UNITED STATES
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 (DATE OF EARLIEST EVENT REPORTED):
August 11, 2005
EDGETECH SERVICES INC.
(Formerly Secure Enterprise Solutions. Inc.)
-----------------------------------------------
(EXACT NAME OF REGISTRANT SPECIFIED IN CHARTER)
NEVADA 000-27397 98-0204280
------------------------------------------------------------------------------
(STATE OF (COMMISSION FILE (IRS EMPLOYER
INCORPORATION) NUMBER) IDENTIFICATION NO.)
501 Santa Monica Blvd, Suite 601
Santa Monica, California 90401
--------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(310) 857-6666
--------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Item 2 Acquisition or Disposition of Assets
Introduction
This Amendment to the Current Report on Form 8-K originally filed by the registrant on June 2, 2005 in connection with the registrant’s June 1, 2005 acquisition of Web’s Biggest Inc., a California corporation (“WB”), is being filed to amend Item 7 to include the required audited financial information omitted from the June 2 Form 8-K as permitted by subparagraphs (a) and (b) of Item 7.
ITEM 7. Financial Statements and Exhibits
Item 7 hereby is amended and supplemented as follows:
(a) Audited Financial Statements of Business Acquired on June 1, 2005.
This Form 8-K/A includes as exhibits audited consolidated financial statements of WB as of and for the year ended April 30, 2005.
(b) Exhibits*.
Exhibit No. | | Item |
| | |
1 | | Audited Consolidated Financial Statements of WB as of and for the year ended April 30. |
| | |
2 | | Share Purchase Agreement dated June 1, 2005. |
| | |
* Pursuant to Item 601(b)(2) of Regulation S-K, certain of the exhibits and schedules may have been omitted. If so, such exhibits and schedules will be provided to the Securities and Exchange Commission upon request.
SIGNATURE
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 thereunto duly authorized.
| Edgetech Services, Inc. |
| | |
| | |
Date: August 11, 2005 | By: | /s/ XAVIER ROY | |
| | Xavier Roy |
| | Chairman & Chief Executive Officer |
Exhibit 1
INDEPENDENT AUDITORS’ REPORT
WEB’S BIGGEST, LTD.
FINANCIAL STATEMENTS
APRIL 30, 2003, 2004 AND 2005
WEB’S BIGGEST, LTD.
FINANCIAL STATEMENTS
APRIL 30, 2003, 2004, AND 2005
INDEX TO FINANCIAL STATEMENTS
Page
Auditor’s Report................................................2
Combined Balance Sheet......................................3-4
Combined Statement of Operations and Retained Earnings..........5
Combined Statement of Cash Flows..............................6-7
Notes to Combined Financial Statements.......................8-9
DAVID B. LANTER, CPA, P.A.
130 SW 91ST AVENUE
SUITE 304
PLANTATION, FL 33324
(954) 557-0534
AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS
WEB’S BIGGEST, INC.
We have audited the accompanying balance sheet of Web’s Biggest, Ltd. as of April 30, 2003, 2004, and 2005, and the related statements of revenues and expenses, changes in retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of 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 misstatements. 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 Web’s Biggest, Ltd. as of April 30, 2003, 2004, and 2005 and the results of its operation and its cash flow for the period then ended in conformity with generally accepted accounting principles.
Respectfully submitted,
DAVID B. LANTER, CPA
August 7, 2005
2
WEB’S BIGGEST, LTD.
BALANCE SHEET
APRIL 30, 2003, 2004, AND 2005
ASSETS 2003 2004 2005
CURRENT ASSETS
Cash $ 343,553 $2,003,975 $542,297
Receivables:
Trade, net of
Allowance
for doubtful
accounts of $5,000. 0 120,194 244,389
TOTAL CURRENT ASSETS 343,553 2,124,169 786,686
Property & Equipment,
net of Accumulated
Depreciation 3,193 8,184 6,184
TOTAL ASSETS $346,746 $2,132,353 $792,870
LIABILITIES AND
SHAREHOLDERS’ EQUITY 2003 2004 2005
CURRENT LIABILITIES
Deferred Income 263,847 844,496 112,286
Loan Payable 5,490 0 0
TOTAL CURRENT
LIABILITIES 269,337 844,496 112,286
See accompanying auditor’s report and notes to financial statements.
3
WEB’S BIGGEST, LTD.
BALANCE SHEET (CONTINUED)
APRIL 30,2003, 2004, AND 2005.
Notes Payable-Shareholder 0 0 682,993
TOTAL LONG-TERM LIABILITIES 0 844,496 682,993
TOTAL LIABILITIES $269,337 $844,496 $795,279
SHAREHOLDERS’ EQUITY
Retained Earnings 77,409 1,287,857 (2,409)
TOTAL SHAREHOLDERS’ EQUITY 77,409 1,287,857 (2,409)
- ---------- -------- - -------
TOTAL LIABILITIES AND
SHAREHOLDER’S EQUITY $ 346,746 $2,132,353 $792,870
See accompanying auditor’s report and notes to financial statements.
4
WEB’S BIGGEST,LTD.
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
YEARS ENDED APRIL 30, 2003, 2004, AND 2005.
2003 2004 2005
GROSS SALES $111,802 $1,540,663 $1,823,334
LESS:REFUNDS (23,785) (149,040) (83,452)
NET SALES $88,017 $1,391,623 $1,739,882
COST OF SALES 1,939 156,433 185,615
GROSS PROFIT 86,078 1,235,190 1,554,267
OPERATING EXPENSES:
General &
Administrative 9,102 18,465 12,753
Selling 333 2,786 2,810
TOTAL OPERATING
EXPENSES 9,435 21,251 15,563
PROFIT (LOSS) FROM
OPERATIONS 76,643 1,213,939 1,538,704
OTHER INCOME
(EXPENSE): 766 4,725 7,888
NET INCOME $77,409 $1,218,664 1,546,592
RETAINED EARNINGS - - BEG. 0 77,409 1,287,857
DISTRIBUTIONS 0 8,216 2,836,858
RETAINEDD EARNINGS-END $77,409 1,287,857 $(2,409)
See accompanying auditor’s report and notes to financial statements.
WEB’S BIGGEST, LTD.
COMBINED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
YEARS ENDED APRIL 30, 2003, 2004, AND 2005.
CASH FLOWS FROM
OPERATING ACTIVITIES: 2003 2004 2005
Net Profit 77,409 1,218,664 $1,546,592
Adjustments to
reconcile net profit
to net cash used
by operating
activities:
Depreciation 798 2,356 2,445
Changes in assets and
liabilities:
Decrease (Increase)
in receivables 0 (120,194) (124,195)
Increase (Decrease)
in Deferred Income 263,847 580,649 (732,210)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 342,054 1,681,475 692,632
CASH FLOWS FROM
INVESTING ACTIVITIES:
Expenditures for
property and equipment(3,991) (7,792) (445)
NET CASH USED IN
INVESTING ACTIVITIES (3,991) (7,792) (445)
See accompanying auditor’s report and notes to financial statements.
6
WEB’S BIGGEST, LTD.
STATEMENT OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH
YEARS ENDED APRIL 30, 2005
CASH FLOWS FROM FINANCING
ACTIVITIES: 2005 2003 2004
Borrowings (Repayments)
on note payable-
shareholder 5,490 (5,490) 682,993
Payment of Distributions
to owners. 0 (7,771) (2,836,858)
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES 5,490 (13,261) (2,153,865)
NET INCREASE (DECREASE)
IN CASH 343,553 1,660,422 (1,416,678)
CASH - BEGINNING OF YEAR 0 343,553 2,003,975
CASH - END OF YEAR $343,553 $2,003,975 $542,297
See accompanying auditor’s report and notes to financial statements.
7
WEB’S BIGGEST, LTD.
NOTES TO FINANCIAL STATEMENTS
April 30, 2003, 2004, and 2005.
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Business: The financial statements presented are those of Web’s Biggest, Ltd. and subsidiaries. The financial results of all of the businesses which are owned and controlled by the same members are represented in the financial statements. The entities have been combined and all intercompany accounts eliminated.
Property and Equipment: Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization is provided principally on the straight-line basis method over the estimated useful lives of the assets. When property is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any resulting gains or losses are credited or charged to operations.
Revenue Recognition: The businesses recognize product revenue at the time of it is earned. The company collects from its customers on a quarterly basis and enters this into the Deferred Income account. Revenue is then accounted for monthly as the Deferred Income account is debited.
Income Taxes: This company was previously composed of Limited Liability Corporations. Each member of the LLC was responsible for their proportionate share of shareholders’ taxable income prior to the creation of the new entity. Therefore, no liability or provision for federal income taxes has been made.
Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenue and expenses. The
estimates used are primarily the useful life of assets and allowance for doubtful accounts. All of management’s estimates have been reviewed for reasonableness.
8
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment at April 30, 2005 is summarized as follows:
Computer Equipment $
11,783
Less: accumulated depreciation
(5,599)
Total Property and Equipment, net of depreciation
$
6,184
NOTE C - CURRENT LIABILITIES
Deferred Income represents unearned income from subscribers who are billed and pay on a quarterly basis yet the income is earned monthly.
NOTE D - LONG-TERM DEBT AND RELATED PARTIES
At April 30, 2005, Notes Payable to Shareholders total $682,993 in the financial statements and are comprised of income earned by the Limited Liability Companies and not paid to the original members while the cash is still in the bank this should balance out between assets and liabilities. Should related accounts receivable become uncollectible, no liability exists for Web’s Biggest, Inc. for the uncollectible amounts.
NOTE E - CONCENTRATIONS OF RISK
Web’s Biggest, Inc. maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Business has not experienced any losses in such accounts. -Management believes the Business is not exposed to any significant credit risk related to cash.
NOTE F - SUBSEQUENT EVENTS
In May 2005, and subsequent to the date of these financial statements, Web’s Biggest Ltd. was subsequently acquired by Web’s Biggest Inc.On June 2,2005, EdgeTech Services, Inc. signed a definitive agreement to acquire Web’s Biggest, Inc. As part of this agreement, EdgeTech will receive a cash injection of $250,000 from Web’s Biggest. The current shareholders of Web’s Biggest, Inc. will become new officers of EdgeTech Services and will continue with the same business procedures.
9
Exhibit 2
WEB’S BIGGEST, INC.
COMMON STOCK PURCHASE AGREEMENT
This agreement (the "AGREEMENT") is made effective as of May 27,
2005 (the "EFFECTIVE DATE"), by and between Web’s Biggest, Inc., a California
corporation (the "COMPANY") and Edgetech Services Inc., a Nevada corporation (the
"PURCHASER") and Advisors LLC, an Iowa Limited Liability Corporation and Xavier Roy (collectively the “Sellers”).
SECTION 1
SALE OF COMMON STOCK
1.1 SALE OF COMMON STOCK. Subject to the terms and conditions hereof, the Seller will sell to the Purchaser and the Purchaser will buy from the Seller a total of 100 shares of The Company, representing 100% of the issued and outstanding shares of The Company, at the aggregate purchase price of $19,014,975 in return for 25,000,000 (twenty five million) new Convertible Preferred Shares of the Purchaser to be issued at per share price of $0.76. The Preferred Shares issued to the Sellers will be convertible at a rate of 25.3533 shares of Purchaser Common Stock for each share of Purchaser Preferred Stock. At any future shareholder meeting of the Purchaser beyond the Closing, the rightful owners of the Purchaser Convertible Preferred Stock will be entitled to voting rights equal to the number of Purchaser Common Stock that the Purchaser Convertible Preferred Stock may convert into notwithstanding the fact the Purchaser Convertible Preferred Stock has not been converted to Purchaser Common stock. Sellers may convert Convertible Purchaser Preferred Stock at any time by providing written instructions to the Company Secretary of the Purchaser instructing the Secretary to convert the Convertible Purchaser Preferred Stock into Purchaser Common Stock.
SECTION 2
CLOSING DATE; DELIVERY
2.1 CLOSING. The closing (the "CLOSING") shall be held as promptly as practicable after satisfaction of the closing conditions in Section 4 and Section 5 of this Agreement (the date and time of the Closing is hereinafter referred to as the "CLOSING DATE").
2.2 DELIVERY AND PAYMENT. At the Closing, the Company will deliver to the Purchaser, with respect to the Shares being purchased at the Closing, certificates, registered in the Purchaser's name, representing the number of Shares to be purchased by the Purchaser at the Closing, against payment of the aggregate purchase price of $$19,014,975.
The purchase price shall be paid in shares of Purchaser Preferred Stock. The authorized capital of the Purchaser must be increased pursuant to a resolution put to shareholders of the Purchaser in a future shareholder meeting in order to enable all of the Convertible
Purchaser Preferred Stock to be converted to Purchaser Common Stock. The Purchaser agrees that the Sellers of the Company will be entitled to vote at said meeting.
2.3 INVESTMENT. On Closing The Company agrees to allocate US$250,000 to be invested in the general business operations of the Purchaser.
2.4 SHARE BUY BACK. The shareholders of the Company and its nominated Director (s) agree to adopt a resolution at the first meeting of the Board of Directors to be held after Closing to establish a Share Buy Back Plan to repurchase up to 20,000,000 of the issued and outstanding stock of the Purchaser.
2.5 BOARD OF DIRECTORS. At Closing, the Purchaser will hold a meeting of the Board of Directors for the purpose of adopting a resolution to appoint Xavier Roy to the position of Chairman and CEO of the Purchaser, Shawn Manesh to the position of independent Director and to accept the resignations of all current members of the Board Of Directors of the Purchaser with the exception of Tae Ho Kim who shall remain a Director of the Purchaser.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER
The Company represents and warrants to the Purchaser that, as of the date of the Closing:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES
(a) Company and each directly and indirectly owned subsidiary of Company (the "COMPANY SUBSIDIARIES") has been duly organized and is validly existing and in good standing (to the extent applicable) under the laws of the jurisdiction of its incorporation or organization, as the case may be, and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Company and each Company Subsidiary is duly qualified or licensed to do business, and is in good standing (to the extent applicable), in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that cou ld not reasonably be expected to have, individually or in the aggregate, any change in or effect on the business of Company and the Company Subsidiaries that, individually or in the aggregate (taking into account all other such changes or effects), is, or is reasonably likely to be, materially adverse to the business, assets, liabilities, financial condition, results of operations or prospects of Company and the Company Subsidiaries, taken as a whole (a MATERIAL ADVERSE EFFECT")
3.2 CAPITALIZATION. The authorized capital stock of Company consists of 100 shares of Company Common Stock. As of the date hereof 100 shares of Company Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable. No shares of Company Common Stock are held in the treasury of Company. No shares of Company Common Stock are held by Company Subsidiaries.
3.3 CORPORATE POWER; AUTHORIZATION. Company and the Seller have all necessary corporate power and authority to execute and deliver this Agreement.
3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of the Authorized Agreements by Company do not, and the performance by Company of its obligations hereunder and under each such agreement and the sale of the Shares will not, (i) conflict with or violate any provision of the certificate of incorporation or bylaws of Company or any equivalent organizational documents of any Company Subsidiary, (ii) assuming that all filings and notifications described in Section 3.5(b) have been made, conflict with or violate any Law applicable to Company or any Company Subsidiary or by which any property or asset of Company or any Company Subsidiary is bound or affected or (iii) result in any breach of or constitute a default (or an event which with the giving of notice or lapse of time or both could reasonably be expected to become a default) under, or give to other s any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Company or any Company Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation.
(b) The execution and delivery of this Agreement by Company do not, and the performance by Company of its obligations hereunder and the sale of the Shares will not, require any consent, approval, authorization or permit of, or filing by Company with or notification by Company to any United States Federal, state or local or any foreign governmental, regulatory or administrative authority, agency or commission or any court, tribunal or arbitral body (a "GOVERNMENTAL ENTITY"), except pursuant to applicable requirements of the Exchange Act, the Securities Act of 1933, as amended (the "SECURITIES ACT"), Blue Sky Laws and the rules and regulations of the NASD.
3.5 PERMITS; COMPLIANCE WITH LAWS. Company and the Company Subsidiaries are in possession of all material franchises, grants, authorizations, licenses, establishment registrations, product listings, permits, easements, variances, exceptions, consents, certificates, identification and registration numbers, approvals and orders of any Governmental Entity necessary for Company or any
Company Subsidiary to own, lease and operate its properties or to offer or perform its services or to develop, produce, store, distribute and market its products or otherwise to carry on its business as it is now being conducted (collectively, the "COMPANY PERMITS"), and, as of the date of this Agreement, none of the Company Permits has been suspended or cancelled nor is any such suspension or cancellation pending or, to the knowledge of Company, threatened. Neither Company nor any Company Subsidiary is in conflict with, or in default or violation of, (i) any Law applicable to Company or any Company Subsidiary or by which any property or asset of Company or any Company Subsidiary is bound or affected or (ii) any Company Permits except for such conflicts, defaults or violations which could not in the aggregate be reasonably expected to have a Material Adverse Effect. Neither Company nor any Company Subsidiary has received from any Governmental Entity any wr itten notification with respect to possible conflicts, defaults or violations of Laws.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Company and the Company Subsidiaries have conducted their businesses only in the ordinary course consistent with past practice and there has not been (i) any Material Adverse Effect on the Company, (ii) any event that could reasonably be expected to prevent or materially delay the performance of Company's obligations pursuant to this Agreement and the sale of the Shares by Company.
3.7 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) The Company currently does not have an employee benefit plan.
(f) Company does not have any non at will employee agreements.
(g) Neither Company nor any Company Subsidiary is a party to, or has any obligations under or with respect to, any collective bargaining or other labor union contract applicable to persons employed by Company or any Company Subsidiary and no collective bargaining agreement is being negotiated by Company or any Company Subsidiary or any person or entity that may obligate the Company or any Company Subsidiary thereunder. As of the date of this Agreement, there is no labor dispute, strike, union organizing activity or work stoppage against Company or any Company Subsidiary pending or, to the knowledge of Company, threatened or may interfere with the respective business activities of Company or any Company Subsidiary. As of the date of this Agreement, to the knowledge of Company, none of Company, any Company Subsidiary, or any of their respective representatives o r employees has committed any unfair labor practice in connection with the operation of the respective businesses of Company or any Company Subsidiary, and there is no charge or complaint against Company or any Company Subsidiary by the National Labor Relations Board or any comparable Governmental Entity pending or threatened in writing.
3.8 CONTRACTS. Neither Company nor any Company Subsidiary is in violation of or in default under (nor does there exist any condition which with the passage of time or the giving of notice could reasonably be expected to cause such a violation of or default under) any contract or agreement that is material to the business, assets, liabilities, financial condition or results of operations of Company and Company Subsidiaries, taken as a whole (each, a "MATERIAL CONTRACT"). Each Material Contract is in full force and effect and is a legal, valid and binding obligation of Company or a Company Subsidiary and, to the knowledge of Company, each of the other parties thereto, enforceable in accordance with its terms.
3.9 LITIGATION . There is no suit, claim, action, proceeding or investigation pending or, to the knowledge of Company, threatened against Company or any Company Subsidiary that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or materially interfere with Company's ability to consummate the transactions contemplated hereby, and, to the knowledge of Company, there are no existing facts or circumstances that could reasonably be expected to result in such a suit, claim, action, proceeding or investigation. Company is not aware of any facts or circumstances which could reasonably be expected to result in the denial of insurance coverage under policies issued to Company and Company Subsidiaries in respect of such suits, claims, actions, proceedings and investigations, except in any case as could not reasonably be expected to have, individually or in the ag gregate, a Material Adverse Effect on the Company. Neither Company nor any Company Subsidiary is subject to any outstanding order, writ, injunction or decree which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or materially interfere with Company's ability to consummate the transactions contemplated hereby.
3.10 ENVIRONMENTAL MATTERS. To the Company's knowledge, except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, (i) Company and the Company Subsidiaries are in compliance with all applicable Environmental Laws and all Company Permits required by Environmental Laws; (ii) all past noncompliance of Company or any Company Subsidiary with Environmental Laws or Environmental Permits has been resolved without any pending, ongoing or future
obligation, cost or liability; and (iii) neither Company nor any Company Subsidiary has released a Hazardous Material at, or transported a Hazardous Material to or from, any real property currently or formerly owned, leased or occupied by Company or any Company Subsidiary, in violation of any Environmental Law. For purposes of this Agreement, "ENVIRONMENTAL LAW" shall mean any Law and any enforceable judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to pollution or protection of the environment or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Material, as in effect as of the date hereof. "ENVIRONMENTAL PERMIT" shall mean any permit, approval, identification number, license or other authorization required under or issu ed pursuant to any applicable Environmental Law. "HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (ii) any chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant or contaminant or waste under any applicable Environmental Law.
3.11 INTELLECTUAL PROPERTY. All patents (including, without limitation, all U.S. and foreign patents, patent applications, patent disclosures, and any and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof), design rights, trademarks, trade names and service marks (whether or not registered), trade dress, Internet domain names, copyrights (whether or not registered) and any renewal rights, database usage rights, statistical models, technology, inventions, supplier lists, trade secrets, know-how, computer software programs or applications in both source and object code form, databases, technical documentation of such software programs ("TECHNICAL DOCUMENTATION"), registrations and applications for any of the foregoing and all other tangible or intangible proprietary information or materials that are or have been used in (including, without limitation, in the development of) Company's business and/or in any product, technology or process (i) currently being or formerly manufactured, published or marketed by Company or (ii) previously or currently under development for possible future manufacturing, publication, marketing or other use by Company are hereinafter referred to as the "COMPANY INTELLECTUAL
PROPERTY."
(a) All of Company's patents, patent applications, registered trademarks, and trademark applications, and registered copyrights remain in good standing with all fees and filings due as of the Closing Date duly made.
(b) Company Intellectual Property contains only those items and rights which are: (i) owned by Company; (ii) in the public domain; or (iii) rightfully used by Company pursuant to a valid and enforceable license or other permission by owner (the "COMPANY LICENSED INTELLECTUAL PROPERTY"). Company has all rights in Company Intellectual Property necessary to carry out Company's current activities (and had all rights necessary to carry out its former activities at the time such activities were being conducted), including without limitation, to the extent required to carry out such activities, rights to make, use, reproduce, modify, adopt, create derivative works based on, translate, distribute (directly and indirectly), transmit, display and perform publicly, license, rent and lease and, other than with respect to Company Licensed Intellectual Property, a ssign and sell, Company Intellectual Property.
(c) To the best of Company's knowledge, the reproduction, manufacturing, distribution, licensing, sublicensing, sale or any other exercise of rights in any Company Intellectual Property, product, work, technology or process necessary for operation of Company's business as presently conducted by Company does not infringe on any rights in
patent, design right, trademark, trade name, service mark, trade dress, Internet domain name, copyright, database, statistical model, technology, invention, supplier list, trade secret, know-how, computer software program or application of any person, anywhere in the world. Other than with respect to Company Licensed Intellectual Property, no claims (i) challenging the validity, effectiveness or, ownership by Company of any Company Intellectual Property, or (ii) to the effect that the use, distribution, licensing, sublicensing, sale or any other exercise of rights in any product, work, technology or process as now used or offered for use, licensing, sublicensing or sale by Company or its agents or use by its customers infringes or will infringe on any intellectual property or other proprietary or personal right of any person, have been asserted or, to the knowledge of Company, are threatened by any person, nor are there, to Company's knowle dge, any valid grounds for any bona fide claim of any such kind. All of the rights within Company Intellectual Property (except with respect to Company Licensed Property), and to Company's knowledge, all the rights in Company's Licensed Intellectual Property, necessary for use in the operation of the Company's business by Company as presently conducted are enforceable and subsisting. To the knowledge of Company, there is no unauthorized use, infringement or misappropriation of any Company Intellectual Property by any third party, employee or former employee.
3.12 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the sale
of Shares based upon arrangements made by or on behalf of Company.
3.13 CERTAIN BUSINESS PRACTICES. Neither Company nor any Company
Subsidiary nor any directors, officers, agents or employees of Company or any
Company Subsidiary (in their capacities as such) has not made any unlawful payment.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby severally represents and warrants to the Company
as follows:
4.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Purchaser and its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted, except where the failure to do so would not, individually or in the aggregate, have a Material Adverse Effect on Purchaser. Each of Purchaser and its subsidiaries is in possession of all Approvals necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted, except where the failure to have such Approvals would not, individually or in the aggregate, have a Material Adverse Effect on Purchaser. Each of Purchaser and its subsidiaries is duly qualified or licen sed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that would not, either individually or in the aggregate, have a Material Adverse Effect on Purchaser.
4.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Purchaser holds complete and correct copies of its certificate of incorporation and bylaws.
4.3 CAPITALIZATION. (i) The authorized capital stock of Purchaser consists
of 600,000,000 shares of Purchaser Common Stock at par value of $0.001. There are 70,425,950 shares of Purchaser Common Stock issued and outstanding as the date of Closing. There are no pending issues of Common Stock as at the date of Closing. (ii) The Purchaser has a stock option plan enabling it to grant options for up to 2,800,000 shares of Common Stock to directors and employees of the Purchaser. The exercise price of all stock options granted under the stock option plan must be at least equal to the fair market value (subject to regulated discounts) of such shares of common stock on the date of grant. Stock options granted to directors and employees of Purchaser generally have a life of five years and frequently vest equally over the first three years. There are 1,035,000 Stock Options outstanding as at the date of Closing with a weighted average stock price of $0.35 cents. (iii) There are no outstanding warrants that remain unex pired as at the date of Closing. (iv) The Purchaser may issue up to 25,000,000 (twenty five million) shares of Purchaser Preferred Stock.
4.4 AUTHORITY RELATIVE TO THE AUTHORIZED AGREEMENTS. Purchaser has all necessary corporate power and authority to perform its obligations under the transactions contemplated under the Authorized Agreements.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution of this Agreement by Purchaser shall not, (i) conflict with or violate the certificate of incorporation, bylaws or equivalent organizational documents of Purchaser or any of its subsidiaries, (ii) subject to compliance with the requirements set forth in Section 4.5(b) below, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Purchaser or any of its subsidiaries or by which it or their respective properties are bound or affected, or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair Purchaser's or any such subsidiary's rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a li en or encumbrance on any of the properties or assets of Purchaser or any of its subsidiaries pursuant to, any material note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Purchaser or any of its subsidiaries is a party or by which Purchaser or any of its subsidiaries or its or any of their respective properties are bound or affected, except to the extent such conflict, violation, breach, default, impairment or other effect could not in the case of clauses (ii) or (iii) individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Purchaser.
(b) The execution of this Agreement by Purchaser shall not require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity except (i) for applicable requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws, the rules and regulations of the NASD, and (ii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, (x) would not prevent the sale of Shares and issuance of Warrant or otherwise prevent Purchaser from performing their respective obligations under this Agreement or (y) could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on Purchaser.
4.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Purchaser has made available to Company a correct and complete copy of each report, schedule, registration statement and definitive proxy statement filed by Purchaser with the SEC, which are all the forms, reports and documents required to be filed
by Purchaser with the SEC. The Purchaser SEC Reports (A) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and (B) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of Purchaser's subsidiaries is required to file any reports or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in each case, any related notes thereto) contained in the Purchaser SEC Reports was prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, do not contain footnotes as permitted by Form 10-Q of the Exchange Act) and each fairly presents the consolidated financial position of Purchaser and its subsidiaries at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements were or are subject to normal adjustments which were not or are not expected to be material in amount.
4.7 BROKERS. Purchaser has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement or any transaction contemplated hereby.
4.8 INVESTMENT INTENT; BLUE SKY. Purchaser is acquiring the Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof.
4.9 NO PUBLIC MARKET. Purchaser understands that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company's securities.
4.10 RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS. Purchaser understands that the transfer of the Shares is restricted by applicable state and Federal securities laws.
4.11 AUTHORIZATION. All action on the part of the Purchaser's partners, board of directors, and stockholders, as applicable, necessary for the authorization, execution, the purchase of and payment for the Shares and the performance of all of the Purchaser's obligations has been taken or will be taken prior to the Closing. This Agreement, when executed and delivered by the Purchaser, shall constitute valid and binding obligations of the Purchaser, enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
4.12 ACCREDITED INVESTOR. Purchaser is an "accredited investor" within the meaning of SEC Rule 501 or Regulation D, as presently in effect. The Purchaser acknowledges that it has had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel. Purchaser is relying solely on its own legal counsel and not on the Company or any of the Company's agents for legal advice with respect to this investment or the transactions contemplated by this Agreement.
SECTION 5
CONDITIONS TO CLOSING OF THE PURCHASER.
The Purchaser's obligation to purchase the Shares is, unless waived in writing by the Purchaser, subject to the fulfillment as of the date of such Closing of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the date of the Closing.
5.2 COVENANTS. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects.
5.3 BOARD OF DIRECTORS. Upon the Closing, the authorized number of the
Company's directors shall be 5 members 1 of whom shall be designated by the
Purchaser and 2 designated by the Company. The Directors designated by The Company are Xavier Roy (to become Chairman & CEO) and Shawn Manesh (independent Director).
5.4 NO ORDER. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the sale of Shares illegal or otherwise prohibiting consummation of the transactions contemplated under this Agreement.
SECTION 6
CONDITIONS TO CLOSING OF THE COMPANY.
The Company's obligation to sell the Shares at the Closing is subject to the fulfillment as of the date of such Closing of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations made in Section 4 hereof by the Purchaser purchasing at the Closing shall be true and correct as of the date of the Closing.
6.2 COVENANTS. All covenants, agreements, and conditions contained in this Agreement to be performed or complied with by the Purchaser on or prior to the date of the Closing shall have been performed or complied with in all material respects.
6.3 NO ORDER. No Governmental Entity shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and which has the effect of making the sale of Shares illegal or otherwise prohibiting consummation of the transactions contemplated under this Agreement.
6.4 CONDITIONS SUBSEQUENT. The Purchaser agrees that the Terms of outstanding loans from shareholders of the Purchaser to the Purchaser as at the date of Closing will be renegotiated and redocumented within 30 days of Closing to reflect a repayment period of two years.
SECTION 7
ADDITIONAL AGREEMENTS
7.1 EMPLOYMENT AGREEMENTS. Upon completion of execution of this Agreement, the Company agrees to order its nominated representatives to the Board of Directors of the Purchaser not to terminate current Employment Agreements for Tae Ho Kim and Sang Ho Kim and to extend the term of the said Employment Agreements for a period of three years commencing from the Closing. However, in the event that the Edgetech Service business (defined substantially as all of the operations of the Canadian subsidiary of the Purchaser) are sold to or merged with another entity that is not affiliated with the Purchaser the Employment Agreements will be assigned to that entity. If the Employment Agreements are assigned to another entity and the Purchaser will be released from any liability or obligations arising from the Employment Agreements. In the event that the Employment Agreements are terminated prior to 36 (thirty six) months from the date of Closing, the Purchaser will pay the greater of $100,000 or the amount unpaid according to the Employment Agreements.
SECTION 8
MISCELLANEOUS
8.1 GOVERNING LAW. This Agreement shall be governed in all respects by the internal laws of the State of Nevada.
8.2 ENTIRE AGREEMENT. This Agreement, including the exhibits hereto, constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.
8.3 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by facsimile transmission, by hand or by messenger, addressed:
(a) if to the Company, to:
Web’s Biggest, Inc.
501 Santa Monica Boulevard, Suite 601
Santa Monica, CA, 90401
Attn: Xavier Roy
Fax: (310) 393 5455
(b) if to the Purchaser, to:
Edgetech Services, Inc.
18 Wynford Drive
Suite 704
Toronto, Ontario
M3C 3S2
Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when received if delivered personally, if sent by facsimile, the first business day after the date of confirmation that the facsimile has been successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid.
8.4 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach or default of another party under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either und er this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.
8.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which together shall constitute one instrument.
8.6 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision, which shall be replaced with an enforceable provision closest in intent and economic effect as the severed provision; PROVIDED HOWEVER, that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
8.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
8.8 SUCCESSORS AND ASSIGNS. This Agreement shall not be assigned without the consent of both parties to the Agreement. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
8.9 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of this Agreement shall not survive the Closing of this
Agreement.
8.10 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with written consent of the Company and the Purchaser.The foregoing agreement is hereby executed effective as of the date first set forth above.
"COMPANY"
"PURCHASER"
Web’s Biggest, INC.,
Edgetech Services INC.
a California corporation
A Nevada Corporation
By:
By:
---------------------------
-------------------------
Name:
Name:
-------------------------
-----------------------
Title:
Title:
------------------------
----------------------
"SELLER"
Advisers, LLC,
An Iowa Limited Liability Corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
"SELLER"
Xavier Roy
By:
---------------------------
Name:
-------------------------
