinks from their
displays on the Company's Website, to promote their offerings. This, in itself
may bring the Company into conflict with securities laws. First, at the state
level, the Company may find it difficult to prevent viewing of solicitation
scripts by end users in states in which the offerings are not "blue skied;"
furthermore, at the federal level, unless a specific exemption applies, an
offering of a client's securities via the Internet constitutes a general
solicitation which would have to be the subject of an applicable, effective
registration statement. The Company may find that certain clients, in their
efforts to raise funds via the powerful medium of the Internet, may be in
violation of securities laws, and the Company, by making their literature
available to the public or by facilitating access to that information, could
find itself construed by state or federal regulators as having been a promoter
of the offerings, a situation which could lead to regulatory sanction. The
Company is instituting proscriptive language in its client contracts to avoid
such situations. The Company will also monitor the activities of its clients
with respect to matters involving descriptions of their securities and
offerings thereof. However, there can be no assurance that, even with this
level of diligence, the Company will not find itself in a situation where it
has unintentionally allowed its Website to be
contributory to a client's defective offering. In such an event, the Company
may face severe penalties for having been involved in securities law
violations. More broadly, a client company may find itself in other types of
litigation, civil or criminal, in which the Company may find itself accused
<PAGE>6
of sharing liability for the actions of the Company by virtue of its support
of the client's advertising and marketing efforts. While it is not likely
that any such liability would be construed as being "strict" liability,
nevertheless, the Company might have to defend itself against charges of non-
strict liability in a claim against a client company. The implications of
this exposure, at the present time, are entirely of a private, civil nature,
and Management does not foresee government regulations involving such
matters.
AMOUNT SPENT DURING EACH OF THE LAST TWO FISCAL YEARS ON RESEARCH AND
DEVELOPMENT ACTIVITIES The Company does not generally involve itself in
research and development.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS (FEDERAL, STATE AND
LOCAL) Environmental laws do not materially affect the Company.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES The Company
currently has five full-time employees, four of which are officers and
directors, the fifth of which is responsible for Management of Information
Systems. Except for the Company's Chairman and Secretary, Anastasios N.
Kyriakides, the officer/employees earn compensation as independent contractors
on commission through the production of new business and the maintenance of
their own books of existing business; Mr. Kyriakides currently receives no
compensation of any kind from the Company; however, the Company may in the
future alter this status as an unpaid principal/employee.
CYCLICALITY OF THE INDUSTRY General public use of the Internet industry has
developed, for the most part, within the past 5 years. As such, the industry
has yet to experience an economic cycle, and has arguably not even experienced
an economic pause as yet; as such, there is no empirical data on the
industry's sensitivity to the business cycle on the macroeconomic level.
Nevertheless, Management of the Company assumes that the Internet industry in
general, and the Company in particular, will experience downward pressures on
revenues during the recessionary phase of the economic cycle. To the extent
that the Company's business is dependent on payments from business clients,
many of which are in other industries, even if the Internet industry itself is
robust to the economic cycle, the Company's revenues may be eroded by any
economic downturn's effect on its clients' businesses.
ECONOMIC DEPENDENCE The Company has no single source for 10% or more of its
revenues, and it does not anticipate any such relationship in the foreseeable
future.
EXECUTIVE OFFICERS OF THE COMPANY See the information contained in Part III,
Item 9, which is incorporated herein by reference.
RECENT DEVELOPMENTS Through the end of the current fiscal year, the Company
had largely conducted its business in the normal course, having added three to
four new clients per month to its "listed members" service. The Company has
also been laying the groundwork for the acquisition of several closely-held,
going concerns with the intent of making them wholly- or partially-owned
subsidiaries of the Company. Subsequent to the end of the
fiscal year for which this Form 10-KSB is filed, the Company had entered into
certain letters of intent, described in Part II, Item 6 (Management Discussion
and Analysis), below, and in the Notes to the Financial Statements presented
in this Form 10-KSB and incorporated herein by reference.
<PAGE>7
YEAR 2000 ISSUES The year 2000 issue results in certain computer systems and
software applications that use only two digits (rather than four) to define
the applicable year. Consequently, such systems and applications may
recognize a date of "00" as the year 1900 instead of the intended year 2000;
this could directly result in a system failure or miscalculations causing
disruption of operations, including, among other things, a temporary
inability to process customers' transactions, order supplies, or engage in
similar, normal business activities. The Company has conducted an initial
assessment of its computer system and software applications and the Company
believes that the terminals will be Year 2000 compliant. The Company is
communicating with key suppliers, financial institutions, and customers
during 1999 to identify and coordinate the resolution of any year 2000
issues that might arise from these constituencies. Based on its initial
assessment, the Company believes the cost of addressing the Year 2000 issue
will not have a material impact on the Company's financial position or
results of operations.
The Securities and Exchange Commission has asked public companies to disclose
four general types of information related to Year 2000 Preparedness: the
Company's state of readiness, costs, risks, and contingency plans.
Accordingly, the Company has included the following discussion in this report,
in addition to the Year 2000 disclosures previously filed.
State Of Readiness
All equipment and computer systems currently utilized by the Company in-house
are believed to be year 2000 compliant. Most vendors used by the Company are
large companies and the Company expects that these companies will be year 2000
compliant. However, the Company has not received written notification from
all vendors affirming their year 2000 compliance. Therefore, there can be no
assurance that the systems of other companies with which the Company does
business will be year 2000 compliant. None of the Company's systems interfaces
directly with any third-party vendors, except for its Internet services, and
the Company has been informed that those systems are Year 2000 compliant.
None of the Company's services is believed to be subject to year 2000
compliance so the Company does not expect to incur any liability in this area.
The failure on the part of merchandise vendors, or other companies with whom
the Company transacts or may transact business, to be year 2000 compliant on a
timely basis may have an adverse impact on the operations of the Company.
Costs
The total cost to the Company of Year 2000 activities has not been and is not
anticipated to be material to its financial position or results of operations
in any given year. Management estimates the total costs of addressing the Year
2000 issue to be less than $10,000. These total costs are based on
Management's best estimates. There are no guarantees that these estimates
will be achieved and actual results could differ from those estimates. The
Company plans to inventory sufficient quantities of supplies from outside
suppliers to be capable of operating for several months should third parties
incur year 2000 problems. The cost of increasing the supply levels is not
expected to exceed $5,000, and any excess purchases will be paid for from
available cash, or will simply not be purchased. Any costs associated with
the year 2000 issue will be expensed as incurred. The amount expensed to date
has been immaterial.
<PAGE>8
Risks
The Company utilizes computers and software in various aspects of its
business, principally billing and accounting. The Company believes that its
computers and software comply with the Year 2000 issue. The Company does not
expect any material adverse impact on its operations relative to the Year 2000
issue. However, as discussed above, the Company is also exposed to the risk
that one or more of its clients, suppliers, or vendors could experience Year
2000 problems that could impact the ability of such customers to transact
business or such suppliers or vendors to provide goods and services. Although
this risk is lessened by the availability of alternate suppliers, the
disruption of certain services, such as utilities, could, depending upon the
extent of the disruption, potentially have a material adverse impact on the
Company's operations.
Contingency Plans
The Company is in the process of identifying and developing contingency plans
for any problems that might be experienced by the Company's suppliers, clients
or vendors. This includes identifying alternate suppliers.
ITEM 2. PROPERTIES.
Pursuant to a lease that expires on July 31, 2000, the Company leases
approximately 1,200 square feet of office space for $1,050 per month on the
5th floor at 405 Central Avenue in St. Petersburg, Florida. The office
building is approximately 7 years old, and in good condition.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On August 19, 1998, at a Special Shareholders' Meeting, the Company submitted
to the shareholders for their approval a merger of the close, Florida
corporation Internet Stock Market Corp. with and into the Company. The
proposal was represented to the shareholders as if it were a "pooling of
interest" with the Company issuing, upon closing, two million (2,000,000)
unregistered, restricted shares of Common Stock of the Company and a
$1,000,000, 6% per annum note, due on demand. The acquisition target was
represented to the shareholders as an operating company. It was further
disclosed to the shareholders that the acquisition target was controlled by
Anastasios N. Kyriakides, currently the Chairman and Secretary of the Company.
The percentage of voting shares voting in favor of the merger plan was 80%.
<PAGE>9
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
(a) Market Information.
(1) (i) The principal United States market in which the Company's Common
Stock has been traded is the Over the Counter (OTC) Electronic Bulletin Board
Service of the National Association of Securities Dealers (NASD).The Company's
Common Stock began trading in 1989 under the symbol SVCR (subsequently changed
to ISMR). Through the Fourth Quarter of fiscal 1998, the high sales price was
$5.00 (adjusted for a 1-for-1000 reverse-split) and the low sales price was
$0.0001. The Company's market makers include Sharp Capital, Weinn Securities,
Hill Thompson Securities, and Paragon Securities.
(ii) The Company's Common stock, under the symbol "ISMR" has experienced
sales of stock at a high of $2.75 and a low of $0.25.
Year Ended Year Ended
May 31, 1999 May 31, 1998
High Low High Low
------------ ------------
First Quarter* *** *** ** **
Second Quarter* 2.75 .875 ** **
Third Quarter* 1.25 .563 *** ***
Fourth Quarter* .750 .250 *** ***
*The prices presented above are bid prices which represent prices between
broker-dealers and do not include retail marketups and markdowns or any
commission to the dealer. These prices may not reflect actual transactions.
** Bid prices during this time period were insignificant.
*** Data either not available or unreliable.
On May 31, 1999, there were approximately 417 holders of record of the
Company's common stock. This number does not include any adjustment for
stockholders owning the Company's Common Stock in "street" name.
The Company has not paid dividends since its inception, does not anticipate
paying any dividends in the foreseeable future and intends to retain earnings,
if any, to provide funds for general corporate purposes and the expansion of
the Company's business. Florida law restricts the payment of dividends for
corporations with a deficiency in assets; however, the $1,000,000 note issued
in connection with the merger was treated as a distribution.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company's revenues for the 12 months ending May 31, 1999 were $214,175
against revenues of $382,775 for the 12 months ending May 31, 1998,
representing a decline of 44%. Management attributes a substantial component
of this decline to the extraordinary revenues from certain one-time services
performed by the Company during the previous fiscal year, and to the
realization of virtually no revenue generation during part of its fiscal
third quarter of this year, this latter pause being the result of suspension
of sales activities during a regulatory investigation which resulted in no
findings adverse to the Company. This temporary challenge to new business
<PAGE>10
development was overcome in the Company's fiscal fourth quarter as continuing
clients remained with the Company while new clients were being added at the
rate of approximately three to four per month. As had been anticipated by
Management, operating expenses declined by only 13.3%, reflecting certain
fixed costs of operations. As such, it is Management's judgment that, as
operating revenues grow, total expenses will also do so, but at a lower rate,
although Management has chosen not to rely the fourth quarter results as an
indication of this expectation due to the need for at least several forward
quarters' data for confirmation.
Total cash balances declined 22.1% from their year-previous levels; at fiscal
year end 1998 almost one-third of the Company's total cash was in restricted
form; therefore, considering only cash available for general purposes, the
Company's cash balances have increased by 14.2% over year-previous levels,
evidencing somewhat better liquidity for the Company's day-to-day needs at the
end of the current fiscal year. The elimination of the restricted cash balance
was the predominant cause of the decline of 22.4% in current assets from the
level at the end of the Company's previous fiscal year, and this single,
dominating effect carried over to the total assets, as well.
With respect to current liabilities, a sharp decline in the current portion of
a note payable to a stockholder contributed substantially to a drop of 55%
from the level at the end of the previous fiscal year. Management notes the
improvement in its current ratio to 0.58 at fiscal year-end 1999 from 0.34 at
fiscal year-end 1998. Coupled with continuing retirement of the outstanding
long-term note payable, the Company's total liabilities have fallen year-over-
year by 34.3%, marking what Management feels is a significant reduction in
overall risk.
From fiscal year-end 1998 to fiscal year-end 1999, the Company's total
deficiency in assets fell by approximately 37%, giving Management reasonable
evidence that the entirety of the Company's asset deficiency can continue to
decrease.
With respect to cash flows, the Company's operating activities used net cash
of more than $102,000 during the current fiscal year while operating
activities provided almost $96,000 during the preceeding fiscal year. This is
the result, among other, lesser factors, of the Company's aggressive reduction
in accrued liabilities as well as a $136,000 rise in deferred income, the
second factor being the result of changes in the recognition of sales
revenues.
Management has embarked on an aggressive plan of expansion involving two
separate, but related, components. First, it is fully the intention of
Management to continue to develop new clients for its flagship business
information Website while maintaining its existing "listed members" base. This
component of Management's plan requires the active, on-going efforts of senior
managers acting in their capacities as producers, making prospective new
clients aware of the benefits of the Company's Website portal at the same time
as providing a high level of service and responsiveness to current clients.
Second, the Company's business model encompasses an imperative to acquire
other going concerns to become subsidiaries of the Company. Although
Management seeks acquisitions within the perimeter of its areas of core
competence, it has made overtures to a diverse set of potential holdings. It
is Management's intention to use a variety of financing vehicles to acquire
<PAGE>11
subsidiaries; among these may be cash, debt, and/or equity securities of the
Company. To the end of having cash available for acquisitions, the Company has
made plans to raise capital through a public offering of its securities under
Regulation S-B. To the end of having its securities be of sufficient value to
use in and of themselves as consideration in acquisitions, it is the intention
of Management, at the earliest possible time, to seek approval for listing in
the Small Cap market of the National Association of Securities Dealers (NASD)
automated quotations system.
EFFECTS OF INFLATION
The Company believes that its revenues and results of operations have not been
significantly affected by inflation during the three years ended May 31, 1999.
GOING CONCERN
The Company has suffered recurring losses from operations and at May 31, 1999,
had a working capital deficit and a deficiency in assets. These and other
factors raise doubt about the Company's ability to continue as a going
concern, without additional capitalization. The attached financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
LIQUIDITY AND CAPITAL RESOURCES
Management has decided to address the Company's financial situation by the
following:
Sale of $72,000 additional shares of Common Stock as part of its foreign
private placement, expected to be received in July 1999.
The note payable to a stockholder has been restructured and will not be
satisfied until the Company has an acceptable level of working capital.
An SB-2 is expected to be filed with the United States Securities and Exchange
Commission; such an offering would provide for the Company to raise up to
$5,000,000 from the general public.
Acquisition of at least two, possibly four, additional companies in the
computer and internet fields for a better vertical integration and to spread
general and administrative costs over a broader base. In that regard, three
letters of intent have been signed, and the Company is in the process of
drafting agreements and performing its due diligence.
Increase promotional expenditures in an effort to increase revenues.
Subsequent to the end of the current reporting period, the Company announced
that it had entered into a letter of intent with the private, close
corporation Delcor Industries, Inc., which manufactures and assembles
electronic components. The proposed acquisition involves the use of both cash
and long-term debt of the Company. Consummation of this acquisition is
predicated on raising sufficient capital from a placement of its equity
securities as previously mentioned in this Management Discussion and Analysis.
Management further notes that negotiations for the acquisition of other firms
are on-going at this time.
<PAGE>12
New Accounting Pronouncements
In June 1997 the Financial Accounting Standards Board (FASB) issued SFAS 130
"Reporting Comprehensive Income" effective for fiscal years beginning after
December 15, 1997, with earlier application permitted. SFAS 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains, losses) in a full set of general-purpose financial
statements and requires that all items required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. SFAS 130 requires an enterprise to classify items of
other comprehensive income by their nature in a financial statement and to
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position. SFAS 130 is effective for the Company in
fiscal 1999, but is not expected to have a significant effect on the Company's
present financial statement disclosures.
Also, in June 1997 the FASB issued SFAS 131 "Disclosures about Segments of an
Enterprise and Related Information", effective for financial statements issued
for periods beginning after December 15, 1997. SFAS 131 establishes standards
for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. In general, SFAS 131 requires
financial information to be reported on the basis that is used internally for
evaluating performance and deciding how to allocate resources. Adoption of
SFAS 131 in fiscal 1999 is not expected to result in significant changes to
the operating activities presently disclosed.
Item 7. Financial Statements.
The consolidated financial statements of the Company (with an index listing
all such statements) in response to this item begin at page F-1 in a separate
financial section at the end of this Annual Report on Form 10-KSB.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
During the fiscal years covered by this report, the Company did not have a
change in or a disagreement with its accountants. The Company appointed Dohan
and Company as its auditors in 1997.
<PAGE>13
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The Directors and executive officers of the Company are as follows:
Name Age Other Office Held Term Period
Served
- --------------------- --- --------------------------- ---- ---------
Anastasios Kyriakides 54 Chairman/Director/Secretary ASM 12 years
Budd Morris 53 President/Director ASM 5 months
Caroline Latta 45 Vice President/Director ASM 5 months
Chad Morris 26 Asst. Vice President/Director ASM 5 months
*ASM=Annual Shareholders Meeting
The members of the Board of Directors of the Company are elected for a one-
year term by the shareholders at each annual meeting. Officers are elected by
the Directors for a one-year term at each annual meeting, or until otherwise
replaced by the Board of Directors. The following table sets forth certain
information with respect to the Officers and Directors of the Company.
IDENTIFICATION OF CERTAIN SIGNIFICANT EMPLOYEES Larry Jacoby, who is neither
an officer nor a director of the Company, is responsible for the Management of
Information Systems for the Company.
FAMILY RELATIONSHIPS OF ALL OFFICERS AND DIRECTORS The Company's Vice
President Caroline Latta is the spouse of Company President Budd Morris, and
Company Assistant Vice President Chad Morris is the son of Company President
Budd Morris.
BUSINESS EXPERIENCE OF ALL OFFICERS AND DIRECTORS
(1) Background during last 5 years.
Anastasios Kyriakides is the Chairman and Secretary of the Board of Directors
of the Company. Mr. Kyriakides received the degree Bachelor of Science in
business from Florida International University in 1989; in 1997, he received
from the American Institute of Banking a degree in investment banking. Mr.
Kyriakides has extensive experience in the field of investment banking and
venture capital. From 1989 to the present, Mr. Kyriakides has consulted for
numerous companies in the areas of banking, travel, and electronics. In 1994,
Mr. Kyriakides became the Chairman of Montgomery Ward Travel, a company
created to provide full travel services to 8 million Montgomery Ward customers
and credit card holders; he served in this capacity from 1994 to 1996. Prior
to that, Mr. Kyriakides had organized the successful start-up operations of
Seawind Cruise Line in 1990; Mr. Kyriakides was the founder, and later, the
Chairman, CEO, and Secretary until 1994. In 1984, Mr. Kyriakides founded
Regency Cruise Line and served as its Chairman and Secretary until 1987. In
1983, Mr. Kyriakides founded the Mylex Corporation to develop and produce the
world's first hand-held optical scanner and VGA card for personal computers.
As the President and Chairman, Mr. Kyriakides guided Mylex from its inception
as a private company to its becoming a public company traded on the NASDAQ
under the stock symbol MYLX.
<PAGE>14
Budd Morris is the President, Treasurer, and chief executive officer of the
Company, and is a member of the Board of Directors. Mr. Morris attended
Southern Colorado State College during the late 1960s; subsequent to his
studies there, Mr. Morris was employed by American Stores, Inc. where he
served in upper management positions; from 1987 to 1992, he was Executive Vice
President and Officer of Jewel Osco of Florida, a subsidiary of American
Stores. In 1993, Mr. Morris left American Stores to become Director of
Marketing for Cellular One, a division of McCaw Telecommunications, Inc. From
1995 to 1997, Mr. Morris was Regional Sales and Operations Manager of LIM
Imports Corporation. In February of 1997, he accepted the position of
President of Internet Stock Exchange Corp. (the former name of Internet Stock
Market Resources, Inc.).
Initially, his primary responsibilities were to develop sales collateral,
staffing, material, marketing, and alliances, as well as to carry out other
managerial duties. In January of 1999, Mr. Morris was appointed to the
position of Chief Executive Officer and Treasurer of the Company while
retaining the office of President. His duties now include monitoring strategic
operations, controlling marketing alliances and expenses, and other such
duties traditionally incumbent upon the President and CEO of a public company.
Caroline Latta is a Vice President and the chief financial officer of the
Company, and is a member of the Board of Directors of the Company. Ms. Latta
attended Drury College in Springfield, Missouri until 1970. Prior to her
current position, she co-owned and operated Passport Gateway Magazine, an
upscale tourist publication. For three years, she was a mortgage broker
consultant for Northern Funding Group, a not-for-profit funding organization.
Most recently, she served as a consultant for Internet Stock Market Resources,
Inc. from March of 1997 until her appointment to the office of Vice President
of Sales and Marketing. Her duties include marketing the Internet site and
consulting with principals of public companies needing exposure on the
Internet. Ms. Latta was promoted to the office of Chief Financial Officer in
January of 1999; her duties now include budgeting and allocation of funds and
accounting procedures, as well as such other duties as she has carried since
she began her professional relationship with the Company.
Chad Morris is an Assistant Vice President and the chief operating officer of
the Company, and is a member of the Board of Directors. Mr. Morris is a recent
graduate of the Florida State University, having earned the degree Bachelor of
Science in Social Sciences. Mr. Morris was the Financial Officer for a not-
for-profit organization, Kappa Alpha Order, from January of 1995 through May
of 1997. He was employed by a private technology company, Aerotek Inc., in the
capacity of Technical Contracts Manager from 1997 through December of 1998.
Mr. Morris came to work for Internet Stock Market Resources, Inc. in January
of 1999 as Chief Operating Officer where his duties include sales, marketing,
and operations.
(2) Directorships.
(a) Anastasios Kyriakides does not serve as a director of any other public
corporation.
(b) Budd Morris does not serve as a director of any other public
corporation.
(c) Caroline Latta does not serve as a director of any other public
corporation.
<PAGE>15
(d) Chad Morris does not serve as a director of any other public
corporation.
(f) Involvement in Certain Legal Proceedings. None.
(g) Promoters and Control Persons.
(i) Promoters. None
(ii) Control Persons.
M.C.K. Marine Enterprises, Inc., a Liberian corporation*,
Anastasios Kyriakides.
*Note: Anastasios Kyriakides, an officer and director of the
Company, has controlling interest in M.C.K. Marine
Enterprises, Inc.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth the compensation to executive officers of the
Company for the period June 1, 1998 to May 31, 1999.
Summary Compensation Table
Long Term Compensation
____________________________
Annual compensation | Awards |Payouts|
_________________________________________|__________________|_______|
(a) (b) (c) (d) (e) | (f) (g) | (h) | (i)
Name Other |Restrctd Securtis | |All Other
and Annual | Stock Underlying| LTIP | Compen-
Principal Compen- |Award(s) Options/ |Payouts| sation
Position Year Salary($)Bonus($)sation($) | ($) SARs (#)| ($) | ($)
_________________________________________|__________________|_______|_________
CEO | | |
Budd | | |
Morris 1999 0 0 27,628 | 0 0 | 0 | 0
1998 0 0 64,587 | 0 0 | 0 | 0
1997 0 0 N/A | 0 0 | 0 | 0
---- | | |
Anastas- 1999 0 0 0 | 0 0 | 0 | 0
ios 1998 0 0 0 | 0 0 | 0 | 0
Kyriak- 1997 0 0 0 | 0 0 | 0 | 0
ides | | |
- ------------- | | |
CFO | | |
Caroline | | |
Latta 1999 0 0 10,068 | 0 0 | 0 | 0
1998 N/A N/A 938 | N/A N/A | N/A | N/A
1997 N/A N/A N/A | N/A N/A | N/A | N/A
- ------------- | | |
COO | | |
Chad | | |
Morris 1999 0 0 10,350 | 0 0 | 0 | 0
1998 N/A N/A N/A | N/A N/A | N/A | N/A
1997 N/A N/A N/A | N/A N/A | N/A | N/A
<PAGE>16
- ------------- | | |
Secretary | | |
Anastas- 1999 0 0 0 | 0 0 | 0 | 0
ios 1998 0 N/A N/A | N/A N/A | N/A | 25,000
Kyriak- 1997 0 N/A N/A | N/A N/A | N/A | 0
ides(1) | | |
| | |
- ------------- | | |
Other Officers/Directors | | |
John 1999 0 0 0 | 0 0 | 0 | 0
Bramis 1998 0 0 0 | 0 0 | 0 | 0
(2) 1997 0 0 0 | 0 0 | 0 | 0
---- | | |
John 1999 0 0 0 | 0 0 | 0 | 0
Karava- 1998 0 0 0 | 0 0 | 0 | 0
siles(3) 1997 0 0 0 | 0 0 | 0 | 0
- ------------- | | |
(1) Anastasios Kyriakides had the title of President of the Company until
Budd Morris was appointed to the capacity, and had held that title for
the Company's predecessor, Internet Stock Exchange Corp.
(2) John Bramis served as an uncompensated officer and director of the
Company for approximately the first two quarters of fiscal year 1999, and
served similarly for the Company's predecessor, Internet Stock Exchange Corp.
In that latter role, he served as uncompensated President.
(3) John Karavasiles served as an uncompensated officer and director of the
Company for approximately the first two quarters of fiscal year 1999, and
served similarly for the Company's predecessor, Internet Stock Exchange Corp.
In that latter role, he served as uncompensated President.
The Company's executive officers currently earn their salaries as independent
contractors through commissions on sales. There are currently no contracts
with any of the executive officers of the Company; moroever, there is
currently no compensation provided to any person in his/her capacity as a
director, and no reimbursement for expenses incurred by directors in their
capacities as such.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Certain Beneficial Owners.
(b) Security Ownership of Management.
(1) Title of (2) Name and Address (3) Amount and Nature (4) Percent
Class Of Beneficial Owner Of Beneficial of Class
Ownership*
- ------------ --------------------------- -------------------- -----------
Common Stock M.C.K. Marine Enterprises** 443,989 8.0%
c/o Anastasios Kyriakides
204 37th Ave., Suite 332
St. Petersburg, Fl. 33704
<PAGE>17
Common stock Anastasios Kyriakides 2,000,000 38.0%
204 37th Ave., Suite 332
St. Petersburg, Fl. 33704
*As of July 16, 1999, and not adjusting for a one-for-nine reverse split of
all shares of Common Stock of the Company issued and outstanding on record
date June 17, 1999 (i.e., subsequent to the end of the fiscal year).
**M.C.K. Marine Enterprises is controlled by Company director Anastasios
Kyriakides.
Note: As a group, the officers and directors beneficially own approximately
2,443,989 shares at July 16, 1999 (subsequent to, but not adjusting for, a
one-for-nine reverse split of all outstanding shares of Common Stock of the
Company).
(c) Changes in Control. None.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 15, 1990, the Company issued 443,988,735 restricted common shares to
M.C.K. Marine Enterprises, Inc. in exchange for a loan of $1,605,800. M.C.K.
Marine Enterprises, Inc. was owned by Company Director Anastasios Kyriakides,
the Chairman and Secretary.
Pursuant to the merger of Internet Stock Market Resources, Inc. with and into
Internet Stock Exchange Corp. (the predecessor to the Company), said merger
becoming effective on September 1, 1998 (described in Item 6, above, and
incorporated herein by reference thereto), Company Director, Chairman, and
Secretary Anastasios Kyriakides, through affiliate parties, received
consideration in the amount of 2,000,000 shares of the Company's Common Stock,
and a $1,000,000 note payable. The terms of repayment of that loan have
recently been restructured (described in the Notes to the Financial
Statements, below, and incorporated herein by reference).
<PAGE>18
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
The following documents are filed with, and as a part of, this Annual Report
on Form 10-KSB:
1. Consolidated Financial Statements
For a complete list of the Financial Statements filed with this Annual Report
on Form 10-KSB, see the Index to Financial Statements.
2. Exhibits required to be filed by Item 601 of Regulation S-B.
Informational filings on Form 8-K are listed below and incorporated herein by
reference.
(a) Forms filed during the first three quarters (June 1, 1998 to
February 28, 1999) of the fiscal year.
(i) Form 8-K, November 18, 1999
(ii) Form 8-K, January 21, 1999
(b) Forms filed during the fourth quarter (March 1, 1999 to May 31,
1999) of the fiscal year.
(i) Form 8-K, March 18, 1999
(ii) Form 8-K, March 23, 1999
(iii) Form 8-K, April 11, 1999
(iv) Form 8-K, May 18, 1999.
3. Exhibits:
(1) Financial Statements (Exhibit 99.2)
(2) Amendment to Articles of Incorporation (Exhibit 99.3)
(3) Agreement and Plan of Merger or Reorganization (Exhibit 99.4)
(4) Financial Data Schedule (Exhibit 27)
<PAGE>19
SIGNATURES
SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the
Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Internet Stock Market Resources, Inc.
(Company)
DATE: 07/29/99 By: /s/ Budd Morris
----------------------------
Budd Morris
President/CEO/Director
By: /s/ Caroline Latta
----------------------------
Caroline Latta
Vice President/CFO/Director
By: /s/ Chad Morris
----------------------------
Chad Morris
Asst. Vice President/COO/Director
By: /s/ Anastasios Kyriakides
----------------------------
Anastastios Kyriakides
Chairman/Secretary/Director
<PAGE>20
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE
99.2 Financial Statements Audited at
May 31, 1999 and May 31, 1998 21
99.3 Amended Articles of Incorporation 35
99.4 Ageement or Plan of Reorganization and Merger 36
27 Financial Data Schedule 42
<PAGE>22
INTERNET STOCK MARKET RESOURCES, INC.
FINANCIAL STATEMENTS
MAY 31, 1999 and 1998
<PAGE>23
CONTENTS
Page
-----------
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statements of Deficiency in Assets F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-11
<PAGE>24
Dohan and Company 7700 North Kendall Drive, #204
Certified Public Accountants Miami, Florida 33156-7564
A Professional Telephone: (305) 274-1366
Association Facsimile: (305) 274-1368
Independent Auditor's Report
Stockholders and Board of Directors
Internet Stock Market Resources, Inc.
St. Petersburg, Florida
We have audited the accompanying balance sheets of Internet Stock Market
Resources, Inc., as of May 31, 1999 and 1998, and the related statements of
operations, deficiency in assets and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Internet Stock Market
Resources, Inc. at May 31, 1999 and 1998, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Dohan and Company, P.A., CPA's
July 9, 1999
Miami, Florida
Member:
Florida Institute of Certified Public Accountants
American Institute of Certified Public Accounts - Private Companies and SEC
Practice Sections
SC International - Offices in Principal Cities World-Wide
[Page F-1]
<PAGE>25
INTERNET STOCK MARKET RESOURCES, INC.
BALANCE SHEETS (RESTATED)
May 31, 1999 1998
($) ($)
---------- ----------
<TABLE>
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 122,786 107,653
Restricted cash - 50,000
Accounts receivable, less allowance for doubtful
accounts of $37,320 and $19,493 in
1999 and 1998 22,343 32,193
Recoverable income taxes 5,928 -
Accrued interest receivable from stockholder - 4,920
-------- -------
TOTAL CURRENT ASSETS 151,057 194,766
PROPERTY AND EQUIPMENT 40,244 49,973
DEPOSITS 1,000 1,000
-------- -------
TOTAL ASSETS 192,301 245,739
-------- -------
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable 11,197 8,995
Accrued and other liabilities 20,998 57,096
Deferred income 112,084 124,444
Current portion of note payable to stockholder 113,550 385,385
Other 1,146 -
-------- --------
TOTAL CURRENT LIABILITIES 258,975 575,920
NOTE PAYABLE TO STOCKHOLDER, 6%, DUE JUNE 1, 2000 564,965 678,515
-------- -------
823,940 1,254,435
COMMITMENTS AND CONTINGENCIES (NOTE 8)
DEFICIENCY IN ASSETS
Preferred stock, $.01 par value; 1,000,000 shares
authorized; none issued and outstanding
Common stock;$.0001 par value; 50,000,000 shares
authorized;5,278,001 and 2,478,001 shares
issued and outstanding 528 248
Additional paid-in capital 504,657 3,458,058
Deficit (1,136,824) (4,467,002)
--------- ---------
TOTAL DEFICIENCY IN ASSETS (631,639) (1,008,696)
--------- ---------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS 192,301 245,739
--------- ---------
</TABLE>
See accompanying notes.
[Page F-2]
<PAGE>26
INTERNET STOCK MARKET RESOURCES, INC.
STATEMENTS OF OPERATIONS (RESTATED)
For the years ended May 31, 1999 1998
($) ($)
-------- --------
<TABLE>
<S> <C> <C>
REVENUES 214,175 382,775
------- -------
EXPENSES
Bad debts 35,763 19,493
Depreciation and amortization 11,307 5,553
Office rent 13,482 12,359
General and administrative 43,801 105,909
Interest 34,947 -
Promotion 3,375 21,386
Professional fees 82,405 51,518
Compensation and related taxes 97,890 156,709
Telephone 20,668 23,470
------- -------
TOTAL EXPENSES 343,638 396,397
------- -------
LOSS FROM OPERATIONS (129,463) (13,622)
OTHER INCOME 1,583 5,332
------- -------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (127,880) (8,290)
PROVISION FOR INCOME TAXES (CREDITS) - -
------- -------
NET LOSS (127,880) (8,290)
-------- -------
BASIC NET LOSS PER SHARE (0.04) (0.00)
====== ======
WEIGHTED AVERAGE SHARES OUTSTANDING 3,582,412 2,478,001
========= =========
</TABLE>
See accompanying notes.
[Page F-3]
<PAGE>27
INTERNET STOCK MARKET RESOURCES, INC.
STATEMENTS OF DEFICIENCY IN ASSETS
For the years ended May 31, 1999 and 1998
ADDITIONAL
PAID-IN
SHARES AMOUNT CAPITAL DEFICIT TOTAL
($) ($) ($) ($)
-------- ------ ----------- ------------ ----------
<TABLE>
<S> <C> <C> <C> <C> <C>
(RESTATED)
BALANCES -
MAY 31, 1997 478,001 48 3,454,664 (3,458,712) (4,000)
STOCK ISSUED
FOR MERGER 2,000,000 200 800 1,000
DEBT ISSUED IN
CONNECTION
WITH MERGER (1,000,000) (1,000,000)
CANCELLATION
OF SHARES 2,594 2,594
NET LOSS FOR
1998 (8,290) (8,290)
--------- ------ ---------- ----------- ----------
BALANCES -
MAY 31, 1998 2,478,001 248 3,458,058 (4,467,002) (1,008,696)
PRIVATE STOCK
PLACEMENT 2,800,000 280 504,657 - 504,937
RECAPITALIZATION
OF DEFICIT (3,458,058) 3,458,058 -
NET LOSS FOR
1999 (127,880) (127,880)
--------- ------ ---------- ----------- ----------
BALANCES -
MAY 31, 1999 5,278,001 528 504,657 (1,136,824) (631,639)
--------- ------ --------- ----------- ----------
</TABLE>
See accompanying notes.
[Page F-4]
<PAGE>28
INTERNET STOCK MARKET RESOURCES, INC.
STATEMENTS OF CASH FLOWS (RESTATED)
May 31, 1999 1998
($) ($)
--------- ---------
<TABLE>
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (127,880) (8,290)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 11,307 5,553
Changes in assets and liabilities:
Decrease (increase) in restricted cash 50,000 (50,000)
Decrease (increase) in accounts receivable 9,850 (32,193)
Increase in recoverable income taxes (5,928) -
Decrease (increase) in accrued interest receivable 4,920 (4,920)
Increase in accounts payable 2,202 8,995
Increase (decrease) in accrued and other liabilities (36,098) 53,096
Increase (decrease) in deferred income (12,360) 124,444
Increase in other liabilities 1,146 -
--------- ---------
NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES (102,841) 96,685
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance 504,937 3,594
Proceeds of stockholder loan - 63,900
Principal payments on note payable stockholder (385,385) -
--------- ---------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 119,552 67,494
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (1,578) (55,526)
Security deposits - (1,000)
--------- ---------
NET CASH USED BY INVESTING ACTIVITIES (1,578) (56,526)
--------- ---------
INCREASE IN CASH 15,133 107,653
CASH, beginning of year 107,653 -
--------- ---------
CASH, end of year $ 122,786 $ 107,653
--------- ---------
SUPPLEMENTAL DISCLOSURES
Interest received $ 6,503 $ 412
Interest paid $ 36,363 $ -
Income taxes paid $ - $ 5,928
</TABLE>
SUPPLEMENTAL DISCLOSURES OF NON-CASH
FINANCING TRANSACTIONS:
In connection with the merger of a commonly controlled affiliate, the Company
issued 2,000,000 shares of common stock in exchange for 1,000 shares
outstanding of the non-surviving corporation and $1,000,000 of debt, recorded
as "Note payable stockholder."
See accompanying notes. [Page F-5]
<PAGE>29
INTERNET STOCK MARKET RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
BUSINESS ACTIVITY Internet Stock Market Resources, Inc., (the Company)
provides Internet design and access to financial websites and information on
behalf of smaller, growing public companies.
Effective September 1, 1998, Internet Stock Market Resources, Inc. (formerly,
Internet Stock Exchange Corp.) acquired 100% of the shares authorized, issued,
and outstanding, consisting of 1,000 shares of common stock, $1.00 par value
per share, of Internet Stock Market Corp., a closely-held Florida corporation,
under an Agreement and Plan of Merger. The shareholders of Internet Stock
Market Corp. were compensated with 2,000,000 restricted common shares of the
Company's stock and a promissory note in the amount of $1,000,000.
The Surviving Corporation is duly organized under General Corporation Law of
the State of Delaware, is in good standing, and is qualified to conduct
business in any lawful jurisdiction. The Surviving Corporation has completed
all aspects of its merger/acquisition with the Non-surviving Corporation.
ACCOUNTING BASIS These financial statements reflect the merger as if it were
a "pooling of interests" of the two entities as a result of common control.
Accordingly, financial information for periods prior to the merger reflect
retroactive restatement of the companies' combined financial position and
operating results.
RECLASSIFICATIONS AND RESTATEMENTS Amounts in the prior year financial
statements have been reclassified for comparative purposes to conform with the
presentation of the current year financial statements. Additionally, amounts
in the prior year financial statements have been restated to give retroactive
effect to the merger for purposes of comparative financial statement
presentation.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, the
Company considers all highly liquid debt securities purchased with a maturity
of three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject
the Company to a concentration of credit risk, are cash and cash equivalents
and accounts receivable. The Company currently maintains its day-to-day
operating cash balances at a single financial institution. At times, cash
balances may be in excess of the FDIC insurance limits. The amounts in excess
were $21,851 and $8,672 at May 31, 1999 and 1998,respectively.
As of May 31, 1999 and 1998, the Company had outstanding trade receivables,
which carrying value of these receivables was reduced for estimated
uncollectibility to estimated fair market value by an allowance for doubtful
accounts. The Company's clients are typically smaller publicly-traded
organizations. Consequently, the Company's ability to collect the amounts due
from clients may be affected by economic fluctuations in their industries and
geographical location, as well as fluctuations in the financial and stock
markets in general.
[Page F-6]
<PAGE>30
PROPERTY AND EQUIPMENT Property and equipment, consisting of furnishings and
equipment used in its current operations, is stated at cost, less accumulated
depreciation. Depreciation is begun when the assets are placed in service and
computed using the straight-line method over the estimated useful lives of the
assets, which range from five to seven years.
LONG-LIVED ASSETS Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate that the
related carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used are recognized based on the fair value of
the asset. Long-lived assets to be disposed of, if any, are reported at the
lower of carrying amount or fair value less cost to sell.
SALES REVENUE Revenues from sales are recorded when the collection of sales
proceeds is reasonably assured and all other material conditions of the sales
are met. Income on contracts in excess of one month is deferred and
recognized monthly, pro-rata, over the term of the agreement.
ADVERTISING Advertising costs are charged to operations in the year incurred.
BASIC NET LOSS PER SHARE Basic net loss per common share is computed by
dividing the net income or loss available to Common stockholders by the
weighted average number of common shares outstanding during each period. There
were no common stock equivalents as of the years ended May 31, 1999 and May
31, 1998.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement No. 109 (FAS No. 109), Accounting
for Income Taxes. SFAS 109 is an asset and liability approach that requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of the difference in events that have been recognized in the
Company's financial statements compared to the tax returns.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the requirements of
Statement of Financial Accounting Standards No. 107, the fair value amounts of
financial instruments have been determined based on available market
information and appropriate valuation methodology. The carrying amounts and
estimated fair values of the Company's financial assets and liabilities
approximate fair value due to the short maturity of the instruments. The fair
value of the note payable stockholder is estimated based on an annual interest
rate of 6% and the anticipated dates of payment and has not been increased
accordingly. Fair value estimates are subjective in nature and involve
uncertainties and matters of significant judgment; therefore, fair value
cannot be determined with precision.
[Page F-7]
<PAGE>31
2. RELATED PARTY TRANSACTIONS
COMPENSATION AND CONVERSION OF SHARES The compensation to a Non-surviving
Corporation (Internet Stock Market Corp.) shareholder for his equity in that
business was $1,000,000 in the form of a promissory note payable with 6%
interest per annum, issued by the Surviving Corporation (Internet Stock Market
Resources, Inc.) This note was due upon demand by the holder, but subsequently
changed to allow the Company to accumulate sufficient working capital. The
shareholder is an officer and director of the Company.
3. RESTRICTED CASH
In May, 1998 the Board of Directors authorized the Company to offer and sell
shares of its common stock under a private placement, which was subsequently
cancelled. Prior to the year end, May 31, 1998, the Company received $50,000
from an investor to purchase shares of its common stock, which was
subsequently returned to the investor.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
1999 1998
--------- ---------
Office equipment $57,104 $55,526
Accumulated depreciation (16,860) (5,553)
--------- ---------
Property and equipment, net $40,244 $49,973
========= =========
Total depreciation expense for the years ended May 31, 1999 and 1998, amounted
to $11,117 and $5,553, respectively.
5. ACCRUED AND OTHER LIABILITIES
Accrued liabilities consisted of the following:
1999 1998
--------- ---------
Professional fees $20,150 $ 6,900
Accrued compensation and related taxes 848 196
Deposit on potential purchase of stock - 50,000
--------- ---------
$20,998 $57,096
========= =========
6. STOCKHOLDERS' EQUITY
The Company has authorized 50,000,000 shares of common stock with a par value
of $.0001 per share. At May 31, 1999 and 1998, 5,278,001 shares and 2,478,001
shares, respectively, were issued and outstanding. The Company has authorized
1,000,000 shares of preferred $.01 par value.
PRIVATE OFFERING In August 1998, the Board of Directors authorized the
Company to offer and sell to foreign investors up to 4,000,000 shares of its
common stock at a purchase price of $.25 per share under a private placement
[Page F-8]
<PAGE>32
to foreign investors, pursuant to an exemption available under the Securities
Act of 1933, as amended. Under this offering, which was made prior to the
merger, 2,800,000 shares were issued at prices ranging from $.12 to $.25
generating net proceeds of $504,937 prior to May 31, 1999. Additional (pre-
reverse split) shares of 1,200,000 were sold in June 1999 for $72,000, with
payment expected in July 1999.
7. INCOME TAXES
For the year ended May 31, 1999, the Company generated for U.S. income tax
purposes a net operating loss of approximately $93,300. This loss carryforward
expires in the year 2018. The Company had a net operating loss carryforward of
approximately $2,850,000 as of May 31, 1998. However, as of September 1, 1998,
and subsequently, there were ownership changes in the Company as defined in
Section 382 of the Internal Revenue Code. Because of these changes, the
Company's ability to utilize net operating losses and capital losses available
before the ownership change were virtually eliminated. The utilization of the
remaining carryforward is dependent on the Company's ability to generate
sufficient taxable income during the carryforward periods and no further
significant changes in ownership.
The Company computes deferred income taxes under the provisions of Statement
of Financial Accounting Standards No. 109, which requires the use of an asset
and liability method of accounting for income taxes. Under FAS No. 109,
deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. These differences
result primarily from the use of the accelerated cost recovery method of
depreciation and the write-off method for accounts receivable as opposed to
the allowance method. Statement No. 109 also provides for the recognition and
measurement of deferred income tax benefits based on the likelihood of their
realization in future years. A valuation allowance must be established to
reduce deferred income tax benefits if it is more likely than not that a
portion of the deferred income tax benefits will not be realized. It is
Management's opinion that the entire deferred tax benefit may not be
recognized in future years. Therefore, a valuation allowance equal to the
deferred tax benefit has been established, resulting in no deferred tax
benefits as of the balance sheet dates.
8. COMMITMENTS AND CONTINGENCIES
LEASED PREMISES The Company leases its facilities in St. Petersburg, Florida
under a three-year lease agreement dated July 24, 1997. The lease provides for
monthly payments of $1,124. Rent expense for the years ended May 31, 1999 and
1998, was $13,482 and $12,359, respectively.
Future minimum lease payments under the lease agreement for years ending May
31 are as follows:
2000 $13,488
2001 2,248
-------
$15,736
=======
[Page F-9]
<PAGE>33
CONSULTING AGREEMENTS From time-to-time, the Company engages, retains and
dismisses various consultants. The consultants provide various services
including assisting with shareholder relations, responding to inquiries, short
and long-term strategic planning, marketing the Company to the investment
community and identification and negotiation of potential acquisitions.
YEAR 2000 The year 2000 issue results from certain computer systems and
software applications that use only two digits (rather than four) to define
the applicable year. As a result, such systems and applications may recognize
a date of "00" as 1900 instead of the intended year 2000, which could result
in data miscalculations and software failures. The Company has conducted a
preliminary assessment of its key computer systems and software application
and believes they are Year 2000 compliant. Based on the initial assessment,
the Company believes the cost of addressing the Year 2000 issue should not
have a material impact on the Company's financial position or results of
operations.
POTENTIAL ACQUISITIONS On May 25, 1999, the Board of Directors authorized
negotiations with PEP Equities, Inc. for the purpose of acquiring an interest
to the extent that it would become a subsidiary of the Company.
The Company is negotiating with Micro Bytes Computer Center, Inc. for the
purchase of business assets and inventory and has executed a Letter of Intent
dated June 16, 1999. The purchase would be accomplished in part by the
issuance of restricted common stock by the Company, which would be given
"piggy-back" registration rights.
On June 30, 1999, a letter of intent was signed by the Company and Delcor
Industries, Inc. (Delcor) to acquire 100% of Delcor for cash and debt. The
letter of intent gives the parties until August 1, 1999 to sign a purchase
agreement to finalize the acquisition. Delcor manufactures and assembles
electronic components, and employs approximately 75 people.
9. GOING CONCERN AND MANAGEMENT'S PLAN
GOING CONCERN The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. The Company has
suffered recurring losses from operations and at May 31, 1999, had a working
capital deficit and a deficiency in assets. These and other factors raise
doubt about the Company's ability to continue as a going concern, without
additional capitalization. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
MANAGEMENT'S PLANS Management has decided to address the Company's financial
situation by the following:
Sale of 1,200,000 additional shares of common stock for $72,000 as part of its
foreign private placement, expected to be received in July 1999.
The note payable stockholder has been restructured and will not be satisfied
until the Company has an acceptable working capital.
An SB-2 is expected to be filed with the United States Securities and
Exchange Commission, which would provide for the Company to raise up to
$5,000,000 from the general public.
[Page F-10]
<PAGE>34
Acquisition of at least two, possibly four, additional companies in the
computer and internet fields for a better vertical integration and to spread
general and administrative costs over a broader base. In that regard, three
letters of intent have been signed and the Company is in the process of
drafting agreements and performing its due diligence.
Increase promotional expenditures in an effort to increase revenues.
10. SUBSEQUENT EVENTS
REVERSE STOCK SPLIT During the first fiscal quarter of the Company's 1998
fiscal year, the common stock of the Company experienced a significant decline
in the trading per share price. In addition to the detrimental effect the
lower trading price had to the shareholders, it diminished the Company's
ability to make acquisitions using the Company's common stock. As a result of
the above, effective on June 30,1999, the Company reverse split its common
stock at a ratio of one new share for each nine old shares issued and
outstanding. Recognition of the reverse stock split has not been given in the
May 31, 1999, and 1998 financial statements.
SALE OF COMMON STOCK On June 14, 1999, the Company sold the remaining
1,200,000 (pre-reverse split) shares of its common stock from its private
placement for $72,000, however, the amount is unpaid.
[Page F-11]
<PAGE>35
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Pursuant to Section 242 of the General Corporation Law
State of Delaware
OF
INTERNET STOCK EXCHANGE CORP.
The undersigned, pursuant to the provisions of the General Corporation Law of
the State of Delaware, do hereby certify and set forth as follows:
FIRST: The name of the corporation is INTERNET STOCK EXCHANGE CORP.
SECOND: The amendments to the Certificate of Incorporation to be effected
hereby are as follows:
Article ONE of the Certificate of Incorporation, relating to the name of the
corporation is to be amended to read as follows:
"ONE: The name of the corporation is INTERNET STOCK MARKET
RESOURCES, INC."
Article FOUR of the Certificate of Incorporation, relating to the stock of the
corporation is amended to read as follows:
"FOUR: The corporation shall be authorized to issue Fifty Million (50,00,000)
common shares at $.0001 par value and One Million preferred shares at $.001
par value."
THIRD: The amendment effected herein was authorized by the affirmative vote of
the (holders of a majority or the outstanding shares entitled to vote thereon
at a meeting of shareholders pursuant to Section 242 of the General
Corporation Law of the State of Delaware.
FOURTH: The capital of the corporation will not be reduced under or by reason
of this amendment.
IN WITNESS WHEREOF, I have hereunto set my hand and seat this 14th Day of
August, 1998.
By: /s/ Anastasios Kyriakides
Anastasios Kyriakides, Board Chairman/Secretary
<PAGE>35
AGREEMENT AND PLAN OF MERGER
INTERNET STOCK MARKET RESOURCES, INC.
(A Delaware Corporation - Survivor)
and
INTERNET STOCK MARKET CORP.
(A Florida Corporation - Non Survivor)
THIS AGREEMENT AND PLAN OF MERGER, dated and effective as of September 1,
1998 between Internet Stock Market Resources, Inc., an entity incorporated in
the State of Delaware, ("Survivor"), hereinafter referred to as I-DEL, and
Internet Stock Market Corp., an entity incorporated in the State of Florida,
("Non-Survivor"), hereinafter referred to as I-FLA; Survivor and Non-Survivor
corporations may collectively be referred to as the "component corporations."
WHEREAS, the Board of Directors of each component corporation deems it
advisable for the benefit of the component corporations and their respective
shareholders, that the component corporations merge into a single corporation
pursuant to this Agreement and the applicable laws of the State of Delaware;
and
WHEREAS, the component corporations desire to adopt this Agreement as a
plan of reorganization and to consummate the merger in accordance with the
provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986: and
WHEREAS, the Survivor and Non-Survivor have entered into this agreement
voluntarily and with the consent and authorization of their respective Board
of Directors and majority consent of its shareholders;
NOW, THEREFORE, the component corporations agree that the Survivor shall
merge with the Non Survivor as the surviving corporation in accordance with
the applicable laws of the State of Delaware, that the name of the surviving
corporation shall be INTERNET STOCK MARKET RESOURCES, INC., (which in its
capacity as the surviving corporation shall hereinafter be referred to as I-
DEL or "Surviving Corporation"), that the Agreement and Plan of Merger shall
be the governing document overseeing every and all aspects of this merger and
that the terms and conditions of the Merger and the mode of carrying it into
effect shall be as follows:
SECTION I.
EFFECTIVE DATE
The merger provided for in this Agreement shall become effective upon the
completion of the following requirements: Adoption of this Agreement by the
Board of Directors of the component corporations as provided by the By-laws of
the component corporations, which provides that the Board of Directors can act
on behalf of their respective corporations by the majority consent of its
shareholders, and pursuant to the laws of the State of Delaware; execution and
filing of the Certificate of Merger and Articles of Merger as required by the
laws of the State of Delaware with the Secretary of State of Delaware.
(1)
<PAGE>37
The component corporations shall agree upon the date (hereinafter
"Effective Date") yn which the Certificate of Merger and the Articles of
Merger shall be filed with the Secretary of State of the State of Delaware.
The filing of these documents necessary to effect a merger of the component
corporations shall be filed after the approval of this Agreement and Plan of
Merger by the component corporation's Board of Directors. The Board of
Directors of the component corporations have deemed the effective date to be
September 1, 1998.
SECTION II.
GOVERNING LAW
The surviving corporation shall be governed by the laws of the State of
Delaware.
SECTION III.
ARTICLES OF INCORPORATION
The Articles of Incorporation of the Survivor shall remain the same with
the State of Delaware from the Effective Date.
SECTION IV.
BY-LAWS
The existing Bylaws of the Surviving Corporation shall remain the same
after the Effective Date.
SECTION V.
MANNER OF COMPENSATION AND CONVERTING SHARES
5.1 Compensation and Conversion of Shares. The compensation paid to the:
shareholders of the Non-Survivor (pv $.001) for the business owned by the Non-
Survivor's shareholders is $1,000,000 in cash and 2,000,000 restricted common
shares of stock of the Survivor. The mode of carrying the merger into effect
and the manner of converting the shares of the Survivor and Non-Survivor into
shares of the Surviving Corporation are a11 follows:
Each share of common stock of the Non-Survivor (Non-Survivor Common
Stock) which is issued and outstanding on the Effective Date, specifically
1,000 shares of common stock, will be converted into 2,000 common shares of
stock of the Survivor corporation by virtue of the merger and without any
action on the part of the holder thereof. Each certificate evidencing
ownership of shares of Survivor common Stock issued and outstanding on the
Effective Date or held by Survivor in its treasury shall continue to evidence
ownership of the same number of shares of Survivor Common Stock.
5.2 Exchange of Certificates. Within a reasonable period of time after
the Effective Date each holder of an outstanding certificate or certificates
theretofore representing shares of the Survivor and the Non-Survivor shall
surrender same to the Survivor's Transfer Agent, OTC Stock Transfer, Inc., 231
East 2100 South, Salt Lake City, Utah 84115. Each holder shall receive a new
certificate for the exchange of 1 for 2,000 shares in the component
corporations as converted into the Survivor.
5.3 Fractional Shares. Fractional shares of the Survivor common stock
shall be rounded up to the next digit.
(2)
<PAGE>38
5.4 Unexchanged Certificates. Until surrendered, each outstanding
certificate in the Survivor and the Non-Survivor shall be represented on the
Survivor's Corporate Shareholder
List and be deemed to be valid and as evidence of ownership until exchanged.
SECTION VI.
BOARD OF DIRECTORS AND OFFICERS
The Surviving Corporation shall on the Effective Date have between three
to five members of the Board of Directors and may increase the Board of
Directors to seven members at their descretion. The Board of Directors of the
Surviving corporation shall remain the same as of the Effective Date.
SECTION VII.
EFFECT OF THE MERGER
On the Effective Date, the separate existence of the Non Survivor shall
cease except insofar as continued by statute and it: shall be merged with and
into the Surviving Corporation. All of the property, real, personal and mixed
of each of the component corporations, and all debts due to either of them,
shall be transferred to and vested in the Surviving corporation., without
further act or deed. The Surviving corporation shall thenceforth be
responsible and liable for all the liabilities and obligations; any legal
claim or judgement against either of the component corporations may be
enforced against the Surviving corporation.
SECTION VIII.
APPROVAL OF SHAREHOLDERS
The By-laws of each of the component corporations provides that majority
consent, represented by the polling of the shareholders (fifty percent or
greater), empowers the Board of Directors to act on behalf of the shareholders
of the respective corporations. Therefore, the Board of Directors must have
approval of at least fifty percent of their respective shareholder to cause
this merger.
SECTION IX.
REPRESENTATIONS AND WARRANTIES OF NON-SURVIVOR
Non-Survivor represents and warrants that:
9.1 Corporate Organization. Non-Survivor is a corporation duly
organized, validly existing under the laws of the State of Florida, and is
qualified to do business in its jurisdiction.
9.2 Capitalization. Non-Survivor's authorized capital stock consists of
1,000 common shares, with a par value of $.001.
9.3 Subsidiaries. The Non-Survivor has no subsidiaries.
9.4 Financial Position. The Non-Survivor represents that it has no
liabilities, actual, contemplated or threatened, other than disclosed to the
Survivor, as of the Effective Date of this Merger.
(3)
<PAGE>39
9.5 Absence of Certain Changes. The Non-Survivor hereby represents and
warrants that there has been no material adverse change in the business or
financial position of the Non-Survivor as of the Effective Date of this
Merger.
9.6 Litigation, etc. The Non-Survivor hereby represents and warrants that
it has no legal action, actual, contemplated or threatened as of the Effective
Date of this Merger.
9.7 Contracts. Except as heretofore disclosed in writing by Non-Survivor
and Survivor, the Non-Survivor is not a party to any material contract which
is to be performed in whole or in part at or after the Effective Date of this
Agreement.
9.8 No Violation. Consummation of the merger will not constitute or
result in a breach or default under any provision or any charter, bylaw,
indenture, mortgage, lease or agreement, or any order. judgement, decree, law
or regulation known to the- Non-Survivor.
9.9 Authorization. Execution of this Agreement has been duly authorized
and anproved by Non-Survivor's Board of Directors.
SECTION X.
REPRESENTATIONS AND WARRANTIES OF SURVIVOR
Survivor represents and warrants that:
10.1 Corporate Organization. Survivor is a corporation duly organized and
valid1y existing under the laws of the State of Delaware and is qualified to
conduct business and upon the Effective Date of this Agreement will merge with
the Florida corporation.
10.2 Capitalization. As of the Effective Date of this Merger, Survivor's
authorized capital is 50,000,000 common shares of stock, $.0001 par value,
1,000,000 preferred shares of stock which shall have a par value of $.01, by
Amendment to the Articles of Incorporation. As of Effective Date of the
Merger, there are 7,478,001 common shares issued and outstanding or due to be
issued, no preferred shares issued and outstanding.
10.3 Subsidiaries. As of the Effective Date of this Merger, their are no
Subsidiaries of the Survivor.
10.4 Financial Position. As of the Effective Date of this Merger the
Survivor is a publicly-held company in the process of completing a private
placement financing to facilitate the operation of the business of the Non-
Survivor. The Survivor has no liabilities other than as disclosed to the Non-
Survivor.
10.5 Absence of Certain Changes. The Survivor hereby represents and
warrants that there has been no material change in the business of the
Survivor as of the Effective Date.
10.6 Litigation. The Survivor hereby represents and warrants that there
is no legal action filed, contemplated or threatened as of the Effective Date
of this Merger.
10.7 Contracts. Except as heretofore disclosed in writing by the Survivor
the Non-Survivor, Survivor is not a party to any material contract which is to
be performed in whole or in part at or after the Effective Date of the Merger.
10.8 No Violation. Consummation of this Merger will not constitute or
result in a breach or default under any provision of any charter, bylaw,
indenture, mortgage, lease or agreement or any order, judgement, decree, law
or regulation known to the Survivor.
10.9 Authorization. Execution of this Agreement has been duly authorized
and approved by the Survivor's Board of Directors.
(4)
<PAGE>40
SECTION XI.
CONDUCT OF SURVIVOR AND NON-SURVIVOR PENDING THE EFFECTIVE DATE
The conduct of the Survivor and Non-Survivor are as follows:
11.1 Certificate of Incorporation and Bylaws: The Survivor shall be known
as INTERNET STOCK MARKET RESOURCES, INC., a Delaware Corporation
11.2 Capitalization. etc: The Survivor shall have the share capital
structure of a total 51,000,000 shares; 50,000,000 common shares authorized,
par value of $.0001; 1,000,000 preferred shares at a par value of $.01.
11.3 Shareholder's Meeting: As of the Effective Date there has been no date
set for a Shareholder's Meeting.
SECTION XII.
DESIGNATION OF AGENT FOR SERVICE
As of the Effective Date of the Merger, the Survivor Corporation hereby
appoints the Survivor's Corporate Secretary to accept service of process in
any action, suit or proceeding for this enforcement of any obligations of Non-
Survivor. The Survivor shall be governed by the laws of the State of Delaware.
SECTION XIII.
ACCESS
From the date hereof to the Effective Date, Survivor and Non-Survivor
shall provide each other with such information and permit each other's
Officers and Directors such access as may be needed to complete the Agreement
and Plan of Merger.
SECTION XIV.
TERMINATION
This Agreement may not be terminated unless by mutual written consent,
executed by both parties, prior to the Effective Date of the Merger.
SECTION XV.
GENERAL PROVISIONS
15.1 Further Assurance. At any time, and from time to time, after the
Effective Date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect any information as deemed necessary to carry out the intent and
purposes of this Agreement and Plan of Merger.
15.2 Waiver. Any failure on the part of either party hereto to comply
with any of its obligations, agreements or conditions hereunder may be waived
in writing by the party to whom such compliance is owed.
(5)
<PAGE>41
15.3 Brokers. Except as otherwise disclosed, each party represents to the
other party that no broker or finder has acted for it in connection with this
Agreement and Plan of Merger; and agrees to indemnify and hold harmless the
other party against any fee, loss or expense arising out of claims by brokers
or finders employed or alleged to have been employed by either party .
15.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given in person or sent via courier
or first class mail to:
Survivor, prior to the Effective date at:
405 Central Avenue, Fifth Floor
St. Petersburg, Florida 33174
Non Survivor:
1333 Snell Island Boulevard
St. Petersburg-, Florida 33704
15.5 Entire Agreement. This Agreement constitutes the entire agreement,
between the parties and supersedes and cancels any other agreement,
representations, or communication, whether oral or written, between the
parties hereto relating to the transactions contemplated herein or the subject
matter hereof.
15.6 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware.
15.7 Assignment. This Agreement shall inure to the benefit of, and
binding upon, the parties hereto and their successors and assigns, provided,
however, that any assignment by either party or its rights under this
Agreement without the consent of the other party shall be void.
15.8 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitutes one and the same instruments.
Non-Survivor (I - FLA) Survivor (I-DEL):
/s/ Anastasios Kyriakides, /s/ John P. Bramis
by Anastasios Kyriakides, President by John P. Bramis, President
Internet Stock Market Corp. Internet Stock Market
Resources, Inc.
(6)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED MAY 31, 1999 AND MAY 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> MAY-31-1999 MAY-31-1998
<PERIOD-START> JUN-01-1998 JUN-01-1997
<PERIOD-END> MAY-31-1999 MAY-31-1998
<CASH> 122,786 157,653
<SECURITIES> 0 0
<RECEIVABLES> 59,663 51,686
<ALLOWANCES> (37,320) (19,493)
<INVENTORY> 0 0
<CURRENT-ASSETS> 151,057 194,766
<PP&E> 57,104 55,526
<DEPRECIATION> (16,860) (5,553)
<TOTAL-ASSETS> 192,301 245,739
<CURRENT-LIABILITIES> 258,975 575,920
<BONDS> 564,965 678,515
0 0
0 0
<COMMON> 528 248
<OTHER-SE> (632,167) (1,008,944)
<TOTAL-LIABILITY-AND-EQUITY> 192,301 245,739
<SALES> 214,175 382,775
<TOTAL-REVENUES> 214,175 382,775
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 308,691 396,397
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (34,947) 0
<INCOME-PRETAX> (127,880) (8,290)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (127,880) (8,290)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (127,880) (8,290)
<EPS-BASIC> (0.04) (0.00)
<EPS-DILUTED> (0.04) (0.00)
</TABLE>
