As filed with the Securities and Exchange Commission on February 8, 2000
Registration No. 333-87895
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
QUIKBIZ INTERNET GROUP, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 7371 88-0320364
- ----------------- ---------------------------- ------------------
(State or Other (Primary Standard Industrial (I.R.S. Employer
Jurisdiction of Classification Code Number) Identification
Incorporation or Number)
Organization)
6801 Powerline Road
Ft. Lauderdale, Florida 33309
(954) 970-3553
(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
David B. Bawarsky, Chief Executive Officer
QuikBiz Internet Group, Inc.
6801 Powerline Road
Ft. Lauderdale, Florida 33309
(954) 970-3553
(Name, Address and Telephone Number of Agent for Service)
Copies to:
David Alan Miller, Esq.
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
(212) 818-8800
(212) 818-8881 - Facsimile
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. |_|
<PAGE>
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
|_| ________________________
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
|_| _______________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
Title of Each Proposed
Class of Maximum Proposed
Securities Offering Maximum Amount of
to be Amount to be Price Per Aggregate Registration
Registered Registered Unit Offering Price Fee
- ------------ ----------- --------- ----------------- -------------
Common stock 15,240,923 $0.75(1) $ 11,430,692.25(1) $ 3,177.73
Common stock(2) 1,500,000 $0.75(2) $ 1,125,000.00 $ 312.75
Common stock(3) 500,000 $1.4625 $ 731,250.00 $ 203.29
Common stock(4) 600,000 $0.75 $ 450,000.00 $ 125.10
Common stock 617,130 $1.50(5) $ 925,695.00(5) $ 244.38
Total Registration Fee........................................ $ 4,063.25
Registration Fee Previously Paid.............................. $ 7,259.12
Registration Fee Payable with this Amendment No. 1............ $ 0
===============================================================================
(1) Based upon the average of the bid and asked prices of QuikBiz Internet
Group, Inc. common stock as reported on the OTC Bulletin Board on
September 24, 1999, pursuant to Rules 457(c) and (g) of the Securities
Act of 1933.
(2) Issuable upon the exercise of common stock purchase warrants issuable
to Swartz Private Equity, LLC. The warrants are issuable to Swartz from
time to time when QuikBIZ exercises its put right to sell shares of
common stock to Swartz. The exercise price of a warrant will be equal
to 110% of the market price on the date that QuikBIZ exercises its put
right to sell shares of its common stock to Swartz.
(3) Issuable upon the exercise of common stock purchase warrants issued to
Swartz Private Equity, LLC, on May 25, 1999. The exercise price of the
warrants is initially $1.4625, but is subject to downward adjustment
under certain circumstances. On each six month anniversary of the date
of issuance, QuikBIZ will calculate a reset exercise price that will be
equal to 100% of the lowest closing bid price of the common stock for
the five trading days ending on the six month anniversary date. The
exercise price will be equal to the lowest reset exercise price
determined on any six month anniversary of the date of issuance
preceding the date on which the warrant is exercised, subject to
anti-dilution adjustments.
(4) Issuable upon the exercise of common stock purchase warrants issued to
M.H. Meyerson & Co, Inc. on July 14, 1998. The exercise price of the
warrants is $.25 per share.
(5) Based upon the average of the bid and asked prices of QuikBIZ Internet
Group, Inc. common stock as reported on the OTC Bulletin Board on
February 2, 2000, pursuant to Rules 457(c) and (g).
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<PAGE>
PROSPECTUS
QuikBIZ Internet Group, Inc.
6801 Powerline Road
Ft. Lauderdale, Florida 33309
(954) 970-3553
The Resale of 18,458,053 Shares of Common Stock
The selling price of the shares will be determined by market factors at
the time of their resale.
------------------------------------
This prospectus relates to the resale by the selling shareholders of up
to 18,458,053 shares of common stock. The selling shareholders may sell the
stock from time to time in the over-the-counter market at the prevailing market
price or in negotiated transactions. Of the shares offered,
o 858,053 shares are presently outstanding,
o up to 15,000,000 shares are issuable to Swartz Private Equity,
LLC based on an amended and restated Investment Agreement
dated as of July 9, 1999,
o up to 2,000,000 shares are issuable upon the exercise of
warrants issued or issuable to Swartz under the amended and
restated Investment Agreement, and
o up to 600,000 shares are issuable upon the exercise of
warrants issued to M.H. Meyerson & Co, Inc.
We will receive no proceeds from the sale of the shares by the selling
shareholders. However, we have received proceeds from the sale of shares that
are presently outstanding and may receive up to $20 million of proceeds from the
sale of shares to Swartz, and we may receive additional proceeds from the sale
to Swartz of shares issuable upon the exercise of any warrants that may be
exercised by Swartz.
Our common stock is quoted on the over-the-counter Electronic Bulletin
Board under the symbol QBIZ. On February 3, 2000, the average of the bid and
asked prices of the common stock on the Bulletin Board was $1.375 per share.
Investing in the common stock involves a high degree of risk. You
should invest in the common stock only if you can afford to lose your entire
investment. See "Risk Factors" beginning on page 7 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is February __, 2000
<PAGE>
Please read this prospectus carefully. It describes our company,
finances, products and services. Federal and state securities laws require that
we include in this prospectus all the important information that you will need
to make an investment decision.
You should rely only on the information contained or incorporated by
reference in this prospectus to make your investment decision. We have not
authorized anyone to provide you with different information. The selling
shareholders are not offering these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front page of this
prospectus.
The following table of contents has been designed to help you find
important information contained in this prospectus. We encourage you to read the
entire prospectus.
Table of Contents
Page Page
---- ----
Prospectus Summary..................3 Management......................27
Summary Financial Data..............6 Executive Compensation..........28
Risk Factors........................7 Principal Shareholders..........30
Use of Proceeds....................11 Certain Transactions............32
Price Range of Common Stock........12 Certain Transactions............32
Dividend Policy....................12 Description of Securities.......33
Management's Discussion Legal Matters...................34
and Analysis of Experts.........................34
Financial Condition Where You Can Find More
and Results of Operations.......13 Information.................35
Business...........................18 Index to Financial Statements..F-1
Selling Shareholders...............22
Plan of Distribution...............26
------------------------------------
QuikBIZ Internet Group, Inc. is a Nevada corporation. We were
originally incorporated in 1984 in Utah under the name Sunwest Industries, Inc.
In 1994 we merged with International Training & Education Corp., changed our
name to International Trading & Education Corp. and became a Nevada corporation.
In 1996 we changed our name to DigiMedia USA, Inc. In May 1997, we merged with
Nitros Franchise Corporation and changed our name to Nitros Franchise
Corporation. In July 1997, we changed our name to Algorhythm Technologies
Corporation. In July 1998 we changed our name to QuikBIZ Internet Group, Inc.
Our principal executive offices are located at 6801 Powerline Road, Ft.
Lauderdale, Florida 33309 and our telephone number is (954) 970-3553.
Some of the statements contained in this prospectus, including
statements under "Prospectus Summary," "Risk Factors," "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business,"
are forward-looking and may involve a number of risks and uncertainties. Actual
results and future events may differ significantly based upon a number of
factors, including:
o our significant historical losses and the expectation of
continuing losses;
o rapid technological change in the Internet industry;
o our reliance on key strategic relationships and accounts;
o the impact of competitive products and services and pricing; and
o uncertain protection of our intellectual property.
In this prospectus, we refer to QuikBIZ Internet Group, Inc. as we or
QuikBIZ. We refer to our subsidiary QuikBIZ Media Centers, Inc. (formerly
QuikLAB Multimedia Centers, Inc.) as QuikBIZ Media, our subsidiary
SmithAgency.com, Inc. as SmithAgency.com, and Swartz Private Equity, LLC as
Swartz.
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<PAGE>
Prospectus Summary
This summary highlights information contained elsewhere in this
prospectus. This summary is not complete and does not contain all of the
information you should consider before investing in the common stock. You should
read the entire prospectus carefully, including the "Risk Factors" section.
Our Business
Through our QuikBIZ Mall division and our principal subsidiaries,
QuikBIZ Media and SmithAgency.com, we are developing several complementary
Internet-oriented businesses.
We are currently developing the QuikBIZ Mall (www.quikbiz.com), a
virtual mall on the Internet that offers corporate communications products,
services and supplies on-line. The QuikBIZ Mall also offers discount pricing,
one-stop shopping, easy ordering and quick delivery, and we expect that in the
future it will also offer product comparison data. We currently own and maintain
most of the merchant stores in the QuikBIZ Mall. We create each merchant store
and purchase the products directly through "drop-ship" vendors. The vendors bill
us for products or services purchased at our merchant stores on the mall and we
bill the purchasers. Each store has its own separate URL and is expected to be
marketed independently of the mall. There are presently 11 stores on the Mall:
M2 PressWIRE, Media Furnishings, QuikBIZ Media, Quoteit.com, The Presentation
Shop, Pro-Tape Outlet, SmithAgency.com, Cables and Bits, BizBookStop,
CDsupplies.com and LCD Mart. We own all of the stores except M2 PressWIRE.
QuikBIZ Media is a retail, business-oriented, multimedia production
facility. QuikBIZ Media offers a wide variety of audio, video, multimedia and
Internet services and products to business entities, government agencies,
non-profit organizations, schools, universities, religious organizations and
consumers. QuikBIZ Media produces and assists companies in creative content for
all types of corporate communication including sales, training, public relations
and promotion. QuikBIZ Media operates the QuikBIZ Media store on the QuikBIZ
Mall.
QuikBIZ Media also operates Quoteit.com, which is linked to the QuikBIZ
Mall. Quoteit.com is an Internet "bidding" website where purchasers of media
duplication services can "name their own price" for audio, video, CD and digital
video disk (DVD) media duplication. Quoteit.com provides businesses, non-profit
corporations, government agencies, schools, universities, and religious
organizations with a "one-stop" site for shopping for media duplication services
on-line. QuikBIZ Media provides the duplication services through its own
facilities and through major duplication/replication companies throughout the
United States.
SmithAgency.com is a full service advertising and marketing agency.
SmithAgency.com provides its clients with a broad range of services, including
Internet site design, television commercial and radio commercial development and
production, print advertisement development and production and promotions.
SmithAgency.com operates the SmithAgency.com store on the QuikBIZ Mall.
SmithAgency.com has created a separate division, called Pix'l Creative, to
provide advertising, marketing and public relations services on a per-project
basis. The Pix'l Creative division will operate an e- commerce web site that
will be linked to the QuikBIZ Mall.
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<PAGE>
Recent Events
On August 31, 1999, we completed the acquisition of substantially all
of the assets of Gallaspy & Lobel, Inc., an advertising firm based in south
Florida doing business under the name G&L Group. We acquired all of G&L Group's
contracts and pending orders with its existing active clients, and all of G&L
Group's accounts receivable relating to its existing active clients. In
connection with the acquisition, G&L Group's president, James Lobel, has become
the president of SmithAgency.com.
Our Investment Agreement
We have entered into an amended and restated Investment Agreement with
Swartz to raise up to $20 million through a series of sales of our common stock
to Swartz. The dollar amount of each sale is limited by our common stock's
trading volume. A minimum period of time must occur between sales. In turn,
Swartz will either sell our stock in the open market, sell our stock to other
investors through nego tiated transactions or hold our stock in its own
portfolio. This prospectus covers the resale of our stock by Swartz either in
the open market or to other investors.
Additional Shares We Are Registering
In July 1998, we issued warrants to M.H. Meyerson & Co., Inc. to
purchase 600,000 shares of common stock at a price of $.25 per share. The resale
of the common stock issuable to M.H. Meyerson & Co., Inc. upon exercise of the
warrants is included in this registration statement.
In 1999, we sold an aggregate of 172,000 shares of common stock to
certain private investors. The resale of the common stock by these private
investors is covered by this prospectus. In addition, the resale of 212,130
shares we issued in February 2000 to a director and former officer of QuikBIZ
for services rendered, 159,000 shares sold by the director to six private
purchasers in 1999, 228,000 shares sold by our Chief Executive Officer to seven
private purchasers in February 2000 and 10,000 shares we issued to a consultant
in December 1999 for services to be rendered is covered by this prospectus.
Key Facts
Total shares outstanding prior to
the offering 14,273,736(1) as of February 1, 2000
Shares being offered for resale to
the public 18,458,053(2)
Total shares outstanding after
the offering 29,273,736(1)(3)
Price per share to the public Market price at time of resale.
Total proceeds raised by offering None; however, we have received
proceeds from the sale of shares that
are presently outstanding, we may
receive up to $20 million from the
sale of shares to Swartz, and we may
receive additional amounts from the
sale to Swartz of shares issuable upon
the exercise of any warrants issued to
Swartz pursuant to the Investment
Agreement and from the sale to M.H.
Meyerson & Co., Inc. of shares
issuable upon the exercise of warrants
that M.H. Meyerson & Co. holds.
4
<PAGE>
Use of proceeds from the sale of We plan to use the proceeds for
the shares to Swartz working capital and general corporate
purposes.
OTC Bulletin Board Symbol QBIZ
(1) Does not include (i) 600,000 shares of common stock underlying warrants
issued to M.H. Meyerson & Co., Inc. in July 1998 to purchase common stock
at $.25 per share, expiring on July 14, 2003; (ii) 500,000 shares
underlying warrants issued to Swartz in connection with the Investment
Agreement; (iii) 100,000 shares of common stock underlying options to
purchase common stock at $.15 per share, expiring on May 14, 2000; (iv)
300,000 shares of common stock underlying options to purchase common stock
at $.15 per share, expiring on May 14, 2000; (v) 200,000 shares of common
stock underlying options to purchase common stock at $.002 per share,
expiring on June 25, 2000; (vi) 60,000 shares of common stock underlying
options to purchase common stock at $.002 per share, with no stated
expiration date; and (vii) 18,643 shares of common stock issuable upon
conversion of 261 shares of preferred stock. Also does not include any
shares underlying warrants that we may issue to Swartz in the future
pursuant to the Investment Agreement.
(2) Includes (i) 858,053 shares that are presently outstanding, (ii) up to
15,000,000 shares that may be issued to Swartz pursuant to the Investment
Agreement, (iii) up to 500,000 shares underlying warrants issued to Swartz
in connection with the Investment Agreement, (iv) up to 1,500,000 shares
underlying warrants that we may issue to Swartz in the future pursuant to
the Investment Agreement, and (v) up to 600,000 shares underlying warrants
issued to M.H. Meyerson & Co., Inc. in July 1998.
(3) Includes up to 15,000,000 shares that may be issued to Swartz pursuant to
the Investment Agreement.
5
<PAGE>
Summary Financial Data
The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes thereto included elsewhere in this
prospectus.
<TABLE>
Nine Months Ended
Year Ended December 31, September-30,
-------------------------------------- ------------------------------------------------
1997 1998 1998 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues......................... 140,355 2,142,414 1,700,284 3,258,056
Operating Expenses............... 329,025 2,899,298 2,241,313 3,448,704
Net Loss......................... 190,278 783,364 (549,744) (201,029)
Basic (loss) per common share.... 0.028 0.060 (0.043) (0.015)
Weighted average number of
common shares outstanding........ 6,841,017 13,067,857 12,893,958 13,466,661
</TABLE>
September 30, 1999
------------------
(Unaudited)
Balance Sheet Data:
Working capital............................ (513,831)
Total assets............................... 2,375,352
Total liabilities.......................... 1,636,342
Shareholders' equity....................... 739,010
6
<PAGE>
Risk Factors
An investment in the common stock being offered for resale by the
selling shareholders is very risky. You should be able to bear a complete loss
of your investment. Before purchasing any of the common stock, you should
carefully consider the following risk factors, among others.
We have incurred significant losses and expect to continue to do so.
To date, we have incurred significant losses. At September 30, 1999,
our accumulated deficit was $2,593,752 and our working capital deficit was
$513,831. For the year ended December 31, 1998, we incurred a net loss of
$783,364 and for the year ended December 31, 1997, we incurred a net loss of
$190,278. For the nine months ended September 30, 1999, we incurred a net loss
of $201,029. These losses have resulted primarily from:
o significant costs associated with the acquisition of Nitros
Franchise Corporation and SmithAgency.com in 1997, QuikBIZ
Media in 1998 and G&L Group in 1999.
o significant costs associated with the development of the
QuikBIZ Mall and Quoteit.com.
We expect to continue to incur operating losses in the future. There is
no assurance that sales of our products and services will ever generate
sufficient revenues to fund our continuing operations, that we will generate
positive cash flow or that we will attain or sustain profitability.
We have a limited operating history.
Although QuikBIZ was incorporated in 1984, it had no significant
business operations until May 1997. David Bawarsky, our Chief Executive Officer,
has been with us only since May 1997. Because of our limited operating history,
you have limited information on which to assess our ability to realize operating
revenues or profits in the future.
We will require additional financing.
Lack of sufficient funding could force us to curtail substantially or
cease our operations, which would have a material adverse effect on our
business. Based on our potential rate of cash operating expenditures and our
current plans, we anticipate our cash requirements for the next 12 months may
need to come primarily from the proceeds of the Investment Agreement. However,
our ability to raise funds under the Investment Agreement is subject to certain
conditions. These conditions include the continuing effectiveness of a
registration statement covering the resale of the shares sold under the
Investment Agreement and a limitation on the number of shares we may issue based
on the volume of trading in the common stock. We anticipate that our future cash
requirements may be fulfilled by improved sales of products and services, the
sale of additional equity securities, debt financing and/or the sale or
licensing of certain of our technologies. However, there can be no assurance
that any future funds required in excess of the proceeds of the Investment
Agreement will be generated from operations or from the aforementioned or other
potential sources. There can also be no assurance that the required funds, if
available, will be available on attractive terms or that the terms under which
they are raised will not significantly dilute the interests of our existing
shareholders.
7
<PAGE>
The market for online commerce is still developing and is subject to a high
degree of uncertainty.
The market for online commerce is rapidly evolving and is subject to a
high level of uncertainty. Our success will depend to a substantial extent on
the willingness of the public to use online services as a method to purchase
corporate communications products and media duplication services. Although
members of management have considerable business experience, this is a new
venture and members of management have limited experience in the operation and
management of an Internet-based business.
The market in which we compete is subject to rapid technological change.
Technology in the Internet industry changes rapidly, and our products
and services, as well as the skills of our employees, could become obsolete
quickly. Our success will depend, in part, on our ability to improve our
existing services, develop new services and solutions that address the
increasingly sophisticated and varied needs of our current and prospective
clients, and respond to technological advances, emerging industry standards and
practices and competitive service offerings.
We could lose money on projects for which we set a fixed price.
We currently bill for most of our services on a "time and materials"
basis. However, we intend to increase the percentage of our work that is billed
at a fixed price and the percentage of revenues from these fixed-price
engagements. If we fail to estimate accurately the resources and time required
for a project, to meet client expectations about the services to be performed,
or to complete projects within budget, we will have cost overruns and, in some
cases, penalties, which could have a material adverse effect on our business,
financial condition and results of operations.
We rely upon key strategic relationships.
We have established a number of strategic relationships with leading
hardware and software companies, some of which can be terminated on short notice
by the parties. These relationships are not supported by written agreements. The
loss of any one of these strategic relationships could deprive us of the
opportunity to gain early access to leading-edge technology, market products
cooperatively with the hardware or software company, cross-sell additional
services and gain enhanced access to vendor training and support, which could
have a material adverse effect on our business, financial condition and results
of operations.
SmithAgency.com depends on key accounts.
SmithAgency.com was dependent on St. Joseph Candler Health Systems and
Enmark Stations for approximately 56% of its revenues during its fiscal year
ended December 31, 1998 and approximately 36% of its revenues for the first nine
months of 1999. Jews for Jesus accounted for approximately 30% of
SmithAgency.com's revenues for the first nine months of 1999. St. Joseph Candler
Health Systems terminated its account with SmithAgency.com in November 1999. If
either of Enmark Stations or Jews for Jesus does not remain a significant
customer of SmithAgency.com, there could be a material adverse effect on our
business, financial condition and results of operations.
8
<PAGE>
Intense competition from existing and new entities may adversely affect our
revenues and profitability.
We compete with advertising, video production and media duplication
companies, many of whom are developing or can be expected to develop Internet
strategies similar to ours. Many of our competitors have significantly greater
financial, technical, marketing and other resources than we do. Some of our
competitors also offer a wider range of services than we offer and have greater
name recognition and a larger customer base. These competitors may be able to
respond more quickly to new or changing opportunities, technologies and customer
requirements and may be able to undertake more extensive promotional activities,
offer more attractive terms to customers, and adopt more aggressive pricing
policies. We cannot assure you that we will be able to compete effectively with
current or future competitors or that the competitive pressures faced by us will
not harm our business.
Protection of our intellectual property is limited and there is a risk of claims
for infringement.
We regard our copyrights, trademarks, trade secrets (including our
methodologies, practices and tools), as important to our success. If others
infringe or misappropriate our copyrights, trademarks or similar proprietary
rights, our business could be hurt. In addition, although we do not believe that
we are infringing the intellectual property rights of others, other parties
might assert infringement claims against us. Such claims, even if not true,
could result in significant legal and other costs and be a distraction to
management. Protection of intellectual property rights in many foreign countries
is weaker and less reliable than in the United States, so if our business
expands into foreign countries, risks associated with intellectual property will
increase.
We depend on David Bawarsky and James Lobel and the loss of either of their
services could harm our business.
We place substantial reliance upon the efforts and abilities of David
Bawarsky, our Chief Executive Officer, and James Lobel, the President of
SmithAgency.com. The loss of the services of either of them could have a
material adverse effect on our business, operations, revenues or prospects. We
presently have employment agreements with each of them. Mr. Bawarsky's
employment agreement expires on June 15, 2003. Mr. Lobel's employment agreement
expires on October 30, 2002. We have no assurance, however, that upon the
expiration of their respective employment agreements they will remain in our
employ. We do not maintain and we do not intend to obtain key man insurance on
the lives of Messrs. Bawarsky and Lobel.
We may be subject to government regulation in the future that could adversely
affect our business.
Our Internet-related business, and the Internet industry generally, is
presently not subject to extensive government regulation. However, because the
Internet is still evolving, new laws or regulations may be implemented that
specifically impact our business. New laws or regulations may address issues
such as user privacy, freedom of expression, pricing of products and services,
taxation, advertising, intellectual property rights, information security and
the convergence of traditional communications services with Internet
communications. There can be no assurance that in the future, as the Internet
market develops, regulation of certain activities on the Internet will not be
implemented and that such regulation will not adversely impact our business and
operations.
9
<PAGE>
Our stock price is volatile.
The market price of our common stock has been and is likely to continue
to be volatile and could be subject to wide fluctuations in response to
quarterly variations in operating results, announcements of technological
innovations or new products by us or our competitors, changes in financial
estimates by securities analysts, overall equity market conditions or other
events or factors. Because our stock is more volatile than the market as a
whole, our stock is likely to be disproportionately harmed by factors that
significantly harm the market, such as economic turmoil and military or
political conflict, even if those factors do not relate to our business. In the
past, securities class action litigation has often been brought against
companies following periods of volatility in the market price of their
securities. If securities class action litigation is brought against us it could
result in substantial costs and a diversion of management's attention and
resources, which would hurt our business.
Trading in our common stock on the OTC Bulletin Board may be limited.
Our common stock trades on the OTC Bulletin Board. The OTC Bulletin
Board is not an exchange and, because trading of securities on the OTC Bulletin
Board is often more sporadic than the trading of securities listed on an
exchange or Nasdaq, you may have difficulty reselling any of the shares that you
purchase from the selling shareholders.
Our common stock is subject to penny stock regulation.
Our common stock is subject to regulations of the Securities and
Exchange Commission relating to the market for penny stocks. These regulations
generally require that a disclosure schedule explaining the penny stock market
and the risks associated therewith be delivered to purchasers of penny stocks
and impose various sales practice requirements on broker-dealers who sell penny
stocks to persons other than established customers and accredited investors. The
regulations applicable to penny stocks may severely affect the market liquidity
for our securities and could limit your ability to sell your securities in the
secondary market.
A significant percentage of our common stock is held by our directors and
executive officers, who can significantly influence all actions that require a
vote of our shareholders.
Our directors and executive officers currently own approximately 50% of
our outstanding common stock. Accordingly, management is in a position to
influence significantly the election of our directors and all other matters that
are put to a vote of our shareholders.
The exercise of options and warrants may adversely affect our stock price and
your percentage of ownership.
If all of the warrants that may be issued to Swartz under the
Investment Agreement are issued, there will be outstanding options and warrants
to purchase 2,778,643 shares of common stock and pre ferred stock convertible
into 18,643 shares of common stock, assuming that we issue a total of 1,000,000
warrants to Swartz under the Investment Agreement. The number of warrants that
may be issued to Swartz under the Investment Agreement will fluctuate depending
on the price at which we put shares to Swartz, which in turn will depend on the
market price at the time of the puts. In the future, we may grant more warrants
or options under stock option plans or otherwise. The exercise or conversion of
stock options, warrants or other convertible securities that are presently
outstanding or that may be granted in the future will dilute the percentage
ownership of our other shareholders. The "Description of Securities"
10
<PAGE>
section of this prospectus provides you with more information about options and
warrants to purchase our common stock and convertible preferred stock that will
be outstanding after this offering.
Forward-looking statements
This prospectus includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934, and the Private Securities Litigation Reform
Act of 1995, and we desire to take advantage of the "safe harbor" provisions in
those laws. Therefore, we are including this statement for the express purpose
of availing ourselves of the protections of these safe harbor provisions with
respect to all of the forward-looking statements we make. The forward-looking
statements in this prospectus reflect our current views with respect to possible
future events and financial performance. They are subject to certain risks and
uncertainties, including specifically the absence of significant revenues,
financial resources, a history of losses, significant competition, the
uncertainty of patent and proprietary rights, trading risks of low-priced stocks
and those other risks and uncertainties discussed herein that could cause our
actual results to differ materially from our historical results or those we hope
to achieve. In this prospectus, the words "anticipates," "believes," "expects,"
"intends," "future" and similar expressions identify certain forward-looking
statements. You are cautioned to consider the specific risk factors described in
"Risk Factors" and elsewhere in this prospectus and not to place undue reliance
on the forward-looking statements contained in this prospectus. We undertake no
obligation to announce publicly revisions we make to these forward- looking
statements to reflect the effect of events or circumstances that may arise after
the date of this prospectus. All written and oral forward-looking statements
made subsequent to the date of this prospectus and attributable to us or persons
acting on our behalf are expressly qualified in their entirety by this section.
Use of Proceeds
We will not receive any proceeds from the sale of the shares by the
selling securityholders. However, we have received proceeds from the sale of
shares that are presently outstanding, we will receive up to $20 million from
Swartz upon Swartz's purchase of the shares from us and we may receive
additional proceeds from the sale to Swartz of shares issuable upon the exercise
of warrants issued or to be issued to Swartz pursuant to the Investment
Agreement and from the sale of shares to M.H. Meyerson & Co., Inc. upon the
exercise of warrants issued to M.H. Meyerson & Co., Inc. We intend to use the
proceeds from the sale of the shares to Swartz and the exercise of warrants by
Swartz and M.H. Meyerson & Co., Inc. for working capital and general corporate
purposes, including acquisitions. To the extent we deem appropriate, we may
acquire fully developed products or businesses that, in our opinion, facilitate
our growth and/or enhance the market penetration or reputation of our products
and services. To the extent that we identify any such opportunities, an
acquisition may involve the expenditure of significant cash and/or the issuance
of our capital stock. We currently have no commitments, understandings or
arrangements with respect to any such acquisition.
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Price Range of Common Stock
Our common stock is traded on the OTC Electronic Bulletin Board. The
following table sets forth the high and low bid prices of our common stock for
each quarter for the years 1997, 1998 and 1999 and the first quarter of 2000
through February 2, 2000. As of February 2, 2000, there were 412 holders of
record of our common stock.
The quotations set forth below reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.
Common stock:
Year High Bid Low Bid
1997
First Quarter .32 .15
Second Quarter (April 1 through May 13) .14 .13
Second Quarter (May 14 through June 30) 1.69 .88
(after a 1 for 7 reverse split)
Third Quarter .88 .25
Fourth Quarter .31 .13
1998
First Quarter .40 .10
Second Quarter .38 .11
Third Quarter .40 .22
Fourth Quarter .69 .38
1999
First Quarter 1.57 .44
Second Quarter 2.00 1.06
Third Quarter 1.81 .63
Fourth Quarter 1.625 .375
2000
Quarter (through February 2) 1.813 1.375
Dividend Policy
We have not paid any dividends on our common stock during the past two
years. We expect to continue to retain all earnings generated by our operations
for the development and growth of our business, and do not anticipate paying any
cash dividends to our shareholders in the foreseeable future. The payment of
future dividends on the common stock and the rate of such dividends, if any,
will be determined by our Board of Directors in light of our earnings, financial
condition, capital requirements and other factors.
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Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
We provide businesses with communications services and products,
including Internet, Intranet, Extranet, Web site and electronic media solutions,
advertising, marketing and branding services, and related services. We offer a
comprehensive range of communications solutions designed to improve clients'
business processes. We provide professional services including strategic
consulting, analysis and design, technology development, systems implementation
and integration and audio and visual materials, including audio, video, CD and
DVD-Rom. We also provide advertising, marketing and consulting services in the
areas of strategic corporate and product positioning, corporate identity and
product branding, new media, packaging, collateral systems, direct marketing,
consumer and trade promotions and media placement services.
QuikBIZ is a Nevada corporation. It was originally incorporated in 1984
in Utah under the name Sunwest Industries Inc. In 1994 it merged with
International Training & Education Corp., changed its name to International
Training & Education Corp. and became a Nevada corporation. In 1996 it changed
its name to DigiMedia USA, Inc. In May 1997 it merged with Nitros Franchise
Corporation and changed its name to Nitros Franchise Corporation. In July 1997
it changed its name to Algorhythm Technologies Corporation. In July 1998 it
changed its name to QuikBIZ Internet Group, Inc.
As a result of QuikBIZ's merger with Nitros Franchise Corporation in
May 1997 and the change in management that accompanied the merger, QuikBIZ
changed the focus of its business to the acquisition and development of
Internet-related businesses and phased out its prior business, which consisted
of developing computer based training courses for the law enforcement industry.
In November 1997, QuikBIZ acquired A.D.S. Advertising Corp., doing business as
The Smith Agency (now SmithAgency.com), and in July 1998 QuikBIZ acquired
QuikBIZ Media.
On July 1, 1998, we completed the acquisition of QuikBIZ Media.
Accordingly, our financial statements have been presented to combine the
consolidated financial statements of QuikBIZ Media and SmithAgency.com for the
periods presented.
Since the reverse merger with Nitros Franchise Corporation in May 1997,
our operations have related primarily to recruiting personnel, raising capital,
and completing the acquisitions of SmithAgency.com (November 1998), QuikBIZ
Media (July 1998) and G & L Group (September 1999). Through December 31, 1998,
we have derived our revenues from two of our wholly-owned subsidiaries:
SmithAgency.com and QuikBIZ Media. Revenues from wholly-owned subsidiaries
represented 100% of our revenues for the year ended December 31, 1998.
QuikBIZ's consolidated financial statements included SmithAgency.com
for the twelve months ended December 31, 1998.
On August 31, 1999, we completed the acquisition of substantially all
of the assets of G&L Group. We acquired all of G&L Group's contracts and pending
orders with its existing active clients, and all of G&L Group's accounts
receivable relating to its existing active clients. QuikBIZ's consolidated
financial statements included G&L Group for the nine months ended September 30,
1999.
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Results of Operations
Our revenues have grown from $140,355 in 1997 to $2,142,414 in 1998 on
an actual basis, but have declined from $8,085,000 to $7,458,000 in 1998 on a
pro forma basis giving effect to our acquisitions.
The consolidated December 31, 1998 financial statements included a net
loss of $783,364, of which $410,970, or 52.5%, was non-cash and mainly
attributable to acquisition costs, including goodwill, amortization expense and
employee stock options. For the nine months ended September 30, 1999, we had
earnings, before depreciation, amortization and interest expenses, of $14,345.
Sources of Revenues and Revenue Recognition
QuikBIZ consolidates the financial statements of acquired entities
beginning on the date QuikBIZ assumes effective control of those entities.
Revenues primarily consist of advertising and multimedia productions. We derive
our revenues from services performed under one of three pricing arrangements:
retainer, time-and-materials and fixed-price.
We bill and recognize revenues from retainer agreements on a monthly
basis while the agreements are in effect. Retainer agreements are generally one
year in length and include a renewal clause. Typically, retainer relationships
with clients result in additional fixed-price and time-and-materials projects.
Retainer fees currently represent a small percentage of our overall revenues,
although revenues from clients with whom we have retainer relationships
represent a substantial portion of our overall revenues. Consistent with our
focus on long-term relationships, our goal is to increase our number of
retainer-based arrangements.
We bill and recognize revenues from time-and-materials projects on the
basis of costs incurred in the period. We use a standardized estimation and work
plan development process to determine the requirements and estimated price for
each project. This process takes into account the type and overall complexity of
the project, the anticipated number of personnel of various skill sets needed
and their associated billing rates, and the estimated duration of and risks
associated with the project. Management personnel familiar with the production
process evaluate and price all project proposals.
We recognize revenues from fixed-price projects using the
percentage-of-completion method based on the ratio of costs incurred to the
total estimated project costs. Fees are billed to the client over the course of
the project. We estimate the price for fixed-price projects using the same
methodology as time-and-materials projects. All fixed-price proposals must first
be approved by a member of our senior management team.
We report revenue net of reimbursable expenses. Our revenues and
earnings are affected by a number of factors, including:
- - the amount of business developed from existing relationships;
- - our ability to meet the changing needs of the marketplace;
- - employee retention;
- - billing rates;
- - our ability to deliver complex projects on time; and
- - efficient utilization of our employees.
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Many of our business initiatives, including our acquisition strategy,
are aimed at enhancing these factors.
Our expenses include direct costs, sales and marketing, general and
administrative, depreciation and amortization of tangible assets, and
amortization of goodwill. Direct costs includes salaries, benefits and incentive
compensation of billable employees and other direct costs associated with
revenue generation. Selling, general and administrative expenses include the
salaries and benefits costs of management and other non-billable employees,
sales and marketing expenses rent, accounting, legal and operational costs.
Depreciation and amortization expenses primarily include depreciation of
technology equipment, furniture and fixtures and leasehold improvements.
Amortization of goodwill expenses include charges for the excess of purchase
price over net tangible book value of acquired companies. Personnel compensation
and facilities costs represent a high percentage of our operating expenses and
are relatively fixed in advance of each quarter.
Acquisition of Internet-Related Professional Services Firms
In addition to organic growth, a key component of our overall growth
strategy is the acquisition of, or investment in, complementary businesses,
technologies, services and products. We have acquired three companies since 1997
and intend to continue acquiring similar businesses.
From July 1, 1997, to September 30, 1999, our staff increased from
approximately two to approximately 33 employees.
We evaluate acquisitions based on numerous quantitative and qualitative
factors. Quantitative factors include historical and projected revenues and
profitability, geographic coverage and backlog of projects under contract.
Qualitative factors include strategic and cultural fit, management skills,
customer relationships and technical proficiency. We used our common stock as
the primary consideration. We anticipate that we will use common stock and cash
as the primary form of consideration for future acquisitions.
We fully integrate all acquired companies into our operating
organization. This integration includes business development, delivery of
services, managerial and administrative support, benefits, purchasing and all
other areas.
All of our acquisitions have been accounted for using the purchase
method. Under the purchase method, the financial data of the acquired entities
are consolidated with our financial results from the effective dates of their
acquisition. For each acquisition, a portion of the purchase price is allocated
to the tangible and identifiable intangible assets acquired and liabilities
assumed based on their respective fair market values on the acquisition date.
The remaining unallocated portion of the purchase price is allocated to
intangible assets, primarily goodwill, and amortized on a straight-line basis
over the estimated period of benefit, which is currently 10 years. We evaluate
the period of benefit on a company- by-company basis. For the year ended
December 31, 1998 and the nine months ended September 30, 1999, amortization of
goodwill expense was $67,373 and $54,969, respectively. We expect to incur
additional acquisition-related amortization expenses as a result of our
acquisition program.
Comparison of the Fiscal Years 1997 and 1998
The following discussion relates to our actual operating results for
the periods noted. The operating results discussed include the operations of
acquired companies from the effective dates of their acquisitions. Given
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that each year includes revenues and expenses from new acquisitions, we believe
that the operating results for 1998 are not directly comparable to the operating
results for 1997.
Revenues. Revenues were $140,355 in 1997 and grew to $2,142,414 in
1998, an increase of approximately 1,426%. The increase in revenues reflected
the acquisitions of SmithAgency.com in November 1997 and QuikBIZ Media in July
1998.
Direct Costs. Direct salaries and costs were $126,703 in 1997 and grew
to $1,753,877 in 1998, an increase of approximately 1,284%. Direct costs
represented approximately 82% and 90% of revenues in 1998 and 1997,
respectively. The increase in direct costs as a percentage of revenues in 1998
compared to 1997 was primarily due to acquisitions.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $127,635 in 1997 and grew to $1,023,831 in 1998, an
increase of 702%. Selling, general and administrative expenses represented
approximately 48% of revenues in 1998 and 91% in 1997. The increase in selling,
general and administrative expenses in absolute dollar terms and as a percentage
of revenues in 1998 compared to 1997 was the result of our acquisitions and
increases in expenses in anticipation of future growth, including rent and other
expenses incurred in offices acquired through our acquisitions of
SmithAgency.com and QuikLAB and the hiring of additional employees.
Amortization of Goodwill. Amortization of goodwill was $11,062 in 1997
and $67,373 in 1998. The increase in amortization of goodwill was the result of
there being only two months of amortization in 1997 and 12 months of
amortization in 1998.
Depreciation and Amortization. Depreciation and amortization expenses
were $74,687 in 1997 and grew to $121,590 in 1998, an increase of approximately
63%. Depreciation and amortization expenses represented approximately 6% of
revenues in 1998 and 53% of revenues in 1997. The increases from year to year
were related to the investment in, and related depreciation of, technology
equipment, furniture and fixtures, and leasehold improvements, and the
depreciation of the assets of the companies we acquired.
Comparison of the Nine Months Ended September 30, 1998 and September 30, 1999
Revenues. Revenues were $1,700,284 for the nine months ended September
30, 1998 and grew to $3,258,056 for the nine months ended September 30, 1999, an
increase of approximately 92%. The increase in revenues reflected our
acquisitions over the period, growing demand for Internet professional services
and the introduction of new strategic, creative and technology services to the
marketplace.
Direct Costs. Direct costs were $1,430,252 for the nine months ended
September 30, 1998 and grew to $2,048,058 for the nine months ended September
30, 1999, an increase of approximately 43%. As a percentage of revenues, direct
costs declined from approximately 84% for the nine months ended September 30,
1998 to approximately 63% for the nine months ended September 30, 1999.
Selling General and Administrative Expenses. Selling, general and
administrative expenses were $700,398 for the nine months ended September 30,
1998 and grew to $1,312,344 for the nine months ended September 30, 1999, an
increase of approximately 87%. As a percentage of revenues, selling, general and
administrative expenses decreased slightly from approximately 41% for the nine
months ended September 30, 1998 to approximately 40% for the nine months ended
September 30, 1999. The decrease in percentage terms was primarily attributable
to improved economies of scale. The increase in
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selling, general and administrative expenses in absolute dollar terms was the
result of the expansion of our infrastructure.
Depreciation and Amortization. Depreciation and amortization expenses
were $110,663 for the nine months ended September 30, 1998 and decreased to
$88,302 for the nine months ended September 30, 1999, a decrease of
approximately 20%. As a percentage of revenues, depreciation and amortization
represented approximately 7% of revenues in the nine months ended September 30,
1998 and approxi mately 3% of revenues in the nine months ended September 30,
1999.
Liquidity and Capital Resources
Since inception, we have funded our operations and investments in
property and equipment through cash from operations, equity financings,
borrowings from commercial banks and capital leases.
Our cash and cash equivalents were $2,310 at December 31, 1997 and
$18,059 at December 31, 1998, and our cash balance was $82,290 at September 30,
1999. Cash used in operating activities of $78,747 in 1997, $191,403 in 1998 and
$212,353 in the nine months ended September 30, 1999 was augmented by net
proceeds from financing activities of $41,916 in 1997, $132,837 in 1998 and
$287,205 in the nine months ended September 30, 1999, and net cash provided by
investing activities of $7,062 in 1997 and $74,315 in 1998, but reduced by cash
used in investing activities of $10,621 in the nine months ended September 30,
1999.
On July 9, 1999 we entered into an investment agreement with Swartz to
raise up to $20 million through a series of sales of common stock. The dollar
amount of each sale is limited by the trading volume and a minimum period of
time must occur between sales. In order to sell shares to Swartz, there must be
an effective registration statement on file with the SEC covering the resale of
the shares by Swartz and we must meet certain other conditions. The agreement is
for a three-year period ending July 9, 2002.
We have incurred recurring operating losses and negative cash flows
from operating activities and have negative working capital. We believe that our
available equity financing arrangement with Swartz will be sufficient to meet
our working capital and capital expenditure requirements for at least the next
two years. However, there can be no assurance that we will receive financing
from Swartz, that we will not require additional financing within this time
frame or that such additional financing, if needed, will be available on terms
acceptable to us, if at all.
Year 2000 Compliance
The Year 2000 problem is the result of certain computer programs being
written using two digits, rather than four digits, to define the applicable
year. Any computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000, or not recognize the
date at all. If not corrected, this could result in system failures or
miscalculations that could result in service or other interruptions. To date, we
have not experienced any significant Year 2000 problems.
Testing and compliance monitoring as part of our Year 2000 program will
continue into 2000 to ensure proper leap year operations and that system changes
and additions are Year 2000 compliant.
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Business
QuikBIZ Internet Group, Inc. is a Nevada corporation. It was originally
incorporated in 1984 in Utah under the name Sunwest Industries Inc. In 1994 it
merged with International Training & Education Corp., changed its name to
International Training & Education Corp. and became a Nevada corporation. In
1996 it changed its name to DigiMedia USA, Inc. In May 1997, it merged with
Nitros Franchise Corporation and changed its name to Nitros Franchise
Corporation. In July 1997, QuikBIZ changed its name to Algorhythm Technologies
Corporation. In July 1998, its name was changed to QuikBIZ Internet Group, Inc.
As a result of QuikBIZ's merger with Nitros Franchise Corporation in
May 1997 and the change in management that accompanied the merger, QuikBIZ
changed the focus of its business to the acquisition and development of
Internet-related businesses. QuikBIZ phased out its prior business, which
consisted of developing computer-based training courses for the law enforcement
industry. In November 1997, QuikBIZ acquired A.D.S. Advertising Corp., doing
business as The Smith Agency (now SmithAgency.com, Inc.), and in July 1998,
QuikBIZ acquired QuikBIZ Media.
Through its QuikBIZ Mall division and its principal subsidiaries,
QuikBIZ Media and SmithAgency.com, QuikBIZ is developing several complimentary
Internet-oriented businesses.
The QuikBIZ Mall. The QuikBIZ Mall is a virtual mall for "business to
business" corporate communications. The QuikBIZ Mall enables businesses to
browse virtual, service-oriented specialty stores and order services on-line.
The services offered through the QuikBIZ Mall include Internet television and
radio services, advertising services and presentation services. We expect that
duplication services will also be offered through the Mall in the near future.
All of our subsidiaries and business units, as well as certain strategic
partners, are "tenants" in the QuikBIZ Mall. We create each merchant store and
purchase products directly through "drop-ship" vendors. The vendors bill us for
products or services purchased at the Mall and we bill the purchasers. Each
store has its own separate URL and is marketed independently of the mall. There
are presently 11 stores on the Mall: M2 PressWIRE, Media Furnishings, QuikBIZ
Media, Quoteit.com, The Presentation Shop, Pro-Tape Outlet, SmithAgency.com,
Cables and Bits, BizBookStop, Cdsupplies.com and LCD Mart. We own all of the
stores except M2 PressWIRE.
Today, the majority of corporate communication products and services
are offered through traditional marketing channels, including audio/video
dealers and catalog/mail order houses. The QuikBIZ Mall provides much more than
the traditional marketing channels of selling products and service. The site
offers businesses greater product selection, product comparison, discount
pricing, one- stop shopping, easy ordering and fast shipping.
QuikBIZ Media. QuikBIZ Media is a retail, business-oriented, multimedia
production facility. It offers a wide variety of audio, video, multimedia and
Internet services and products to businesses, government agencies, non-profit
organizations, schools, universities, religious organizations and consumers.
QuikBIZ Media produces and assists companies in creative content for all types
of corporate communications including sales, training, public relations and
promotion. QuikBIZ Media provides services in the development of Internet and
Intranet sites, interactive media, video and audio production, video and audio
digital encoding, animation, video/audio/CD duplication and media package design
and collateral materials. Most of the services offered through QuikBIZ Media are
done in-house. We offer free pick-up, free delivery and same day service. More
than 70% of QuikBIZ Media's clientele are businesses using electronic media for
sales, training, public relations, promotion and corporate communications.
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QuikBIZ Media also acts as a service bureau, providing services for all formats
of audio/visual and interactive media.
QuikBIZ Media has been operating a multimedia center in Fort
Lauderdale, Florida since 1991. It has developed and tested proprietary systems
for operating retail multimedia centers and plans to open retail multimedia
centers in major cities in the United States during the next three years.
QuikBIZ Media served over 9,000 clients within the last four years. QuikBIZ
Media was founded by its President, David Bawarsky, who is the Chief Executive
Officer and Chairman of QuikBIZ.
Quoteit.com. Quoteit.com is an Internet site created and operated by
QuikBIZ Media that enables businesses, non-profit corporations, and government
agencies to shop for media duplication services on-line. Visitors to the site
can name their own price for any quantity of audio, video, CD-Rom, digital video
disc (DVD) and diskette duplication services. QuikBIZ Media provides the
duplication services through its own facilities and through major
duplication/replication companies throughout the United States. Potential
vendors are approved through an application process. If a vendor is approved, it
becomes part of a pool of vendors that we approach with the consumer's bid
price.
SmithAgency.com. SmithAgency.com is a full service agency specializing
in advertising and public relations services. SmithAgency.com has been in
business since 1983.
SmithAgency.com offers a broad range of services to its clients,
including television and radio commercial development and production, print
advertisement development and production, direct marketing, promotions, general
image advertising, design services and Internet site design. The traditional
marketing services offered by SmithAgency.com include the development and
planning of the advertising, including creative design and production of the
advertisements, media research, planning and buying of space and time, and
market research. SmithAgency.com has created a separate division, called Pix'l
Creative, to provide advertising, marketing and public relations services on a
per-project basis. The Pix'l Creative division will operate an e-commerce web
site that will be linked to the QuikBIZ Mall.
Direct marketing and promotions offered by SmithAgency.com include
direct mail, direct response and 800 number services, as well as on-line
marketing. The development and the design of interactive campaigns are part of
the promotion aspect of the agency's business.
General image advertising focuses on the company or organization as a
whole and not on a specific product. This "branding" effort is an important
element in building consumer confidence.
SmithAgency.com represents clients in a wide variety of industries,
including healthcare, automotive, consumer packaged goods, entertainment and the
food industry.
Recent Events
On August 31, 1999, we completed the acquisition of substantially all
of the assets of Gallaspy & Lobel, Inc., an advertising firm based in south
Florida doing business under the name G&L Group. We acquired all of G&L Group's
contracts and pending orders with its existing active clients, as well as all of
G&L Group's accounts receivable relating to its existing active clients. The
accounts receivable we acquired totaled approximately $500,000. In consideration
for G&L Group's assets, we agreed to pay G&L Group $610,000, payable in shares
of our common stock, and we assumed approximately $750,000 of G&L Group's
liabilities. We issued 366,000 shares of common stock to G&L Group on September
1, 1999, valued for purposes of the transaction at $1.25 per share, and we are
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obligated to issue another 122,000 shares within one year. In connection with
the acquisition, James Lobel, the president of G&L Group, entered into a three
year employment agreement with us and agreed to become the president of
SmithAgency.com.
Competition
The QuikBIZ Mall. There are presently a limited number of Internet
sites focusing specifically on corporate communication products and services.
These Internet sites fall under three types: manufac turers' websites, dealers'
websites, and business portal websites.
Manufacturers of communication products who have websites generally do
not offer their products directly to the end user through the websites. These
manufacturers use traditional marketing channels such as local audio/visual
dealers, wholesalers and catalog houses to sell their products. Manufacturers
generally use their websites only to disseminate product and dealer information.
Most dealers and vendors of communication products market to production
companies, schools and government agencies. Very few dealers market directly to
businesses, and many of these dealers presently do not offer on-line ordering.
Local retail outlets for these products and services are extremely rare.
Nevertheless the opportunity exists, since businesses spend billions each year
using electronic media equipment and supplies for sales, marketing, training,
communication and other uses.
Business portals that provide business information generally have
limited offerings of communications products and services. Business portals that
offer some e-commerce products usually just redirect purchasers through hot
links to third-party merchant websites.
Other virtual shopping malls group products and/or virtual stores
together but send consumers to individual merchants' websites to complete the
purchase. The problem with this is that once consumers are redirected to other
sites, they start to go direct, bypassing the original referring site.
The QuikBIZ Mall will receive a gross profit percentage from each sale
ranging from 5% to 40%, after discounting. QuikBIZ deals directly with its
suppliers, buying at greatly discounted prices, providing higher profit
percentages than most other virtual malls. Most other virtual malls are
middlemen, collecting commissions from banner ads and click-through and
re-direct referrals. These types of commissions are generally low, ranging from
3% to 15% of the sale.
QuikBIZ Media. Many businesses compete with QuikBIZ Media in some
aspects of the video, multimedia and the Internet industries. This competition
includes traditional video production facilities, cable companies, television
stations, duplication facilities, ISP companies, web development companies, ad
agencies and service bureaus. Most of QuikBIZ Media's competitors operate from
office buildings or warehouses. Some limit their services to commercial or trade
clients only; others are even more specialized.
QuikBIZ Media is different from most of its competition because it
operates in a convenient retail setting, with retail walk-in hours, and caters
to businesses, schools, universities, government agencies, non-profit
organizations, religious organizations and consumers. As a full service, retail
multimedia showroom, QuikBIZ Media's retail shops provide an alternative to
visiting several different, unrelated facilities to complete a multimedia
project.
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SmithAgency.com.
The marketing and communications industry is very competitive and is
expected to remain so. SmithAgency.com's primary competitors are the advertising
firms in the southeastern United States, but SmithAgency.com also faces
competition from small- to mid-size firms in cities around the country.
Competition in the advertising industry is based upon creativity, knowledge of
media, ability to service a client, financial controls and "chemistry" with the
client. Firms that have focused primarily in public relations are beginning to
accept assignments for non-public relations work. The Internet appears to be
giving rise to an influx of competitors who are not necessarily trained in the
traditional aspects of the advertising industry.
Government Regulation
Our Internet-related businesses, including the QuikBIZ Mall, are
presently not subject to extensive government regulation. However, because the
Internet is still evolving, new laws or regulations may be implemented in the
future that specifically impact our Internet-related businesses. New laws or
regulations may address issues such as user privacy, freedom of expression,
pricing of products and services, taxation, advertising, intellectual property
rights, information, security and the convergence of traditional communications
services with Internet communications.
The advertising services produced by SmithAgency.com are subject to the
Federal Trade Commission Act and the regulations of the Federal Trade
Commission. The FTC Act proscribes false advertising, misleading and unfair
advertising and similar practices.
Employees
QuikBIZ has two employees, QuikBIZ Media has 17 employees and
SmithAgency.com has 16 employees. None of our employees is represented by a
labor union. We consider our relations with our employees to be good.
Litigation
QuikBIZ Media is a defendant in a lawsuit filed in June 1999 in the
Circuit Court of the Seventeenth Judicial Circuit, in Broward County, Florida.
The plaintiff, Lynda V. McGlawn, is seeking to collect a debt resulting from the
assignment to her by Telephonetics International, Inc. of a debenture of QuikBIZ
Media in the amount of $110,000. QuikBIZ Media previously filed a separate
action in the Circuit Court against Telephonetics International, Inc. alleging,
among other things, that QuikBIZ Media was fraudulently induced to execute the
debenture. QuikBIZ Media is currently seeking to have the two lawsuits
consolidated.
Properties
Our subsidiaries lease the following properties:
21
<PAGE>
<TABLE>
Subsidiary Location Area Yearly Rent Termination Date
---------- -------- ---- ----------- ----------------
<S> <C> <C> <C> <C>
SmithAgency.com 6801 Powerline Road 10,000 square $6,500 8/31/2004*
Ft. Lauderdale, FL feet
33309
SmithAgency.com 5310 N.W. 33rd 2,746 square $3,098 1/31/2001
Ave., Ste. 212 feet**
Ft. Lauderdale, FL
33309
QuikBIZ Media 2121 W. Oakland 6,700 square $7,575 2/01/2006
Park Blvd., Suite 8 feet
Ft. Lauderdale, FL
33311
</TABLE>
- ------------------------------------
* SmithAgency.com has an option to renew this lease for an additional
three-year term.
** SmithAgency.com has sublet this space to a third party.
We are consolidating the operations of SmithAgency.com at 6801
Powerline Road in Ft. Lauderdale and expect to sublet the offices at 5310 N.W.
33rd Avenue in Ft. Lauderdale in the near future.
Selling Shareholders
The following table provides certain information with respect to the
selling shareholders' beneficial ownership of our common stock as of January 31,
2000, and as adjusted to give effect to the sale of all of the shares offered
hereby. Except for Kirk J. Girrbach and Andrew Smith, each of whom is a director
and former officer of QuikBIZ, none of the selling shareholders currently is an
affiliate of ours and none of them has had a material relationship with us
during the past three years. Except for M.H. Meyerson & Co., Inc., which is a
registered broker-dealer, none of the selling shareholders are or were
affiliated with registered broker-dealers. See "Plan of Distribution." The
selling shareholders possess sole voting and investment power with respect to
the securities shown.
<TABLE>
Shares Beneficially
Number of Shares Owned
Beneficially After Offering (1)
Owned Number of Number
Name Before Offering Shares Offered of Shares Percentage
---- ---------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
Swartz Private Equity, LLC 17,000,000 17,000,000(2) 0 0
M.H. Meyerson & Co., Inc. 600,000 600,000 0 0
Craig Baldwin 4,044 4,044 0 0
James Brakefield 40,000 40,000 0 0
Patrick Comer 12,500 12,500 0 0
</TABLE>
22
<PAGE>
<TABLE>
Shares Beneficially
Number of Shares Owned
Beneficially After Offering (1)
Owned Number of Number
Name Before Offering Shares Offered of Shares Percentage
---- ---------------- -------------- --------- ----------
<S> <C> <C> <C> <C>
C. J. Comu 20,000 20,000 0 0
Joseph V. George 8,250 8,250 0 0
John E. Girrbach 80,162 80,162 0 0
Kirk J. Girrbach 980,828(4) 212,130 768,698(4) 2.6%
Todd Green 20,000 20,000 0 0
David Gubbay 20,000 20,000 0 0
Hotel Europe 20,000 20,000 0 0
Tim Iverson 50,000 10,000 40,000 *
Gyorgy Katz 92,000 92,000 0 0
Peter Kertes 139,423 139,423 0 0
Renee Kertesz 125,000 125,000 0 0
Lloyd Mandell 33,000 28,000 5,000 *
Charles Robb 204,044 4,044 200,000 *
Andrew D. Smith 2,335,050(4) 22,500 2,312,550(4) 5.2%
</TABLE>
- ------------------------------------
* Less than one percent.
(1) Assumes that all of the offered shares will be resold by the selling
shareholders and none will be held by the selling shareholders for their
own accounts.
(2) Represents shares of common stock that we may sell to Swartz pursuant to
the Investment Agreement and upon the exercise by Swartz of options issued
or issuable in connection with the Investment Agreement. It is expected
that Swartz will not own beneficially more than 9.9% of our outstanding
common stock at any time.
(3) Includes 130,000 shares of common stock issuable upon exercise of
outstanding options. Does not include an aggregate of 218,000 shares of
common stock held by several adult members of Mr. Girrbach's family. Mr.
Girrbach disclaims beneficial ownership of the shares held by such persons.
(4) Does not include 400,000 shares of common stock owned by Mr. Smith's
parents, Howard and Elaine Smith. Andrew D. Smith disclaims beneficial
ownership of the shares held by Howard and Elaine Smith.
Amended and Restated Investment Agreement
On July 9, 1999, we entered into an Investment Agreement with Swartz,
which was subsequently amended and restated as of July 9, 1999. The amended and
restated Investment Agreement entitles us to issue and sell our common stock to
Swartz for up to an aggregate of $20 million from time to time during the
three-year period ending on July 9, 2002. Each election by us to sell stock to
Swartz is referred to as a put right.
23
<PAGE>
Put rights. In order to invoke a put right, we must have an effective
registration statement on file with the SEC registering the resale of the shares
of common stock that may be issued as a consequence of the exercise of that put
right. We must also give at least 10 but not more than 20 business days' advance
notice to Swartz of the date on which we intend to exercise a particular put
right and we must indicate the maximum number of shares of common stock that we
intend to sell to Swartz. At our option, we may also designate a maximum dollar
amount of common stock (not to exceed $3 million) that we will sell under the
put and/or a minimum purchase price per common share at which Swartz may
purchase shares under the put. The minimum purchase price may not exceed 82.5%
of the closing bid price of our com mon stock on the date on which we give
Swartz advance notice of our exercise of a put right. The num ber of common
shares sold to Swartz may not exceed the lesser of 15% of the aggregate daily
reported trading volume during a period that begins on the business day
immediately following the day we exer cise the put right and ends on and
includes the day that is 20 business days after the date we exercise the put
right, or 9.9% of the total number of shares of common stock that would be
outstanding upon completion of the put.
For each share of common stock, Swartz will pay us the lesser of:
o the market price for such share, minus $.10, or
o 91% of the market price for the share;
provided, however, that Swartz may not pay us less than the designated
minimum per share price, if any, that we indicate in our notice.
Market price is defined as the lowest closing bid price for the common
stock on its principal market during the pricing period. The pricing period is
defined as the 20 business days immediately following the day we exercise the
put right.
Warrants. Within five business days after the end of each pricing
period, we are required to issue and deliver to Swartz a warrant to purchase a
number of shares of common stock equal to 10% of the common shares issued to
Swartz in the applicable put. Each warrant will be exercisable at a price that
will initially equal 110% of the market price on the date on which we exercised
the put right. Each warrant will be immediately exercisable and have a term
beginning on the date of issuance and ending five years thereafter.
Limitations and conditions precedent to our put rights. Swartz is not
required to acquire and pay for any shares of common stock with respect to any
particular put for which, between the date we give advance notice of an intended
put and the date the particular put closes:
o we have announced or implemented a stock split or combination
of our common stock;
o we have paid a common stock dividend;
o we have made a distribution of all or any portion of our
assets or evidences of indebtedness to the holders of our
common stock; or
o we have consummated a major transaction, such as a sale of all
or substantially all of our assets or a merger or tender or
exchange offer that results in a change of control of QuikBIZ.
Short sales. Swartz and its affiliates are prohibited from engaging in
short sales of our common stock unless Swartz has received a put notice under
which shares have not yet been issued and the amount of shares involved in the
24
<PAGE>
short sale does not exceed the number of shares specified in the put notice.
Cancellation of puts. We must cancel a particular put between the date
of the advance put notice and the last day of the pricing period if:
o we discover an undisclosed material fact relevant to Swartz's
investment decision;
o the registration statement registering resales of the common
shares becomes ineffective; or
o our shares are delisted from the then primary exchange.
If a put is canceled, it will continue to be effective, but the pricing
period for the put will termi nate on the date notice of cancellation of the put
is given to Swartz. Because the pricing period will be shortened, the number of
shares Swartz will be required to purchase in the canceled put will be smaller
than it would have been had the put not been canceled.
Shareholder approval. Under the Investment Agreement, we may sell
Swartz a number of shares that is more than 20% of our shares outstanding on the
date of this prospectus. If we become listed on The Nasdaq Small Cap Market or
Nasdaq National Market, we may be required to obtain shareholder approval to
issue some or all of the shares to Swartz. As we are currently a Bulletin Board
company, we do not need shareholder approval.
Termination of Investment Agreement. We may terminate our right to
initiate further puts or terminate the Investment Agreement at any time by
providing Swartz with notice of such intention to terminate; however, any such
termination will not affect any other rights or obligations we have concerning
the Investment Agreement or any related agreement.
Restrictive covenants. During the term of the Investment Agreement and
for a period of 90 days after the Investment Agreement is terminated, we are
prohibited from engaging in certain transactions. These include the issuance of
any equity securities, or debt securities convertible into equity securities,
for cash in a private transaction without obtaining the prior written approval
of Swartz. We are also prohibited from entering into any private equity line
type agreements similar to the Investment Agreement without obtaining Swartz's
prior written approval.
Right of first refusal. Swartz has a right of first refusal, subject to
another first refusal obligation for which we are contractually obligated,
to participate in any private capital raising transaction of equity securities
that closes from the date of the Investment Agreement (July 9, 1999) through 90
days after the Investment Agreement is terminated.
Swartz's right of indemnification. We have agreed to indemnify Swartz
(including its stockholders, officers, directors, employees, investors and
agents) from all liability and losses resulting from any misrepresentations or
breaches we make in connection with the Investment Agreement, our registration
rights agreement, other related agreements, or the registration statement.
Additional Securities Being Registered
In July 1998 we issued 200,000 shares of common stock to Kirk J.
Girrbach pursuant to an employment agreement between Mr. Girrbach and one of our
subsidiaries. In February 2000 we issued 12,130 shares to Mr. Girrbach in
payment for $8,100 of accrued legal fees and disbursements relating to
25
<PAGE>
his services as our general counsel from July 1998 to March 1999. Mr. Girrbach
is reimbursing us for the SEC filing fees that we are paying to include his
shares on the registration statement of which this prospectus is a part.
On various dates between May 1997 and August 1999, Kirk J. Girrbach
sold an aggregate of 159,000 shares of common stock in private transactions to
James Brakefield, Charles Robb, Joseph V. George, Craig Baldwin, Andrew D. Smith
and John E. Girrbach. John E. Girrbach is Kirk Girrbach's brother. All of these
shares are being registered for resale on behalf of the purchasers. Mr. Girrbach
is reimbursing us for the SEC filing fees that we are paying to include these
shares on the registration statement of which this prospectus is a part.
On July 14, 1998, we issued warrants to M.H. Meyerson & Co., Inc. to
purchase 600,000 shares of common stock in connection with our entry into an
agreement with M.H. Meyerson & Co., Inc. pursuant to which M.H. Meyerson & Co.,
Inc. agreed to provide certain investment banking services to us for five years
beginning on July 14, 1998. The warrants expire on July 14, 2003.
On February 17, 1999, we sold 76,923 shares of common stock to Peter
Kertes at a price of $.78 per share. On August 20, 1999, we sold 100,000 shares
of common stock to Renee Kertesz at a price of $.50 per share and 64,000 shares
of common stock to Gyorgy Katz at a price of $.50 per share.
On December 13, 1999, we issued 50,000 shares of our common stock to
Tim Iverson in consideration for certain website consulting services to be
provided by Mr. Iverson. 10,000 of those shares are being registered for resale
by Mr. Iverson.
On February 3, 2000, David Bawarsky, our President, Chief Executive
Officer, Chief Financial Officer and director, sold an aggregate of 228,000
shares of common stock in private transactions to Peter Kertes, Renee Kertesz,
Patrick Comer, Gyorgy Katz, Hotel Europe, C. Jay Comu, Lloyd Mandell, Todd Green
and David Gubbay. All of these shares are being registered for resale on behalf
of the purchasers. Mr. Bawarsky is reimbursing us for the SEC filing fees that
we are paying to include these shares on the registration statement of which
this prospectus is a part.
Plan of Distribution
Each selling shareholder is free to offer and sell his or her common
shares at such times, in such manner and at such prices as he or she may
determine. The types of transactions in which the common shares are sold may
include transactions in the over-the-counter market (including block
transactions), negotiated transactions, the settlement of short sales of common
shares or a combination of such methods of sale. The sales will be at market
prices prevailing at the time of sale or at negotiated prices. Such transactions
may or may not involve brokers or dealers. The selling shareholders have advised
us that they have not entered into agreements, understandings or arrangements
26
<PAGE>
with any underwriters or broker-dealers regarding the sale of their shares. The
selling shareholders do not have an underwriter or coordinating broker acting in
connection with the proposed sale of the common shares.
The selling shareholders may sell their shares directly to purchasers
or to or through broker-dealers, which may act as agents or principals. These
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the selling shareholders. They may also receive compensation
from the purchasers of common shares for whom such broker-dealers may act as
agents or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). Swartz
is, and each remaining selling shareholder and any broker-dealer that assists
in the sale of the common stock may be deemed to be, an underwriter within the
meaning of Section 2(a)(11) of the Securities Act. Any commissions received by
such broker-dealers and any profit on the resale of the common shares sold by
them while acting as principals might be deemed to be underwriting discounts or
commissions. The selling shareholders may agree to indemnify broker- dealers for
transactions involving sales of the common stock against certain liabilities,
including liabilities arising under the Securities Act.
Because Swartz is and the remaining selling shareholders may be deemed
to be "underwriters" within the meaning of Section 2(a)(11) of the Securities
Act, the selling shareholders will be subject to prospectus delivery
requirements.
We have informed the selling shareholders that the anti-manipulation
rules of the SEC, including Regulation M promulgated under the Securities and
Exchange Act, may apply to their sales in the market and has provided the
selling shareholders with a copy of such rules and regulations.
Selling shareholders also may resell all or a portion of the common
shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of such Rule.
Except for the SEC filing fees for which we are being reimbursed by
Messrs. Bawarsky and Girrbach, we are responsible for all costs, expenses and
fees incurred in registering the shares offered hereby. The selling shareholders
are responsible for brokerage commissions, if any, attributable to the sale of
such securities.
Management
The following persons are our current directors, executive officers and
significant employees:
Name Age Position
---- ---- ---------
David Bawarsky 44 President, Chief Executive
Officer, Chief Financial
Officer and Director
Kirk J. Girrbach 41 Director
Dr. Bohdan Moroz 61 Director
James Lobel 55 President of SmithAgency.com
David Bawarsky has served as our Chief Executive Officer since May
1997, as a director since March 1997 and as our President, Chief Financial
Officer and Treasurer since December 1999. He also served as President from May
1997 to November 1997. Mr. Bawarsky served as President of our wholly- owned
subsidiary, QuikLAB, since 1991, when he founded QuikLAB. From July 1997 to
March 1998, Mr. Bawarsky served as President and a director of Tlephonetics
International, Inc., a company engaged in the business of telephone advertising.
Mr. Bawarsky was a consultant to QuikBIZ from 1995 to May 1997. From 1991 to
1997 Mr. Bawarsky was Vice President of Videotape Supply Company, Inc., a
27
<PAGE>
company engaged in the business of manufacturing video tapes. He was also an
independent video consultant from 1990 to 1997.
Kirk J. Girrbach has served as a director since April 1998. He served
as Treasurer from April 1998 to December 1999. Mr. Girrbach is a lawyer and
since 1990 has conducted a law practice in Ft. Lauderdale, Florida,
concentrating in the areas of securities, construction, contracts and real
estate law. From November 1991 to May 1997, Mr. Girrbach served as President and
director of QuikBIZ. From December 1985 to November 1994 he was a police officer
and detective with the Ft. Lauderdale Police Department.
Dr. Bohdan Moroz has served as a director since November 1997. Since
1982, he has been a licensed and practicing psychiatrist at Holy Cross Hospital
in Ft. Lauderdale, Florida. He is a member of the American Medical Association,
Canadian Royal College of Physical Medicine & Rehabilitation, American Congress
of Physical Medicine & Rehabilitation, and the Broward County Medical
Association.
James Lobel has served as President of SmithAgency.com since September
1, 1999. He was the President of G&L Group from 1989, when he founded G&L Group,
to August 31, 1999. He was the Treasurer of Harvey Studios, Inc., an advertising
design firm, from 1983 to 1989. He was selected as a Business Leader in
Advertising & Public Relations by The Daily Business Review in 1994 and was
named "Adman of the Year" in 1998 by the Ft. Lauderdale Ad Club.
Executive Compensation
The following table lists the cash remuneration paid or accrued during
1998, 1997 and 1996 to Messrs. Bawarsky and Andrew Smith, who served as our
President until October 1999. Except for Messrs. Bawarsky and Smith, none of our
executive officers received compensation of $100,000 or more from us in 1998.
<TABLE>
Summary Compensation Table
Name and Principal Other Annual Securities Underlying
Position Year Salary($) Bonus($) Compensation($) Options(#)
---------- ---- --------- -------- --------------- -----------
<S> <C> <C> <C> <C> <C>
David Bawarsky 1998 87,501(1) 0 13,800(2) 200,000
President and Chief
Executive Officer
1997 0 0 0 300,000
Andrew Smith 1998 100,000 0 0 0
Former President 1997 16,500 0 1,500(3) 200,000
</TABLE>
- ----------------
(1) $34,617 of this amount has been deferred and will be paid in the form of
shares of common stock, valued at market price on the date of issue.
28
<PAGE>
(2) Consists of $5,200 life insurance premiums and $8,600 of automobile lease
and insurance payments.
(3) Consists of $1,500 of automobile lease and insurance payments.
The following table shows options to purchase common stock granted to
Messrs. Bawarsky and Smith during 1998.
Option Grants in 1998
<TABLE>
Number of
Securities % of Total Options
Underlying Options Granted To Employees
Name Granted(#) In Fiscal Year Exercise Price Expiration Date
---- ----------------- --------------------- -------------- ---------------
<S> <C> <C> <C> <C>
David Bawarsky 200,000 100% $.002 6/16/2000
Andrew Smith -0- -0- N/A N/A
</TABLE>
The following table shows the aggregate number of options to purchase
common stock held by Messrs. Bawarsky and Smith, and the value of such options
at December 31, 1998. Neither Mr. Bawarsky nor Mr. Smith exercised any options
in 1998.
<TABLE>
1998 Year-End Option Values
Value of securities underlying
Number of securities underlying unexercised in-the-money options at
Name unexercised options at December 31, 1998 December 31, 1998(1)
---- ---------------------------------------- ---------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David Bawarsky 500,000 0 $219,600 $0
Andrew Smith 200,000 0 $105,600 $0
</TABLE>
- -------------
(1) Represents the total gain that would be realized if all in-the-money
options held at December 31, 1998 were exercised, determined by multiplying
the number of shares underlying the options by the difference between the
per share option exercise price and $.53, the average of the high and low
bid prices of the common stock on December 31, 1998.
Director Compensation
We granted options to purchase 30,000 shares of common stock at a price
of $.002 per share to each of Kirk J. Girrbach and Dr. Bohdan Moroz in June 1998
as compensation for their services as directors during 1998. The options were
fully vested upon grant. Directors who were also employees did
29
<PAGE>
not receive any compensation for their services as directors in 1998. We have
not yet determined how our non-employee directors will be compensated in 1999.
Employment Agreements
QuikLAB has an employment agreement with David Bawarsky, dated June 16,
1998 and expiring June 15, 2003, pursuant to which Mr. Bawarsky serves as
Chairman, President and Chief Executive Officer of QuikLAB. QuikBIZ assumed
QuikLAB's obligations under the employment agreement when QuikBIZ acquired
QuikLAB in July 1998. Mr. Bawarsky's employment agreement provides for a present
base annual salary of $210,000 and a non-accountable expense allowance of
$25,000 per year. The employment agreement also provides a customary benefits
package, including two automobiles and term life insurance, payable to Mr.
Bawarsky's beneficiaries, in the amount of $2,000,000, and term life insurance
on the life of Mr. Bawarsky's wife in the amount of $500,000 payable to Mr.
Bawarsky. Mr. Bawarsky's employment agreement prohibits him from competing with
QuikLAB during the term of the agreement or disclosing confidential information
or trade secrets of QuikBIZ in any unauthorized manner at any time. If QuikBIZ
terminates Mr. Bawarsky's employment or changes his duties without his consent,
QuikBIZ will be obligated to pay Mr. Bawarsky severance pay of $2,000,000. Under
his employment agreement, Mr. Bawarsky is entitled to receive an annual
performance incentive bonus based upon the net profits of QuikLAB, as follows:
Percentage of Net Profits
Net Profits of QuikLAB Payable to Executive
---------------------- --------------------
$0 to $149,000 10%
$150,000 to $299,000 15%
$300,000 or greater 20%
SmithAgency.com has an employment agreement with James Lobel, dated
August 31, 1999 and expiring August 31, 2002, pursuant to which Mr. Lobel serves
as President of SmithAgency.com. Mr. Lobel's employment agreement provides for a
present base annual salary of $120,000 per year, a non- accountable expense
allowance of $10,000 for the first year of the agreement, $40,000 worth of
common stock of QuikBIZ, and a customary benefits package, including an
automobile. Pursuant to a separate Noncompete/Nondisclosure agreement, Mr. Lobel
is prohibited from competing with SmithAgency.com during the term of the
agreement and for three years after termination of the agreement and from
disclosing confidential information or trade secrets of SmithAgency.com in any
unauthorized manner during such time. Mr. Lobel is entitled to receive a
performance bonus equal to 10% of SmithAgency.com's net profits, subject to a
maximum of $250,000 per year, payable at his option in cash or common stock of
QuikBIZ.
Principal Shareholders
The following table sets forth certain information regarding beneficial
ownership of our common stock as of February 3, 2000 by (i) each shareholder
known by us to be the beneficial owner of 5% or more of the outstanding common
stock, (ii) each of our directors and (iii) all directors and executive officers
as a group. Except as otherwise indicated, we believe that the beneficial owners
of the common stock listed below, based on information furnished by such owners,
have sole investment and voting power with respect to such shares, subject to
community property laws where applicable. Shares of common stock issuable upon
exercise of options and warrants that are currently exercisable or exercisable
within 60 days of February 3, 2000 have been included in the table.
30
<PAGE>
<TABLE>
Name and Address of Shares Beneficially Shares Beneficially
Beneficial Owner Owned Prior to the Offering Owned After the Offering
-------------------- ---------------------------------------------------------------------------------
Number of Shares Percent Number of Shares After Offering
---------------- ------- ---------------- --------------
<S> <C> <C> <C> <C>
David Bawarsky 5,450,867(1) 36.9% 5,450,867(1) 1.8%
6184 Vista Linda Lane
Boca Raton, Florida 33433
Kirk J. Girrbach 980,828(2) 6.8% 768,698(2) 2.6%
6550 N. Federal Highway
Ft. Lauderdale, Florida 33308
Dr. Bohdan Moroz 497,857(3) 3.5% 497,857(3) 1.7%
250 Compass Drive
Ft. Lauderdale, Florida 33308
Andrew D. Smith 2,335,050(4) 16.4% 2,312,550(4) 7.9%
20955 Vieto Terrace
Boca Raton, Florida 33433
Anthony J. Ard 1,000,000(5) 7.0% 1,000,000(5) 3.4%
240 S.E. 28th Avenue
Pompano Beach, Florida 33062
Officers and directors as a group 6,929,552(1)(2)(3) 46.4% 6,717,422(1)(2)(3) 22.4%
(3 persons)
</TABLE>
- --------------------------
(1) Includes 500,000 shares of common stock issuable upon exercise of
outstanding options. Does not include 25,000 shares of common stock owned
by Mr. Bawarsky's father, Henry Bawarsky. David Bawarsky disclaims
beneficial ownership of the shares held by Henry Bawarsky.
(2) Includes 130,000 shares of common stock issuable upon exercise of
outstanding options. Does not include an aggregate of 218,000 shares of
common stock held by several adult members of Mr. Girrbach's family. Mr.
Girrbach disclaims beneficial ownership of the shares held by such persons.
(3) Includes 30,000 shares of common stock issuable upon exercise of
outstanding options, 25,000 shares held by Dr. Moroz' wife and 11,428
shares held by Dr. Moroz' son.
(4) Does not include 400,000 shares of common stock owned by Mr. Smith's
parents, Howard and Elaine Smith. Andrew Smith disclaims beneficial
ownership of the shares held by Howard and Elaine Smith.
(5) Does not include 20,000 shares held by Mr. Ard's brother, Michael Ard.
Anthony J. Ard disclaims beneficial ownership of the shares held by Michael
Ard.
31
<PAGE>
Certain Transactions
On February 7, 2000, we issued 200,000 shares of common stock to Kirk
J. Girrbach pursuant to an employment agreement dated April 13, 1998 between Mr.
Girrbach and Capital Network of America, Corp., a subsidiary of QuikBIZ that is
now dormant.
On August 31, 1999, we completed the acquisition of substantially all
of the assets of G&L Group, of which James Lobel was the president and a
principal stockholder. In consideration for G&L Group's assets, we agreed to pay
G&L Group $610,000, payable in shares of our common stock, and we assumed
approximately $750,000 of G&L Group's liabilities. We issued 366,000 shares of
common stock to G&L Group on September 1, 1999, valued for purposes of the
transaction at $1.25 per share, and we are obligated to issue another 122,000
shares within one year. In connection with the acquisition, Mr. Lobel entered
into a three year employment agreement with us and agreed to become the
president of SmithAgency.com.
We entered into an agreement with Kirk J. Girrbach, dated July 15,
1998, pursuant to which we retained Mr. Girrbach as corporate counsel. Mr.
Girrbach is no longer our counsel. We agreed with Mr. Girrbach that Mr.
Girrbach's compensation (at the rate of $200 per hour) and reimbursement for
costs would be payable in shares of QuikBIZ common stock valued at market price
on the date of grant. On February 3, 2000, we issued an aggregate of 12,130
shares of common stock to Mr. Girrbach in payment for $8,100 of accrued fees and
disbursements.
On July 9, 1998, we acquired QuikLAB from David Bawarsky, our present
Chief Executive Officer and the then sole shareholder of QuikLAB. Pursuant to
the acquisition agreement, the outstanding shares of QuikLAB were canceled and
500,000 shares of common stock of QuikLAB were issued to us. In consideration
for such shares, we assumed QuikLAB's obligations to Mr. Bawarsky under his
employment agreement with QuikLAB and agreed that if by July 9, 2001 QuikLAB
doubles its $100,000 net profit for 1996, we will issue options to Mr. Bawarsky
to purchase a total of 2,800,000 shares of common stock, exercisable for five
years at a price of $.002 per share. In connection with our assumption of Mr.
Bawarsky's employment agreement, we issued options to Mr. Bawarsky to purchase
200,000 shares of QuikBIZ common stock, exercisable for two years from the date
of issue at a price of $.002 per share. The acquisition agreement also provided
that Mr. Bawarsky would be entitled to elect to have his annual performance
incentive bonus paid in shares of QuikBIZ common stock. The acquisition
agreement also required that our board of directors consist of two persons, Mr.
Bawarsky and Andrew Smith, and contained our agreement that Mr. Bawarsky will
serve as our Chairman and Chief Executive Officer. Mr. Bawarsky has waived the
provision of the acquisition agreement limiting the board of directors to two
persons.
On June 25, 1998, we borrowed $50,000 from Cella Reyes, the wife of Dr.
Bohdan Moroz, pursuant to a promissory note due June 25, 1999 and bearing
interest at 12% per annum. In consideration for the loan, on June 26, 1999 we
issued warrants to purchase 25,000 shares of common stock at a price of $.17 per
share to Ms. Reyes. The warrants were exercised on June 25, 1999. We repaid the
note in full prior to the maturity date and applied $4,250 of the accrued
interest on the note to the exercise price of the warrants.
On November 7, 1997, we acquired SmithAgency.com from Andrew Smith, our
former President. Pursuant to the acquisition agreement, all of the outstanding
shares of SmithAgency.com were canceled, SmithAgency.com issued 6,500 shares of
its common stock to us and we issued 2,300,000 shares of our common stock to
Andrew Smith. Pursuant to the acquisition agreement, we caused
32
<PAGE>
SmithAgency.com to enter into an employment agreement with Mr. Smith and, in
connection with such employment agreement, we issued options to Mr. Smith to
purchase 200,000 shares of our common stock, exercisable for two years at a
price of $.002 per share. The employment agreement was terminated as of October
28, 1999.
In July 1997, in exchange for 1,000,000 shares of common stock, we
acquired the rights to the name "Algorythm Technologies International Inc." from
Telephonetics International, Inc. David Bawarsky, who was our President and one
of our directors at the time of the transaction, and Alan J. Kvares, who was one
of our directors at the time of the transaction, were the controlling
shareholders and principal officers of Telephonetics International, Inc. We
returned the rights to the name "Algorythm Technologies International, Inc." to
Telephonetics International, Inc. in 1998 and the 1,000,000 shares issued to
Telephonetics International, Inc. were returned to us at that time.
In June 1997 we issued 144,077 shares of common stock to Kirk J.
Girrbach and 144,076 shares of common stock to Gene Farmer for consulting
services. Prior to the merger with Nitros Franchise Corporation, which is
referred to in the next paragraph, Mr. Girrbach was the President and a director
of QuikBIZ and Mr. Farmer was the Executive Vice President and a Director of
QuikBIZ. Mr. Girrbach is currently the Treasurer and a director of QuikBIZ.
In May 1997 QuikBIZ merged with Nitros Franchise Corporation. David
Bawarsky, who was then a director of QuikBIZ, was the president, a director and
the principal shareholder of Nitros Franchise Corporation. Mr. Bawarsky received
2,400,889 shares of common stock in the merger and options to purchase 300,000
shares of common stock at $.15 per share. Kirk J. Girrbach and Gene Farmer each
received options to purchase 100,000 shares of common stock at $.15 per share.
Description of Securities
Common Stock
Our certificate of incorporation authorizes us to issue up to
25,000,000 shares of common stock, par value $.002 per share. Of the 25,000,000
shares of common stock authorized, 14,273,736 shares are issued and outstanding
as of the date of this prospectus.
Holders of common stock are entitled to receive such dividends as may
be declared by the Board of Directors from funds legally available for such
dividends. We may not pay any dividends on the common stock until cumulative
dividends on the preferred stock have been paid in full. Upon liquidation,
holders of shares of common stock are entitled to a pro rata share in any
distribution available to holders of common stock. The holders of common stock
have one vote per share on each matter to be voted on by stockholders, but are
not entitled to vote cumulatively. Holders of common stock have no preemptive
rights. All of the outstanding shares of common stock are, and all of the shares
of common stock offered for resale in connection with this prospectus will be,
validly issued, fully paid and non-assessable.
Preferred Stock
There are 261 shares of preferred stock, par value $.001 per share, of
QuikBIZ outstanding. The holders of the preferred stock are entitled to receive
cumulative dividends of $120 per share per year, when and as declared by the
board of directors, payable quarterly. Each share of preferred stock is
33
<PAGE>
convertible into 71.43 shares of common stock at the option of the holder. We
may redeem the preferred stock at our option upon payment of a redemption price
of $1,100 per share. In the event of liquidation of QuikBIZ the holders of the
preferred stock are entitled to receive $1,000 per share prior to any
distribution to the holders of common stock. Except as otherwise provided by
law, the holders of the preferred stock are not entitled to vote.
Warrants
There are outstanding warrants to purchase 600,000 shares of our common
stock at a price of $.25 per share. These warrants were issued to M.H. Meyerson
& Co., Inc. on July 14, 1998 in connection with our entry into an agreement with
M.H. Meyerson & Co., Inc. pursuant to which M.H. Meyerson & Co., Inc. agreed to
provide certain investment banking services to us for five years beginning on
July 14, 1998. The warrants expire on July 14, 2003. The holders of at least 51%
of the warrants have the right to require, on one occasion, that we register the
shares of common stock underlying the warrants for resale under the Securities
Act. The holders of at least 51% of the warrants also have the right to be
included on any other registration statement we file during the period beginning
on July 14, 1998 and ending on July 14, 2003.
There are outstanding warrants to purchase 500,000 shares of our common
stock at a price of $1.4625 per share. These warrants were issued to Swartz on
May 25, 1999 in consideration of Swartz's commitment to enter into the
Investment Agreement. The warrants expire on May 25, 2004. The holders of the
warrants have the right to have the common stock issuable upon exercise of the
warrants included on any registration statement we file, other than a
registration statement covering an employee stock plan or a registration
statement filed in connection with a business combination or reclassification of
our securities.
Legal Matters
The legality of the securities offered hereby has been passed upon by
Graubard Mollen & Miller, New York, New York.
Experts
The balance sheet of QuikBIZ as of December 31, 1997 and the statements
of operations, shareholders' equity and cash flows of QuikBIZ for the year ended
December 31, 1997, included in this prospectus, have been included herein in
reliance on the report of Want & Ender CPA, P.C., independent accountants, given
on the authority of that firm as experts in accounting and auditing. The balance
sheet of QuikBIZ as of December 31, 1998 and the statements of operations,
shareholders' equity and cash flows of QuikBIZ for the year ended December 31,
1998, included in this prospectus, have been included herein in reliance on the
report, which includes an explanatory paragraph on our ability to continue as a
going concern, of Gerson, Preston & Company, P.A., certified public accountants,
given on the authority of that firm as experts in accounting and auditing. The
balance sheet of Gallaspy & Lobel, Inc. as of December 31, 1998 and the
statements of operations and accumulated adjustment account and cash flows for
the years ended December 31, 1998 and 1997, included in this prospectus, have
been included herein in reliance on the report, which includes an explanatory
paragraph on the ability of Gallaspy & Lobel, Inc. to continue as a going
concern, of Charles A. Nichols, C.P.A., P.C., certified public accountant, given
on the authority of Mr. Nichols as an expert in accounting and auditing.
34
<PAGE>
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. Our SEC filings
are available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, Seven
World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room.
We have filed with the SEC a registration statement on Form SB-2 under
the Securities Act with respect to the securities offered under this prospectus.
This prospectus, which constitutes a part of the registration statement, does
not contain all of the information set forth in the registration statement,
certain items of which are omitted in accordance with the rules and regulations
of the SEC. Statements contained in this prospectus as to the contents of any
contract or other documents are not necessarily complete and in each instance
reference is made to the copy of such contract or documents filed as an exhibit
to the registration statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information regarding QuikBIZ and the securities offered under this prospectus,
we refer you to the registration statement and such exhibits and schedules which
may be obtained from the SEC at its principal office in Washington, D.C. upon
payment of the fees prescribed by the SEC.
35
<PAGE>
Index to Financial Statements
<TABLE>
<S> <C>
Pro Forma Combined Financial Information of
QuikBIZ Internet Group, Inc.
Introduction to Pro Forma Combined Financial Information...................................... F-1
QuikBIZ Internet Group, Inc. and Subsidiaries Pro Forma Balance Sheet
as of June 30, 1999...................................................................... F-3
Pro Forma Condensed Combined Statements of Operations
for the Year Ended December 31, 1998..................................................... F-4
Pro Forma Condensed Combined Statements of Operations
for the Six Months Ended June 30, 1999................................................... F-5
Notes to Pro Forma Condensed Combined Financial Information................................... F-6
QuikBIZ Internet Group, Inc.
Report of Gerson, Preston & Company, P.A...................................................... F-7
Report of Want & Ender CPA, P.C............................................................... F-8
Consolidated Balance Sheets, December 31, 1997 and 1998 and September 30, 1999................ F-9
Consolidated Statements of Operations, Years Ended December 31, 1997 and 1998
and the Nine Months Ended September 30, 1998 and 1999.................................... F-10
Consolidated Statements of Shareholders' Equity, Years Ended December 31, 1997
and 1998 and the Nine Months ended September 30, 1999.................................... F-11
Consolidated Statements of Cash Flows, Years Ended December 31, 1997 and 1998
and the Nine Months Ended September 30, 1998 and 1999.................................... F-13
Notes to the Financial Statements............................................................. F-15
Gallaspy & Lobel, Inc.
Report of Charles A. Nichols, C.P.A., P.C..................................................... F-25
Balance Sheets, December 31, 1998 and 1997.................................................... F-26
Statements of Operations and Accumulated Adjustment Account
For the Years Ended December 31, 1998 and 1997........................................... F-27
Statements of Cash Flows For the Years Ended December 31, 1998 and 1997....................... F-28
Notes to Financial Statements................................................................. F-29
</TABLE>
F-1
<PAGE>
Introduction to Pro Forma Combined Financial Information of QuikBIZ Internet
Group, Inc.
The following unaudited pro forma combined condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the combined financial position or results of operations for future periods or
the results of operations of financial position that actually would have been
realized had QuikBIZ Internet Group, Inc. (QuikBIZ) and Gallaspy & Lobel, Inc.
d/b/a G & L Group (G & L) been a combined company during the specified periods.
The unaudited pro forma combined condensed financial statements, including
related notes, are qualified in their entirety by reference to, and should be
read in conjunction with, the historical consolidated financial statements and
related notes thereto of QuikBIZ, included in its registration statement on Form
SB-2 as amended, and Gallaspy & Lobel, Inc. d/b/a G & L Group, included
elsewhere in this filing.
The following unaudited pro forma combined condensed financial statements give
effect to the acquisition of Gallaspy & Lobel, Inc. d/b/a G & L Group using the
purchase method of accounting. The pro forma combined condensed financial
statements are based on the respective historical audited and unaudited
consolidated financial statements and related notes of QuikBIZ Internet Group,
Inc. and Gallaspy & Lobel, Inc. d/b/a G & L Group. The pro forma adjustments are
preliminary and are based on management's estimates of the value of tangible and
intangible assets acquired.
The actual adjustments may differ materially from those presented in these pro
forma financial statements. A change in the pro forma adjustments would result
in a reallocation of the purchase price affecting the value assigned to the
long-term tangible and intangible assets or, in some circumstances, result in a
charge to the statement of operations. The effect of these changes on the
statement of operations will depend on the nature and amounts of the assets and
liabilities adjusted.
The unaudited pro forma combined condensed balance sheet assumes that the
acquisition took place on June 30, 1999, and combines QuikBIZ's unaudited June
30, 1999 consolidated balance sheet with G & L's unaudited June 30, 1999 balance
sheet. The pro forma combined condensed statements of operations assume all of
the acquisition completed through the date of this report took place January 1,
1998 and combines QuikBIZ's audited consolidated statement of operations for the
year ended December 31, 1998 and unaudited consolidated statement of operations
for the six months ended June 30, 1999 with G & L's audited statement of
operations for the year ended December 31, 1998 and unaudited statement of
operations for the six months ended June 30, 1999, respectively.
F-2
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries Pro Forma Balance Sheet
as of June 30,1999
<TABLE>
QuikBIZ Pro Forma
Historical G & L Group (a) Adjustments Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash $ 35,758 $ -- $ -- $ 35,758
Accounts receivable 303,260 389,962 44,571 (2) 737,793
Other 34,345 7,419 (7,419)(2) 34,345
----------- ----------- ----------- -----------
Total current assets 373,363 397,381 37,152 807,896
Property and Equipment
Furniture and equipment 76,772 105,834 (25,834)(2) 156,772
Leasehold improvements 44,862 97,332 (97,332)(2) 44,862
----------- ----------- ----------- ---------
121,634 203,166 (123,166) 201,634
Less accumulated depreciation (56,773) (102,813) 94,813(1), (2) (64,773)
----------- ----------- ----------- ---------
Depreciated cost 64,861 100,353 (28,353) 136,861
Intangible assets 561,614 -- 532,656 (2) 1,094,270
Other assets -- -- 147,337 (2) 147,337
----------- ----------- ----------- ---------
Total assets $ 999,838 $ 497,734 $ 688,792 $ 2,186,364
=========== =========== =========== ===========
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable and accrued
expenses $ 566,289 $ 690,637 $ 15,889 (2) $ 1,272,815
Current maturities of long-term
debt 124,320 207,965 (207,965 (2) 124,320
----------- ----------- ----------- ------------
Total current liabilities 690,609 898,602 (192,076) 1,397,135
Long-term debt 160,884 -- -- 160,884
----------- ----------- ----------- ------------
Total liabilities 851,493 898,602 (192,076) 1,558,019
Shareholders' equity
Preferred stock 10,208 -- -- 10,208
Common stock 26,943 300 676 (2) 27,919
Additional paid-in-capital 2,868,905 -- 487,024 (2) 3,355,929
Accumulated deficit (2,575,520) (401,168) 401,168 (2) (2,575,520)
Unearned compensation on restricted
stock (182,191) -- (182,191) --
----------- ----------- ----------- ------------
Total shareholders' equity 148,345 (400,868) 888,868 636,345
----------- ----------- ----------- ------------
Total liabilities and shareholders'
equity $ 999,838 $ 497,734 $ 696,792 $ 2,194,364
============ ============ =========== =============
</TABLE>
(a) Balance sheet presented as of June 30,1999, which represents acquiree's
most recent quarter.
F-3
<PAGE>
QuikBIZ Internet Group, Inc and Subsidiaries
Pro Forma Condensed Combined Statements of Operations
For the year ended December 31, 1998.
<TABLE>
QuikBIZ Pro Forma
Historical G & L Group (b) Adjustments Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue
Advertising $ 1,541,454 $ 3,699,737 $ - $ 5,241,191
Multimedia services and products 600,960 806,093 - 1,407,053
--------- ----------- ---------- ------------
Total revenue 2,142,414 4,505,830 6,648,244
Operating expenses
Direct costs 1,753,877 3,521,178 - 5,275,055
Selling, general and administrative 1,023,831 655,562 14,000 (4) 1,693,393
Depreciation and amortization 121,590 7,072 62,194 (1),(2) 190,856
--------- ----------- ---------- ------------
Total operating expenses 2,899,298 4,183,812 76,194 7,159,304
--------- ----------- ---------- ------------
Income (Loss) from operations (756,884) 322,018 (76,194) (511,060)
Interest expense 26,480 14,851 (14,851) (2) 26,480
--------- ----------- ---------- ------------
Net income (loss) $ (783,364) $ 307,167 $ (61,343) $ (537,540)
========= =========== ========== =============
Weighted average number of common
shares outstanding 13,067,857 13,555,857
Basic (loss) per common share $ (0.060) $ (0.040)
</TABLE>
(b) The Pro Forma Combined Statement of Operations for the twelve months ended
December 31,1998 includes the results of operations for G & L Group, Inc.
for the twelve months ended December 31,1998.
F-4
<PAGE>
QuikBIZ Internet Group, Inc and Subsidiaries Pro Forma Condensed Combined
Statements of Operations For the six months ended June 30, 1999.
<TABLE>
QuikBIZ Pro Forma
Historical G & L Group (c) Adjustments Pro Forma
---------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue
Advertising $ 1,094,197 $ 1,268,231 $ - $ 2,362,428
Multimedia services and products 696,448 276,320 - 972,768
------- ------- ------ -------
Total revenue 1,790,645 1,544,551 - 3,335,196
Operating expenses
Direct costs 1,080,601 1,121,934 2,202,535
Selling, general and administrative 829,203 331,194 11,000 (4) 1,171,397
Depreciation and amortization 55,020 4,000 30,633 (1),(2) 89,653
------ ----- ------ ------
Total operating expenses 1,964,824 1,457,128 41,633 3,463,585
--------- --------- ------ ---------
Income (Loss) from operations (174,179) 87,423 (41,633) (128,389)
Interest expense 8,618 11,385 (11,385)(2) 8,618
----- ------ ------ -----
Net income (loss) $ (182,797) $ 76,038 $ (30,248) $ (137,007)
------- ------ ------ -------
Weighted average number of common
shares outstanding 13,350,676 13,594,676
Basic (loss) per common share $ (0.014) $ (0.010)
</TABLE>
(c) The Pro Forma Combined Statement of Operations for the six months ended
June 30, 1999 includes the results of operations for G & L Group, Inc. for
the six months ended June 30, 1999.
F-5
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Pro Forma Condensed Combined Financial Information
The following adjustments were applied to QuikBIZ's Consolidated Financial
Statements and the financial data of the company acquired by QuikBIZ since
January 1, 1998 to arrive at the unaudited Pro Forma Combined Financial
Information.
(1) The acquisition of Gallaspy & Lobel, Inc. d/b/a G & L accounted for by the
purchase method of accounting. Under purchase accounting the total purchase
price was allocated to the tangible and intangible assets acquired and
liabilities assumed of G & L Group based upon their respective fair values
as of closing date of the acquisition. The following presents the effects
of the purchase adjustments:
Six Months
Ended Year Ended
June 30, 1999 December 31, 1998
------------- -----------------
Depreciation $8,000 $16,000
Amortization of Goodwill $26,633 $53,266
The adjustments for estimated pro forma depreciation and amortization of
goodwill are based on the estimated useful lives of five and ten years,
respectively.
(2) To reflect the purchase consideration consisting of the issuance of 366,000
shares of common stock and an unconditional promise to issue an additional
122,000 shares of common stock all valued at $1.00 per share, the
elimination of acquired company's net equity and certain assets and
liabilities not acquired or assumed and to record intangible assets arising
from the acquisition.
(3) There is no provision for income taxes included in the historical
statements of operations of Gallaspy & Lobel d/b/a G & L Group, as the
Company was a Subchapter S Corporation. Consequently, income taxes were the
responsibility of the individual shareholders. No pro forma adjustment for
income taxes is required because there is a consolidated pro forma net
loss.
(4) To record performance incentive compensation under terms of an employment
agreement with the owner and now key employee of Gallaspy & Lobel d/b/a G &
L Group.
F-6
<PAGE>
Board of Directors
QuikBIZ Internet Group, Inc. and Subsidiaries
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheet of
QuikBIZ Internet Group, Inc. and Subsidiaries at December 31, 1998 and the
related consolidated statements of operations, shareholders' equity and cash
flows for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
QuikBIZ Internet Group, Inc. and Subsidiaries at December 31, 1998 and the
consolidated results of their operations and cash flows for the year then ended
in conformity with generally accepted accounting principles.
The financial statements referred to above have been prepared
assuming that QuikBIZ Internet Group, Inc. and Subsidiaries will continue as a
going concern. As more fully described in Note 3, the Company has incurred
recurring operating losses, negative cash flows from operating activities, and
has negative working capital. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans as to these
matters are also described in Note 3. The accompanying financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that might result from the outcome of this uncertainty.
/s/ GERSON, PRESTON & COMPANY, P.A.
September 17, 1999
F-7
<PAGE>
Want & Ender
CPA, P.C.
Certified Public Accountants
Martin Ender CPA
Stanley Z. Want CPA, CFP
Independent Auditor's Report
To the Shareholders and Board of Directors
QuikBIZ Internet Group, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of QuikBIZ Internet
Group, Inc. and Subsidiaries at December 31, 1997 and related consolidated
statements of operations, shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We have conducted our audit 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 our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of QuikBIZ
Internet Group, Inc. and Subsidiaries at December 31, 1997 and the consolidated
results of operations and cash flows of QuikBIZ Internet Group, Inc. and
Subsidiaries for the year ended, in conformity with generally accepted
accounting principles.
/s/ Want & Ender CPA, P.C.
Want & Ender CPA, P.C.
Certified Public Accountants
New York, NY
September 7, 1999
F-8
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Consolidated Balance Sheets
<TABLE>
Assets
December 31, September 30,
----------------------------------- ------------------
1997 1998 1999
------------------- ---------- ------------------
(unaudited)
Current Assets
<S> <C> <C> <C>
Cash $ 2,310 $ 18,059 $ 82,290
Accounts receivable 85,857 136,340 849,545
Other 37,827 38,969 36,389
------------------- -------- ----------------
Total current assets 125,994 193,368 968,224
Property and equipment
Furniture and equipment 45,847 68,647 159,268
Leasehold improvements - 44,862 44,862
------------------- ---------- ---------------
45,847 113,509 204,130
Less accumulated depreciation 4,819 40,706 (66,139)
------------------- ---------- ---------------
Depreciated cost 41,028 72,803 137,991
Intangible assets 1,296,515 595,300 1,072,987
Other assets - - 196,150
------------------- ---------- ---------------
Total assets $ 1,463,537 $ 861,471 $ 2,375,352
=================== ============ =================
Liabilities and Shareholders' Equity
December 31, September 30,
------------------------------------- -----------------
1997 1998 1999
------------------- ---------- ------------------
(unaudited)
Current liabilities
Accounts payable and accrued expenses $ 545,165 $ 483,291 $ 1,302,055
Current maturities of long-term debt 95,845 59,397 180,000
------------------- ---------- ---------------
Total current liabilities 641,010 542,688 1,482,055
Long-term debt -- 242,685 154,287
------------------- ---------- ---------------
Total liabilities 641,010 785,373 1,636,342
Shareholders' equity
Preferred stock; $.001 par value, 3,000 shares
authoried;
261 shares issued and outstanding 10,208 10,208 10,208
Common stock; $.002 par value; 25,000,000 shares
authorized; 12,784,372; 13,090,571; and 14,011,426
shares issued and outstanding, respectively 25,569 26,179 28,247
Additional paid-in capital 2,547,276 2,692,419 3,437,601
Accumulated deficit (1,609,359) (2,392,723) (2,593,752)
Unearned compensation on restricted stock -- (259,985) (143,294)
Subscription receivable (151,167) -- --
------------------- ---------- ---------------
Total shareholders' equity 822,527 76,098 739,010
------------------- ---------- ---------------
Total liabilities and shareholders' equity $ 1,463,537 $ 861,471 $ 2,375,352
=================== ============ =================
</TABLE>
F-9
<PAGE>
QuikBIZ Internet Group, Inc. And Subsidiaries
Consolidated Statements Of Operations
<TABLE>
Nine Months Ended
Years Ended December 31, September 30,
------------------------------------- -------------------------------------
1997 1998 1998 1999
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue
Advertising $ 140,355 $ 1,541,454 $ 1,335,058 $ 2,241,081
Multimedia services and products -- 600,960 365,226 1,016,975
------------------ ------------------ ------------------ ------------------
Total revenue 140,355 2,142,414 1,700,284 3,258,056
------------------ ------------------ ------------------ ------------------
Operating expenses
Direct costs 126,703 1,753,877 1,430,252 2,048,058
Selling, general and administrative 127,635 1,023,831 700,398 1,312,344
Depreciation and amortization 74,687 121,590 110,663 88,302
------------------ ------------------ ------------------ ------------------
Total operating expenses 329,025 2,899,298 2,241,313 3,448,704
------------------ ------------------ ------------------ ------------------
Loss from operations (188,670) (756,884) (541,029) (190,648)
Interest expense 1,608 26,480 8,715 10,381
------------------ ------------------ ------------------ ------------------
Net loss $ (190,278) $ (783,364) $ (549,744) $ (201,029)
------------------ ------------------ ------------------ ------------------
Weighted average number of common
shares outstanding 6,841,017 13,067,857 12,893,958 13,466,661
Basic (loss) per common share $ (0.028) $ (0.060) $ (0.043) $ (0.015)
</TABLE>
F-10
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
<TABLE>
Unearned
Additional Compensation
Preferred Stock Common Stock Paid-in Accumulated on Common Subscription
Shares Amount Shares Amount Capital Deficit Stock Receivable Total
------ ------ ---------- ------ --------- ----------- ------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December
31, 1996 441 $ 17,248 12,056,225 $ 8,077 $ 1,492,044 $(1,419,081) $ - $ (21,428) $ 76,860
Effect of 1997
7-for-1 reverse
stock split -- -- (10,333,903) (4,632) 4,632 -- -- -- --
Conversion of
preferred
stock (180) (7,040) 9,000 18 7,022 -- -- -- --
Acquisitions -- -- 10,002,667 20,005 894,650 -- -- -- 914,665
Issuance of
common stock -- -- 531,428 1,063 20,227 -- -- -- 21,290
Subscription
receivable
issued in
exchange for
common stock
and donated
stock -- -- 518,955 1,038 128,701 -- -- (129,739) --
Net loss -- -- -- -- -- (190,278) -- -- (190,278)
------ ----- ---------- ------ --------- ----------- ------ ------------ ---------
Balance, December
31, 1997 261 10,208 12,784,372 25,569 2,547,276 (1,609,359) -- (151,167) 822,527
Acquisition -- -- -- -- 42,000 -- -- -- 42,000
Issuance of common
stock for
compensation -- -- 2,394,868 4,787 544,578 -- (549,365) -- --
Tradename returned
in exchange for
common stock
and donated stock -- -- (2,300,000) (4,600) (396,445) -- -- -- (401,045)
Amortization of
unearned
compensation
on stock -- -- -- -- -- -- 289,380 -- 289,380
Issuance of common
stock -- -- 816,000 1,632 104,968 -- -- -- 106,600
Subscription
receivable
rescinded in
exchange for
return of common
stock -- -- (604,669) (1,209) (149,958) -- -- 151,167 --
Net loss -- -- -- -- -- (783,364) -- -- (783,364)
------ ----- ---------- ------ --------- ----------- ------ ------------ ---------
Balance, December
31, 1998 261 10,208 13,090,571 26,179 2,692,419 (2,392,723)(259,985) -- 76,098
</TABLE>
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Consolidated Statements of Shareholders' Equity
<TABLE>
Continued Unearned
Additional Compensation
Preferred Stock Common Stock Paid-in Accumulated on Common Subscription
Shares Amount Shares Amount Capital Deficit Stock Receivable Total
------ ------ ---------- ------ --------- ----------- ------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unaudited:
Acquisition - - 366,000 976 487,024 - - - 488,000
Issuance of
common stock - - 554,855 1,092 258,158 - - - 259,250
Amortization
of unearned
compensation
on stock - - - - - - 116,691 - 116,691
Net loss - - - - - (201,029) - - (201,029)
------ ------ ---------- ------ --------- ---------- --------- --------- ----------
Balance,
September 30, 1999 261 $ 10,208 $14,011,426 $28,247 $3,437,601 $(2,593,752) $(143,294) $ - $ 739,010
===== ======== =========== ======= ========== =========== ========= ========= ==========
</TABLE>
F-12
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
Nine Months Ended
Years Ended December 31, September 30,
------------------------------------- -------------------------------------
1997 1998 1998 1999
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating activities
Net (loss) $ (190,278) $ (783,364) $ (549,744) $ (201,029)
Adjustments to reconcile net (loss)
to net cash used in operating
activities:
Depreciation and amortization 74,687 121,590 110,663 88,302
Amortization of unearned compensation - 289,380 234,278 116,691
Changes in operating assets and liabilities,
net of effects of acquisition:
(Increase) decrease in accounts receivable 33,005 63,240 (252,429) (278,672)
(Increase) decrease in other current assets 10,103 8,526 4,388 (1,072)
(Increase) in other assets - - - (48,813)
Increase (decrease) in accounts payable
and accrued expenses (6,264) 109,225 398,518 112,240
------------------ ------------------ ------------------ ------------------
Net cash (used in) provided by
operating activities (78,747) (191,403) (114,326) (212,353)
------------------ ------------------ ------------------ ------------------
Investing activities
Purchases of property and equipment - (1,997) - (10,621)
Cash received from acquisition 7,062 76,312 76,312 -
------------------ ------------------ ------------------ ------------------
Net cash (used in) provided by
investing activities 7,062 74,315 76,312 (10,621)
------------------ ------------------ ------------------ ------------------
Financing activities
Proceeds from notes payable, including
$15,900 from a director in 1998 - 68,446 65,970 127,032
Payment on notes payable (3,084) (2,209) - (94,827)
Issuance of common stock 45,000 66,600 66,660 255,000
------------------ ------------------ ------------------ ------------------
Net cash provided by financing
activities 41,916 132,837 132,570 287,205
------------------ ------------------ ------------------ ------------------
Net increase (decrease) in cash (29,769) 15,749 94,556 64,231
Cash, beginning of period 32,079 2,310 2,310 18,059
------------------ ------------------ ------------------ ------------------
Cash, end of period $ 2,310 $ 18,059 $ 96,866 $ 82,290
================== ================== ================= ==================
</TABLE>
Continued
F-13
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
continued
<TABLE>
Nine Months Ended
Years Ended December 31, September 30,
------------------------------------- -------------------------------------
1997 1998 1998 1999
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest $ 1,608 $ 23,480 $ 8,715 $ 10,381
Supplemental schedule of noncash
investing and financing activities:
Common stock issued in connection with
compensation, net of amortization $ - $ 259,985 $ 63,270 $ -
Issuance of common stock and options
related to acquisitions $ 914,655 $ 42,000 $ 42,000 $ 488,000
Subscription receivable issued in exchange
for common stock $ 129,739 $ - $ - $ -
Subscription receivable rescinded in
exchange for return of common stock $ - $ 151,167 $ - $ -
Tradename returned in exchange for
common stock and donated stock $ - $ 401,045 $ 401,045 $ -
Note payable paid with the issuance of
common stock $ - $ 40,000 $ - $ -
Issuance of common stock related to exercise
of warrants, cash not yet received $ - $ - $ - $ 4,250
</TABLE>
See accompanying notes.
F-14
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
1. Nature of Operations
The Company has two reportable segments, both of which sell their
products and services in the Southeastern United States.
One segment provides its clients with internet site design, television
commercial and radio commercial development and production, print
advertisement development and production, public relations and
promotions.
The other segment offers audio, video, multimedia and internet
services and products. It also produces and assists companies in
creative content for corporate communications including sales,
training, public relations and promotion.
During 1998, the Company changed its name from Algorhythm Technologies
Corporation.
During 1999, the Company commenced development of the QuikBiz Mall, a
virtual mall on the Internet that offers corporate communications
products, services and supplies on-line. Start-up costs with regards
to this were expensed as incurred.
2. Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries.
All significant intercompany balances have been eliminated in
consolidation.
Property and Equipment. Property and equipment are stated at cost and
depreciated, using the straight-line method, over the estimated useful
lives of the assets as follows: three to seven years for furniture and
equipment and the lease term for leasehold improvements.
Intangible Assets. Intangible assets are being amortized on the
straight-line basis over ten years.
Long-Lived Assets. The Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of income and expenses during the reported period. Actual
results could differ from those estimates.
Fair Value of Financial Instruments. The carrying amount of cash,
accounts receivable, accounts payable and accrued expenses approximate
fair value because of their short duration. The carrying amount of
F-15
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
short and long-term debt approximates fair value because the interest
rates are similar to the interest rates currently available to the
Company.
Income Taxes. The Company accounts for income taxes under Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes". Under SFAS 109, deferred income tax assets and liabilities are
determined based upon differences between financial reporting and tax
bases of assets and liabilities and are measured using currently
enacted tax rates.
Revenue Recognition. Revenue is recognized from sales when a product
is delivered and from services when performed. Revenue is reduced for
estimated customer returns and allowances.
Earnings Per Share. In 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings Per Share". SFAS No. 128 requires two
presentations of earnings per share - basic and diluted. Basic
earnings per share is computed by dividing income available to common
stockholders by the weighted-average number of common shares for the
period. The computation of diluted earnings per share is similar to
basic earnings per share, except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potentially dilutive common shares, such as
options, had been issued. Diluted earnings per share are not presented
because the effects would be anti-dilutive. The restated loss per
share to be reported under SFAS No. 128 does not differ from amounts
reported under existing accounting rules for all periods reported by
the Company through September 30, 1999.
Reclassification. Certain prior period amounts have been reclassified
to conform to the current year presentation.
Year 2000. The Company developed and implemented a plan to deal with
the Year 2000 problem and converted its computer systems to be Year
2000 compliant. The conversion efforts were completed by mid 1999. The
Year 2000 problem is the result of computer programs being written
using two digits rather than four to define the applicable year. In
addition, the Company is working with its suppliers and customers to
ensure their compliance with Year 2000 issues in order to avoid any
interruptions in its business.
Unaudited Interim Financial Information. The unaudited balance sheet
as of September 30, 1999 and the unaudited statements of operations
and cash flows for the nine months ended September 30, 1998 and 1999,
and the unaudited statement of shareholders' deficit for the nine
months ended June 30, 1999 include, in the opinion of management, all
adjustments (consisting of normal recurring adjustments) necessary to
present fairly the Company's financial position, results of operations
and cash flows. Operating results for the nine months ended September
30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. The footnotes related
to such periods are also unaudited.
F-16
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
3. Going Concern - Uncertainty
As shown in the accompanying financial statements, the Company has
incurred recurring operating losses, negative cash flows from
operating activities and has negative working capital. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
The Company has initiated several actions to generate working capital
and improve operating performance, including private issuances of
stock (Notes 7 and 13), generation of additional revenue and entering
into an investment agreement to raise up to $20,000,000 through a
series of sales of common stock (Note 13).
There can be no assurance that the Company will be able to
successfully implement its plans, or if such plans are successfully
implemented, that the Company will achieve its goals.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern and do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that might result from the outcome of
this uncertainty.
4. Intangible Assets
<TABLE>
September
At December 31, 30,
1997 1998 1999
------------------ ---------------- -----------------
(Unaudited)
<S> <C> <C> <C>
Intangible assets
Goodwill, net of accumulated amortization of
$11,062, $78,435 and $133,404, respectively $ 662,672 $ 595,300 $ 1,072,987
Tradename, net of accumulated amortization of
$21,875 415,625 - -
Franchise rights, net of accumulated amortization
of $15,587 218,218 - -
------------------ ---------------- -----------------
Total $ 1,296,515 $ 595,300 $ 1,072,987
------------------ --------------- -----------------
</TABLE>
F-17
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
5. Long-Term Debt
<TABLE>
December 31, September 30,
1997 1998 1998
---------------- ---------------- ------------------
(Unaudited)
<S> <C> <C> <C>
Unsecured note payable; interest at
prime plus one percent (9.25% at December
31, 1998); matures October 13,
2000 $ - $ 110,000 $ 110,000
$150,000 line-of-credit; interest at prime plus one percent
(9.25% at December 31, 1998); collateralized by
accounts receivable, inventory and property and
equipment; guaranteed by a director/shareholder;
matures in March 2000 95,845 98,345 150,000
Unsecured note payable to shareholder; interest at 12%;
matured and was paid in July 1999 - 50,000 -
Note payable; interest at 9%; collateralized by accounts
receivable, inventory and property and equipment;
guaranteed by a director/shareholder; paid off after
December 31, 1998 - 27,837 -
Unsecured demand note payable to a director/shareholder;
interest variable (8.75% at December 31, 1998); share
holder has indicated he will not request payment within
the next twelve months - 15,900 30,000
$50,000 line of credit, interest at prime plus one percent;
collateralized by accounts receivable, inventory and
property and equipment; guaranteed by a director/ - - 44,287
shareholder; matures in March 2000. ---------------- ---------------- -----------------
Total $ 95,845 $ 302,082 $ 334,287
================ ================ =================
</TABLE>
F-18
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
The aggregate maturities of long-term debt for the years ended December
31 are as follows:
Year Amount
----- ----------
1999 $ 59,397
2000 234,472
2001 8,213
----- ----------
$ 302,082
==========
6. Preferred Stock
The preferred stock calls for the payment of dividends of $120 per
share per annum, when and as declared by the Board of Directors,
payable quarterly. The Board of Directors has not declared any
dividends as of September 30, 1999. Each share of preferred stock is
convertible into 71.43 shares of common stock, at the option of the
holder. In the event of liquidation of the Company, the holders of the
preferred stock are entitled to receive $1,000 per share prior to any
distribution to the holders of common stock. The preferred is also
callable, at the option of the Company, at $1,100 per share plus
unpaid dividends.
7. Common Stock
In May 1997, the Company's Board of Directors, authorized a
seven-for-one reverse stock split. Outstanding shares and per share
data contained in these financial statements have been restated to
reflect the impact of the split.
On July 18, 1997, the Company issued 1,000,000 shares of common stock
to acquire the rights to the name "Algorythm Technologies
International, Inc." During 1998, the Company returned the rights to
the use of the name and 1,000,000 shares of common stock were returned
to the Company. Separately, during 1998, David Bawarsky donated
1,300,000 shares of common stock to the Company. These transactions
resulted in a reduction to shareholder's equity of $401,045 in 1998.
During 1998, the Company issued 2,394,868 shares of common stock as
compensation to certain key salaried employees. Sale of these shares
is restricted prior to the date of vesting, which ranges from one to
two years from the date of issuance. Shares issued were recorded at
their fair market value on the date of the issuance, with a
corresponding charge to shareholders' equity. The unearned portion is
being amortized as compensation expense on a straight-line basis over
the related vesting period. By December 31, 1998, three officers of
one of the Company's subsidiaries entered into an agreement in
principal to terminate their employment agreements with the Company.
During June 1998, the Company issued options to purchase an aggregate
of 60,000 shares at par value to two of its directors as compensation
F-19
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
for their services as directors during 1998. These options were valued
at $10,000 and this expense has been included in selling, general and
administrative expense.
On September 29, 1998, the Company entered into an agreement with two
of its shareholders to return 604,669 shares of common stock issued by
the Company in December 1996 and September 1997. In exchange, the
Company rescinded the debt owed by the two shareholders, in the amount
of $151,167.
During the nine months ended September 30, 1999, the Company issued
429,855 shares of common stock for $240,000. The Company also received
$15,000 when one shareholder exercised options for 100,000 shares of
common stock.
In addition to options issued in connection with acquisitions (Note 8)
and those issued to directors, the Company issued warrants and options
to purchase the Company's common stock as follows:
During June 1998, the Company issued a warrant to purchase
25,000 shares of common stock at an exercise price of $0.17
per share. The warrant was exercised in June 1999.
During July 1998, the Company issued 600,000 options for
investment banking services. The options expire in five
years and have an exercise price of $0.25 per share.
During May 1999, the Company issued a warrant to purchase
500,000 shares of common stock at an initial exercise price
of $1.4625 per share. The warrant expires in May 2004.
Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation",
the Company has determined that, other than the options issued in
connection with acquisitions and to directors, there was only minimal
value to the warrants and options described above at the date of
issuance.
On July 9, 1999 the Company entered into an investment agreement to
raise up to $20 million through a series of sales of common stock. The
dollar amount of each sale is limited by the trading volume and a
minimum period of time must occur between sales. The agreement is for
a three-year period ending July 9, 2002.
8. Acquisitions
On May 14, 1997, the Company entered into an agreement with Nitros
Franchise Corporation ("Nitros") for a tax-free merger. In connection
with this transaction, the Company issued 6,702,667 shares of common
stock and options to purchase 300,000 shares of common stock at $0.15
per share to the shareholders of Nitros in return for all of their
shares. The Company also issued options to purchase 300,000 shares of
common stock at $0.15 per share to officers of the Company. Of the
options so issued, options for 400,000 shares remain exercisable until
May 2000, options for 100,000 shares expired in 1998 and options for
100,000 shares were exercised in February 1999. This transaction was
accounted for in a manner similar to a pooling of interests,
accordingly, the Company's consolidated financial statements have been
F-20
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
restated for all periods to the business combination to include the
combined financial results of Nitros. Nitros had no revenues or
expenses prior to the merger.
On September 1, 1999, the Company acquired the assets and assumed
certain of the liabilities of Gallaspy & Lobel, Inc. d/b/a G&L Group
for $610,000 payable in the form of approximately 488,000 shares of
restricted common stock, of which 366,000 shares were issued and
approximately 122,000 shares are to be issued. In connection with this
transaction, the Company entered into a three-year employment
agreement with the acquiree's president. The acquisition was accounted
for by the purchase method of accounting and accordingly the results
of operations of G&L Group for the period from September 1, 1999 are
included in the accompanying consolidated financial statements. Assets
acquired and liabilities assumed have been recorded at their estimated
fair values. The excess of the purchase price over the fair value of
the net assets acquired (goodwill) was approximately $533,000.
On July 1, 1998, the Company acquired the outstanding stock of QuikLAB
Multimedia Centers, Inc. ("QuikLAB"), a company owned by a
director/shareholder of the Company. The acquisition was accounted for
as a purchase and the results of QuikLAB's operations were included in
the Company's 1998 consolidated statements of operations from the date
of acquisition. Consideration was the issuance of 200,000 stock
options, at par, exercisable over a period of two years, valued at
$42,000. The Company will issue an additional 2,800,000 stock options,
at par, exercisable over a period of five years from the date of
acquisition if QuikLAB achieves an annual net profit of $200,000 by
July, 2001. Franchise rights were eliminated as part of the
combination. The fair value of the net assets acquired exceeded the
purchase price by $87,000 which has been recorded as a reduction to
property and equipment.
On November 7, 1997, the Company acquired the outstanding stock of The
Smith Agency. The Company issued 2,300,000 shares of common stock and
200,000 options, at par, exercisable over a period of two years to the
former shareholder of The Smith Agency, for an aggregate purchase
price of $468,000. The acquisition was accounted for by the purchase
method of accounting and accordingly the results of operations of The
Smith Agency for the period from November 7, 1997 are included in the
accompanying consolidated financial statements. Assets acquired and
liabilities assumed have been recorded at their estimated fair values.
The excess of the purchase price over the fair value of the net assets
acquired (goodwill) was approximately $674,000.
The following unaudited proforma consolidated results of operations
are presented as if the business combinations of G&L Group, QuikLAB
and The Smith Agency had been made at the beginning of the periods
presented:
Years Ended December 31, 1998 1997
------------------ ------------------
Sales $ 7,458,000 $ 8,085,000
Net loss $ (434,000) $ (456,000)
Net loss per share:
Basic and diluted $(0.033) $(0.067)
F-21
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
The unaudited proforma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which would have actually resulted had the combination been
in effect on January 1, 1997, or of future results of operations.
9. Leases
The Company has entered into several long-term leases for offices,
retail locations and equipment. At December 31, 1998, future minimum
rental payments required under noncancellable lease obligations during
the years ended December 31 are approximately as follows:
Year Amount
------- ----------
1999 $ 124,000
2000 123,000
2001 106,000
2002 98,000
2003 98,000
Thereafter 210,000
--------------
$ 759,000
==============
Rent expense was $83,000 and $36,000 for the years ended December 31,
1998 and 1997, respectively, and $110,000 and $54,000 for the nine
months ended September 30, 1999 and 1998, respectively.
10. Deferred Income Taxes
At December 31, 1998, the Company has available net operating loss
carryforwards of $2,393,000, which will expire through 2013.
SFAS 109 requires a valuation allowance to reduce the deferred tax
assets reported if, based on the weight of the evidence, it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. After consideration of all the evidence, both
positive and negative, management has determined that a valuation
allowance is not necessary to reduce the deferred tax assets to the
amount that will more likely than not be realized.
F-22
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
Significant components of the Company's net deferred income taxes are
as follows:
<TABLE>
September
December 31, 30,
1997 1998 1999
-------------------- ---------------- -----------------
(Unaudited)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 628,000 $ 933,000 $ 1,009,000
Valuation allowance for deferred tax asset (628,000) (933,000) (1,009,000)
-------------------- ---------------- -----------------
Total $ - $ - $ -
-------------------- ---------------- -----------------
</TABLE>
11. Employment Agreements
The Company has employment agreements with its executive officers and
certain other key employees. The agreements are for periods ranging
from two to five years, provide for performance incentive bonuses and
severance payments under certain circumstances, and provide for
minimum annual base compensation of $396,000 in 1999, $448,000 in
2000, $410,000 in 2001, $455,000 in 2002 and $350,000 in 2003. If the
employment contract with the Chief Executive Officer were to be
canceled or should the employer change the employee's position without
employee's consent, the Company's liability would be $2,000,000.
12. Segment Information
QuikBIZ Internet Group, Inc. and Subsidiaries organizes its business
into two reportable segments. The reportable segments are strategic
business units that offer different products and services. They are
managed separately because each business requires different technology
and marketing strategies. The accounting policies of the segments are
the same as those described in the significant accounting policies.
The Company evaluates the performance of its operating segments based
on operating earnings of the respective business units.
Two customers accounted for approximately 32% and 24%, respectively,
of the Company's net sales for the year ended December 31, 1998. These
same two customers represented approximately 25% and 7%, respectively,
of the Company's accounts receivable balance at December 31, 1998.
F-23
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Information as of September 30, 1999 and for the Nine Months
Ended September 30, 1998 and 1999 is Unaudited)
Summarized financial information concerning the Company's reportable segments is
shown in the following table:
<TABLE>
Year Ended Advertising Multimedia
December 31, 1998 Segment Segment Corporate
- -------------------------------- ------------------- ----------------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 1,541,454 $ 600,960 $ - $ 2,142,414
Segment income (loss) $ (116,982) $ (126,064)$ (540,318) $ (783,364)
Depreciation and amortization $ 18,876 $ 17,010 $ 85,704 $ 121,590
Total assets $ 100,048 $ 261,880 $ 499,543 $ 861,471
</TABLE>
<TABLE>
Nine Months Ended Advertising Multimedia
September 30, 1999 Segment Segment Corporate
- -------------------------------- ------------------- ----------------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 2,241,081 $ 1,016,975 $ - $ 3,258,056
Segment income (loss) $ 154,898 $ (19,435) $ (336,492) $ (201,029)
Depreciation and amortization $ 8,450 $ 16,900 $ 62,952 $ 88,302
Total assets $ 857,811 $ 280,734 $ 1,236,807 $ 2,375,352
</TABLE>
For 1997, the Company operated only the advertising business segment for
approximately two months.
F-24
<PAGE>
CHARLES A. NICHOLS
CERTIFIED PUBLIC ACCOUNTANT
PROFESSIONAL ASSOCIATION
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Gallaspy & Lobel, Inc.
I have audited the accompanying balance sheets of Gallaspy & Lobel,
Inc. (the "Company") at December 31, 1998 and 1997, and the related statements
of operations and accumulated adjustment account, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these consolidated
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
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. I
believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Gallaspy & Lobel,
Inc. at December 31, 1998 and 1997 and the results of their operations and cash
flows for the years then ended in conformity with generally accepted accounting
principles.
The financial statements referred to above have been prepared assuming
that the Company will continue as a going concern. As more fully described in
Note 2, the Company has incurred recurring operating losses, negative cash flows
from operating activities, and has negative working capital. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans as to these matters are also described in Note 2.
The accompanying financial statements do not include an adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that might result from the
outcome of this uncertainty.
/s/ Charles A. Nichols, C.P.A., P.A.
------------------------------------
CHARLES A. NICHOLS, C.P.A., P.A.
December 22, 1999
F-25
<PAGE>
GALLASPY & LOBEL, INC.
BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
1998 1997
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Accounts receivable (Notes 1 and 3) $ 463,798 $ 747,463
--------- ---------
PROPERTY AND EQUIPMENT: (Notes 1 and 3)
Furniture and equipment 104,836 102,339
Leasehold improvements 97,332 18,000
------ ------
202,168 120,339
Less accumulated depreciation 98,813 91,741
------ ------
Depreciated cost 103,355 28,598
DEPOSITS 7,419 4,869
----- -----
TOTAL ASSETS $ 574,572 $ 780,930
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdraft $ 157,586 $ 109,702
Accounts payable and accrued expenses 674,673 1,307,473
Current maturities of long-term debt (Notes 3 and 5) 219,219 147,828
------- -------
Total current liabilities 1,051,478 1,565,003
--------- ---------
COMMITMENTS and CONTINGENCIES (Notes 2, 4 and 6)
STOCKHOLDERS' EQUITY
Common stock; $1.00 par value; 600 shares authorized;
300 shares issued and outstanding 300 300
Accumulated adjustment account (477,206) (784,373)
------- -------
Total stockholders' equity (476.906) (784,073)
------- -------
TOTAL LIABILITIES AND
AND STOCKHOLDERS' EQUITY $ 574,572 $ 780,930
========= =========
</TABLE>
See notes to financial statements
F-26
<PAGE>
GALLASPY & LOBEL, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED ADJUSTMENT ACCOUNT
For the Years Ended December 31, 1998 and 1997
<TABLE>
1998 1997
---- ----
<S> <C> <C>
REVENUE:
Advertising $3,699,737 $4,476,574
Multimedia services and products 806,093 618,741
------- -------
Total revenue 4,505,830 5,095,315
---------
OPERATING EXPENSES:
Direct costs 3,521,178 4,711,577
Selling, general and administrative 655,562 698,689
Depreciation and amortization 7,072 4,926
----- -----
Total operating expenses 4,183,812 5,415,192
--------- ---------
INCOME (LOSS) FROM OPERATIONS 322,018 (319,877)
INTEREST EXPENSE 14,851 8,477
------ -----
NET INCOME (LOSS) 307,167 (328,354)
ACCUMULATED ADJUSTMENT ACCOUNT,
BEGINNING OF YEAR (784,373) (369,626)
STOCKHOLDER DISTRIBUTIONS - 86,393
--------- ------
ACCUMULATED ADJUSTMENT ACCOUNT,
END OF YEAR $ (477,206) $ (784,373)
----------- ----------
</TABLE>
See notes to financial statements
F-27
<PAGE>
GALLASPY & LOBEL, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1998 and 1997
<TABLE>
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 307,167 $(328,354)
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation 7,072 4,926
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 283,665 (437,917)
Increase in deposits (2,550) (4,869)
(Decrease) increase in accounts payable and
accrued expenses (632,800) 766,911
-------- -------
Net cash (used in) provided by operating activities (37,446) 697
------- ---
INVESTING ACTIVITIES:
Purchases of property and equipment (81,829) (12,777)
------ ------
FINANCING ACTIVITIES:
Borrowings of debt 648,103 529,113
Repayment of debt (576,712) (513,257)
Stockholder's distributions - (86,393)
------
Net cash provided by (used in) financing activities 71,391 (70,537)
------ ------
NET DECREASE IN CASH (47,884) (82,617)
OVERDRAFT, BEGINNING OF YEAR (109,702) (27,085)
-------- ------
OVERDRAFT, END OF YEAR $(157,586) $(109,702)
========== ==========
Supplemental Disclosure for Cash Flow Information:
Cash paid for interest $ 14,851 $ 8,477
-------- --------
</TABLE>
See notes to financial statements
F-28
<PAGE>
GALLASPY & LOBEL, INC.
Notes to Financial Statements
For the Years Ended December 31, 1998 and 1997
Note 1 - Summary of Significant Accounting Policies
The following is a summary of significant accounting policies of Gallaspy &
Lobel, Inc. (the "Company") in the preparation of the accompanying financial
statements.
Principal Business Activity - The Company was incorporated in the State of
Florida on February 5, 1993, and is a full service advertising agency. The
Company's corporate headquarters are located in Pompano Beach, Florida.
Basis of Accounting - The financial statements of the Company have been prepared
on the accrual basis of accounting and accordingly reflect all significant
receivables, payables and other liabilities.
Property and Equipment - Property and equipment are carried at cost. The cost of
property and equipment is depreciated over the estimated useful lives of the
related assets. The, costs of leasehold improvements are depreciated (amortized)
over the lesser of the length of the related leases or the estimated useful
lives of the assets. Depreciation is computed on the straight-line method for
financial reporting purposes and on the accelerated cost recovery system method
for income tax purposes.
Expenditures for major renewals and betterments that extend the useful lives of
property and equipment are capitalized. Expenditures for maintenance and repairs
are charged to expense as incurred.
Income Taxes - The Company, with the consent of all of its shareholders, has
elected to be taxed under the provisions of Subchapter S of the Internal Revenue
Code. Under those provisions, the Company does not provide for or pay Federal
and certain State corporate income taxes on its taxable income. Instead, the
stockholders are liable for individual Federal and State income taxes, if any,
on their share of the Company's taxable income.
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures 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.
Allowance for Bad Debts - The Company provides an allowance for doubtful
accounts, as needed, for accounts deemed uncollectible.
F-29
<PAGE>
Note 2 - Going Concern - Uncertainty
As shown in the accompanying financial statements, the Company has incurred
operating losses, negative cash flows from operating activities and has negative
working capital. These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
The Company has initiated several actions to generate working capital and
improve operating performance, including seeking a buyer for the Company (see
Note 6).
There can be no assurance that the Company will be able to successfully
implement its plans, or if such plans are successfully implemented, that the
Company will achieve its goals.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern and do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that might result from
the outcome of this uncertainty.
Note 3 - Long-Term Debt
Long-term debt consists of the following:
<TABLE>
1998 1997
---- ----
<S> <C> <C>
Note payable - financial institution line-of-credit (maximum borrowings of
$100,000), interest only payable monthly at prime plus 2%, due on demand,
collateralized by accounts receivable, furniture, equipment and personal
guarantee of the stockholder $ 99,871 $ 51,136
Unsecured line-of-credit (maximum borrowings of $100,000),
interest only payable monthly at a variable rate, 11.5% at
December 31, 1998, due on demand. 95,649 52,933
Notes payable to stockholders with no stated interest rate 23,699 43,759
Total $219,219 $147,828
-------- --------
Principal payments on note payable are as follows:
Years ending
December 31, $219,219
1999 ========
</TABLE>
F-30
<PAGE>
Note 4 - Leases
The Company has entered into several long-term leases for the office building
and various equipment with monthly payments ranging from $2,617 to $6,400. These
leases are classified as operating leases.
The future minimum rental payments required under long-term non-cancelable
leases during the years ended December 31, may be summarized as follows:
<TABLE>
Related Party
(Note 5) Other Total
------- ----- -----
<S> <C> <C> <C>
1999 $ 76,800 $31,402 $ 108,202
2000 76,800 13,084 89,884
2001 76,800 - 76,800
2002 76,800 - 76,800
2003 and thereafter 1,152,000 - 1,152,000
--------- ------------- ---------
$ 1,459,200 $44,486 $ 1,503,686
============= =============
</TABLE>
Total rental expense for all operating leases for the years ended December 31,
1998 and 1997 amount to $127,086 and $155,970, respectively.
Note 5 - Related Parties
The Company leases its office facility from a Company stockholder since February
1998. Rent paid on this lease for the year ended December 31, 1998 was $66,640
(see Note 4).
The Company paid a related corporation consulting fees, which amounted to
$50,976 and $56,400 for the years ended December 31, 1998 and 1997,
respectively. This corporation also provided production services during 1998 for
$94,819, which is included in accounts payable at December 31, 1998.
Net amounts paid on stockholder loans payable were $20,061 and $41,090 for 1998
and 1997, respectively. Stockholder's loan payable amounted to $23,699 and
$43,759 at December 31, 1998 and 1997, respectively. The stockholder personally
guaranteed a Company line-of-credit (see Note 3).
Note 6 - Subsequent Event
On September 1, 1999, the Company sold its net assets, primarily in exchange for
restricted stock in the acquiring company. In connection with this transaction,
the acquiring company entered into a three-year employment agreement with the
Company's president.
F-31
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
Section 78.7502 through 78.752 of the Nevada General Corporation Law
("NGCL") provides that a corporation may indemnify directors, officers,
employees or agents of the corporation against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement in connection with
threatened, pending or completed actions, suits or proceedings brought against
them by reason of their service in such capacity, including, under certain
circumstances, actions brought by or in the right of the corporation, and may
purchase insurance or make other financial arrangements on behalf of any such
persons for any such liability.
Article V of the Company's By-laws provides that the Company shall
indemnify any and all of its directors and officers, and its former directors
and officers, or any person who may have served at the Company's request as a
director or officer of another corporation in which the Company owns shares of
capital stock or of which it is a creditor, against expenses actually and
necessarily incurred by them in connection with the defense of any action, suit
or proceeding in which they, or any of them, are made parties, or a party, by
reason of being or having been director(s) or officer(s) of the Company, or of
such other corporation, except in relation to matters as to which any such
director or officer or former director or officer or person shall be adjudged in
such action, suit or proceeding to be liable for negligence or misconduct in the
performance of duty.
Article Twelfth of the Company's Articles of Incorporation, as amended,
provides for limitation of the personal liability of a director or officer to
the Company or its stockholders for damages for breach of fiduciary duty as a
director or officer, other than for acts or omissions that involve intentional
misconduct, fraud or a knowing violation of law, or the payment of dividends in
violation of Section 78.300 of the NGCL, which generally states that dividends
may be paid to stockholders from a corporation's excess of its assets over its
liabilities.
ITEM 25. Other Expenses of Issuance and Distribution
The following is an itemized statement of the estimated amounts of all
expenses payable by the registrant in connection with the registration of the
common stock offered hereby:
SEC filing fee............................................. $ 7,259.12
Blue sky fees and expenses................................. 5,000.00
Legal fees................................................. 50,000.00
Accounting fees and expenses............................... 50,000.00
Miscellaneous.............................................. $ 12,740.88
------------
Total............................................. $ 125,000.00
===========
II-1
<PAGE>
ITEM 26. Recent Sales of Unregistered Securities
Except as otherwise indicated, the Company relied upon Section 4(2) of
the Securities Act as the basis for exemption from registration for all of the
following sales because the transactions did not involve public offerings.
In May 1997 the Company issued 57,142 shares to a consulting firm in
consideration for consulting services rendered to the Company.
In May 1997 the Company issued an aggregate of 6,702,667 shares of
common stock to David Bawarsky, Jason Sherman and Alan Kvares in consideration
for all of the outstanding shares of capital stock of Nitros Franchise
Corporation.
In May 1997, in connection with the acquisition of Nitros Franchise
Corporation, the Company issued options to purchase 100,000 shares of common
stock at $.15 per share to each of Kirk J. Girrbach, Gene Farmer and Douglas
Stepelton and options to purchase 300,000 shares of common stock at $.15 per
share to David Bawarsky.
In June 1997 the Company issued 144,077 shares of common stock to Kirk
J. Girrbach and 144,076 shares of common stock to Gene Farmer in consideration
for consulting services rendered to the Company.
In June 1997 the Company also issued 80,162 shares of common stock to
Kirk J. Girrbach, 38,858 shares of common stock to Gene Farmer and 24,783 shares
of common stock to Douglas Stepelton in consideration for consulting services
rendered to the Company.
In July 1997 the Company issued 1,000,000 shares of common stock to
Telephonetics International, Inc. in consideration for the rights to use the
name "Algorythm Technologies International, Inc." These shares were subsequently
returned to the Company and canceled and the rights to use the name "Algorythm
Technologies International, Inc." were returned to Telephonetics International,
Inc.
In October 1997 the Company issued 20,000 shares of common stock to one
individual in consideration of such individual waiving any rights to the return
of $5,000 paid to the Company for services to be performed by the Company.
In November 1997 the Company issued 2,300,000 shares of common stock to
Andrew D. Smith in exchange for 6,500 shares of common stock of SmithAgency.com,
Inc. Also in November 1997 the Company issued options to purchase 200,000 shares
of common stock, exercisable for two years at a price of $.002 per share, to
Andrew D. Smith.
In November and December 1997 the Company sold an aggregate of 400,000
shares of common stock at $.10 per share to four persons, all of whom were
accredited investors. The Company relied on Rule 506 of Regulation D and Section
4(2) of the Securities Act of 1933 as the basis for an exemption from
registration, because the transactions did not involve any public offering.
In February 1998 the Company sold an aggregate of 46,000 shares of
common stock at a price of $.10 per shares to two individuals.
II-2
<PAGE>
In March 1998 the Company sold 50,000 shares of common stock at a price
of $.10 per share to one individual.
In March 1998 the Company issued 400,000 shares of common stock in
payment of an outstanding loan of $40,000 to the Company's subsidiary
SmithAgency.com, Inc.
In April 1998 the Company sold 20,000 shares of common stock at a price
of $.10 per share to one individual.
In April 1998 the Company issued an aggregate of 1,525,000 shares of
common stock to three individuals in consideration for services to be rendered
pursuant to employment agreements between its subsidiary QBIZ Business Centers,
Inc., f/k/a Capital Network of America, Corp., and such individuals.
In June 1998 the Company sold 100,000 shares of common stock at a price
of $.10 per share to one individual.
In June 1998 the Company issued options to purchase an aggregate of
60,000 shares at a price of $.002 per share to two of its directors as
compensation for their services as directors during 1998.
In July 1998 the Company issued an aggregate of 1,300,000 shares of
common stock to three individuals in consideration for services to be rendered
pursuant to employment agreements between its subsidiary QBIZ Business Centers,
Inc., f/k/a Capital Networks of America, Corp., and such individuals. 1,000,000
of these shares were subsequently returned to the Company.
In July 1998 the Company issued options to purchase 200,000 shares of
common stock to David Bawarsky, exercisable for five years at a price of $.002
per share, in connection with the Company's acquisition of QuikLAB Multimedia
Centers, Inc.
In July 1998 the Company issued warrants to purchase 600,000 shares of
common stock at a price of $.25 per share to M.H. Meyerson & Co., Inc. in
consideration for services to be rendered by Meyerson pursuant to an investment
banking agreement entered into between the Company and Meyerson as of July 14,
1998. The warrants have a term of five years.
In August 1998 the Company issued an aggregate of 240,000 shares of
common stock to two individuals in consideration for services rendered.
In August 1998 the Company sold 200,000 shares of common stock at a
price of $.25 per share to one individual.
In September 1998 the Company issued 9,868 shares of common stock to
Kirk J. Girrbach pursuant to an agreement under which Mr. Girrbach provided
legal services to the Company.
In October 1998 the Company issued 120,000 shares to one individual in
consideration for services rendered and to be rendered pursuant to an employment
agreement between the Company and such individual.
In November 1998 the Company issued 200,000 shares to one individual in
consideration for services rendered and to be rendered pursuant to an employment
agreement between SmithAgency.com and such individual.
II-3
<PAGE>
In January 1999 the Company sold 100,000 shares of common stock at a
price of $.30 per share to one individual.
In February 1999 the Company sold 76,923 shares of common stock at a
price of $.78 per share to one individual.
In February 1999 the Company issued 100,000 shares to an individual
upon the exercise of outstanding options at an exercise price of $.15 per share.
In March 1999 the Company sold 40,000 shares of common stock at a price
of $.80 per share to two individuals.
In April 1999 the Company sold 40,000 shares of common stock at a price
of $.90 per share to two individuals.
In May 1999 the Company issued warrants to purchase 500,000 shares of
common stock at a price of $1.4625 per share to Swartz Private Equity, LLC in
consideration for Swartz's commitment to enter into an investment agreement for
the purchase of $20,000,000 of common stock of the Company.
In June 1999, the Company sold 25,000 shares at a price of $.17 per
share to Cella Reyes upon the exercise of a warrant issued to Ms. Reyes in
connection with a promissory note issued to Ms. Reyes in June 1998.
In August 1999 the Company sold an aggregate of 172,000 shares of
common stock at a price of $.50 per share to two individuals.
In September 1999 the Company issued 366,000 shares of common stock to
Gallaspy & Lobel, Inc. in consideration for substantially all of the assets of
Gallaspy & Lobel, Inc.
In December 1999 we issued 50,000 shares of common stock to an
individual in consideration for certain consulting services to be provided by
such individual.
In February 2000 we issued 200,000 shares of common stock to Kirk J.
Girrbach pursuant to an employment agreement dated April 13, 1998 between Mr.
Girrbach and Capital Network of America, Corp., a subsidiary of the Company that
is now dormant, and we issued 12,310 shares of common stock to Mr. Girrbach in
payment of $8,100 of accrued legal fees and disbursements.
II-4
<PAGE>
ITEM 27. Exhibits
<TABLE>
Exhibit
Number Description
- --------- -----------
<S> <C>
2.1 Acquisition Agreement between the Registrant and QuikLAB
Multimedia Centers, Inc. (incorporated by reference from the
Registrant's Current Report on Form 8-K filed on July 24, 1998).
2.2 Asset Purchase Agreement, dated as of August 20, 1999, by and
between Gallaspy & Lobel, Inc., the Registrant, and James Lobel and
Diane C. Harvey.*
3.1 Registrant's Articles of Incorporation, as amended (incorporated by
reference from the Registrant's Quarterly Report on Form 10-QSB for
the period ended March 31, 1998, except for the July 1998
amendment, which is incorporated by reference from the Registrant's
Annual Report on Form 10-KSB for the year ended December 31,
1997).
3.2 Registrant's Bylaws (incorporated by reference from the Registrant's
Quarterly Report on Form 10-QSB for the period ended March 31,
1998).
3.3 Certificate of Correction of Certificate of amendment to the
Registrant's Articles of Incorporation (incorporated by reference from
the Registrant's Form 10-KSB/A for the year ended December 31,
1997, filed on January 27, 2000).
4.1 Specimen common stock certificate.*
4.2 Form of warrant to purchase common stock issued to Swartz
Private Equity, LLC on May 25, 1999, exercisable to purchase
an aggregate of 500,000 shares of common stock at $1.4625
per share until May 24, 2004, granted to Swartz in
connection with the offering of securities described in
Exhibit 4.3.*
4.3 Amended and restated investment agreement, dated as of July
9, 1999, by and between the Registrant and Swartz Private
Equity, LLC.*
4.4 Registration rights agreement, dated as of July 9, 1999, by
and between the Registrant and Swartz Private Equity, LLC,
related to the registration of the common stock to be sold
pursuant to Exhibit 4.3.*
4.5 Form of warrant to purchase common stock to be issued from time to
time in connection with the offering of securities described in Exhibit
4.3.*
4.6 Promissory note, dated June 25, 1998, and warrant, issued
June 26, 1999, issued by the Registrant to Cella Reyes.*
5.1 Legal opinion of Graubard Mollen & Miller.**
</TABLE>
II-5
<PAGE>
<TABLE>
Exhibit
Number Description
- --------- -----------
<S> <C>
10.1 Employment Agreement between QuikLAB Multimedia Centers, Inc.
and David Bawarsky (incorporated by reference from the Registrant's
Current Report on Form 8-K filed on July 24, 1998).
10.2 Employment Agreement between SmithAgency.com, Inc. (formerly
A.D.S. Advertising Corp.) and Andrew Smith, dated October 30, 1997
(incorporated by reference from the Registrant's Quarterly Report on
Form 10-QSB for the period ended September 30, 1997).
10.3 Retainer Agreement between the Registrant and Kirk J. Girrbach,
dated July 15, 1998 (incorporated by reference from Registrant's
Quarterly Report on Form 10-QSB for the period ended September 30,
1998).
10.4 Investment Banking Agreement between the Registrant and M.H.
Meyerson & Co., Inc. dated as of July 14, 1999 (incorporated by
reference from Registrant's Quarterly Report on Form 10-QSB for the
period ended September 30, 1998).
10.5 Employment Contract for James Lobel, dated August 31, 1999,
between the Registrant and James Lobel.*
10.6 Agreement to Sublease, dated August 31, 1999, by and between James
Lobel, Diane Harvey, Gallaspy & Lobel, Inc., Harvey Studios, Inc.
and the Registrant.*
10.7 Mortgage Deed and Security Agreement, dated August 31, 1999, by
James S. Lobel and Diane C. Harvey to the Registrant.*
10.8 Office Lease, dated as of January 9, 1996, by and between
Massachusetts Mutual Life Insurance Company and A.D.S.
Advertising Corporation.*
10.9 Leasing Agreement, dated as of October 1, 1995, by and between
Palasan Properties, Inc. and Video QuickLAB of South Florida, Inc.*
10.10 Employment Agreement between Capital Network of America, Corp.
and Kirk J. Girrbach, dated April 13, 1998 (incorporated by reference
from the Registrant's Quarterly Report on Form 10-QSB for the
period ended March 31, 1998).
21 Subsidiaries of the Registrant.*
23.1 Consent of Graubard Mollen & Miller (contained in Exhibit 5.1).
23.2 Consent of Gerson, Preston & Company, P.A.**
23.3 Consent of Want & Ender CPA, P.C.**
23.4 Consent of Charles A. Nichols, C.P.A., P.C.**
</TABLE>
II-6
<PAGE>
<TABLE>
Exhibit
Number Description
- --------- -----------
<S> <C>
24.1 Powers of Attorney (included on the signature page to this registration
statement).*
27 Financial Data Schedule.**
</TABLE>
- --------------------------------
* Previously filed.
** Filed herewith.
ITEM 28. Undertakings.
(a) The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) To include any additional or changed material
information on the plan of distribution;
(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
II-7
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497 (h)
under the Securities Act as part of this registration statement as of the time
the Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-8
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of Ft.
Lauderdale, Florida on February 8, 2000.
QUIKBIZ INTERNET GROUP, INC.
By: /s/ David Bawarsky
---------------------------------
David Bawarsky, Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and as of the dates indicated.
<TABLE>
Signature Title Date
- ------------- -------- ----
<S> <S> <S> <C>
/s/ David B. Bawarsky Director, Chief Executive Officer February 8, 2000
- -------------------------------------------
David B. Bawarsky (Principal Executive Officer), Chief
Financial Officer and Treasurer
(Principal Financial Officer)
/s/ David Bawarsky, Director and Treasurer February 8, 2000
by Power of Attorney (Principal Financial and
- -------------------------------------------- Accounting Officer)
Kirk J. Girrbach
/s/ David Bawarsky, Director February 8, 2000
by Power of Attorney
- --------------------------------------------
Dr. Bohdan Moroz
</TABLE>
II-9
<PAGE>
Exhibit Index
<TABLE>
Exhibit
Number Description
- --------- -----------
<S> <C>
2.1 Acquisition Agreement between the Registrant and QuikLAB
Multimedia Centers, Inc. (incorporated by reference from the
Registrant's Current Report on Form 8-K filed on July 24, 1998).
2.2 Asset Purchase Agreement, dated as of August 20, 1999, by and
between Gallaspy & Lobel, Inc., the Registrant, and James Lobel and
Diane C. Harvey.*
3.1 Registrant's Articles of Incorporation, as amended (incorporated by
reference from the Registrant's Quarterly Report on Form 10-QSB for
the period ended March 31, 1998, except for the July 1998
amendment, which is incorporated by reference from the Registrant's
Annual Report on Form 10-KSB for the year ended December 31,
1997).
3.2 Registrant's Bylaws (incorporated by reference from the Registrant's
Quarterly Report on Form 10-QSB for the period ended March 31,
1998).
3.3 Certificate of Correction of Certificate of amendment to the
Registrant's Articles of Incorporation (incorporated by reference from
the Registrant's Form 10-KSB/A for the year ended December 31,
1997, filed on January 27, 2000).
4.1 Specimen common stock certificate.*
4.2 Form of warrant to purchase common stock issued to Swartz
Private Equity, LLC on May 25, 1999, exercisable to purchase
an aggregate of 500,000 shares of common stock at $1.4625
per share until May 24, 2004, granted to Swartz in
connection with the offering of securities described in
Exhibit 4.3.*
4.3 Amended and restated investment agreement, dated as of July
9, 1999, by and between the Registrant and Swartz Private
Equity, LLC.*
4.4 Registration rights agreement, dated as of July 9, 1999, by
and between the Registrant and Swartz Private Equity, LLC,
related to the registration of the common stock to be sold
pursuant to Exhibit 4.3.*
4.5 Form of warrant to purchase common stock to be issued from time to
time in connection with the offering of securities described in Exhibit
4.3.*
4.6 Promissory note, dated June 25, 1998, and warrant, issued
June 26, 1999, issued by the Registrant to Cella Reyes.*
5.1 Legal opinion of Graubard Mollen & Miller.**
</TABLE>
II-10
<PAGE>
<TABLE>
Exhibit
Number Description
- --------- -----------
<S> <C>
10.1 Employment Agreement between QuikLAB Multimedia Centers, Inc.
and David Bawarsky (incorporated by reference from the Registrant's
Current Report on Form 8-K filed on July 24, 1998).
10.2 Employment Agreement between SmithAgency.com, Inc. (formerly
A.D.S. Advertising Corp.) and Andrew Smith, dated October 30, 1997
(incorporated by reference from the Registrant's Quarterly Report on
Form 10-QSB for the period ended September 30, 1997).
10.3 Retainer Agreement between the Registrant and Kirk J. Girrbach,
dated July 15, 1998 (incorporated by reference from Registrant's
Quarterly Report on Form 10-QSB for the period ended September 30,
1998).
10.4 Investment Banking Agreement between the Registrant and M.H.
Meyerson & Co., Inc. dated as of July 14, 1999 (incorporated by
reference from Registrant's Quarterly Report on Form 10-QSB for the
period ended September 30, 1998).
10.5 Employment Contract for James Lobel, dated August 31, 1999,
between the Registrant and James Lobel.*
10.6 Agreement to Sublease, dated August 31, 1999, by and between James
Lobel, Diane Harvey, Gallaspy & Lobel, Inc., Harvey Studios, Inc.
and the Registrant.*
10.7 Mortgage Deed and Security Agreement, dated August 31, 1999, by
James S. Lobel and Diane C. Harvey to the Registrant.*
10.8 Office Lease, dated as of January 9, 1996, by and between
Massachusetts Mutual Life Insurance Company and A.D.S.
Advertising Corporation.*
10.9 Leasing Agreement, dated as of October 1, 1995, by and between
Palasan Properties, Inc. and Video QuickLAB of South Florida, Inc.*
10.10 Employment Agreement between Capital Network of America, Corp.
and Kirk J. Girrbach, dated April 13, 1998 (incorporated by reference
from the Registrant's Quarterly Report on Form 10-QSB for the
period ended March 31, 1998).
21 Subsidiaries of the Registrant.*
23.1 Consent of Graubard Mollen & Miller (contained in Exhibit 5.1).
23.2 Consent of Gerson, Preston & Company, P.A.**
23.3 Consent of Want & Ender CPA, P.C.**
23.4 Consent of Charles A. Nichols, C.P.A., P.C.**
</TABLE>
II-11
<PAGE>
<TABLE>
Exhibit
Number Description
- --------- -----------
<S> <C>
24.1 Powers of Attorney (included on the signature page to this registration
statement).*
27 Financial Data Schedule.**
</TABLE>
- --------------------------------
* Previously filed.
** Filed herewith.
II-12
EXHIBIT 5.1
[Graubard Mollen & Miller Letterhead]
February 8, 2000
QuikBIZ Internet Group, Inc.
6801 Powerline Road
Ft. Lauderdale, Florida 33308
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel for QuikBIZ Internet Group, Inc., a Nevada
corporation ("QuikBIZ"), in connection with the preparation of a Registration
Statement on Form SB-2 filed by QuikBIZ with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as amended
("Act"), relating to the public resale by certain selling shareholders (the
"Selling Shareholders") of (i) 858,053 shares of QuikBIZ's common stock, par
value $.002 per share ("Common Stock"), that are presently outstanding, (ii) up
to 17,000,000 shares of Common Stock ("Swartz Shares") that may be issued to
Swartz Private Equity LLC ("Swartz") pursuant to a certain Investment Agreement
between QuikBIZ and Swartz ("Investment Agreement") and upon exercise of
warrants issued or to be issued to Swartz under the Investment Agreement, and
(ii) up to 600,000 shares of Common Stock ("Meyerson Shares") that may be issued
to M.H. Meyerson & Co., Inc. ("Meyerson") upon exercise of warrants held by
Meyerson. This opinion is being furnished pursuant to Item 601(b)(5) of
Regulation S-B under the Act.
In connection with rendering the opinion as set forth below, we have
reviewed (a) the Registration Statement and the exhibits thereto; (b) QuikBIZ's
Articles of Incorporation, as amended, (c) QuikBIZ's Bylaws; (d) the Investment
Agreement, the warrants issued to Swartz, the form of the warrants to be issued
to Swartz and the warrants issued to Meyerson, (e) certain records of QuikBIZ's
corporate proceedings as reflected in its minute books, and (f) such statutes,
records and other documents as we have deemed relevant.
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and conformity
with the originals of all documents submitted to us as copies thereof. In
addition, we have made such other examinations of law and fact as we have deemed
relevant in order to form a basis for the opinion hereinafter expressed.
Based upon the foregoing, we are of the opinion that (i) the
outstanding shares of Common Stock to be sold by the Selling Shareholders have
been validly issued and are fully paid and non-assessable, and (ii) that the
Swartz Shares and the Meyerson Shares, upon issuance by the Company in the
manner and for the consideration contemplated in the Investment Agreement and,
in the case of the shares of Common Stock underlying the warrants issued and to
be issued to Swartz under the Investment Agreement and the warrants issued to
Meyerson, upon exercise of the warrants and payment of the respective exercise
prices thereof to QuikBIZ in accordance with their terms, will be validly
issued, fully paid and non-assessable. We hereby consent to the use of this
opinion as an exhibit to the Registration Statement and to the references to
this firm under the caption "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we acting within the category
of persons whose consent is required under Section 7 of the Securities Act and
the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GRAUBARD MOLLEN & MILLER
EXHIBIT 23.2
QuikBiz Internet Group, Inc. and Subsidiaries
Ft. Lauderdale, FL
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated September 17, 1999, relating to the
consolidated financial statements of QuikBIZ Internet Group, Inc. and
Subsidiaries which is contained in that Prospectus. Our report contains an
explanatory paragraph regarding the Company's ability to continue as a going
concern.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ Gerson, Preston & Company, P.A.
GERSON, PRESTON & COMPANY, P.A.
Miami Beach, FL
February 4, 2000
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Dear Sirs:
We hereby consent to the use in the Prospectus constituting a part of
this Registration Statement of our report dated September 7, 1999 relating to
the consolidated financial statements of QuikBIZ Internet Group, Inc. and
Subsidiaries which is contained in that Prospectus.
/s/ Martin Ender, C.P.A.
Martin Ender, C.P.A.
Want & Ender C.P.A., P.C.
February 4, 2000
EXHIBIT 23.4
QuikBiz Internet Group, Inc. and Subsidiaries
Ft. Lauderdale, FL
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of my report dated December 22, 1999, relating to the
financial statements of Gallaspy & Lobel, Inc. which is contained in that
Prospectus. My report contains an explanatory paragraph regarding the ability of
Gallaspy & Lobel, Inc. to continue as a going concern.
I also consent to the reference to me under the caption "Experts" in the
Prospectus.
/s/ Charles A. Nichols, C.P.A., P.C.
CHARLES A. NICHOLS, C.P.A., P.C.
Fort Lauderdale, FL
February 4, 2000
