U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 33-43621
INTERNET BUSINESS'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 33-0845463
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
4634 South Maryland Parkway, Suite 101, Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (702) 968-0008
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes No X .
As of December 31, 2000, the Registrant had 232,755,519 shares of
common stock issued and outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2000 AND JUNE 30, 2000 3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
DECEMBER 31, 2000 AND DECEMBER 31, 1999 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 15
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURE 16
PART I.
ITEM 1. FINANCAL STATEMENTS.
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31 June 30
2000 2000
ASSETS
Cash and cash equivalents $ 358,856 $1,661,963
Accounts receivable, net 83,316 128,389
Mortgage notes held for sale 2,277,777 2,907,741
Prepaid expenses and other 16,794 127,905
Total current assets 2,736,743 4,825,998
Property and equipment, net 896,557 575,061
Intangible assets, net 2,732,050 2,884,174
Investments in unconsolidated companies 894,707 0
Note receivable 488,700 654,009
$ 7,748,757 $8,939,242
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 599,179 $ 317,998
Accrued liabilities 57,254 48,900
Revolving line of credit 2,706,156 2,958,563
Current portion of long-term debt 31,653 29,165
Deferred revenues 215,376 247,090
Total current liabilities 3,609,618 3,601,716
Long-term debt 214,062 203,931
Minority interest in subsidiaries (25,526) (5,868)
Stockholders' equity:
Preferred stock, par value $100.00 per
share; 1,000,000 1,817,000 2,390,000
shares authorized; 18,170 and 23,900 issued
and outstanding respectively as of
December 31, 2000 and June 30, 2000
Common stock, par value $0.001 per share;
349,000,000 2,327,555 2,211,151
shares authorized; 232,755,519 and
221,115,113 shares issued and outstanding
respectively as of December 31,2000 and
June 30, 2000
Additional paid-in capital 3,669,490 3,669,490
Accumulated deficit (3,863,442) (3,131,178)
Total stockholders' equity 3,950,603 5,139,463
Total liabilities and stockholders' equity $7,748,757 $8,939,242
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
December December December December
31 31 31 31
2000 1999 2000 1999
Revenues $6,539,850 $ 540,102 $13,439,787 $ 835,548
Cost and expenses:
Cost of revenues 5,108,321 199,102 11,173,187 404,950
Interest expense 0 0 2,726 0
Selling, general and admin. 1,583,242 319,314 3,420,286 406,033
Depreciation and amortization 47,163 0 289,322 0
Total costs and expenses 6,738,726 518,416 14,885,521 810,983
(Loss) income from operations ( 198,876) 21,686 (1,445,734) 24,565
Other income (expense):
Gain on sale of equity
investments 102,117 0 410,529 0
Interest income 218,018 0 279,160 0
Other expenses (1,806) 0 (6,047) 0
Total other income, net 318,329 21,686 0 683,642
Income (loss) before
minority interest
Minority interest in loss of
sub (10,170) 0 (29,828) 0
Net (loss) income 129,623 21,686 (732,264) 24,565
Net loss (income) per common
share Nil Nil Nil Nil
Weighted average number of
Common shares outstanding 225,539,580 181,737,364 225,539,580 181,737,364
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31 December 31
2000 1999
Cash Flows From Operating Activities:
Net (loss) income $ (732,264) $ 2,079
Adjustments to reconcile net (loss)
income to net cash (used in) provided by
operating activities:
Depreciation and amortization 289,322 163,587
Gain on sale of equity investment (410,529) 0
Minority interest (29,828) 0
Changes in operating assets and
liabilities:
Accounts receivable 83,316 (183,352)
Inventories 0 (73,771)
Mortgage loans receivable 569,110 0
Prepaid expenses and other 16,794 287,245
Accounts payable 57,254 207,757
Accrued liabilities 47,005 201,253
Deferred revenues (16,984) 0
Net cash (used in) provided by operating
Activities (126,804) 604,798
Cash Flows From Investing Activities:
Purchases of property and equipment (292,896) (196,664)
Purchase of intangible assets 0 (564,562)
Proceeds from sale of investment in company 559,812 0
Investments in companies' stock (1,025,357) 0
Net cash used in investing activities (758,441) (761,226)
Cash Flows From Financing Activities:
Net repayments under revolving line of
Credits (627,784) 0
Net repayment of long-term debt 177,740 77,546
Collection of notes receivable -
Stockholder 32,182 0
Issuance of common stock 0 364
Net cash (used in) provided by financing
Activities (417,862) 77,910
Net decrease in cash (1,303,107) (78,518)
Cash, beginning of period 1,661,963 82,577
Cash, end of period 358,856 4,059
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results
could differ materially from those estimates. The unaudited
consolidated financial statements of the Company include the
accounts of all of its wholly or majority owned subsidiaries. All
intercompany accounts or transactions have been eliminated.
The unaudited consolidated financial statements at December 31,
2000 and for the three and six months ended December 31, 2000 and
1999 are unaudited, but include all normal recurring adjustments
and accruals which are necessary to fairly state the Company's
consolidated financial position, results of operations and cash
flows for the periods presented. Operating results for the three
and six months ended December 31, 2000 and 1999 are not
necessarily indicative of results that may be expected for any
future periods. The consolidated balance sheet at June 30, 2000
has been derived from the audited consolidated financial
statements at that date but does not include all of the
information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements.
The information included in this report should be read in
conjunction with the Company's audited consolidated financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2000.
2. Acquisitions
First Quarter of Fiscal Year June 30, 2001
PMCC Financial Corp.
On July 28, 2000, the Company entered into an agreement with PMCC
Financial Corp. ("PMCC"), a full-service mortgage banking
company, whereby the Company would purchase 2,460,000 shares of
PMCC common stock from PMCC's former chairman of the board, which
represents 66.36% of the 3,707,000 total PMCC shares outstanding.
The aggregate purchase price of $3,198,000 is to be paid in cash
to the seller by the Company as follows: $700,000 at date of
closing; $306,857 for each of the seven installment payments to
be paid on the 30th, 60th, 90th, 120th, 150th, 180th and 210th days
following the close; $175,000 on each of the 240th and 270th day
after the date of the closing. Shares of PMCC will be released to
the Company based on payments made by the Company, as outlined in
the agreement. Shares of PMCC, a listed AMEX company, are
currently not trading. In the event that three months after
closing, if PMCC's shares are not actively trading on the AMEX or
NASDQ exchanges and the Company has not merged PMCC with the
Company or any of the Company's subsidiaries, the purchase price
shall be reduced by the amount of the final two $175,000
payments. As of September 30, 2000, the Company has paid
approximately $1,043,000, representing the payment due at closing
and the 1st installment, and has received 269,230 shares of PMCC,
representing approximately 7% of the total outstanding stock of
PMCC.
Also on July 28, 2000, in a separate transaction, the Company
entered into a stock purchase agreement with an unrelated
individual whereby the Company would sell up to 370,000 of PMCC
shares that the Company either owns or will eventually own, for
total consideration of $1,387,500. Shares of PMCC stock sold by
the Company will be released to the buyer in proportion to
payments received.
As of December 31, 2000, the Company received payments of
$559,812 and the Company released 149,283 shares of PMCC stock
that it owned. If PMCC is not actively trading within six months
of the agreement, the Company will issue to the Buyer the
equivalent number of shares of stock of the Company. PMCC has
been actively trading as of January 19, 2001, and the gain on the
sale of the PMCC stock of $410,529 has been included in
revenues for the period ending December 31,2000.
As of February 12, 2001, the former Chairman of the Board of
PMCC and the Company have yet to reach agreement on the
renegotiated purchase price for the stock that is being acquired
by the Company.
In January 2001, the PMCC was delisted from the American Stock
Exchange and began trading on the Pink Sheets under the symbol of
"PMCF"; this met the trading requirement as per the stock sale
agreement the Company had entered into with an unrelated
individual during the first quarter of this fiscal year.
International Business Co., Inc.
On August 11, 2000, the Company entered into an agreement to
acquire all of the outstanding shares of International Business
Co. ("IBC"), a software developer that streamlines B2B e-
commerce, in exchange for 2,000,000 shares of restricted Company
shares to be held in escrow, with 1,000,000 restricted company
shares released to the seller on August 11, 2001 and the
remaining 1,000,000 shares released on April 11, 2002. Between
September 1, 2000 through March 1, 2001, the Company can
unilaterally cancel the contract if dissatisfied with the
seller's performance. As of September 30, 2000, the Company has
not completed its acquisition of IBC and has advanced monies to
IBC totaling $18,500.
As of December 31, 2000 the Company has not completed the
acquisition of IBC, which is not schedule to close until the end
of January 31, 2001.
Second Quarter of Fiscal Year ending June 30, 2001
SonicAuction.com
On October 5, 2000, the Company entered into a Stock Purchase
Agreement to acquire all of the outstanding stock of
SonicAuction.com, a business-to-business auction marketplace that
provides a forum for business merchants to purchase equipment and
merchandise. The agreement calls for the Company to issue to the
Seller 500,000 shares of Company stock (with certain restrictions
as set forth in the agreement), in exchange for all of the
outstanding and treasury shares of common stock of
SonicAuction.com.
Auction-Sales.com
On October 20, 2000, the Company entered into a Stock Purchase
Agreement ("Agreement") with Auction-Sales.Com, Inc. and its
majority shareholder, Zahid Rafiq (collectively, "Seller"), for
the purchase by the Company of 96.62% of the outstanding and
treasury shares of common stock ("Shares") of Auction-Sales.Com,
Inc., a leading edge e-commerce dynamic pricing application
service provider and has developed a proprietary state of the art
hybrid auction platform that address the combined needs of the
B2C, B2B and C2C markets. In exchange for the Shares, the
Company will pay, under the terms of the agreement, the
following: (a) 11,000,000 shares of Company's restricted common
stock to Seller for all of Seller's Shares, as follows: (i)
5,500,000 restricted shares will be issued to the Seller's
current shareholders, as defined (ii) 2,500,000 restricted shares
will be paid to certain creditors of the Seller. Seller
represents that all of these creditors are unsecured.
Seller shall procure signed consents from each creditor
confirming the agreement to accept restricted shares in
proportion to their claims within 60 days of closing of the
transaction. Failure to procure signed consents will justify
rescission of this Agreement at the option of the Company, such
that each party shall restore to the other the consideration
which each placed into the Agreement. (iii) 3,000,000 restricted
shares of the purchase price will be paid to outside consultants
for work performed for facilitating the transaction (b) Earn out
for the "Seller": The Seller shall be paid up to an additional
$3,000,000 based upon earnings over the next 3 years through
additional restricted stock. The earn out will be based on a 10%
growth per year over the previous years' revenue. The $3,000,000
will be distributed equally over the subsequent 3 year i.e.
$1,000,000 per year, and can be cumulative. This earn out is
further defined as follows: (i) The initial base Year ends on 9-
30-00. The subsequent year base will be the previous revenue (ii)
The stock will be issued per quarter upon reaching the Goal per
quarter for that portion of the annualized growth of 10% over the
previous year. The Company may invest up to $2,000,000 in
Auction-Sales. Com, Inc., at a rate not to exceed $500,000 per
quarter, based on performance on Auction-Sales.Com as a function
of gross revenues and based on a budget, which is pre-approved by
Company.
As of December 31, 2000 the acquisition was rescinded and the
necessary filings with the SEC were flied in January 2001.
3. Net Loss Per Share
Basic net loss per shares has been computed by dividing net loss
by the weighted average number of shares outstanding during the
period. Diluted net loss per share is computed by adjusting the
weighted average number of shares outstanding during the period
for all potentially dilutive shares outstanding during the
period. Net loss and weighted average shares outstanding used for
computing diluted loss per share were the same as that used for
computing basic loss per share for the three and six months ended
December 31, 2000 and 1999.
4. Segment Information
Management has determined that there are four reportable segments
based on the customers served by each segment: Full service
internet service provider (ISP), mortgage banking business, and
e-commerce ("B2BC") business-to-business and or to-consumer
provider and marketing ("B2B") business-to-business and ("B2C")
business-to-consumer. Such determination was based on the level
at which executive management reviews the results of operations
in order to make decisions regarding performance assessment and
resource allocation.
Certain general expenses related to advertising and marketing,
information systems, finance and administrative groups are not
allocated to the operating segments and are included in "other"
in the reconciliation of operating income reported below.
Information on reportable segments is as follows:
Six Months Ended
December 31, December 31,
2000 1999
Full-service ISP
Net sales $ 1,402,448 $ 835,548
Operating income 257,676 24,565
Mortgage loan originations held
for resale
Net sales 11,173,276
Operating income (548,318)
E Commerce (B2BC)
Net sales 42,816
Operating income (134,630)
Marketing (B2BC)
Net sales 457,862
Operating income (335,065)
Other
Other Income 363,385
Net Income 28,073
Total
Net sales 13,439,787 835,548
Operating income (732,264) 24,565
Prior to December 31 1999, the Company only had one reportable
segment, full-service ISP provider services.
5. Stock Issuance.
The following shares were issued 1. 500,000 shares of restricted
144 stock for the acquisition of Sonic Auction.Com; and 2.
pursuant to the agreement with the conversion rights of the
Preferred Stock issued December 15, 1998. The following shares
were converted to common based upon the 10 day average of the
closing bid price prior to the to the conversion date. 7,140,406.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto
contained elsewhere in this report.
Results of Operations.
Revenues for the three-month period ended December 31, 2000
of $6,539,850 increased 121% when compared with revenues of
$540,102 in the prior year comparable period of the fourth
calendar quarter of 1999. Revenues for the six-month period ended
December 31, 2000 of $13,439,787 increased 162% when compared to
the revenues of 835,548 for the comparable period ended December
31, 1999.
The gross profits margin of 21.9% for the three months ended
and 17.7% for six months December 31, 2000 is a decrease from the
gross profit margin of 36.9 % for the same three-month period and
30.1% for the same six-month period of the previous fiscal year.
Current fiscal margins for the second quarter of this fiscal
year are reflective of the acquisitions made by the company and
its related increase in overhead. The Company for the three
months ended December 31, 2000 posted a net profit for the
quarter of $129,623.
Selling, general, and administrative expenses for the six
months ended December 31, 2000 increased to $3,420,286 which is a
significant increase when compared with the $ 406,033 for the
prior years comparable period. This increase is again due to the
acquisitions made during the last 12 months.
The resulting net loss for the six months ended December 31,
2000 was $737,146, which is a significant change when compared
with a profit of $24,565 for same period ending December 31,
1999. $394,689 of the loss represents "Depreciation and
Amortization". The net loss of $732,264 for the six months ended
December 31, 2000 is an improvement over the net loss for the
three months ended September 30, 2000 of $861,887 by $126,623.
The most significant change the made during this quarter was
to reduce cost of revenues by $956,545 over the previous quarter
with only an over all reduction in sales of $360,087.
Liquidity and Capital Resources.
Net cash provided by the operations of the Registrant was
$358,856 for the three months ended December 31, 2000 versus net
cash provided by operating activities of $4,059 in the comparable
prior year period.
Capital Expenditures.
Other than as follows, no material capital expenditures were
made during the two quarters ended on December 31, 2000: purchase
of infrastructure equipment totaling $467,248.
Acquisitions
(a) Stock in PMCC Financial Corp.
On July 28, 2000, the Registrant entered into an agreement with
PMCC Financial Corp. ("PMCC"), a full-service mortgage banking
company, whereby the Registrant would purchase 2,460,000 shares
of PMCC common stock from PMCC's former chairman of the board,
which represents 66.36% of the 3,707,000 total PMCC shares
outstanding (see Exhibit 10.11 to this Form 10-Q). The aggregate
purchase price of $3,198,000 is to be paid in cash to the seller
by the Registrant as follows: $700,000 at date of closing;
$306,857 for each of the seven installment payments to be paid on
the 30th, 60th, 90th, 120th, 150th, 180th and 210th days following the
close; $175,000 on each of the 240th and 270th day after the date
of the closing. Shares of PMCC will be released to the Registrant
based on payments made by the Registrant, as outlined in the
agreement. Shares of PMCC, a listed AMEX company, are currently
not trading. In the event that three months after closing, if
PMCC's shares are not actively trading on the AMEX or NASDQ
exchanges and the Registrant has not merged PMCC with the
Registrant or any of the Registrant's subsidiaries, the purchase
price shall be reduced by the amount of the final two $175,000
payments. As of September 30, 2000, the Registrant has paid
approximately $1,043,000, representing the payment due at closing
and the 1st installment, and has received 269,230 shares of PMCC,
representing approximately 7% of the total outstanding stock of
PMCC. The Registrant is currently renegotiating the terms of
this transaction.
Also on July 28, 2000, in a separate transaction, the Registrant
entered into a stock sales agreement with an unrelated individual
whereby the Registrant would sell up to 370,000 of PMCC shares
that the Registrant either owns or will eventually own, for total
consideration of $1,387,500 (see Exhibit 10.12 to this Form 10-
Q). Shares of PMCC stock sold by the Registrant will be released
to the buyer in proportion to payments received. As of September
30, 2000, the Registrant received payments of $420,563 and the
Registrant released 112,150 shares of PMCC stock that it owned.
If PMCC shares are not actively trading within six months of the
agreement, the Registrant will issue to the Buyer the equivalent
number of shares of stock of the Registrant. Management has
represented that PMCC will become actively trading within the
six-month period, and the Registrant has recognized a gain on the
sale of the PMCC stock of $308,413 during the three months ended
September 30, 2000.
(b) International Business Co.
On August 11, 2000, the Registrant entered into an agreement
to acquire all of the outstanding shares of International
Business Co. ("IBC"), a software developer that streamlines B2B
e-commerce, in exchange for 2,000,000 shares of restricted
Registrant shares to be held in escrow, with 1,000,000 restricted
company shares released to the seller on August 11, 2001 and the
remaining 1,000,000 shares released on April 11, 2002 (see
Exhibit 10.13 to this Form 10-Q). Between the period from
September 1, 2000 through March 1, 2001, the Registrant can
unilaterally cancel the contract if dissatisfied with the
seller's performance. As of September 30, 2000, the Registrant
has not completed its acquisition of IBC and has advanced monies
to IBC totaling $18,500.
(c) Sonic Auction.com.
100% of the web based auction site Sonic Auction.com was acquired
by the Registrant on October 5, 2000 in exchange for 500,000
shares of restricted common stock of the Registrant (see Exhibit
10.14 to this Form 10-Q). Sonic Auction is a B2B auction
marketplace, providing a auction site for business merchants to
purchase equipment, and merchandise at a discount. This site has
a loyal customer base and had sales of over $2,000,000 for the
year ended December 31, 1999. The site has over $400 million
worth of auction-able product currently listed for auction.
(d) Auction-Sales.Com, Inc.
On October 19, 2000, the Registrant entered into a Stock Purchase
Agreement with Auction-Sales.Com, Inc. and its majority
shareholder, Zahid Rafiq (collectively, "Seller"), for the
purchase by the Registrant of 96.62% of the outstanding and
treasury shares of common stock of Auction-Sales.Com, Inc., a
Delaware corporation (see Exhibit 10.15 of this Form 10-Q). In
exchange for the shares, the Registrant will pay, under the terms
of this agreement, the following:
(a) 11,000,000 shares of Registrant's restricted common
stock to Seller for all of Seller's Shares, as follows:
(i) 5,500,000 restricted shares will be issued to current
shareholders, identified on the list attached to the Agreement.
(ii) 2,500,000 restricted shares will be paid to certain
creditors of the Registrant identified in an attachment to the
Agreement. Seller represents that all of these creditors are
unsecured. Seller shall procure signed consents from each
creditor confirming the agreement to accept restricted shares in
proportion to their claims within 60 days of closing of the
transaction. Failure to procure signed consents will justify
rescission of this Agreement at the option of the Registrant,
such that each party shall restore to the other the consideration
which each placed into the Agreement.
(iii) 3,000,000 restricted shares of the purchase price
will be paid to outside consultants for work performed for
facilitating the transaction.
(b) Earn out for the "Seller": The Seller shall be paid up
to an additional $3,000,000 based upon earnings over the next 3
years through additional restricted stock. The earn out will be
based on a 10% growth per year over the previous years revenue.
The $3,000,000 will be distributed equally over the subsequent 3
year i.e. $1,000,000 per year, and can be cumulative. This earn
out is further defined as follows:
The initial base Year ends on September 30, 2000. The subsequent
year base will be the previous revenue .
(ii) The stock will be issued per quarter upon reaching the Goal
per quarter for that portion of the annualized growth of 10% over
the previous year.
(c) The Registrant may invest up to $2,000,000 in Auction-
Sales.Com, Inc., at a rate not to exceed $500,000 per quarter,
based on performance on Auction-Sales.Com as a function of gross
revenues and based on a budget, which is pre-approved by the
Registrant.
Auction-Sales.Com is an e-commerce pricing application service
provider. Auction-Sales.Com has developed a proprietary state of
the art hybrid auction platform that address the combined needs
of the B2C, B2B and C2C markets. This is accomplished by
providing a single integrated marketplace and portal technology
that empowers all parties, including manufacturers, distributors,
resellers and consumers. The Auction-Sales.Com platform provides
supply chain integration and economies of scale in connection
with dynamic pricing application targeting businesses and /or
consumers.
This acquisition was rescinded in December 2000. The site
was retained until the funds invested into Auction-Sales.Com are
returned which at this time management has very low expectations
of occurring.
Other Agreement - Washington State Hotel and Motel Association.
The agreement, entered into in the ordinary course of business,
with the Washington State Hotel and Motel Association, dated
October 4, 2000, provides the use of the GGPP reverse auction
site as a platform for hotel association members purchasing
products needed for their different hotel properties. This
method of purchasing allows the suppliers of products the chance
to sell products to the buyers in competition with one another,
the net effect is that the buyers would select the supplier with
the lowest per unit cost. This reduces the cost of supplies and
thereby should increase their potential of profit. This
agreement covers the modification of the GGPP website for use by
the Association, and does not involve any payment by the
Registrant.
Forward Looking Statements.
The foregoing Management's Discussion and Analysis of Financial
Condition and Results of Operations contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act
of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934,
as amended, including statements regarding, among other items,
the Registrant's business strategies, continued growth in the
Registrant's markets, projections, and anticipated trends in the
Registrant's business and the industry in which it operates. The
words "believe," "expect," "anticipate," "intends," "forecast,"
"project," and similar expressions identify forward-looking
statements. These forward-looking statements are based largely
on the Registrant's expectations and are subject to a number of
risks and uncertainties, certain of which are beyond the
Registrant's control. The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's products
and the level of expenses incurred in the Registrant's
operations. In light of these risks and uncertainties, there can
be no assurance that the forward-looking information contained
herein will in fact transpire or prove to be accurate. The
Registrant disclaims any intent or obligation to update "forward
looking statements."
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not applicable.
PART II.
ITEM 1. LEGAL PROCEEDINGS.
The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
In October 2000, the Registrant issued 500,000 shares of
restricted common stock in connection with the acquisition of the
Sonic Auction.com agreement (as discussed above).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits.
Exhibits included or incorporated by reference herein: See Exhibit Index
Reports on Form 8-K.
The following reports on Form 8-K were filed during the second
quarter of the fiscal year covered by this Form 10-Q.
(a) A Form 8-K was filed on November 6, 2000 to report the
acquisition of Auction-Sales.Com, as set forth above.
(b) A Form 8-K was filed on January 12, 2001 to report that
based on certain breaches of the representations and warranties
in the acquisition agreement with regard to Auction-Sales.Com by
the seller, the Registrant, through its counsel, had notified the
seller that since it failed to cure such breaches the Registrant
was rescinding this agreement.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Internet Business's International, Inc.
Dated: February 14, 2001 By: /s/ Albert R. Reda
Albert R. Reda, Chief Executive Officer
EXHIBIT INDEX
Exhibit Description
No.
2 Agreement and Plan of Merger (incorporated by reference to
Exhibit 2 to the Form 8-K/A filed on November 22, 1999)
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 to the Form 10-Q filed on December 1, 1999).
3.2 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.2 to the Form 10-Q filed
on December 1, 1999).
3.3 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.3 of the Form 10-Q filed
on May 22, 2000).
3.4 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.4 of the Form 10-Q filed
on May 22, 2000).
3.5 Bylaws (incorporated by reference to Exhibit 3.3 to the Form
10-Q filed on December 1, 1999).
4.1 Retainer Stock Plan for Non-Employee Directors and
Consultants, dated October 1, 1999 (incorporated by reference to
Exhibit 4.1 to Form S-8 filed on October 8, 1999)
4.2 Consulting Agreement between the Registrant and Mark Crist,
dated October 5, 1999 (incorporated by reference to Exhibit 4.2
to Form S-8 filed on October 8, 1999)
10.1 Purchase Agreement (LA Internet) between the Registrant and
Iron Horse Holdings, Incorporated, dated June 10, 1999
(incorporated by reference to Exhibit 10.2 to the Form 10-Q filed
on December 1, 1999).
10.2 Purchase Agreement between the Registrant and the
Stockholders of MBM Capital Group Inc., dated July 1, 1999
(incorporated by reference to Exhibit 10.3 to the Form 10-Q filed
on December 1, 1999).
10.3 Acquisition Agreement (Net 2 Loan) between the Registrant
and Lifestyle Mortgage Partners, dated September 15, 1999
(incorporated by reference to Exhibit 10.4 to the Form 10-Q filed
on February 22, 2000).
10.4 Purchase Agreement (license) between the Registrant and
Stockholders of California Land & Home Sale, Inc., dated October
1, 1999 (incorporated by reference to Exhibit 10.5 to the Form
10-Q filed on February 22, 2000).
10.5 Acquisition Agreement (Optical Brigade) between the
Registrant and Wade Whitley, dated November 1, 1999 (incorporated
by reference to Exhibit 10.6 to the Form 10-Q filed on February
22, 2000).
10.6 Agreement for Acquisition between the Registrant and Direct
Communications, Inc., dated February 25, 2000 (incorporated by
reference to Exhibit 10.6 of the Form 10-Q filed on May 22, 2000).
10.7 Agreement between the Registrant and Internet 2xtreme, dated
March 6, 2000 (incorporated by reference to Exhibit 10.7 of the
Form 10-Q filed on May 22, 2000).
10.8 Agreement between the Registrant, Roanoke Technology Corp.,
and Global GPP Corp., dated March 21, 2000 (incorporated by
reference to Exhibit 10.8 of the Form 10-Q filed on May 22, 2000).
10.9 Agreement between GPP Hungary Kft and Haitec Magyarorazagi
Kft, dated March 30, 2000 (incorporated by reference to Exhibit
10.9 of the Form 10-Q filed on May 22, 2000).
10.10 Stock Purchase Agreement between the Registrant and
Atlas Capital Corporation, dated April 1, 2000 (incorporated by
reference to Exhibit 10.10 to the Form 10-K filed on September
27, 2000).
10.11 Stock Purchase Agreement between the Registrant and
Ronald Friedman, Robert Friedman, and The Ronald Friedman 1997
Grantor Retained Annuity Trust, dated July 28, 2000 (incorporated
by reference to Exhibit 10.11 of the Form 10-Q filed on November
16, 2000).
10.12 Stock Sales Agreement between the Registrant and a
buyer, dated July 28, 2000 (incorporated by reference to Exhibit
10.12 of the Form 10-Q filed on November 16, 2000).
10.13 Stock Purchase Agreement between the Registrant,
International Business Company, Dennis B. Ginther, Clifford J.
Roebuck, Jadwiga L. Ginther, and Bogumila E. Basu , dated August
19, 2000 (incorporated by reference to Exhibit 10.13 of the Form
10-Q filed on November 16, 2000).
10.14 Stock Purchase Agreement between the Registrant, Sonic
Auction.com, Inc., and Brian Pruett, dated October 5, 2000 (see below).
10.15 Stock Purchase Agreement between the Registrant,
Auction-Sales.Com, Inc., and Zahid Rafiq, dated October 19, 2000
(see below).
21 Subsidiaries of the Registrant (see below).
EX-10.14
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered into as of October 5, 2000, by and between SONIC
AUCTION.com, Inc., a Delaware Corporation and Brian Pruett, an
individual (collectively "Seller"), and INTERNET BUSINESS'S
INTERNATIONAL, INC., a Nevada Corporation ("Buyer").
RECITALS
A. WHEREAS, Seller owns 100% of outstanding and treasury
shares ("The Shares") of SONIC AUCTION.com, INC., ("The Company").
B. WHEREAS, Seller desires to sell and transfer to Buyer and
Buyer desires to purchase and acquire from Seller, 100% of the
Shares of The Company, upon the terms and subject to the conditions
set forth in this Agreement.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Purchase and Sale. Seller hereby sells, assigns, transfers
and delivers to Buyer, and Buyer hereby purchases and acquires from
Seller, the Shares upon the terms and subject to the conditions set
forth in this Agreement.
2. Purchase Price; Payment Terms.
(a) The purchase price for the Shares is that Buyer shall transfer
500,000 shares of Buyer's stock, (IBUI: OTCBB), Common Stock to Seller.
(b) Seller has the right to hold all or part of received IBUI Common
Stock, with terms of liquidation defined as follows: Seller shall have
the right to sell up to 100,000 Shares of received stock per week, beginning
one week after close of sale of The Company.
3. Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows:
3.1 Authority. Seller has the right, power and authority to
enter into this Agreement and to perform all obligations' required
to be performed by it hereunder. The Company has the full power to
transfer the Shares to Buyer without obtaining the consent or
approval of any other person or governmental authority.
3.2 Title to Shares. Seller is the owner, beneficially and
of record, of all the Shares free and clear of all liens,
encumbrances, security agreements, equities, options, claims,
charges, and restrictions.
3.3 Organization. SONIC AUCTION.com, INC., is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all necessary corporate
powers to own its properties and operate its business as now owned
and operated by it. Exhibit "A" contains the Articles of
Incorporation, Bylaws, Minutes and Stock Book of Seller.
3.4 Authorization. This Agreement and all other agreements
and documents executed and delivered by Seller constitute valid and
legally binding obligations of Seller enforceable in accordance
with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and
subject to availability of equitable remedies.
3.5 Capitalization. The authorized capital stock of The
Company consists of shares of Common Stock, of which 100% of said
shares are held in The Company's treasury or are issued to and in
possession of Brian Pruett. All of the outstanding shares are
validly issued, and paid, and nonassessable, and such shares have
been so issued in full compliance with all federal and state
securities laws. There are no outstanding subscriptions, options,
rights, warrants, convertible securities, or other agreement or
commitments obligating The Company to issue or to transfer from
treasury any additional shares of its capital stock of any class.
3.6 Financials. Exhibit "B," to this Agreement contains the
federal tax returns for The Company for the year 1999. To the best
of Seller's knowledge, there are no outstanding taxes owed.
Exhibit "C," to this Agreement sets forth the financial statements
of The Company, including the balance sheets and statements of
earnings as of September 30, 2000. The financial statements
attached hereto as Exhibit "C," have been prepared in accordance
with generally accepted accounting principles consistently followed
by The Company throughout all periods indicated, and fairly present
the financial position of The Company on the respective dates of
the balance sheets included in the financial statements, and the
results of its operations for the respective periods indicated.
Exhibit "D," contains the financial projections for The Company for
the years 2000 and 2001. Since September 30, 2000, there has not
been any change in the financial condition or operations of The
Company or its business, assets, properties or prospects, except as
set forth on Exhibit "E," which also contains all of the debts and
liabilities of The Company.
3.7 Absence of Undisclosed Liabilities. The Company is not
aware of any debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to
become due, that is not reflected in the financial statements,
except as set forth on Exhibit "E."
3.8 Tax Returns. Within the times and in the manner
prescribed by law, The Company has filed all federal, state and
local tax returns required by law and has paid all taxes,
assessments, including but not limited to income and payroll taxes,
and penalties. The provisions for taxes reflected in the financial
statements are adequate for all federal, state, county and local
taxes for the period that ended September 30, 2000, and for all
prior periods, whether disputed or undisputed. There are no present
disputes about taxes of any nature payable or owed by The Company.
3.10 Personal Property. The books and records of The Company
contain a complete and accurate description and specify the
location of all equipment, furniture, supplies and all other
tangible personal property owned by, in the possession of, or used
by The Company in connection with its business. No personal
property is held under any lease, security agreement, conditional
sales contract or other title retention or security arrangement, or
is located other than in the possession and under the control of
The Company. The tangible personal property reflected in those
books and records constitutes all such tangible personal property
necessary for the conduct by The Company of its business as now
conducted. All of the tangible personal property of The Company is
in good operating condition and repair, reasonable wear and tear
excepted.
3.11 Title. The Company has good and marketable title to all
of its assets and interest in assets, whether real, personal,
mixed, tangible or intangible, which constitute all of the assets
and interests in assets that are used in the business of The
Company. All of these assets are free and clear of restrictions on
or conditions to transfer or assignment and are free and clear of
mortgages, liens, pledges, charges, encumbrances, equities and
claims of third parties, except for (a) those disclosed on Exhibit
"E;" and (b) the lien for current taxes not yet due and payable.
Exhibit "F," to this Agreement is a schedule of all personal assets
owned by The Company which are in its possession.
3.12 Accounts Receivable. All accounts receivable of The
Company shown on the financial statements, and all accounts
receivable of The Company created after September 30, 2000, arose
from valid sales in the ordinary course of business. These amounts
have been collected in full since that date as reflected in the
books and records of The Company, or are collectible at their full
amounts and are not subject to valid defenses, setoffs or
counterclaims. The Company agrees that as of September 30, 2000,
all receivables shall be the property of Buyer. Exhibit "G"
contains accounts receivable.
3.13 Accounts Payable. Exhibit "H," to this Agreement is a
complete and accurate list, with an accurate aging, of all trade
and other accounts, notes and contract payables of The Company as
of the date hereof, all of which arose in the ordinary course of
business and are usual and normal in amount.
3.15 Contracts. Except as otherwise disclosed in any of the
exhibits to this Agreement, The Company is not a party to, nor is
its properties or assets bound by, any contract, agreement,
understanding (whether written or verbal) of any nature whatsoever.
There is no default or event that, with notice, lapse of time, or
both, would constitute a default by any party to any agreement to
which The Company is a party or by which it or its properties or
assets are bound.
3.16 Employees and Employee Benefit Plans. Exhibit "I" to
this Agreement is a correct and complete list of all full-time and
part-time employees of The Company, together with their address,
social security numbers and all current and promised salary, wage
and bonus information. All of the employees of The Company are at-
will employees and may be terminated by The Company at any time
without liability and without any obligation to pay any severance
or similar benefit. There are no employment contracts, collective
bargaining agreement, pension, bonus, profit-sharing, stock option
or other agreement or arrangement providing for employee
remuneration or benefits to which The Company is a party or by
which it is bound. The Company has delivered to Buyer a copy of its
most current employee manual and description of all company
policies and practices, including no discrimination, overtime,
vacation, holiday and sick leave, if any. The Company's
relationship with all of its employees is good. All unused
vacation, holiday and sick leave, and any other paid time off, for
all of the employees has been properly and accurately recorded in
the books and records of The Company and are reflected on Exhibit
"J," attached hereto. All records of The Company for each of its
employees are complete and accurate.
3.17 Litigation. There is no pending, or, to Seller's
knowledge, threatened suit, action, arbitration or legal,
administrative or other proceeding, or governmental investigation
against or affecting The Company or its business, assets or
financial condition. The Company is not presently engaged in any
legal action to recover money due to it or damages sustained by it.
3.18 Compliance with Laws. Seller has not received notice of
any violation of any applicable federal, state or local statute,
law or regulation of any kind or nature whatsoever, including,
without limitation, any applicable building, zoning, environmental
protection, health and safety, handicap access, or other law,
ordinance or regulation, affecting its properties or the operation
of its business and there are no such violations. Seller has all
proper and valid licenses, permits and other governmental
authorities necessary to conduct its business as now being
conducted.
3.19 Agreement will not Cause a Breach or Violation. The
consummation of the transactions contemplated by this Agreement
will not result in or constitute any of the following: (a) a breach
of any term or provision of this Agreement (b) a default or an
event that, with notice, lapse of time, or both, would be a
default, breach, or violation of the Articles of Incorporation or
Bylaws of The Company or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed
of trust, or other agreement, instrument, or arrangement to which
it is bound, (c) an event that would permit any party to terminate
any agreement or to accelerate the maturity of any indebtedness or
other obligation of The Company; or (d) the creation or imposition
of any lien, charge, or encumbrance on any of the properties of The
Company.
3.20 Corporate Records. All corporate records are in the
possession of Seller and are complete and accurate in all material
respects. The minute book of The Company contains complete,
accurate and current copies of the Articles of Incorporation,
Bylaws and all amendments thereto, and all records required to be
set forth of all proceedings, consents actions and meetings of the
shareholders and board of directors of The Company.
3.21 Persons with Authority. Exhibit "K," to this Agreement
contains a complete and accurate list of (a) all bank accounts of
The Company and all other accounts at any financial institutions,
including the names and addresses thereof and the account numbers,
and the signatory or signatories thereon; (b) the names and
addresses of all persons holding a power of attorney on behalf of
The Company; all safe deposit boxes and the names of all persons
authorized to have access thereto; and (d) the names and addresses
of all persons and entities which have guaranteed any debts or
obligation of The Company or with respect to whom The Company has
guaranteed any debts or obligation.
3.22 Full Disclosure. None of the warranties made by Seller
will contain any untrue statement of a material fact, or omit to
state any material fact necessary to make the statements made true
and accurate in all material respects.
4. Buyer hereby represents and warrants to Seller as follows:
4.1 Authority. Buyer has the right, power and authority to
enter into this Agreement and to perform all obligations required
to be performed by it hereunder.
4.2 Authorization. This Agreement and all other agreements
and documents executed and delivered by Buyer constitute valid and
legally binding obligations of Buyer enforceable in accordance with
their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and
subject to availability of equitable remedies.
5. Resignation of Officers and Directors. Concurrently with
the execution of this Agreement, Seller shall obtain and deliver to
Buyer resignations from all its directors and officers, together
with general releases by such persons of all claims that they may
have, or claim to have against The Company.
6. Survival of All Warranties and Representations. All
representations, warranties, covenants and agreements of the
parties contained in this Agreement will survive the closing.
7. Indemnification by Brian Pruett. Brian Pruett
individually, hereby agrees to indemnify, defend, protect and hold
Buyer, and/or its assigns, and SONIC AUCTION.com, INC., harmless
against and in respect of all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable
attorneys' fees, that The Company or Buyer may incur or suffer,
which arise, result from or relate to any breach or failure by
Brian Pruett or Seller to perform any of the representations,
warranties, covenants or agreements in this Agreement. Brian Pruett
further agrees to indemnify and hold Buyer and/or its assigns
harmless from all liabilities not disclosed to Buyer and accepted
by Buyer, and specifically, Buyer will not be responsible for any
back taxes owed by Brian Pruett or Seller to any taxing authority,
federal or state.
8. Attorneys' Fees and Costs. Each party shall be solely
responsible for the costs and fees of its own attorneys in
connection with the negotiation of this Agreement. If any suit,
legal proceeding, arbitration or other action is brought for the
enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party
shall be entitled to recover its reasonable attorneys' fees and
other costs incurred in such proceeding or action, in addition to
any other relief to which it may be entitled.
9. Governing Law. This Agreement will be construed in
accordance with, and governed by, the laws of the State of
California as applied to contracts that are executed and performed
entirely in California.
10. Disputes; Arbitration over Price. Any dispute arising
between the parties, their agents or employees shall be submitted
to arbitration before JAMS/ENDISPUTE of Orange County, California.
11. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
12. Counterpart and Facsimile Transmission. This Agreement
may be executed in two or more counterparts, each of which shall be
deemed an original, and all of which when taken together shall
constitute one and the same document. The signature of any party to
any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart. Any party may deliver its signed
counterpart of this Agreement to the other party by facsimile
transmission, and such delivery shall be deemed made and completed
upon receipt of such facsimile transmission by the other party. Any
party delivering a signed counterpart by facsimile transmission
agrees to promptly send the counterpart bearing its original
signature to the other party; provided that a delay or failure to
do so shall not negate the effectiveness of the delivery made by
the facsimile transmission.
13. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the
subject matter hereof and supersedes any and all prior or
contemporaneous written or oral negotiations or agreements between
them regarding the subject matter hereof. No addition, modification
or amendment of or to any term or provision of this Agreement, or
to this Agreement as a whole, shall be effective unless set forth
in writing and signed by all the parties hereto.
14. No Interpretation Against Draftsman. Both parties have
had an equal role in the preparation of this Agreement, such that
there shall be no interpretation or construction of terms against
the draftsman.
15. Attorneys. Seller and Buyer each acknowledge that the
other is represented by counsel and neither is relying in any
respect on any statements or representations of the other party's
counsel.
16. Broker's Fees. Each side shall pay its own broker's and
accountant's fees, if any.
WHEREFORE, the parties agree:
SELLER:
SONIC AUCTION.com, INC.
By: /s/ Brian Pruett
Brian Pruett, President
/s/ Brian Pruett
Brian Pruett, Shareholder
BUYER:
INTERNET BUSINESS'S
INTERNATIONAL, INC.
By: /s/ Al Reda
Al Reda, CEO
EX-10.15
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered
into as of October 19, 2000, by and between AUCTION-SALES.COM,
INC., a Delaware Corporation and Zahid Rafiq, an individual
(collectively "Seller"), and INTERNET BUSINESS'S INTERNATIONAL,
INC., a Nevada Corporation ("Buyer").
RECITALS
A. WHEREAS, Seller owns or controls 96.62% of outstanding
and treasury shares ("The Shares") of AUCTION-SALES.COM, INC.,
("The Company").
B. WHEREAS, Seller desires to sell and transfer to Buyer and
Buyers desires to purchase and acquire from Seller, 96.62% of the
Shares of THE COMPANY, upon the terms and subject to the
conditions set forth in this Agreement. Seller shall have the
obligation for assembling the Exhibits and Addenda, identified
below.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Purchase and Sale. Seller hereby sells, assigns,
transfers and delivers to Buyer, and Buyer hereby purchases and
acquires from Seller, the Shares upon the terms and subject to
the conditions set forth in this Agreement.
2. Purchase Price; Payment Terms.
(a) The purchase price for the Shares is that Buyer
shall transfer 11,000,000 shares of Buyer's Rule 144 Stock to
Seller for all of Seller's stock, as follows:
(i) 5,500,000 restricted shares will be issued to
current shareholders, identified on the list at Addendum "1".
(ii) 2,500,000 restricted shares will be paid to
certain creditors of THE COMPANY identified at Addendum "2."
Seller represents that all of the creditors at Addendum "2," are
unsecured. Seller shall procure signed consents from each
creditor identified at Addendum"2," confirming agreement to
accept restricted shares in proportion to their claims within 60
days of closing. Failure to procure signed consents will justify
rescission of this Agreement at the option of Buyer, such that
each party shall restore to the other the consideration which
each placed into this Agreement.
(iii) 3,000,000 restricted shares of the purchase price will be paid to
outside consultants for work performed for facilitating the transaction.
(b) Earn out for the "Seller"; The Sellers shall be paid up
to an additional $3,000,000 (Three Million Dollars) based upon
earnings over the next 3 years through additional rule 144 stock.
The earn out will be based on a 10% growth per year over the
previous years revenue. The $3,000,000 will be distributed
equally over the subsequent 3 year i.e. $1,000,000 per year, and
can be cumulative. This earn out is further defined as follows:
(i) The initial base Year ends on 9-30-00. The subsequent year base will
be the previous revenue
(ii) The stock will be issued per quarter upon reaching the Goal per
quarter for that portion of the annualized growth of 10% over the previous
year.
(c) Buyer may invest up to $2,000,000 to THE COMPANY, at a
Rate not to exceed $500,000 per quarter, based on performance on
THE COMPANY as a function of gross revenues and based on a
budget, which is pre-approved by Buyer.
3. Representations and Warranties of Seller. Seller
hereby represents and warrants to Buyer as follows:
3.1 Authority. Seller has the right; power and authority
to enter into this Agreement and to perform all obligations'
required to be performed by it hereunder. THE COMPANY has the
full power to transfer the Shares to Buyer without obtaining the
consent or approval of any other person or governmental
authority.
3.2 Title to Shares. Seller is the owner, beneficially and
of record, of all the Shares free and clear of all liens,
encumbrances, security agreements, equities, options, claims,
charges, and restrictions.
3.3 Organization. AUCTION-SALES.COM.,INC., is a
corporation dully organized, validly existing, and in good
standing under the laws of the State of Delaware and has all
necessary corporate powers to own its properties and operate its
business as now owned and operated by it. Exhibit "A" contains
the Articles of Incorporation, Bylaws, Minutes and Stock Book of
THE COMPANY.
3.4 Authorization. This Agreement and all other agreements
and documents executed and delivered by Seller constitute valid
and legally binding obligations of Seller enforceable in
accordance with their respective terms, subject to laws of
general application relation to bankruptcy, insolvency and the
relief of debtors and subject to availability of equitable
remedies.
3.5 Capitalization. The authorized capital stock of THE
COMPANY consists of shares of Common Stock, of which 100% of said
shares are held in THE COMPANY'S treasury or are issued to and in
possession of Zahid Rafiq, or to the persons identified in
Addendum "1." All of the outstanding shares are validly issued,
and paid, and nonassessable, and such shares have been so issued
in full compliance with all federal and state securities laws.
There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreement or
commitments obligating THE COMPANY to issue or to transfer from
treasury any additional shares of its capital stock of any class.
3.6 Financials. Exhibit "B," to this Agreement contains
the federal tax returns for THE COMPANY for the years 1997
through 1999. To the best of Seller's knowledge, there are not
outstanding taxes owed. Exhibit "C," to this Agreement sets
forth the financial statements of THE COMPANY, including the
balance sheets and statements of earnings as of September 30,
2000. The financial statements attached hereto as Exhibit "C,"
have been prepared in accordance with generally accepted
accounting principles consistently followed by THE COMPANY
throughout all periods indicated, and fairly present the
financial position of THE COMPANY on the respective dates of the
balance sheets included in the financial statements, and the
results of its operations for the respective periods indicated.
Since September 30, 2000, there has not been any change in the
financial condition or operations of THE COMPANY or its business,
assets, properties or prospects, except as set forth on Exhibit
"D," which also contains all of the debts and liabilities of THE
COMPANY.
3.7 Absence of Undisclosed Liabilities. THE COMPANY is not
aware of any debt, liability or obligation of any nature, whether
accrued, absolute, contingent or otherwise, and whether due or to
become due, that is not reflected in the financial statements,
except as set forth on Exhibit "D."
3.8 Tax Returns. Within the times and in the manner
prescribed by law, THE COMPANY has filed all federal, state and
local tax returns required by law and has paid all taxes,
assessments, including but not limited to income and payroll
taxes, and penalties. The provisions for taxes reflected in the
financial statements are adequate for all federal, state, county
and local taxes for the period that ended September 30, 2000, and
for all prior periods, whether disputed or undisputed. There are
no present disputes about taxes of any nature payable or owed by
THE COMPANY.
3.9 Personal Property. The books and records of THE
COMPANY contain a complete and accurate description and specify
the location of all equipment, furniture, supplies and all other
tangible personal property owned by, in the possession of, or
used by THE COMPANY in connection with its business. No Personal
property is held under any lease, security agreement, conditional
sales contract or other title retention or security arrangement,
or is located other than in the possession and under the control
of THE COMPANY. The tangible personal property reflected those
books and records constitutes all such tangible personal property
necessary for the conduct by THE COMPANY of its business as now
conducted. All of the tangible personal property of THE COMPANY
is in good operating condition and repair, reasonable wear and
tear excepted.
3.11 Title. THE COMPANY has good and marketable title to
all of its assets and interest in assets, whether real, personal,
mixed, tangible or intangible, which constitute all of the assets
and interest in assets that are used in the business of THE
COMPANY. All of these assets are free and clear of restrictions
or conditions to transfer or assignment and are free and clear of
mortgages, liens, pledges, charges, encumbrances, equities and
claims of third parties, except for (a) those disclosed on
Exhibit "D;" and (b) the lien for current taxes not yet due and
payable. Exhibit "E," to this Agreement is a schedule of all
personal assets owned by THE COMPANY which are in its possession.
3.12 Accounts Receivable. All accounts receivable of THE
COMPANY shown on the financial statements, and all accounts
receivable of THE COMPANY created after September 30, 2000, arose
from valid sales in the ordinary course of business. These
amounts have been collected in full since that date as reflected
in the books and records of THE COMPANY, or are collectible at
their full amounts and are not subject to valid defenses, setoffs
or counterclaims. THE COMPANY agrees that as of September 30,
2000, all receivables shall be the property of Buyer. Exhibit
"F" contains accounts receivable.
3.13 Accounts Payable. Exhibit "G," to this Agreement is a
complete and accurate list, with an accurate aging, of all trade
and other accounts, notes and contract payables of THE COMPANY as
of the date hereof, all which arose in the ordinary course of
business and are usual and normal in amount.
3.14 Deleted
3.15 Contracts. Except as otherwise disclosed in any of the
exhibits to this Agreement, THE COMPANY is not a party to, nor is
its properties or assets bound by, and contract, agreement,
understanding (whether written or verbal) of any nature
whatsoever. There is no default or event that, with notice,
lapse of time, or both, would constitute a default by any party
to any agreement to which THE COMPANY is a party or by which it
or its properties or assets are bound.
3.16 Employees and Employee Benefit Plans. Exhibit "h" to
this Agreement is a correct and complete list of all full-time
and part-time employees of THE COMPANY, together with their
address, social security numbers and all current and promised
salary, wage and bonus information. All of the employees of THE
COMPANY are at will employees and may be terminated by THE
COMPANY at any time without liability and without any obligation
to pay any severance or similar benefit. There are no employment
contracts, collective bargaining agreement, pension, bonus,
profit-sharing, stock option or other agreement or arrangement
providing for employee remuneration or benefits to which THE
COMPANY is party or by which it is bound. THE COMPANY has
delivered to Buyer a copy of its most current employee manual and
description of all company policies and practices, including no
discrimination, overtime, vacation, holiday and sick leave, if
any. THE COMPANY's relationship with all of its employees is
good. All unused vacation, holiday and sick leave, and any other
paid time off, for all of the employees has been properly and
accurately recorded in the books and records of THE COMPANY and
are reflected on Exhibit "I," attached hereto. All records of
THE COMPANY for each of its employees are complete and accurate.
There are no arrearages nor obligations outstanding or owed to
any employee, including but not limited to Zahid Rafiq.
3.17 Litigation. There is no pending, or, to Seller's
knowledge, threatened suit, action, arbitration or legal
administrative or other proceeding, or governmental investigation
against or affecting THE COMPANY or its business, assets or
financial condition. THE COMPANY is not presently engaged in any
legal action to recover money due to it or damages sustained by
it.
3.18 Compliance with Laws. Seller has not received notice
of any violation of any applicable federal, state or local
statute, law or regulation of any kind or nature whatsoever,
including, without limitation, any applicable building, zoning,
environmental protection, health and safety, handicap access, or
other law, ordinance or regulation, affecting its properties or
the operation of its business and there are not such violations.
Seller has all proper and valid licenses, permits and other
governmental authorities necessary to conduct business as now
being conducted.
3.19 Agreement will not Cause a Breach or Violation. The
consummation of the transactions contemplated by this Agreement
will not result in or constitute any of the following: (a) a
breach of any term or provision of this Agreement (b) a default
or an event that, with notice, lapse of time, or both, would be a
default, breach, or violation of the Articles of Incorporation or
Bylaws of THE COMPANY or any lease, license, promissory note,
conditional sales contract, commitment, indenture, mortgage, deed
of trust, or other agreement, instrument, or arrangement to which
it is bound (c) an event that would permit any party to terminate
any agreement or to accelerate the maturity of any indebtedness
or other obligation of THE COMPANY; or (d) the creation or
imposition of any lien, charge, or encumbrance on any of the
properties of THE COMPANY.
3.20 Corporate Records. All corporate records are in the
possession of Seller and are complete and accurate in all
material respects. The minute book of THE COMPANY contains
complete, accurate and current copies of the Articles of
Incorporation, Bylaws and all amendments thereto, and all records
required to be set forth of all proceedings, consents actions and
meetings of the shareholders and board of directors of THE COMPANY.
3.21 Persons with Authority. Exhibit "J," to this Agreement
contains a complete and accurate list of (a) all bank accounts of
THE COMPANY and all other accounts at any financial institutions,
including the names and addresses thereof and the account
numbers, and the signatory or signatories thereon; (b) the names
and addresses of all persons holding a power of attorney on
behalf of THE COMPANY; all safe deposit boxes and the names of
all persons authorized to have access thereto; and (d) the names
and addresses of all persons and entities which have guaranteed
any debts or obligation of THE COMPANY or with respect to whom
THE COMPANY has guaranteed any debts or obligation.
3.22 Full Disclosure. None of the warranties made by
Seller, whether in this Agreement of in the Exhibits or Addenda
hereto, will contain any untrue statement of material fact, or
omit to state any material fact necessary to make the statements
made true and accurate in all material respects. The existence
of any untrue statement of a material fact, shall be grounds for
rescission of this Agreement.
4. Buyer hereby represents and warrants to Seller as follows:
4.1 Authority. Buyer has the right, power and authority to
enter into this Agreement and to perform all obligations required
to be performed by it hereunder.
4.2 Authorization. This Agreement and all other agreements
and documents executed and delivered by Buyer constitute valid
and legally binding obligations of Buyer enforceable in
accordance with their respective terms, subject to laws of
general application relating to bankruptcy, insolvency and the
relief of debtors and subject to availability of equitable
remedies.
5. Resignation of Officers and Directors. Concurrently
with the execution of this Agreement, Seller shall obtain and
deliver to Buyer resignations from all THE COMPANY's directors
and officers, together with general releases by such persons of
all claims that they may have, or claim to have against THE COMPANY.
6. Survival of All Warranties and Representations. All
representations, warranties, covenants and agreements of the
parties contained in this Agreement will survive the closing.
7.1 Indemnification by Zahid Rafiq. Zahid Rafiq
individually, hereby agrees to indemnify, defend, protect and
hold Buyer, and/or its assigns, and AUCTION-SALES.COM,INC.,
harmless against and in respect of all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries
and deficiencies, including interest, penalties and reasonable
attorneys' fees, that THE COMPANY or Buyer may incur or suffer,
which arise, result from or relate to any fraudulent, intentional
or grossly negligent breach or failure by Zahid Rafiq or Seller
to perform any of the representations, warranties, covenants or
agreements in this Agreement. Zahid Rafiq further agrees to
indemnify and hold Buyer and/or its assigns harmless from all
liabilities not disclosed to Buyer and accepted by Buyer, and
specifically, Buyer will not be responsible for any back taxes
owed by Zahid Rafiq or Seller to any taxing authority, federal or
state.
7.2 Indemnification by Buyer. Buyer hereby agrees to
indemnify, defend, protect and hold Zahid Rafiq harmless against
and in respect of all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and reasonable attorneys' fees,
that he may incur or suffer, which arise after the date of
closing of this Agreement, that are not related to any fraudulent
or intentional breach or failure by Zahid Rafiq or Seller to
perform any of the representations, warranties, covenants or
agreements in this Agreement.
8. Attorneys' Fees and Costs. Each party shall be solely
responsible for the costs and fees of its own attorneys in
connection with the negotiation of this Agreement. If any suit,
legal proceeding, arbitration or other action is brought for the
enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing
party shall be entitled to recover its reasonable attorneys' fees
and other cost incurred in such proceeding or action, in addition
to any other relief to which it may be entitled.
9. Governing Law. This Agreement will be construed in
accordance with, and governed by, the laws of the State of
California as applied to contracts that are executed and
performed entirely in California.
10. Disputes; Arbitration over Price. Any dispute arising
between the parties, their agents or employees shall be submitted
to arbitration before JAMS/ENDISPUTE of Orange County,
California.
11. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
12. Counterparts and Facsimile Transmission. This Agreement
may be executed in two or more counterparts, each of which shall
be deemed an original, and all of which when taken together shall
constitute one and the same document. The signature of any party
to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart. Any party may deliver its
signed counterpart of this Agreement to the other party by
facsimile transmission, and such delivery shall be deemed made
and completed upon receipt of such facsimile transmission by the
other party. Any party delivering a signed counterpart by
facsimile transmission agrees to promptly send the counterpart
bearing its original signature to the other party; provided that
a delay or failure to do so shall not negate the effectiveness of
the delivery made by the facsimile transmission.
13. Entire Agreement. This Agreement contains the entire
understanding between the parties hereto with respect to the
subject matter hereof and supersedes any and all prior or
contemporaneous written or oral negotiations or agreements
between them regarding the subject matter hereof. No additions,
modification or amendment of or to any term or provision of this
Agreement, or to this Agreement as a whole, shall be effective
unless set forth in writing and signed by all the parties hereto.
14. No Interpretation Against Draftsman. Both parties have
had an equal role in the preparation of this Agreement, such that
there shall be no interpretation or construction of terms against
the draftsman.
15. Attorneys. Seller and Buyer each acknowledge that
the other is represented by counsel and neither is relying in any
respect on any statements or representations of the other party's
counsel.
16. Broker's Fees. Each side shall pay its own broker's
and accountant's fees, if any.
WHEREFORE, the parties agree:
SELLER:
AUCTION-SALES.COM,INC.
By: /s/ Zahid Rafiq
Zahid Rafiq, CEO
/s/ Zahid Rafiq
Zahid Rafiq, Shareholder
BUYER:
INTERNET BUSINESS'S
INTERNATIONAL, INC.
By: /s/ Al Reda
Al Reda, CEO
EX-21
SUBSIDIARIES OF THE REGISTRANT
LA Internet, Inc., a California corporation
MBM Capital Group, Inc., a Nevada corporation
Allstates Communication, Inc., a Nevada corporation
Global GPP Corp. (80%), a North Carolina corporation (100% owned
subsidiary: GPP Hungary Kft, a Hungary corporation)
Atlas Capital Corporation, a California corporation
International Business Co., a California corporation