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) NOVEMBER 14, 2001
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THE INTERNET ADVISORY CORPORATION
(Exact name of registrant as specified in its charter)
UTAH 0-16665 87-042635
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State or other jurisdiction (Commission File Number) (IRS Employer Identification No.)
of incorporation or organization)
150 E. 58TH STREET, NEW YORK, NY 10022
(Address of principal executive offices)(Zip Code)
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(212) 421-8480
(Registrant's Telephone Number, Including Area Code)
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N/A
(Former Name or Former Address, If Changed since Last Report.)
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
(a) Not Applicable.
(b) (1) The United States Bankruptcy Court, Southern District of Florida,
has entered an order (the "Order") confirming our Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code dated as of August 29, 2001.
(2) The date the Order was entered is November 14, 2001.
(3) The following is a summary of our Plan of Reorganization as
confirmed by the Bankruptcy Court.
Under the Plan of Reorganization (the "Plan"), we complied with Section
1129 of the Bankruptcy Code as a Debtor-in-Possession pursuant to Section 1107
and Section 1108 of the Bankruptcy Code. We also complied with Section 1129 of
the Bankruptcy Code as a good faith debtor seeking to reorganize its financial
affairs during the term of the Plan in order to pay off or substantially reduce
the principal due and owing to all allowed creditors ("Creditors") from our
continuing operations.
BACKGROUND
Subsequent to the date of filing of the Plan, we have continued to
provide comprehensive Internet services to our customers emphasizing the small
and medium- sized business market. We store our customers' website information
on a "virtual" basis but also provide our customers with server lease facility
resources, providing such customers with space to house equipment in our Tier 1
Data Center. We also offer a package of enhanced Internet tools, including
website design services and electronic commerce solutions (e-Commerce).
Our goal is to be a premier, full-service provider of Internet services
to small and medium-sized businesses. To accomplish this goal, we will endeavor
to expand our market presence, strengthen our Internet access and Web hosting
core service platforms, and add additional enhanced value service capabilities
through acquisitions and strategic relationships.
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to the Plan, the claims ("Claims") of Creditors and other
interested parties were divided into the following six classes ("Classes"):
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CLASS 1: Allowed Unsecured Lease Termination Damage Claim of Spring
Lake Partners
CLASS 2: Allowed Unsecured Rejected Bandwidth Contract Claims
CLASS 3: Allowed Unsecured Convenience Class Claims
CLASS 4: Allowed Unsecured Claims
CLASS 5: Equity Security Interest Claims ("White Knight Class")
CLASS 6: Equity Stock Option Holders
DESIGNATION AND TREATMENT OF UNIMPAIRED CLAIMS
ADMINISTRATIVE EXPENSE CLAIMS: These claims consisted primarily of the
balance of unpaid post-petition rent obligations to Spring Lake Partners
("Leasor") for the use and occupancy of our Fort Lauderdale, FL premises, the
balance of unpaid post-petition obligations to AT&T arising from the Internet
bandwidth contract by and between us and AT&T, and the fees and expenses of
professionals employed by us pursuant to the authorization of the Bankruptcy
Court.
PRIORITY TAX CLAIMS: The Allowed Priority Tax Claims of the Internal
Revenue Service were determined in accordance with Section 507(a)(8) of the
Bankruptcy Code. The total of such claims were approximately $11,680 which is
exclusively comprised of a claim in that amount of the Internal Revenue Service.
DESIGNATION AND TREATMENT OF IMPAIRED CLAIMS
CLASS 1: The claim of Spring Lake Partners was treated as an Unsecured
Claim. Spring Lake Partners shall receive deferred cash payments equal to ten
percent (10%) of its claim in twelve equal monthly installments.
CLASS 2: These claims represent Unsecured Rejected Bandwidth Contract
Claims of Winstar, Genuity Solutions, Inc., Expanets, Quest, AT&T, Bellsouth,
and MCI. These Creditors shall receive ten percent (10%) of their Allowed
Unsecured Claims. The Company estimates the total of such Allowed Unsecured
Claims to be $650,000.
CLASS 3: This class is composed of all Allowed Unsecured Claims less
than $2,500.00. Each claimant is to receive the lesser of the amount of the
claim or $100.
CLASS 4: Each claimant of an Allowed Unsecured Claim shall receive
deferred cash payments equal to five percent (5%) of the Claim in equal monthly
installments over one (1) year commencing ten days after the Plan Confirmation
Date.
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CLASS 5: The White Knight Class consists of Richard Goldring and all
equity security holders that choose to make an additional equity contribution to
us on or before November 30, 2001 ("White Knight Electors"). As of November 27,
2001 there are no White Knight Electors. Richard Goldring contributed $50,000 in
exchange for retention of all of his equity interest in the Company. White
Knight Electors are entitled to contribute $1.00 per share owned, subject to a
minimum of $1,000, and are allowed to retain up to 100% of their corresponding
equity interest in the Company.
All holders of our common stock who choose not to make a cash
contribution to us as a White Knight Elector will presently retain his, her or
its respective number of common shares in the Company but such shares will be
subject to a 1 for 50 reverse stock split ("Reverse Stock Split"). We intend to
effect the Reverse Stock Split on or about December 12, 2001 with respect to all
of our presently outstanding common shares other than those held by members of
the White Knight Class. As of November 27, 2001 Richard Goldring is the sole
member of the White Knight Class.
CLASS 6: Any and all holders of any of our equity stock options had
their options extinguished and will not receive any distribution under the Plan.
MANAGEMENT, DIRECTORS AND OFFICERS
We continue to be managed by Richard Goldring, President and Chief
Executive Officer, and John Neilson, Vice President and Secretary.
MEANS BY WHICH PLAN TO BE EFFECTUATED
Richard Goldring, our President and Chief Executive Officer, funded the
Plan. The funding was structured as a capital contribution in exchange for
retention of stock.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
As of the date of filing of the Plan, we expressly rejected all
executory contracts and unexpired leases set forth as Exhibit D of the
Disclosure Statement and filed as Exhibit 99.2 of this Form 8-K.
(4) The following table shows the number of issued and outstanding
shares of the Company's Common Stock as of the date of the Order. It does not
take into account the Reverse Stock Split, which has not yet been effected.
Shares of The Internet Advisory Corporation's Issued and
Outstanding Common Stock.....................................14,445,018
(5) Information about our assets and liabilities as of the date the
Bankruptcy Court issued the Order confirming our Plan will be filed by
amendment.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
99.1 Plan of Reorganization, dated August 29, 2001.
99.2 Disclosure Statement, dated August 27, 2001.
99.3 Order confirming Plan of Reorganization, dated November 14, 2001.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE INTERNET ADVISORY CORPORATION
Dated: November 29, 2001 By: /s/ Richard Goldring
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Richard Goldring
President & Chief Executive
Officer
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