U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: June 20, 1997
DETOUR MAGAZINE, INC.
f/k/a ICHI-BON INVESTMENT CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO
(State or other jurisdiction of incorporation)
0-25388 84-1156459
(Commission File No.) (IRS Employer
Identification No.)
201 N. Service Road
Melville, N.Y. 11747
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (516) 423-9300
<PAGE>
Item 1(a). Change in Control of Registrant.
Effective June 6, 1997, pursuant to a definitive agreement
(attached hereto and incorporated herein as Exhibit 2.0) (the
"Agreement") Ichi-Bon Investment Corporation (the "Company")
acquired all of the issued and outstanding securities of Detour,
Inc. ("Detour"), a California corporation. The terms of the
transaction involved the Company issuing an aggregate of 4,500,000
shares of its "restricted" common stock to the former shareholders
of Detour in exchange for all of the issued and outstanding stock
of the Company. Detour did not survive the transaction. The
Company also changed its name to "Detour Magazine, Inc."
Pursuant to the terms of the Agreement the Company's officers
and directors, Cheryl L. Okizaki, Wallace S. Westwood and Charles
A. Arnold resigned their respective positions in the Company and
the following persons were appointed as new officers and/or
directors of the Company:
NAME OFFICE
----------------- ----------------------------
Edward T. Stein Chairman of Board, Chief
Financial Officer, Director
James Turner President, Director
Luis Barajas Corp. Secretary, Director
Lorraine Rasmussen Director
The percentage of voting securities of the Company now
beneficially owned directly or indirectly by the entity who
acquired control and the identity of the entities who acquired
control are as follows:
<TABLE>
<CAPTION>
Percent
Name of Amount and Nature of of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -------
<S> <C> <C>
Edward T. Stein 3,847,500 77%
201 N. Service Rd.
Suite 100
Melville, N.Y. 11747
James Turner 101,250 2%
2736 Jalmia Drive
Los Angeles, CA 90046
Luis Barajas 101,250 2%
2736 Jalmia Drive
Los Angeles, CA 90046
Lorraine Rasmussen -0- -
1800 Century Park East
Suite 600
Los Angeles, CA 90067
2
<PAGE>
Percent
Name of Amount and Nature of of
Beneficial Owner Beneficial Ownership Class
- ---------------- -------------------- -------
All Directors 4,050,000 81%
and Officers as a
Group (4 persons)
</TABLE>
Item 2. Acquisition or Disposition of Assets.
Effective June 6, 1997, the Company acquired all of the issued
and outstanding securities of Detour, consisting of 9,330,760
shares of common stock, par value $.001 per share. The nature and
amount of consideration given in connection with the agreement was
the issuance of 4,500,000 shares of "restricted" common stock of
the Company to the former Detour shareholders. The consideration
given and received was determined by arms-length negotiations
between the principals of the Company and principals of Detour. No
material relationship existed or presently exists between
management of the companies.
Detour is engaged in publishing and distribution, on an
international basis, of a monthly magazine entitled Detour, which
includes advertisements and articles relating to fashion,
contemporary music and entertainment and social issues. Management
describes the magazine as an "urban, avant-garde" publication. It
derives its revenues primarily from advertising. The Company
maintains offices in both Los Angeles and New York.
Historically, the magazine has been published monthly, with
the exception of the issues for January/February and July/August,
for which one issue was published. However, management intends to
issue 12 magazines on a monthly basis in the future.
The magazine has been, in general, approximately 112 to 120
pages in length, comprised of about 30 to 45 pages of advertising,
with the balance in editorial pages. This reflects the limited,
but growing, advertising base which typifies new publications.
While no assurances can be provided, management anticipates that
the Company will increase the number of advertising pages (as well
as increase the advertising revenue per page) in the near future.
Item 4. Changes in Registrant's Certifying Accountant.
On June 6, 1997, Kish, Leake & Associates, P.C., the
Registrant's independent accountant for the Registrant's two most
recent fiscal years, resigned. The Registrant's financial
statements for the last two years prepared by Kish, Leake &
Associates, P.C., contained no adverse opinion or disclaimer of
opinion, or was qualified as to uncertainty, audit scope, or
accounting principles.
Also on June 6, 1997, the Registrant engaged the accounting
firm of Marcum & Kliegman LLP, independent public accountants, to
audit the Registrant's fiscal year ended October 31, 1997, as well
as future financial statements, to replace the firm of Kish, Leake
3
<PAGE>
& Associates, P.C., which was the principal independent public
accountant as reported in the Registrant's Form 10-KSB for the
fiscal year ended December 31, 1996, as filed with the Securities
& Exchange Commission. This change in independent accountants was
approved by the Board of Directors of the Registrant.
There were no disagreements within the last two fiscal years
and subsequent periods with Kish, Leake & Associates, P.C., on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope of procedure, which disagreement(s),
if not resolved to the satisfaction of Kish, Leake & Associates,
P.C., would have caused that firm to make reference in connection
with its reports to the subject matter of the disagreement(s) or
any reportable events.
The Registrant has requested that Kish, Leake & Associates,
P.C., furnish it with a letter addressed to the Commission stating
whether it agrees with the above statements. A copy of such
letter, dated June 6, 1997, is filed as Exhibit 16 to this Form 8-
K.
Item 5. Other Events
Effective June 6, 1997, the Company issued options to purchase
an aggregate of 2,000,000 shares of its common stock in favor of
Anchor Capital Management, Ltd. ("Anchor"), a corporation organized
under the laws of the Turks & Caicos Islands, with its principal
place of business located at Suite D18, Market Place,
Providenciales, Turks and Caicos Islands, B.W.I. The Company has
relied upon the exemption from registration provided under
Regulation S, as promulgated under the Securities Act of 1933, as
amended, in issuing said options, as well as in expectation of
Anchor exercising all or any portion of its options.
In consideration for the issuance of the stock options
referenced above, the Company received consideration totalling
$20,000 (US). The exercise price of each option was established at
$1.50 per share, pursuant to arms length negotiations between
management of the Company and Anchor.
Item 6. Resignation of Registrant's Directors.
Cheryl L. Okizaki, Wallace S. Westwood and Charles A. Arnold
resigned as officers and directors of the Company, as applicable,
effective June 6, 1997, all of whom constituted the complete Board
of Directors of the Company as of said date.
Item 7(a) and 7(b). Financial Statements and Pro Forma Financial
Statements
The audited financial statements of Detour for the fiscal
years ended December 31, 1996 and 1995 are attached hereto. The
Registrant hereby undertakes to file an amendment to this Form 8-K
within sixty (60) days from the date of this filing, to include the
unaudited financial statements of Detour for the three (3) month
periods ended March 31, 1997 and 1996.
4
<PAGE>
Item 7(c). Exhibits.
Number Exhibit
------ --------------------------------------------
2.0 Agreement and Plan of Reorganization between
the Company and Detour, Inc.
16.0 Letter of Resignation of Registrant's
independent certified accountant, Kish, Leake
& Associates, P.C.
27.0 Financial Data Schedule
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
DETOUR MAGAZINE, INC.
By:/s/ James Turner
---------------------------
James Turner,
President
Dated: June 20, 1997
6
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS
Balance Sheets 2-3
Statements of Operations 4
Statements of Accumulated Deficits 5
Statements of Cash Flows 6-7
NOTES TO FINANCIAL STATEMENTS 8-13
INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY INFORMATION 14
Schedules of Cost of Sales 15
Schedules of Selling, General and Administrative Expenses 16
<PAGE>
Marcum & Kliegman LLP
------------------------------------------
Certified Public Accountants & Consultants
A Limited Liability Partnership Consisting
of Professional Corporations
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Detour, Inc. Detour Magazine
We have audited the accompanying balance sheets of Detour, Inc. Detour
Magazine as of December 31, 1996 and 1995, and the related statements of
operations, accumulated deficit and cash flows for the year ended
December 31, 1996 and the period January 11, 1995 (inception) through
December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Detour,
Inc. Detour Magazine as of December 31, 1996 and 1995 and, the results
of its operations and its cash flows for the year ended December 31,
1996 and for the period January 11, 1995 (inception) through December
31, 1995 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in Note 11 to
the financial statements, the Company incurred a net loss of $825,828
for the year ended December 31, 1996, and, as of that date, had a
working capital deficiency of $1,516,529 and a stockholders' deficiency
of $1,348,124. Those conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
s/Marcum & Kliegman LLP
February 7, 1997
-1-
130 Crossways Park Drive - Woodbury, New York 11797-2027
Tel 516-390-1000 - Fax 516-390-1001
Woodbury New York Greenwich
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
BALANCE SHEETS
December 31, 1996 and 1995
<CAPTION>
ASSETS
1996 1995
-------- --------
<S> <C> <C>
CURRENT ASSETS
Accounts receivable, less allowance
for doubtful accounts of $30,000
and $25,000, respectively $174,079 $267,897
Loan receivable, officer 52,241 -0-
Prepaid expenses and other current assets 36,778 76,972
-------- --------
Total Current Assets 263,098 344,869
PROPERTY AND EQUIPMENT, net 148,885 158,684
OTHER ASSETS
Security deposits 19,520 19,335
-------- --------
TOTAL ASSETS $431,503 $522,888
======== ========
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
-2-
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
BALANCE SHEETS
December 31, 1996 and 1995
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
1996 1995
---------- ----------
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft $ 23,062 $ 22,684
Accounts payable and accrued expenses 500,751 413,995
Unexpired subscriptions 25,664 15,720
Note payable 190,000 300,000
Due to stockholder 28,590 -0-
Note payable stockholder 932,313 932,313
Interest payable stockholder 79,247 60,679
---------- ----------
Total Current Liabilities 1,779,627 1,745,391
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock, $.001 par value,
100,000,000 shares authorized,
9,365,760 and 8,445,000 shares
issued and outstanding in 1996
and 1995, respectively 9,366 8,445
Additional paid-in capital 855,161 155,875
Accumulated deficit (2,212,651) (1,386,823)
---------- ----------
TOTAL STOCKHOLDERS' DEFICIENCY (1,348,124) (1,222,503)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 431,503 $ 522,888
========== ==========
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
-3-
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
SALES $2,736,207 $ 1,852,288
COSTS OF SALES 1,976,067 1,909,468
---------- -----------
GROSS PROFIT (LOSS) 760,140 (57,180)
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 1,465,403 1,261,464
---------- -----------
OPERATING LOSS (705,263) (1,318,644)
OTHER EXPENSE
Interest expense (120,565) (68,179)
---------- -----------
NET LOSS $ (825,828) $(1,386,823)
========== ===========
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
-4-
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
STATEMENTS OF ACCUMULATED DEFICIT
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ACCUMULATED DEFICIT - Beginning $(1,386,823) $ -0-
Net Loss (825,828) (1,386,823)
----------- -------------
ACCUMULATED DEFICIT - Ending $(2,212,651) $(1,386,823)
=========== ===========
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
-5-
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
STATEMENTS OF CASH FLOWS
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<CAPTION>
1996 1995
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(825,828) $(1,386,823)
--------- -----------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 33,093 27,003
Increase in bad debt reserve 5,000 25,000
Decrease (increase) in
accounts receivable 88,818 (175,564)
Decrease (increase) in prepaid expenses
and other assets 40,009 (90,307)
Increase in accounts payable and
accrued expenses 86,756 231,345
Increase in unexpired subscriptions 9,944 15,720
Increase in interest payable,
stockholder 18,568 60,679
--------- -----------
TOTAL ADJUSTMENTS 282,188 93,876
--------- -----------
NET CASH USED IN OPERATING ACTIVITIES (543,640) (1,292,947)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets, net (23,294) (58,130)
Loan to officer (52,241) -0-
--------- -----------
NET CASH USED IN INVESTING ACTIVITIES (75,535) (58,130)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of note payable 190,000 300,000
Principal repayments of note payable (300,000) -0-
Proceeds from stockholder advances
and note payable 28,590 932,313
Capital contributed upon inception -0- 34,080
Proceeds from additional paid-in capital -0- 62,000
Net proceeds from issuance of
common stock 700,207 -0-
--------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES $ 618,797 $ 1,328,393
--------- -----------
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
-6-
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
STATEMENTS OF CASH FLOWS, Continued
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
NET DECREASE IN CASH $ (378) $ (22,684)
CASH (OVERDRAFT) - Beginning (22,684) -0-
---------- -----------
CASH (OVERDRAFT) - Ending $ (23,062) $ (22,684)
========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES
During 1995, the Company received the following noncash
assets as contributed capital to the Company:
Accounts receivable $117,333
Prepaid expenses 3,000
Security deposits 3,000
Property and equipment 127,557
Accounts payable (182,650)
--------
Net Capital Contribution $ 68,240
========
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
-7-
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - Summary of Significant Accounting Policies
Nature of Business
Detour, Inc. Detour Magazine (the "Company") is in the
business of publishing a national fashion and entertainment
magazine. The Company derives its revenue primarily from
advertising. The Company maintains office locations in Los
Angeles and New York City.
Prior to its incorporation on January 11, 1995, the Company
had been operating as a sole proprietorship. Upon
incorporation, assets and liabilities with a net value of
and $102,320 were contributed to the Company.
Property and Equipment
Property and equipment is stated at cost. Maintenance and
repairs are charged to expense as incurred; costs of major
additions and betterments are capitalized. When property
and equipment is sold or otherwise disposed of, the cost and
related accumulated depreciation are eliminated from the
accounts and any resulting gain or loss is reflected in
income.
Depreciation
Depreciation is provided for on the straight-line and
accelerated methods over the estimated useful lives of the
related assets.
Advertising Costs
Advertising costs are expensed as incurred.
Use of Estimates in the Financial Statements
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 disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
Unexpired Subscriptions
Unexpired subscriptions represent unearned subscription
revenue, which is recognized as income on a monthly basis
over the life of the individual subscriptions.
-8-
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - Property and Equipment
Property and equipment at December 31, 1996 and 1995
consists of the following:
Estimated
1996 1995 Useful Lives
-------- -------- ------------
Office equipment $131,229 $111,938 5-7 years
Furniture and fixtures 55,800 53,296 5-7 years
Leasehold improvements 20,453 20,453 39.5 years
-------- --------
207,482 185,687
Less: accumulated
depreciation 58,597 27,003
-------- --------
Property and
Equipment, net $148,885 $158,684
======== ========
Depreciation expense for the year ended December 31, 1996
and the period January 11, 1995 (inception) through December
31, 1995 was $33,093 and $27,003, respectively.
NOTE 3 - Accounts Receivable
On October 17, 1996, the Company entered into a factoring
agreement with a finance company which acts as the factor
for the majority of the Company's accounts receivable. The
receivables are purchased at a discount of 9% on a
preapproved, nonrecourse basis. The Company's obligation to
the factor is secured by substantially all of the Company's
assets. At December 31, 1996 there were no outstanding
receivables from the factor.
NOTE 4 - Loan Receivable, Officer
Loan receivable, officer represents noninterest-bearing
advances to an officer/ stockholder during 1996 and are
expected to be repaid in full in 1997.
NOTE 5 - Note Payable
During 1996 the Company borrowed $190,000 as evidenced by a
note payable which bears interest at 12% payable in
quarterly installments. The note is due on demand and is
personally guaranteed by one of the Company's stockholders.
-9-
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - Note Payable, continued
During 1995 the Company obtained a $300,000 note payable
from JCM Capital Corp. originally due January 15, 1996 and
extended through June 15, 1996. The note bears interest at
12%, payable upon the expiration of the note. The note is
also collateralized by the accounts receivable of the
Company and personally guaranteed by one of its
stockholders. During 1996 the note in the amount of
$300,000 was fully repaid.
NOTE 6 - Due to Stockholder
This balance represents advances from a stockholder of the
Company, which is noninterest-bearing and has no definitive
repayment terms.
NOTE 7 - Note Payable, Stockholder
A stockholder of the Company advanced funds in the amount of
$932,313 to the Company during 1995. This amount was
converted to a demand note (the "note"), bearing interest at
12% per annum calculated on the average monthly outstanding
balance. On August 14, 1996 this note was assigned by the
stockholder to JCM Capital Corp. The note is secured by
substantially all the assets of the Company and is
subordinated to the Company's accounts receivable factor
(see Note 3) in accordance with the Company's factoring
agreement.
At December 31, 1996 and 1995 $932,313 was outstanding under
this note.
NOTE 8 - Income Taxes
The Company recognizes deferred tax assets for the future
tax effect of net operating loss carryforwards. A valuation
allowance is provided if it is unlikely that some portion or
all of the deferred tax assets will not be realized.
Management concluded a valuation allowance was appropriate
at December 31, 1996 and 1995 due to an operating loss
incurred. The need for the valuation allowance is evaluated
periodically by management.
-10-
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - Income Taxes, continued
The components of deferred tax assets at December 31, 1996
and 1995 are as follows:
1996 1995
-------- --------
Federal $435,166 $270,000
State 195,824 121,500
-------- --------
Total Deferred Tax Assets 630,990 391,500
Less: valuation allowances 630,990 391,500
-------- --------
Deferred Tax Asset,
Net of Valuation Allowances $ -0- $ -0-
======== ========
Operating loss carryforward which may provide future tax
benefits approximate $2,175,828 at December 31, 1996. The
operating loss carryforward expires through 2010.
NOTE 9 - Commitments and Contingencies
Leasing Arrangements
The Company conducts its operations from two facilities that
are leased under a five year and a three year noncancelable
operating lease expiring in October 1999 and January 1998,
respectively. The Company's per annum rent on one of its
locations will increase by a percentage of any increase in
real estate taxes and water and sewer charges in excess of
the base year amount on that location. The Company is
leasing two automobiles under three year noncancelable
agreements expiring December 1997 and January 1998.
Certain operating leases provide renewable options at their
fair rental value at the time of renewal. In the normal
course of business, operating leases are generally renewed
or replaced by other leases.
-11-
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - Commitments and Contingencies, continued
Leasing Arrangements, continued
Minimum future rental payments under noncancelable operating
leases as of December 31, 1996 for each of the next three
years and in the aggregate are as follows:
Year Ending
December 31, Amount
------------ --------
1997 $124,560
1998 83,020
1999 67,100
--------
Total $274,680
=========
NOTE 10 - Stock Offering
During 1996, the Company raised $700,207 (net of expenses)
of capital through a securities offering. The Company
issued 5,000 units at $5 per unit, each unit consists f
share common stock, 99 Class A Warrants and 13 Class B
Warrants. Each Class A Warrant entitled the holder to
purchase one additional share at a price of $1.95 per share
and each Class B Warrant entitled the holder to purchase one
share at .15 cents per share. The offering price was determined
arbitrarily by the Company, and bears no relationship to
book value, earning assets or any other criteria of value.
As a result of this offering, 520,760 shares of common stock
were purchased by investors raising $700,207 (net of
expenses). The Company also issued in connection with this
offering 400,000 shares of restricted common stock to the
lead underwriter (the "underwriter") for services rendered
as the lead underwriter. The shares issued to the
underwriter were considered to have no value by the Company
given the restrictions placed on the shares and the
financial condition of the Company.
NOTE 11 - Going Concern Uncertainty
As shown in the accompanying financial statements, the
Company incurred a net loss of $825,828 during the year
ended December 31, 1996 and $1,386,823 during the period
January 11, 1995 (inception) through December 31, 1995. As
of December 31, 1996,
-12-
<PAGE>
DETOUR, INC.
DETOUR MAGAZINE
NOTES TO FINANCIAL STATEMENTS
NOTE 11 - Going Concern Uncertainty, continued
the Company's current liabilities exceeded its current
assets by $1,516,529 and its total liabilities exceeded its
total assets by $1,348,124. These conditions raise
substantial doubt about the Company's ability to continue as
a going concern. These financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
-13-
<PAGE>
Marcum & Kliegman LLP
------------------------------------------
Certified Public Accountants & Consultants
A Limited Liability Partnership Consisting
of Professional Corporations
INDEPENDENT AUDITORS' REPORT ON
SUPPLEMENTARY INFORMATION
To the Board of Directors of
Detour, Inc. Detour Magazine
Our report on our audit of the basic financial statements of
Detour, Inc. Detour Magazine for the year ended December 31, 1996
and for the period January 11, 1995 (inception) through December
31, 1995 appears on page one. The audit was made for the purpose
of forming an opinion on the basic financial statements taken as a
whole. The schedules of cost of sales and selling, general and
administrative expenses are presented for purposes of additional
analysis and are not a required part of the basic financial
statements. Such information has been subjected to the auditing
procedures applied in the audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
s/Marcum & Kleigman LLP
February 7, 1997
-14-
130 Crossways Park Drive - Woodbury, New York 11797-2027
Tel 516-390-1000 - Fax 516-390-1001
Woodbury New York Greenwich
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
SCHEDULES OF COST OF SALES
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Paper, printing and binding $1,467,310 $1,525,258
Production salaries 262,500 200,400
Fashion/photos 166,069 109,575
Editorial 76,589 61,045
Art 1,920 4,428
Miscellaneous 1,679 8,762
---------- ----------
TOTAL COST OF SALES $1,976,067 $1,909,468
========== ==========
<FN>
See independent auditors' report on supplementary information.
</TABLE>
-15-
<PAGE>
<TABLE>
DETOUR, INC.
DETOUR MAGAZINE
SCHEDULES OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
For the Year Ended December 31, 1996 and
For the Period January 11, 1995 (Inception) Through December 31, 1995
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Salaries - officers $ 120,000 $ 108,000
Salaries - other 233,262 117,895
Payroll taxes 57,669 39,841
Travel 101,566 162,832
Entertainment 3,433 35,119
Auto leases and expenses 22,793 37,335
Bank charges 5,828 5,091
Bad debt expense 24,804 30,000
Contributions 465 5,540
Commissions 144,701 87,549
Computer supplies 3,415 14,356
Deliveries 38,833 49,624
Depreciation 33,093 27,003
Dues and subscriptions 9,461 4,877
Equipment rental 5,659 2,971
Insurance 66,614 42,824
Miscellaneous 5,933 6,013
Moving expense -0- 3,220
Office 72,869 72,881
Postage 56,546 40,962
Factoring fee 34,926 -0-
Professional fees 144,514 98,431
Subscription processing 22,838 -0-
Promotion 60,221 127,613
Rent 97,667 76,949
Telephone 85,071 56,650
Utilities 12,222 7,888
---------- ----------
TOTAL SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES $1,464,403 $1,261,464
========== ==========
<FN>
See independent auditors' report on supplementary information.
</TABLE>
-16-
<PAGE>
DETOUR MAGAZINE, INC.
---------------------------
EXHIBIT 2.0 TO FORM 8-K
---------------------------
AGREEMENT AND PLAN OF SHARE EXCHANGE
BETWEEN THE COMPANY AND
DETOUR, INC.
---------------------------
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
by and among
ICHI-BON INVESTMENT CORPORATION
a Colorado corporation
and
DETOUR, INC.
a California corporation
Dated June 6, 1997
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (hereinafter
referred to as the "Agreement"), is entered into as of June 6,
1997, by and among ICHI-BON INVESTMENT CORPORATION, a Colorado
corporation, 3222 S. Vance, Suite 100, Lakewood, Colorado 80227
("IBI"), and DETOUR, INC., 201 N. Service Road, Melville, N.Y.
11747, a privately held California corporation ("Detour").
Premises
A. This Agreement provides for the merger of Detour
with and into IBI as the surviving entity, and in connection
therewith, the conversion of the outstanding common stock of Detour
into shares of common voting stock of IBI, all as set forth in the
plan of merger, which shall be appended to the Articles of Merger
(the "Articles of Merger"), substantially in the form attached
hereto as Exhibit "A," all for the purpose of effecting a tax-free
reorganization pursuant to sections 354 and 368(a) of the Internal
Revenue Code of 1986, as amended.
B. The shareholders and boards of directors of Detour
and IBI have agreed, subject to the terms and conditions set forth
in this Agreement, and by these premises do hereby evidence the
agreement, that it is desirable and in the best interests of all of
said corporations and their stockholders, that Detour be merged
into IBI as the surviving corporation pursuant to the laws of the
state of Colorado and Detour shall cease to exist. This Agreement
is being entered into for the purposes of setting forth the terms
and conditions of the proposed merger.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
DETOUR
As an inducement to and to obtain the reliance of IBI, Detour
represents and warrants as follows:
Section 1.1 Organization. Detour is a corporation duly
organized, validly existing, and in good standing under the laws of
California and has the corporate power and is duly authorized,
qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all
1
<PAGE>
of its properties and assets and to carry on its business in all
material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the
jurisdiction in which the character and location of the assets
owned by it or the nature of the business transacted by it requires
qualification. Included in the Detour Schedules (as hereinafter
defined) are complete and correct copies of the articles of
incorporation, bylaws and amendments thereto of Detour as in effect
on the date hereof. The execution and delivery of this Agreement
does not and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not violate
any provision of Detour's articles of incorporation or bylaws.
Detour has full power, authority and legal right and has taken all
action required by law, its articles of incorporation, its bylaws
or otherwise to authorize the execution and delivery of this
Agreement.
Section 1.2 Capitalization. The authorized capitalization
of Detour consists of 100,000,000 Common Shares, $0.001 par value
per share. As of the Closing Date, there will be no more than
9,400,000 shares of Detour's Common Stock issued and outstanding
(the "Detour Common Shares"). All issued and outstanding shares
are legally issued, fully paid and nonassessable and are not issued
in violation of the preemptive or other rights of any person.
Detour has no other securities, warrants or options authorized or
issued.
Section 1.3 Subsidiaries and Predecessor Corporations.
Except as otherwise set forth in the Detour Schedules, Detour does
not have any other subsidiaries and does not own, beneficially or
of record, any shares of any other corporation.
Section 1.4 Financial Statements. Included in the Detour
Schedules is an audited financial statement, including a balance
sheet, statement of operations, shareholder equity and cash flows
and notes thereto, dated as of December 31, 1996 and unaudited,
interim financial statements dated as of March 31, 1997
(hereinafter jointly referred to as the "Detour Financial
Statements"). Relevant thereto:
(a) the Detour Financial Statements present fairly in
all material respects as of and as at their date the financial
condition of Detour in accordance with generally accepted
accounting principles;
(b) Detour has no material liabilities with respect
to the payment of any federal, state, county, local or other
taxes (including any deficiencies, interest or penalties),
except for taxes accrued but not yet due and payable;
2
<PAGE>
(c) Detour has filed all federal and state income tax
returns in those jurisdictions where the same are required to
be filed by it from inception to the date hereof; and
(d) The books and records, financial and others, of
Detour are in all material respects complete and correct.
Section 1.5 Information. The information concerning
Detour set forth in this Agreement and in the Detour Schedules is
complete and accurate in all material respects and does not contain
any untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 1.6 Options and Warrants. There are no existing
options, warrants, calls or commitments of any character to which
Detour is a party and by which it is bound.
Section 1.7 Absence of Certain Changes or Events. Except
as set forth in this Agreement, the Detour Schedules, or as
otherwise disclosed to IBI, since March 31, 1997:
(a) there has not been: (i) any material adverse
change in the business, operations, properties, assets or
condition of Detour; or (ii) any damage, destruction or loss
to Detour (whether or not covered by insurance) materially and
adversely affecting the business, operations, properties,
assets or condition of Detour;
(b) Detour has not: (i) granted or agreed to grant
any options, warrants or other rights for its stocks, bonds or
other corporate securities calling for the issuance thereof;
(ii) sold or transferred, or agreed to sell or transfer, any
of its assets, properties or rights (except assets, properties
or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); or (iii) issued,
delivered or agreed to issue or deliver any stock, bonds or
other corporate securities, including debentures (whether
authorized and unissued or held as treasury stock); and
(c) to the best knowledge of Detour, it has not become
subject to any law or regulation which materially and
adversely affects the business, operations, properties, assets
or condition of Detour.
Section 1.8 Title and Related Matters. Detour has good
and marketable title to and is the sole and exclusive owner of all
of its properties, inventory, interests in properties and assets,
real and personal, which are reflected in the most recent Detour
unaudited balance sheet and the Detour Schedules or acquired after
that date (except properties, interests in properties and assets
sold or otherwise disposed of since such date in the ordinary
3
<PAGE>
course of business), free and clear of all liens, pledges, charges
or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not
and will not, materially detract from or interfere with the present
or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations
on such properties; and (c) as described in the Detour Schedules or
in the notes to the financial statements.
Section 1.9 Litigation and Proceedings. To the best of
Detour's knowledge and belief, there are no actions, suits,
proceedings or investigations pending or threatened in writing by
or against Detour, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or
before any arbitrator that are likely to have a material adverse
effect on the business, operations, financial condition or income
of Detour, if adversely decided against Detour. Detour does not
have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or
instrumentality.
Section 1.10 Material Contract Defaults. To the best of
Detour's knowledge, Detour is not in default in any material
respect under the terms of any outstanding contract, agreement,
lease or other commitment which default is likely to have a
material adverse effect on the business, operations, properties,
assets or condition of Detour.
Section 1.11 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the
breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which Detour is
a party or to which any of its properties or operations are
subject.
Section 1.12 Governmental Authorizations. To the best of
Detour's knowledge, Detour has all licenses, franchises, permits or
other governmental authorizations legally required to enable Detour
to conduct its business in all material respects as conducted on
the date hereof, except where the failure to have any such license,
franchise, permit or authorization would not have a material
adverse effect on Detour. Except for compliance with U.S. and
state securities laws, as hereinafter provided, no authorization,
approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in
connection with the execution and delivery by Detour of this
Agreement and the consummation by Detour of the transactions
contemplated hereby.
4
<PAGE>
Section 1.13 Compliance With Laws and Regulations. To the
best of Detour's knowledge, except as disclosed in the Detour
Schedules, Detour has complied with all applicable statutes and
regulations of any governmental entity or agency, except where non-
compliance would not have a material adverse effect on Detour.
Section 1.14 Approval of Agreement. The board of
directors of Detour has authorized the execution and delivery of
this Agreement by Detour, has approved the transactions
contemplated hereby and approved the submission of this Agreement
and the transactions contemplated hereby to the stockholders of
Detour for their approval with the recommendation that the
reorganization be accepted.
Section 1.15 Labor Relations. Detour has never had a work
stoppage resulting from labor problems. To the best knowledge of
Detour, no union or other collective bargaining organization is
organizing or attempting to organize any employee of Detour.
Section 1.16 Previous Sales of Securities. Since
inception, Detour has sold Detour Common Shares to investors in
reliance upon applicable exemptions from the registration
requirements under the laws of the United States, the state of
California and such other states in the United States where such
sales have occurred. All such sales were made in accordance with
the laws of the United States and those states where such
securities were sold.
Section 1.17 Detour Schedules. Upon execution hereof,
Detour will deliver to IBI the following schedules if applicable to
the business or organization of Detour (unless previously delivered
to IBI or its counsel), which are collectively referred to as the
"Detour Schedules" and which consist of separate schedules dated as
of the date of this Agreement and instruments and data as of such
date, all certified by the chief executive officer of Detour as
complete, true and correct in all material respects:
(a) copies of the articles of incorporation, bylaws
and all minutes of shareholders' and directors' meetings of
Detour, or such other corporate documentation and records
required to maintain Detour in good standing in California
and/or such other states where Detour is licensed to do
business;
(b) the Detour Financial Statements;
(c) a list indicating the name and address of the
stockholders of Detour, together with the number of shares
owned by them, a copy of which is annexed hereto as Exhibit
"B";
(d) a list of all executive employees of Detour,
including current compensation, with notation as to job
5
<PAGE>
description and whether or not such employee is subject to a
written contract:
(e) a copy of all material documentation relating to
the sale of Detour Common Shares by Detour to its present
stockholders;
(f) a description of any material adverse change in
the business operations, property, inventory, assets or
condition of Detour since the most recent Detour balance sheet
required to be provided pursuant to Section 1.7; and
(g) any other information, together with any required
copies of documents required to be disclosed in the Detour
Schedules by Sections 1.1 through 1.16.
Detour shall cause the Detour Schedules and the instruments
and data delivered to IBI hereunder to be updated after the date
hereof up to and including the Closing Date, as hereinafter
defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF IBI
As an inducement to, and to obtain the reliance of Detour, IBI
represents and warrants as follows:
Section 2.1 Organization. IBI is a corporation duly
organized, validly existing and in good standing under the laws of
the state of Colorado and has the corporate power and is duly
authorized, qualified, franchised and licensed under all applicable
laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business
in all material respects as it are now being conducted, including
qualification to do business as a foreign corporation in the states
in which the character and location of the assets owned by it or
the nature of the business transacted by it requires qualification.
Included in the IBI Schedules (as hereinafter defined) are complete
and correct copies of the articles of incorporation, amended
articles of incorporation (collectively, hereinafter referred to as
the "articles of incorporation") and bylaws of IBI as in effect on
the date hereof. The execution and delivery of this Agreement does
not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any
provision of IBI's articles of incorporation or bylaws. IBI has
taken all action required by law, its articles of
6
<PAGE>
incorporation, its bylaws or otherwise to authorize the execution
and delivery of this Agreement. IBI has full power, authority and
legal right and has taken all action required by law, its articles
of incorporation, bylaws or otherwise to consummate the
transactions herein contemplate.
Section 2.2 Capitalization. The authorized capitalization
of IBI consists of 25,000,000 shares of Common Stock, par value
$0.001 per share and 10,000,000 shares of Preferred Stock, par
value $0.01 per share. As of the date hereof there are 500,000
Common Shares of IBI issued and outstanding. There are no
Preferred Shares issued or outstanding. As of the Closing Date, as
defined herein, there will be no more than 500,000 common shares
issued and outstanding and reserved for issuance (the "IBI Common
Shares") held by the then existing securities holders of IBI. All
issued and outstanding IBI Common Shares have been legally issued,
fully paid and are nonassessable.
Section 2.3 Subsidiaries. IBI has no subsidiary
companies.
Section 2.4 Financial Statements.
(a) Included in the IBI Schedules are the audited
consolidated balance sheet of IBI for the years ended October
31, 1996 and 1995 and the related statements of operations,
stockholders' equity and cash flows for the year then ended,
and unaudited financial statements for the six month period
ended April 30, 1997, which are included in the schedules
identified in Section 2.18(c).
(b) All such financial statements have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The IBI
balance sheets presents fairly as of their respective dates
the financial condition of IBI. IBI did not have as of the
date of any of such IBI balance sheets, any liabilities or
obligations (absolute or contingent) which should be reflected
in a balance sheet or the notes thereto prepared in accordance
with generally accepted accounting principles, and all assets
reflected therein are properly reported and present fairly the
value of the assets of IBI, in accordance with generally
accepted accounting principles. The statements of operations,
stockholders' equity and changes in financial position reflect
fairly the information required to be set forth therein by
generally accepted accounting principles.
(c) The books and records, financial and others, of
IBI are in all material respects complete and correct and have
been maintained in accordance with good business accounting
practices.
(d) IBI has no liabilities with respect to the
payment of any federal, state, county, local or other taxes
(including any deficiencies, interest or penalties).
7
<PAGE>
(e) As of the Closing Date, as defined herein, the
IBI balance sheet and the notes thereto, shall reflect that
IBI has: (i) no receivables; (ii) no accounts payable; and
(iii) no contingent liabilities, direct or indirect, matured
or unmatured.
Section 2.5 Information. The information concerning IBI
as set forth in this Agreement and in the IBI Schedules is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
Section 2.6 Options and Warrants. There are no existing
options, warrants, calls or commitments of any character to which
IBI is a party and by which it is bound.
Section 2.7 Absence of Certain Changes or Events. Except
as described herein or in the IBI Schedules, since April 30, 1997:
(a) IBI has not: (i) amended its articles of
incorporation or bylaws; (ii) waived any rights of value which
in the aggregate are extraordinary or material considering the
business of IBI; (iii) made any material change in its method
of management, operation or accounting; or (iv) made any
accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay
to any present or former officer or employee;
(b) IBI has not: (i) granted or agreed to grant any
options, warrants or other rights for its stocks, bonds or
other corporate securities calling for the issuance thereof,
which option, warrant or other right has not been cancelled as
of the Closing Date; (ii) borrowed or agreed to borrow any
funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business: and
(c) to the best knowledge of IBI, it has not become
subject to any law or regulation which materially and
adversely affects, or in the future may adversely affect, the
business, operations, properties, assets or condition of IBI.
Section 2.8 Title and Related Matters. As of the Closing
Date, IBI will own no real, personal or intangible property.
Section 2.9 Litigation and Proceedings. There are no
actions, suits or proceedings pending or, to the best of IBI's
knowledge and belief, threatened by or against or affecting IBI, at
law or in equity, before any court or other governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of
any kind that would have a material adverse affect on the business,
8
<PAGE>
operations, financial condition, income or business prospects of
IBI. IBI does not have any knowledge of any default on its part
with respect to any judgment, order, writ, injunction, decree,
award, rule or regulation of any court, arbitrator or governmental
agency or instrumentality.
Section 2.10 Contracts. On the Closing Date and except as
previously disclosed to Detour by IBI or as included in the IBI
Schedules herein:
(a) With the exception of its agreement with its
legal counsel, Andrew I. Telsey, P.C., there will be no
contracts, agreements, franchises, license agreements, or
other commitments to which IBI is a party or by which it or
any of its properties are bound;
(b) IBI will not be a party to any contract,
agreement, commitment or instrument or subject to any charter
or other corporate restriction or any judgment, order, writ,
injunction, decree or award; and
(c) IBI will not be a party to any material oral or
written: (i) contract for the employment of any officer or
employee; (ii) profit sharing, bonus, deferred compensation,
stock option, severance pay, pension, benefit or retirement
plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii)
agreement, contract or indenture relating to the borrowing of
money; (iv) guaranty of any obligation for the borrowing of
money or otherwise; (v) consulting or other similar contract;
(vi) collective bargaining agreement; (vii) agreement with any
present or former officer or director of IBI; or (viii) any
other contract, agreement, or other commitment.
Section 2.11 No Conflict With Other Instruments. The
execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the
breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust or
other material contract, agreement or instrument to which IBI is a
party or to which any of its properties or operations are subject.
Section 2.12 Material Contract Defaults. IBI is not in
default in any material respect under the terms of any outstanding
contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of IBI,
and there is no event of default in any material respect under any
such contract, agreement, lease or other commitment in respect of
which IBI has not taken adequate steps to prevent such a default
from occurring.
9
<PAGE>
Section 2.13 Governmental Authorizations. IBI has all
licenses, franchises, permits and other governmental authorizations
that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date
hereof. Except for compliance with federal and state securities or
corporation laws, no authorization, approval, consent or order of,
or registration, declaration or filing with, any court or other
governmental body is required in connection with the execution and
delivery by IBI of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. IBI
has complied with all applicable statutes and regulations of any
federal, state or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and
adversely effect the business, operations, properties, assets or
condition of IBI or would not result in IBI's incurring any
material liability.
Section 2.15 Insurance. IBI has no insurable properties
and no insurance policies will be in effect at the Closing Date, as
hereinafter defined.
Section 2.16 Approval of Agreement. The shareholders and
board of directors of IBI have authorized the execution and
delivery of this Agreement by IBI and have approved the
transactions contemplated hereby.
Section 2.17 Material Transactions or Affiliations.
Except for the retainer agreement between IBI and Andrew I. Telsey,
P.C. for the providing of legal services, as of the Closing Date
there will exist no material contract, agreement or arrangement
between IBI and any person who was at the time of such contract,
agreement or arrangement an officer, director or person owning of
record, or known by IBI to own beneficially, ten percent (10%) or
more of the issued and outstanding common stock of IBI and which is
to be performed in whole or in part after the date hereof. IBI has
no commitment, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions
with, any such affiliated person.
Section 2.18 Labor Relations. IBI has never had a work
stoppage resulting from labor problems. IBI has no employees other
than its officers and directors.
Section 2.19 Public Reports. All of IBI's reports filed
under the 1934 Securities Exchange Act, as amended, and its
registration statements filed under the 1934 Securities Exchange
Act, as amended, (i) comply as to form and in all material respects
with the requirements of such Act, and (ii) as of the date they
were filed, and as of the date hereof, did not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
10
<PAGE>
therein, in light of the circumstances under which they were made,
not misleading.
Section 2.20 IBI Schedules. Upon execution hereof, IBI
shall deliver to Detour the following schedules, which are
collectively referred to as the "IBI Schedules" which are dated the
date of this Agreement, all certified by an officer of IBI to be
complete, true and accurate.
(a) complete and correct copies of the articles of
incorporation and bylaws of IBI as in effect as of the date of
this Agreement;
(b) copies of all financial statements of IBI
identified in Section 2.4(a);
(c) the description of any material adverse change in
the business, operations, property, assets, or condition of
IBI since April 30, 1997 required to be provided pursuant to
Section 2.6; and
(d) any other information, together with any required
copies of documents, required to be disclosed in the IBI
Schedules by Sections 2.1 through 2.17.
IBI shall cause the IBI Schedules and the instruments to be
delivered to Detour hereunder to be updated after the date hereof
up to and including the Closing Date.
ARTICLE III
EXCHANGE PROCEDURE
Section 3.1 Delivery of Detour Securities. On the Closing
Date, the holders of the Detour Common Shares shall deliver to
Liberty Transfer Company, (the "Exchange Agent") their respective
Detour certificates or other documents evidencing all of the issued
and outstanding Detour Common Shares, duly endorsed in blank or
with executed stock power attached thereto in transferrable form.
Section 3.2 Issuance of IBI Common Shares.
(a) In exchange for all of the Detour Common Shares
tendered pursuant to Section 3.1, IBI shall issue an aggregate
of 4,500,000 IBI Common Shares to the Detour shareholders on
a pro rata basis.
(b) No fractional IBI Common Shares shall be issued
pursuant to this Section 3.2. In lieu of such fractional
shares, all shares to be issued shall be rounded up or down to
the nearest whole share. However, in no event shall IBI be
11
<PAGE>
obligated to issue more than 4,500,000 common shares to the
shareholders of Detour.
Section 3.3 Events Prior to Closing. Upon execution
hereof or as soon thereafter as practical, management of IBI and
Detour shall execute, acknowledge and deliver (or shall cause to be
executed, acknowledged and delivered) any and all certificates,
opinions, financial statements, schedules, agreements, resolutions,
rulings or other instruments required by this Agreement to be so
delivered, together with such other items as may be reasonably
requested by the parties hereto and their respective legal counsel
in order to effectuate or evidence the transactions contemplated
hereby, subject only to the conditions to Closing referenced
hereinbelow.
Section 3.4 Closing. The closing ("Closing") of the
transactions contemplated by this Agreement shall be as of the date
in which all of the conditions to Closing referenced in Articles V
and VI below have been satisfied or waived by Detour or IBI, as
applicable, and all documentation referenced herein is delivered to
the respective party herein, unless a different date is mutually
agreed to in writing by the parties hereto (the "Closing Date").
Section 3.5 Termination.
(a) This Agreement may be terminated by the board of
directors of either IBI or Detour at any time prior to May 31,
1997 if:
(i) there shall be any action or proceeding
before any court or any governmental body which shall
seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement and which, in
the judgment of such board of directors, made in good
faith and based on the advice of its legal counsel, makes
it inadvisable to proceed with the exchange contemplated
by this Agreement; or
(ii) any of the transactions contemplated hereby
are disapproved by any regulatory authority whose
approval is required to consummate such transactions: or
(iii) the conditions described in Article V (in
the case of IBI) and Article VI (in the case of Detour)
have not been satisfied in full.
In the event of termination pursuant to this paragraph
(a) of this Section 3.5, no obligation, right, or liability
shall arise hereunder and each party shall bear all of the
expenses incurred by it in connection with the negotiation,
drafting and execution of this Agreement and the transactions
herein contemplated, unless otherwise provided herein.
12
<PAGE>
(b) This Agreement may be terminated at any time
prior to the Closing Date by action of the board of directors
of IBI if Detour shall fail to comply in any material respect
with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of
Detour contained herein shall be inaccurate in any material
respect, which noncompliance or inaccuracy is not cured after
20 days' written notice thereof is given to Detour. If this
Agreement is terminated pursuant to this paragraph (b) of this
Section 3.5, this Agreement shall be of no further force or
effect and Detour shall be responsible for all costs and
expenses incurred by IBI herein in the amount of $12,500,
including but not limited to all IBI attorneys' fees.
(c) This Agreement may be terminated at any time
prior to the Closing Date by action of the board of directors
of Detour if IBI shall fail to comply in any material respect
with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of
IBI contained herein shall be inaccurate in any material
respect, which noncompliance or inaccuracy is not cured after
20 days' written notice thereof is given to IBI. If this
Agreement is terminated pursuant to this Paragraph (c) of
Section 3.5, this Agreement shall be of no further force or
effect and no obligation, right or liability shall arise
hereunder.
Section 3.6 Directors of IBI. Upon the Closing, the
present members of IBI's Board of Directors shall tender their
resignations seriatim and the following persons will be appointed
directors of IBI in accordance with procedures set forth in the IBI
bylaws: Edward T. Stein, James Turner, Luis Barajas and Lorraine
Rasmussen. Each director shall hold office until his or her
successor shall have been duly elected and shall have qualified or
until his or her earlier death, resignation or removal.
Section 3.7 Officers of IBI. Upon the Closing, the
present officers of IBI shall tender their resignations and
simultaneous therewith, the following persons shall be appointed as
officers of IBI in accordance with procedures set forth in the IBI
bylaws:
NAME OFFICE
---- ------
James Turner President
Edward T. Stein Chief Financial Officer
Luis Barajas Secretary
Section 3.8 Effective Date. As soon as practicable
following consummation of the transactions contemplated hereby on
the Closing Date, Articles of Merger setting forth the plan of
merger and other matters required by the corporate statutes of the
states of Colorado and California to complete the transaction
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contemplated herein, shall be filed with the Secretary of State of
Colorado and California.
ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Access to Properties and Records. IBI and Detour
will each afford to the officers and authorized representatives of
the other full access to the properties, books and records of IBI
and Detour, as the case may be, in order that each may have full
opportunity to make such reasonable investigation as it shall
desire to make of the affairs of the other and each will furnish
the other with such additional financial and operating data and
other information as to the business and properties of IBI and
Detour, as the case may be, as the other shall from time to time
reasonably request.
Section 4.2 Information for IBI Public Reports. Detour
will furnish IBI with all information concerning Detour and the
Detour Stockholders, including all financial statements, required
for inclusion in any registration statement or public report
intended to be filed by IBI pursuant to the Securities Act, the
Exchange Act, or any other applicable federal or state law. Detour
covenants that all information so furnished for either such
registration statement or other public release by IBI, including
the financial statements described in Section 1.4, shall be true
and correct in all material respects without omission of any
material fact required to make the information stated not
misleading.
Section 4.3 Special Covenants and Representations
Regarding the IBI Common Shares to be Issued in the Exchange. The
consummation of this Agreement, including the issuance of the IBI
Common Shares to the stockholders of Detour as contemplated hereby,
constitutes the offer and sale of securities under the Securities
Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and
prospectus delivery requirements of such statutes which depend,
inter alia, upon the circumstances under which the Detour
stockholders acquire such securities. In connection with reliance
upon exemptions from the registration and prospectus delivery
requirements for such transactions, at the Closing, Detour shall
cause to be delivered, and the Detour stockholders shall deliver to
IBI, the investment letter referenced in Section 3.1.
Section 4.4 Third Party Consents. IBI and Detour agree to
cooperate with each other in order to obtain any required third
party consents to this Agreement and the transactions herein
contemplated.
Section 4.5 Actions Prior to Closing.
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(a) From and after the date of this Agreement until
the Closing Date and except as set forth in the IBI or Detour
Schedules or as permitted or contemplated by this Agreement,
Detour will each use its best efforts to:
(i) carry on its business in substantially the
same manner as it has heretofore;
(ii) maintain and keep its properties in states
of good repair and condition as at present, except for
depreciation due to ordinary wear and tear and damage due
to casualty;
(iii) maintain in full force and effect
insurance comparable in amount and in scope of coverage
to that now maintained by it;
(iv) perform in all material respects all of its
obligations under material contracts, leases and
instruments relating to or affecting its assets,
properties and business;
(v) maintain and preserve its business
organization intact, to retain its key employees and to
maintain its relationship with its material suppliers and
customers; and
(vi) fully comply with and perform in all
material respects all obligations and duties imposed on
it by all federal and state laws and all rules,
regulations and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until
the Closing Date, neither IBI nor Detour will, without the
prior consent of the other party:
(i) except as otherwise specifically set forth
herein, make any change in their respective certificates
or articles of incorporation or bylaws;
(ii) declare or pay any dividend on its
outstanding shares of capital stock, except as may
otherwise be required by law, or effect any stock split
or otherwise change its capitalization, except as
provided herein;
(iii) enter into or amend any employment,
severance or similar agreements or arrangements with any
directors or officers;
(iv) issue any shares of its capital stock;
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<PAGE>
(v) grant, confer or award any options,
warrants, conversion rights or other rights not existing
on the date hereof to acquire any shares of its capital
stock: or
(vi) purchase or redeem any shares of its
capital stock.
Section 4.8 Indemnification.
(a) Detour hereby agrees to indemnify IBI and each of
the officers, agents and directors of IBI as of the date of
execution of this Agreement against any loss, liability,
claim, damage or expense (including, but not limited to, any
and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation,
commenced or threatened or any claim whatsoever), to which it
or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made in this
Agreement. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for a
period of 13 months.
(b) IBI and its officers and directors hereby agree
to indemnify Detour and each of the officers, agents,
directors and current shareholders of Detour as of the Closing
Date against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened or any claim
whatsoever), to which it or they may become subject arising
out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement and particularly the
representation regarding no liabilities referred to in Section
2.4(b). The indemnification provided for in this Section
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for a
period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF IBI
The obligations of IBI under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following
conditions:
Section 5.1 Accuracy of Representations. The
representations and warranties made in all material respects by
Detour in this Agreement were true when made and shall be true at
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the Closing Date with the same force and effect as if such
representations and warranties were made at the Closing Date
(except for changes therein permitted by this Agreement) and Detour
shall have performed or complied with all covenants and conditions
required by this Agreement to be performed or complied with by
Detour prior to or at the Closing. IBI shall be furnished with a
certificate, signed by a duly authorized officer of Detour and
dated the Closing Date, to the foregoing effect.
Section 5.2 Stockholder Approval. The stockholders of
Detour shall have approved this Agreement and the transactions
contemplated thereby.
Section 5.3 Officer's Certificate. On the Closing Date
IBI shall be furnished with a certificate dated the Closing Date
and signed by a duly authorized officer of Detour to the effect
that (i) no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of Detour, threatened, which
might result in an action to enjoin or prevent the consummation of
the transactions contemplated by this Agreement; (ii) Detour's
shareholders include no more than 35 "non-accredited" investors (as
that term is defined under the Securities Act of 1933, as amended);
and (iii) including the disclosure described in Section 5.1, above
herein.
Section 5.4 No Material Adverse Change. Prior to the
Closing Date, there shall not have occurred any material adverse
change in the financial condition, business or operations of
Detour.
Section 5.5 Opinion of Counsel to Detour. IBI shall
receive a opinion dated the Closing Date of Schifino & Lindon,
counsel to Detour, in substantially the following form:
(a) Detour is a corporation duly organized, validly
existing and in good standing under the laws of California and
has the corporate power to own all of its properties and
assets and to conduct its business as now conducted.
(b) To the best knowledge of such legal counsel, the
execution and delivery by Detour of this Agreement and the
consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not
conflict with or result in the breach of any term or provision
of Detour's articles of incorporation or bylaws or violate any
court order, writ, injunction or decree applicable to Detour
and which is identified to such counsel by Detour.
(c) The authorized capitalization of Detour consists of
100,000,000 Common Shares, par value $0.001 per share. As of
the Closing Date, there will be no more than 9,400,000 common
shares issued and outstanding. Except as set forth in the
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<PAGE>
Detour Schedules, to the best knowledge of such legal counsel,
there are no outstanding subscriptions, options, rights,
warrants, convertible securities obligating Detour to issue
any additional shares of any class of its capital stock which
have been approved by Detour's Board of Directors.
(d) This Agreement has been duly and validly
authorized, executed and delivered by Detour.
Section 5.6 Other Items. IBI shall have received such
further documents, certificates or instruments relating to the
transactions contemplated hereby as IBI may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF DETOUR
The obligations of Detour under this Agreement are subject to
the satisfaction, at or before the Closing Date (unless otherwise
indicated herein), of the following conditions:
Section 6.1 Accuracy of Representations. The
representations and warranties made by IBI in this Agreement were
true when made and shall be true as of the Closing Date (except for
changes therein permitted by this Agreement) with the same force
and effect as if such representations and warranties were made at
and as of the Closing Date, and IBI shall have performed and
complied with all covenants and conditions required by this
Agreement to be performed or complied with by IBI prior to or at
the Closing. Detour shall have been furnished with a certificate,
signed by a duly authorized executive officer of IBI and dated the
Closing Date, to the foregoing effect.
Section 6.2 Officer's Certificate. Detour shall be
furnished with a certificate dated the Closing Date and signed by
a duly authorized officer of IBI to the effect that (i) no
litigation, proceeding, investigation or inquiry is pending or, to
the best knowledge of IBI, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions
contemplated by this Agreement or, to the extent not disclosed in
the IBI Schedules, by or against IBI which might result in any
material adverse change in any of the assets, properties, business
or operations of IBI; and (ii) including the disclosure described
in Section 6.1, above herein.
Section 6.3 No Material Adverse Change. Prior to the
Closing Date, there shall not have occurred any material adverse
change in the financial condition, business or operations of nor
shall any event have occurred which, with the lapse of time or the
giving of notice, may cause or create any material adverse change
in the financial condition, business or operations of IBI.
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Section 6.5 Opinion of Counsel to IBI. Detour shall
receive an opinion dated the Closing Date of Andrew I. Telsey,
P.C., counsel to IBI, in substantially the following form:
(a) IBI is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Colorado and has the corporate power and is duly authorized,
qualified, franchised, and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its
business in all material respects as it is now being
conducted, including qualification to do business as a foreign
corporation in the states in which the character and location
of the assets owned by it or the nature of the business
transacted by it requires qualification.
(b) To the best knowledge of such legal counsel, the
execution and delivery by IBI of this Agreement and the
consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not
conflict with or result in the breach of any term or provision
of IBI's articles of incorporation or bylaws or constitute a
default or give rise to a right of termination, cancellation
or acceleration under any material mortgage, indenture, deed
of trust, license agreement or other obligation or violate any
court order, writ, injunction or decree applicable to IBI or
its properties or assets.
(c) The authorized capitalization of IBI consists of
25,000,000 shares of Common Stock, par value $0.001 per share
and 10,000,000 shares of Preferred Stock, par value $0.01 per
share. As of the Closing Date, there will be no more than
500,000 common shares issued and outstanding and reserved for
issuance, held by the then existing securities holders of IBI.
All issued and outstanding shares are legally issued, fully
paid and nonassessable and not issued in violation of the
preemptive rights of any person.
(d) The IBI Common Shares to be issued to the Detour
stockholders pursuant to the terms of this Agreement will be,
when issued in accordance with the terms hereof, legally
issued, fully paid and non-assessable.
(e) This Agreement has been duly and validly authorized,
executed, and delivered and constitutes the legal and binding
obligation of IBI, except as limited by bankruptcy and
insolvency laws and by other laws affecting the rights of
creditors generally.
(f) To the best knowledge of such counsel, except as set
forth in the IBI Schedules, there are no actions, suits or
proceedings pending or threatened by or against IBI or
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affecting IBI's properties, at law or in equity, before any
court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind.
(g) IBI has taken all actions required by the applicable
laws of the State of Colorado to permit the issuance of the
IBI Common Shares to the Detour stockholders.
(h) Such other matters reasonably requested by Detour.
Section 6.6 Compliance with Reporting Requirements. As of
the Closing Date, IBI shall be current in, and in compliance with
all requirements of, all filings required to be tendered to the
Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended.
Section 6.7 Other Items. Detour shall have received such
further documents, certificates, or instruments relating to the
transactions contemplated hereby as Detour may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Brokers and Finders. Except as set forth in
Schedule 7.1, each party hereto hereby represents and warrants that
it is under no obligation, express or implied, to pay any finders
in connection with the bringing of the parties together in the
negotiation, execution, or consummation of this Agreement. The
parties each agree to indemnify the other against any claim by any
third person regarding any claim for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or
understanding between the indemnifying party and such third person,
whether express or implied from the actions of the indemnifying
party.
Section 7.2 Law, Forum and Jurisdiction. This Agreement
shall be construed and interpreted in accordance with the laws of
the State of Colorado, except as the corporate law of California
applies to Detour and as US federal law may be applicable.
Section 7.3 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or certified
mail, postage prepaid, or by prepaid telegram addressed as follows:
If to IBI: Cheryl Okizaki, President
Ichi-Bon Investment Corp.
3222 S. Vance, Suite 100
Lakewood, Colorado 80227
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With a copy to: Andrew I. Telsey, Esq.
2851 S. Parker Rd.
Suite 720
Aurora, CO 80014
If to Detour: Mr. Edward T. Stein
Detour, Inc.
201 N. Service Road
Melville, N.Y. 11747
With a copy to: Mark Lindon, Esq.
Schifino & Lindon
1901 Ave. of the Stars, Suite 251
Los Angeles, CA 90067
or such other addresses as shall be furnished in writing by any
party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered, mailed, or telegraphed.
Section 7.4 Attorneys' Fees. In the event that any party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
breaching party or parties shall reimburse the non-breaching party
or parties for all costs, including reasonable attorneys'
fees,incurred in connection therewith and in enforcing or
collecting any judgment rendered therein.
Section 7.5 Confidentiality. Each party hereto agrees
with the other parties that, unless and until the reorganization
contemplated by this Agreement has been consummated, they and their
representatives will hold in strict confidence all data and
information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director or
employee, or from any books or records or from personal inspection,
of such other party, and shall not use such data or information or
disclose the same to others, except: (i) to the extent such data is
a matter of public knowledge or is required by law to be published;
and (ii) to the extent that such data or information must be used
or disclosed in order to consummate the transactions contemplated
by this Agreement.
Section 7.6 Schedules; Knowledge. Each party is presumed
to have full knowledge of all information set forth in the other
party's schedules delivered pursuant to this Agreement.
Section 7.7 Third Party Beneficiaries. This contract is
solely among IBI and Detour and, except as specifically provided,
no director, officer, stockholder, employee, agent, independent
contractor or any other person or entity shall be deemed to be a
third party beneficiary of this Agreement.
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Section 7.8 Entire Agreement. This Agreement represents
the entire agreement between the parties relating to the subject
matter hereof. This Agreement alone fully and completely expresses
the agreement of the parties relating to the subject matter hereof.
There are no other courses of dealing, understandings, agreements,
representations or warranties, written or oral, except as set forth
herein. This Agreement may not be amended or modified, except by
a written agreement signed by all parties hereto.
Section 7.9 Survival; Termination. The representations,
warranties and covenants of the respective parties shall survive
the Closing Date and the consummation of the transactions herein
contemplated for 18 months.
Section 7.10 Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an original
and all of which taken together shall be but a single instrument.
Section 7.11 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may be
enforced concurrently herewith, and no waiver by any party of the
performance of any obligation by the other shall be construed as a
waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing
Date, this Agreement may be amended by a writing signed by all
parties hereto, with respect to any of the terms contained herein,
and any term or condition of this Agreement may be waived or the
time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.
Section 7.12 Incorporation of Recitals. All of the
recitals hereof are incorporated by this reference and are made a
part hereof as though set forth at length herein.
Section 7.13 Expenses. Each party herein shall bear all
of their respective costs and expenses incurred in connection with
the negotiation of this Agreement and in the consummation of the
transactions provided for herein and the preparation therefor.
Section 7.14 Headings; Context. The headings of the
sections and paragraphs contained in this Agreement are for
convenience of reference only and do not form a part hereof and in
no way modify, interpret or construe the meaning of this Agreement.
Section 7.15 Benefit. This Agreement shall be binding
upon and shall insure only to the benefit of the parties hereto,
and their permitted assigns hereunder. This Agreement shall not be
assigned by any party without the prior written consent of the
other party.
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Section 7.16 Public Announcements. Except as may be
required by law, neither party shall make any public announcement
or filing with respect to the transactions provided for herein
without the prior consent of the other party hereto.
Section 7.17 Severability. In the event that any
particular provision or provisions of this Agreement or the other
agreements contained herein shall for any reason hereafter be
determined to be unenforceable, or in violation f any law,
governmental order or regulation, such unenforceability or
violation shall not affect the remaining provisions of such
agreements, which shall continue in full force and effect and be
binding upon the respective parties hereto.
Section 7.18 Failure of Conditions; Termination. In the
event any of the conditions specified in this Agreement shall not
be fulfilled on or before May 31, 1997, either of the parties have
the right either to proceed or, upon prompt written notice to the
other, to terminate and rescind this Agreement without liability to
any other party. The election to proceed shall not affect the
right of such electing party reasonably to require the other party
to continue to use its best efforts to fulfill the unmet
conditions.
Section 7.19 No Strict Construction. The language of this
Agreement shall be construed as a whole, according to its fair
meaning and intendment, and not strictly for or against either
party hereto, regardless of who drafted or as principally
responsible for drafting the Agreement or terms or conditions
hereof.
Section 7.20 Execution Knowing and Voluntary. In
executing this Agreement, the parties severally acknowledge and
represent that each: (a) has fully and carefully read and
considered this Agreement; (b) has been or has had the opportunity
to be fully apprised by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and
(c) is executing this Agreement voluntarily, free from any
influence, coercion or duress of any kind.
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IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective officers,
hereunto duly authorized, and entered into as of the date first
above written.
ICHI-BON INVESTMENT CORPORATION
ATTEST:
/s/ Wallace S. Westwood By:/s/ Cheryl Okizaki
- ------------------------------ ---------------------------
Secretary or Cheryl Okizaki, President
Assistant Secretary
DETOUR, INC.
ATTEST:
/s/ Luis Barajas By:/s/ James Turner
- ------------------------------ ---------------------------
Secretary or Its: President
Assistant Secretary
24
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EXHIBIT "A"
---------------------------
ARTICLES OF MERGER
---------------------------
25
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ARTICLES OF MERGER
THIS IS TO CERTIFY:
1. Parties. Pursuant to the terms of that certain
definitive Agreement and Plan of Merger dated June 6, 1997 (the
"Agreement"), Ichi-Bon Investment Corporation ("IBI"), a
corporation formed pursuant to the laws of the State of Colorado,
has merged with Detour, Inc. ("Detour"), a corporation formed
pursuant to the laws of the State of California, effective June 6,
1997 (the "Effective Date").
2. Approval. The terms of the Agreement were approved by
the affirmative vote of the Boards of Directors and Shareholders of
both IBI and Detour, respectively, on June 6, 1997, pursuant to
unanimous consents or meetings of the same held pursuant to proper
notice (or waiver thereof).
3. Share Exchange. The Agreement provides that all of the
shareholders of Detour, representing 9,400,000 issued and
outstanding common shares, shall exchange their respective shares
for an aggregate of 4,500,000 shares of IBI common stock, to be
distributed to each Detour shareholder pro rata to their respective
ownership in Detour at the Effective Date. Immediately prior to
the Effective Date, there were 500,000 common shares of IBI issued
and outstanding.
4. Service. For purposes herein, all notices and service
of process may be effectuated by tendering the same to Andrew I.
Telsey, Esq., Andrew I. Telsey, P.C., 2851 South Parker Road, Suite
720, Aurora, Colorado 80014, legal counsel to IBI.
5. Surviving Entity. Pursuant to the terms of the
Agreement, IBI shall be the surviving entity and, upon the
Effective Date and upon filing of these Articles of Merger with the
Colorado Secretary of State and issuance of an applicable
Certificate of Merger by the Secretary of State for the State of
Colorado, Detour shall cease to exist as a bona fide California
corporation.
6. Name Change. Pursuant to the affirmative vote of the
shareholders of IBI, the IBI Articles of Incorporation shall be
amended to reflect a change in IBI's name to "Detour Magazine,
Inc."
7. Counterparts. This Articles of Merger may be executed
in counterparts, each of which shall be deemed to be an original
document, but together shall be deemed to constitute only one
agreement.
Executed this 6th day of June, 1997.
ICHI-BON INVESTMENT CORPORATION DETOUR, INC.
By:/s/ Cheryl Okizaki By:/s/ James Turner
--------------------------- ---------------------------
Cheryl Okizaki, President James Turner, President
26
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PLAN OF MERGER
OF
DETOUR, INC.
(a California corporation)
INTO
ICHI-BON INVESTMENT CORPORATION
(a Colorado corporation)
This Plan of Merger made and entered into by and between
DETOUR, INC., a California corporation ("Detour") and ICHI-BON
INVESTMENT CORPORATION, a Colorado corporation ("IBI"), hereinafter
referred to collectively as the "Constituent Corporations," parties
hereto,
WITNESSETH:
WHEREAS, the respective Boards of Directors of said
corporations deem it advisable that the corporations merge into one
corporation as the surviving corporation, as hereinafter agreed and
specified; and
WHEREAS, prior to said merger, IBI has an authorized
capitalization of 25,000,000 common shares, par value $0.001 per
share, of which 500,000 shares are issued and outstanding, and
10,000,000 preferred shares, $.01 par value per share, of which no
shares are issued and outstanding; and
WHEREAS, prior to said merger, Detour has an authorized
capitalization of 100,000,000 common shares, par value $.001 per
share, of which 9,400,000 shares are issued and outstanding;
NOW, THEREFORE, in consideration of the premises, and the
mutual covenants, agreements, provisions and grants herein
contained, the Constituent Corporations hereby agree and prescribe
the terms and conditions of this Plan of Merger, and the mode of
carrying the same into effect, as follows:
1. Merger and Surviving Corporation. Detour, the
nonsurviving corporation (hereinafter referred to as the
"Nonsurviving Corporation"), is hereby merged into IBI as the
surviving corporation (hereinafter referred to as the "Surviving
Corporation").
2. Conversion of Shares. The manner and basis of
converting the shares of the Nonsurviving Corporation into shares
of the Surviving Corporation are:
(a) None of the shares of any class of the capital stock
of the Surviving Corporation issued and outstanding as of the
effective date of this merger shall be converted as a result
of the merger, and all such shares shall remain unchanged.
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(b) 9,400,000 shares of the common stock of the
Nonsurviving Corporation shall be and become 4,500,000 shares
of the common stock of the Surviving Corporation upon
surrender for conversion and exchange, and shall represent
only shares in the Surviving Corporation for all corporate and
legal purposes, subject, however, to the rights of dissenting
shareholders; and, such shares shall be called in for
cancellation and exchange for shares in the Surviving
Corporation upon this merger taking effect upon the foregoing
basis.
(c) No fractional shares shall be issued by reason of
the conversion and exchange of shares.
3. Approval of Shareholders and Directors. This Plan of
Merger has been submitted for approval to the Board of Directors
and Shareholders of each of the Constituent Corporations, in
accordance with the provisions of the Colorado Business Corporation
Act and the Sec. 607.1102 and Sec. 1103 of the General Corporation Law of
California and their respective Articles of Incorporation and
Bylaws as appropriate. Should such approvals of the Directors and
Shareholders of each Constituent Corporation not be secured or
effected, and this Plan not approved and adopted as contemplated,
then it shall, without any further action by the parties, other
than certification to the other party of the results of the vote by
the secretary of the corporation the shareholders of which shall
not have approved or adopted the Plan of Merger, be cancelled and
annulled, and the Constituent Corporations each discharged without
liability to the other.
4. Effect of Merger on Nonsurviving Corporation. Upon
this merger taking effect, the Constituent Corporations shall be
and become a single corporation and be the Surviving Corporation
herein designated, the separate existence of the Nonsurviving
Corporation herein shall cease, and the Surviving Corporation shall
have the rights, privileges, immunities, and powers, and be subject
to all the duties and liabilities of a corporation organized under
the laws of the State of Colorado.
5. Effect of Merger on Surviving Corporation. Upon this
merger taking effect, the Surviving Corporation shall thereupon and
thereafter possess all the rights, privileges, immunities, and
franchises, of a public as well as a private nature, of each of the
merging corporations, and all property, real, personal, and mixed,
and all debts due on whatever account, and all other choses in
action, and every other interest of or belonging to or due to each
of the corporations so merged shall be deemed to be transferred to
and vested in such single corporation without further act or deed;
and the title to any real estate, or any interest therein vested in
any of such corporations shall not revert or be in any way impaired
by reason of the merger. Such transfer to and vesting in the
Surviving Corporation shall be deemed to occur by operation of law,
and no consent or approval of any other person shall be required in
connection with any such transfer or vesting unless such consent or
approval is specifically required in the event of merger by law or
by express provision of any contract, agreement, decree, order, or
other instrument to which either corporation is a party or by which
it is bound.
6. Liabilities and Obligations. Upon this merger taking
effect, the Surviving Corporation shall thenceforth be responsible
and liable for all the liabilities and obligations of each of the
corporations so merged; and any claim existing or action or
proceeding, whether civil or criminal, pending by or against any of
such corporations may be prosecuted as if the merger
28
<PAGE>
had not taken place, or such Surviving Corporation may be
substituted in its place. Neither the rights of creditors nor any
liens upon the property of any such corporation shall be impaired
by such merger.
7. Transfer of Property. The Nonsurviving Corporation
agrees that from time to time and as and when requested by the
Surviving Corporation or by its successors or assigns, to execute
and deliver or cause to be executed and delivered all such deeds
and instruments, assignments, assurances in the law, or take such
action, as the Surviving Corporation may deem necessary or
desirable to vest in and confirm to the Surviving Corporation title
to and possession of any property of the Nonsurviving Corporation
acquired or to be acquired by reason of the merger herein provided
for, and its proper officers and directors shall and will execute
and do all such acts and things and execute such papers and
document as are necessary or proper to carry out the purposes of
this merger.
8. Articles of Incorporation. The Articles of
Incorporation of the Surviving Corporation as in effect on the date
this merger takes effect shall continue in full force and effect
except that the Articles of Incorporation of the Surviving
Corporation shall be amended to change its name to "Detour
Magazine, Inc."
9. Bylaws. The Bylaws of the Surviving Corporation as
existing on the date this merger takes effect shall be and remain
the Bylaws of the Surviving Corporation until the same are altered,
amended or repealed according to the provisions therefor made or as
provided by law.
10. Officers. Upon this merger taking effect, the
officers of the Surviving Corporation shall submit their
resignations and the following persons shall be appointed to hold
the offices opposite their respective names for the remainder of
the respective terms of office and until their successors shall
have been elected and qualified:
James Turner President
Edward T. Stein Chief Financial Officer
Luis Barajas Secretary
11. Directors. Upon this merger taking effect, the
directors of the Surviving Corporation shall resign, and those
persons named below shall be appointed to serve for the remainder
of the present terms of office of the Surviving Corporation and
until their successors shall have been elected and qualified:
Edward T. Stein Luis Barajas
James Turner Lorraine Rasmussen
12. Earned Surplus. Upon this merger taking effect, to
the extent allocation to stated capital is not required by reason
of this merger by either or both the Constituent Corporations, the
Board of Directors of the Surviving Corporation may allocate to
earned surplus of the Surviving Corporation, the earned surplus of
the Nonsurviving Corporation, and the earned surplus of both
corporations so combined shall be thereafter available for the
payment of dividends by the Surviving Corporation, or for any other
proper use or allocation.
29
<PAGE>
13. Warranties. The Constituent Corporations hereby
agree, and warrant each with the other, that they will cooperate
with the other in carrying out the terms and provisions of this
Plan; that they and each of them will not issue or sell any shares
of capital stock, except shares issued pursuant to rights or
warrants outstanding, issue rights to subscribe or options to
purchase any shares of their capital stock, amend the Articles of
Incorporation or Bylaws of their corporation except as may be
required to comply with the terms and provisions of this Plan,
issue or contract any funded debt, declare and pay any dividend or
make any other distribution of surplus, undertake or incur any
obligations or liabilities except in the ordinary course of
business and those fees and expenses in connection with the
negotiation and consummation of this merger, mortgage, pledge or
encumber any real or personal property, or interest therein held by
them, sell assign or dispose of any trademark, trade name, patent
or other intangible assets, default in performance of any material
contract or other obligation, waive any right of substantial value,
invest in or purchase any security, equity or property not in the
usual course of business; and each of them represent that all
state, federal and local taxes and assessments, excise taxes, ad
valorem taxes and sales taxes, withholding and other employee
related obligations are currently paid and not in default.
14. Abandonment of Merger. Notwithstanding anything to
the contrary or implied herein, this Plan may be abandoned without
further liability and obligation prior to the filing of the
Articles of Merger, even if subsequent to approval being given
thereto by the shareholders of both Constituent Corporations, by
the Board of Directors of either Constituent Corporation by
resolution duly adopted and notice thereof received by the other
Constituent Corporation, in the event or upon the contingency that:
a material adverse change occurs in the business, properties,
operations or financial condition of the other Constituent
Corporation; any drastic or substantial change occurs in the
economic or political condition generally of the State of Colorado
or the United States which would affect the advisability of
completing the merger herein contemplated; upon the discovery that
any financial statements, or other information furnished by the
other Constituent Corporation is highly inaccurate, misleading in
material respect, or omits important relevant data or information;
either of the Constituent Corporations becomes involved in any
litigation not previously disclosed to the other, either pending or
threatened, which would materially affect the financial condition
or reputation of the Constituent Corporation so involved; any
action or suit to enjoin or restrain or restrict the merger herein
contemplated has been filed in any court or agency having
jurisdiction in this matter.
15. Expenses. In the event the merger herein contemplated
is not completed, each Constituent Corporation shall bear their own
expenses incurred in the negotiation and processing of this Plan.
If the merger herein contemplated is completed and takes effect,
the Surviving Corporation shall pay all expenses arising by reason
of such merger or that remain owing and unpaid by either
Constituent Corporation.
16. Counterpart Agreements. This Plan of Merger may be
executed in counterparts, each of which shall be deemed an original
document, but together shall be deemed to constitute only one
agreement.
17. Notices. Notice or other transmittals to the
Constituent Corporations shall be properly made or served if
delivered by hand or by certified or registered mail at or to the
addresses set forth below:
30
<PAGE>
If to IBI: Cheryl Okizaki, President
Ichi-Bon Investment Corp.
3222 S. Vance, Suite 100
Lakewood, Colorado 80227
With a copy to: Andrew I. Telsey, Esq.
2851 S. Parker Rd.
Suite 720
Aurora, CO 80014
If to Detour: Mr. Edward T. Stein
Detour, Inc.
201 N. Service Road
Melville, N.Y. 11747
With a copy to: Mark Lindon, Esq.
Schifino & Lindon
1901 Ave. of the Stars, Suite 251
Los Angeles, CA 90067
Executed this 6th day of June, 1997.
ICHI-BON INVESTMENT CORPORATION
By:/s/ Cheryl Okizaki
--------------------------------
Cheryl Okizaki, President
DETOUR, INC.
By:/s/ James Turner
--------------------------------
James Turner, President
31
<PAGE>
EXHIBIT "B"
---------------------------
LIST OF DETOUR SHAREHOLDERS
---------------------------
32
<PAGE>
DETOUR, INC.
List of Shareholders
Name of Shareholder No. of Shares
- ---------------------------------------- -------------
Luis Barajas 211,125
Joseph Berardino 167,000
Theordore Berk 60
Deborah Burghard 500
Raymond Burghard 550
BWL Associates, Inc. 200
Cede & Co. 389,025
Christina Civello 300
JCM Capital Corp. 67,000
Ernest Lamonte 300
Lawrence S. Lisnoff 200
Robert W. Lisnoff 250
Ursula Lisnoff 200
Robert Lisnoff C/F Ryan Lisnoff USMA 100
Keith Mazer 1,000
Monetary Advancement International, Inc. 400,000
Vincent Morreale 20
Novoya Overseas Ltd. 62,660
Darlene Perby 1,000
Philadep & Co. 27,920
Flavil Pollock 200
Layton Quick 100
33
<PAGE>
Name of Shareholder No. of Shares
- ----------------------------------------- -------------
Rani Raghawan 725
Brian Saiya 40
Gloria Saiya 40
Anthony Shaffer 250
Edward T. Stein 7,788,790
Joseph Topalian 20
Lilit Topalian 50
Marie-Ther Topalian 50
Jim Turner 211,125
---------
TOTAL 9,330,760
34
<PAGE>
EXHIBIT "C"
---------------------------
FORM OF INVESTMENT LETTER
---------------------------
35
<PAGE>
INVESTMENT LETTER
June ____, 1997
Ichi-Bon Investment Corporation
3222 S. Vance, Suite 100
Lakewood, Colorado 80227
Gentlemen and Madam:
The undersigned herewith deposits certificate(s) for shares of
common stock of Detour, Inc., a California corporation, ("Detour"),
as described below (endorsed, or having executed stock powers
attached) in acceptance of and subject to the terms and conditions
of that certain Agreement and Plan of Reorganization (the
"Agreement"), between Ichi-Bon Investment Corporation ("IBI") and
Detour, dated May 12, 1997, receipt of which is hereby
acknowledged, in exchange for shares of Common Stock of IBI (the
"Exchange Shares"). If any condition precedent to the Agreement is
not satisfied within the relevant time parameters established in
the Agreement (or any extension thereof), the certificate(s) are to
be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees
with you that, in connection with the undersigned's acceptance of
the Exchange Shares and as of the date of this letter:
1. The undersigned is aware that his, her or its acceptance
of the Exchange Shares is irrevocable, absent an extension of the
Expiration Date of any material change to any of the terms and
conditions of the Agreement.
2. The undersigned warrants full authority to deposit all
shares referred to above and IBI will acquire a good and
unencumbered title thereto.
3. The undersigned has full power and authority to enter into
this Agreement and that this Agreement constitutes a valid and
legally binding obligation of the undersigned.
4. By execution hereof, the undersigned hereby confirms that
the Pharma common stock to be received in exchange for IBI common
stock (the "Securities"), will be acquired for investment for the
undersigned's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof, and that
the undersigned has no present intention of selling, granting any
participation in, or otherwise distributing the same. By execution
hereof, the undersigned further represents the undersigned does not
have any contract, undertaking, agreement or arrangement with any
third party, with respect to any of the Securities.
5. The undersigned understands that the Securities are being
issued pursuant to available exemption thereto and have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or under any state securities laws. The undersigned
understands that no registration statement has been filed with the
United States Securities and Exchange Commission nor with any other
regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as the undersigned by an impartial
review of such a registration statement by the Securities and
Exchange Commission or other regulatory authority will not be
forthcoming. The undersigned understands that he/she/it cannot
sell the Securities unless such sale is registered under the 1933
Act and applicable state securities laws or exemptions from such
registration become available. In this
36
<PAGE>
Ichi-Bon Investment Corporation
June ____, 1997
Page 2
connection the undersigned understands that the Company has advised
the Transfer Agent for the Common Shares that the Securities are
"restricted securities" under the 1933 Act and that they may not be
transferred by the undersigned to any person without the prior
consent of the Company, which consent of the Company will require
an opinion of counsel to the effect that, in the event the
Securities are not registered under the 1933 Act, any transfer as
may be proposed by the undersigned must be entitled to an exemption
from the registration provisions of the 1933 Act. To this end, the
undersigned acknowledges that a legend to the following effect will
be placed upon the certificate representing the Securities and that
the Transfer Agent has been advised of such facts:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED PURSUANT TO
THE PROVISIONS OF THE ACT OR IF AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE, THE AVAIL-
ABILITY OF WHICH MUST BE ESTABLISHED TO THE SATIS-
FACTION OF THE COMPANY.
The undersigned understands that the foregoing legend on
his/her its certificate for the Common Shares limits their value,
including their value as collateral.
6. The undersigned represents that he/she/it is experienced
in evaluation and investing in securities of companies in the
development stage and acknowledges that he/she it is able to fend
for itself, can bear the economic risk of this investment and has
such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the
investment in the Securities.
In Witness Whereof, the undersigned has duly executed this
Investment Letter as of the date indicated hereon.
Dated: June ____, 1997
Very truly yours,
____________________________
(signature)
____________________________
(print name in full)
____________________________
(street address)
____________________________
(city, state, zip)
____________________________
(social security number or
employer identification no.)
37
<PAGE>
DETOUR MAGAZINE, INC.
---------------------------
EXHIBIT 16.0 TO FORM 8-K
---------------------------
LETTER OF RESIGNATION
OF REGISTRANT'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
---------------------------
<PAGE>
KISH, LEAKE & ASSOCIATES, P.C.
Certified Public Accountants
J.D. Kish, C.P.A., M.B.A. 7901 E. Belleview Ave., Suite 220
James D. Leake, C.P.A., M.T. Englewood, Colorado 80111
____________________________ Telephone (303) 779-5006
Arleen R. Brogan, C.P.A. Facsimile (303) 779-5724
June 20, 1997
Securities and Exchange Commission
450 5th Street N.W.
Washington, D.C. 20549
We would like to inform you that we have read the disclosures
provided by Detour Magazine, Inc., f/k/a Ichi-Bon Investment
Corporation in its filing of Form 8-K dated June 20, 1997 and that
there are no disagreements regarding the statements made under Item
4 - Changes in Registrant's Certifying Accountant.
Sincerely,
Kish, Leake & Associates, P.C.
Kish, Leake & Associates, P.C.
<PAGE>
DETOUR MAGAZINE, INC.
-----------------------------
EXHIBIT 27.0 TO FORM 8-K
-----------------------------
FINANCIAL DATA SCHEDULE
-----------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 226,320
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 263,098
<PP&E> 148,885
<DEPRECIATION> 0
<TOTAL-ASSETS> 431,503
<CURRENT-LIABILITIES> 1,779,627
<BONDS> 0
0
0
<COMMON> 9,366
<OTHER-SE> (1,357,490)
<TOTAL-LIABILITY-AND-EQUITY> 431,503
<SALES> 2,736,207
<TOTAL-REVENUES> 2,736,207
<CGS> 1,976,067
<TOTAL-COSTS> 1,976,067
<OTHER-EXPENSES> 1,465,403
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (120,565)
<INCOME-PRETAX> (825,828)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (825,828)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
