SCHEDULE 14C
Information Statement Pursuant to
Section 14(c) of the Securities Exchange Act of 1934
Check the appropriate box:
[X] Preliminary Information Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
24HOLDINGS INC.
(Name of Registrant as Specified in its Charter)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: Not
applicable.
(2) Aggregate number of shares to which transaction applies: Not
applicable.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Not applicable.
(4) Proposed maximum aggregate value of transaction: $100,000.
(5) Total fee paid: $20.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing fee for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid: Not applicable.
(2) Form, Schedule or Registration Statement No.: Not applicable.
(3) Filing Party: Not applicable.
(4) Date Filed: Not applicable.
24HOLDINGS INC.
Cyberia House
Church Street, Basingstoke
Hampshire RG21 7QN
United Kingdom
+44 1256 867 800
INFORMATION STATEMENT
This information statement is circulated to advise the stockholders of
24Holdings Inc., a Delaware corporation formerly known as Scoop, Inc. (the
"Company"), of action proposed to be taken without a meeting upon the written
consent of the holder of a majority of the outstanding shares of the common
stock of the Company.
This information statement was first sent to the stockholders of the
Company on or about June __, 2005.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU
ARE REQUESTED NOT TO SEND US A PROXY.
PROPOSED ACTION TO BE TAKEN
The matter upon which action is proposed to be taken is a proposed sale by
the Company of all of the outstanding stock of 24STORE (Europe) Limited, a
Company incorporated under the laws of England formerly known as 24STORE.com
Limited and currently operating in the United Kingdom ("24STORE"), to InfiniCom
AB, a company registered in Sweden and the owner of a majority of the issued and
outstanding stock of the Company ("InfiniCom"). As the Company is as a holding
company and the shares of 24STORE held by the Company constitute substantially
all of the Company's assets, the sale of 24STORE to InfiniCom will result in the
Company continuing its existence as a shell company with no subsidiaries and no
business operations. The Agreement for the Sale of Shares in 24 STORE (Europe)
Limited dated as of May 26, 2005, by and between the Company and InfiniCom (the
"Agreement"), which governs the sale of 24STORE stock, is attached hereto as
Exhibit A. The sale of the Company's stock in 24STORE will not result in any
material differences in the rights of security holders of the Company.
In connection with the Agreement, the Company, 24STORE and InfiniCom also
entered into an Agreement for the Sale and Purchase of Intellectual Property
Rights, pursuant to which the Company and 24STORE have agreed to transfer all of
their right, title and interest in certain trademarks and domain names to
InfiniCom. In exchange for the transfer of intellectual property rights,
InfiniCom will pay to the Company the sum of GBP (pound)350,000 and an amount to
be determined by the parties at the closing of the sale of 24STORE stock to
InfiniCom, such sum to be paid through a set-off against all outstanding and
contingent liabilities of the Company to InfiniCom as of the closing of the
sale.
In connection with the sale of the stock of 24STORE to InfiniCom, InfiniCom
has entered into a Common Stock Purchase Agreement dated as of May 26, 2005, by
and among InfiniCom, the Company, Moyo Partners, LLC and R&R Biotech Partners
LLC, whereby InfiniCom will sell all of its shares of the Company's common stock
to Moyo Partners, LLC and R&R Biotech Partners LLC. The common stock to be
transferred will include 34,459,500 shares of common stock of the Company that
will be issued upon the conversion of Series A Preferred Stock that InfiniCom
will receive in exchange for discharging US$230,879 of current and outstanding
debt owed to InfiniCom by the Company, pursuant to a Preferred Stock Purchase
Agreement dated as of May 26, 2005, between the Company and InfiniCom. This
proposed sale of InfiniCom's stock in the Company will result in a change in
control of the Company.
On May 26, 2005, the Company's Board of Directors approved the sale of its
shares in 24STORE to InfiniCom.
The sale of the Company's shares of 24STORE will constitute the sale of
substantially all of the assets of the Company. Pursuant to Section 271 of the
Delaware General Corporation Law (the "DGCL"), the holders of a
-1-
majority of the outstanding voting stock of a corporation are required to adopt
a resolution to authorize any sale of substantially all of the corporation's
property and assets. If the proposed sale of 24STORE shares were not to be
adopted by written consent, it would be required to be considered by the
Company's stockholders at a special stockholders' meeting convened for the
specific purpose of approving the sale. The elimination of the need for such a
special meeting of stockholders is made possible by Section 228 of the DGCL,
which provides that the written consent of the holders of outstanding shares
entitled to vote at a meeting of stockholders, having not less than the minimum
number of votes which would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted, may
be substituted for such a special meeting. In order to eliminate the costs and
management time involved in holding a special meeting, the Board of Directors of
the Company voted to utilize the written consent of the holder of a majority of
the voting capital stock of the Company.
The record date established by the Company for purposes of determining the
number of outstanding shares of voting capital stock of the Company for the
approval of the sale was May 26, 2005 (the "Record Date"). On the Record Date,
InfiniCom owned 74,711,681 shares of common stock of the Company, constituting
approximately 77.7% of the 96,147,395 total outstanding shares of voting capital
stock of the Company as of such date. Each share of voting capital stock of the
Company entitles the holder thereof to one vote on all matters submitted to
stockholders. InfiniCom gave its written consent to the sale on May 26, 2005,
which written consent will become effective on or about June 30, 2005.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of May 26, 2005, concerning
the issued and outstanding stock of the Company beneficially owned (i) by each
director and each named executive officer of the Company, (ii) by all directors
and executive officers of the Company as a group and (iii) by each stockholder
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock. The beneficial owners named have, to the knowledge of
the Company, sole voting and dispositive power with respect to the shares
beneficially owned, subject to community property laws where applicable.
Amount and Nature of Beneficial
Name and Address Ownership Percentage
Title of Class of Beneficial Owner (Shares of Stock) of Class
- -------------- ------------------- ----------------- --------
InfiniCom AB (publ)*
Common Karlaplan 2
114 60 Stockholm
Sweden 74,711,681<F1> 77.7
Common Margaret Elardi* 7,000,000 7.3
Common Martin Clarke* 4,953,455 5.2
Common Larsake Sandin**
Frensham Court, Summerfield Lane
Surrey GU10 3AN
England 0 0
Common Urban von Euler****
Valhallavagen 108
Stockholm
Sweden 0 0
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Amount and Nature of Beneficial
Name and Address Ownership Percentage
Title of Class of Beneficial Owner (Shares of Stock) of Class
- -------------- ------------------- ----------------- --------
Common Roger Woodward***
Zennor
Cherry Tree Walk
Rowledge
Farnham
Surrey
GU10 4AD
United Kingdom 0 0
Common All executive officers and directors as a
group (3 persons) 0 0
* 5% or more beneficial owner *** Officer
** Director **** Director and Officer
<F1> Excludes 34,459,500 shares of common stock issuable upon conversion of Series A Preferred Stock.
THE SALE OF STOCK OF 24STORE
The Company's Business
The Company is a holding company owning 100% of the outstanding shares of
24STORE. 24STORE's current business operations are held in 24STORE Limited
(previously known as Lapland U.K. Limited), a company registered in England in
1991, and a wholly-owned subsidiary of 24STORE, which supplies primarily
business customers with computer and electronics products. 24STORE Limited sells
a wide range of computing and related products, sourced from major computer
manufacturers. 24STORE Limited generates business through an active telesales
team, working on inquiries from the existing customer base, regular advertising
in national computer magazines, and from the company's web site,
www.24Store.com. In October 2002, 24STORE Limited formed a new business unit,
24Solutions, which offers primarily accounting based, business management
software. Its services include the provision, customization, installation and
training on software products from leading business software vendor, Sage.
InfiniCom's Business
InfiniCom is an information technology and management consulting and
solutions company. The operating activities of InfiniCom consist of three
separate parts: IT consultancy operations that are mainly conducted in Sweden,
Management Consultancy operations mainly conducted in Sweden and the rest of
Europe, and trading operations focusing on laptops, mobile telephones and palm
computers in the United Kingdom. In addition to its majority interest in the
Company, InfiniCom owns Evolution & Co., a management consultancy firm
specializing in business development and sales efficiency, and Server Group, an
IT firm with expertise in transaction technology for project management and
control assignments.
The Agreement for the Sale of Shares in 24STORE (Europe) Limited
This section describes the material provisions of the Agreement, but does
not purport to describe all of the material terms of the Agreement. The
following summary is qualified in its entirety by reference to the complete text
of the Agreement, which is attached hereto as Exhibit A and incorporated herein
by reference. We urge you to read the full text of the Agreement because it is a
legal document that governs the sale of 24STORE.
o Parties. The parties involved in the proposed sale of 24STORE stock
are the Company and InfiniCom. See the introductory portion of the
Agreement. The contact information for the Company is as set forth at
the top of this information statement. The contact information for
InfiniCom is as follows: InfiniCom AB, Karlaplan 2, 114 60 Stockholm,
Sweden, Telephone No. +46 8-555 165 27.
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o Assets to be Sold. The assets to be sold by the Company consist of
34,651,552 ordinary shares of 24STORE, GBP (pound)0.10 par value. See
Section 3 of the Agreement.
o Consideration. The consideration to be received by the Company
consists of the sum of US$100,000, to be paid in cash by InfiniCom at
closing. See Section 3 of the Agreement.
o Intellectual Property Rights. The Company makes various
representations and warranties to InfiniCom regarding its Intellectual
Property Rights (as defined in the Agreement), including the
effectiveness of the Intellectual Property Rights, its exclusive
ownership of the Intellectual Property rights and certain disclosures
regarding the Intellectual Property Rights. The Company disclaims all
other representations and warranties, express or implied, with regard
to the Intellectual Property Rights. See Section 5 of the Agreement.
Reasons for Engaging in the Transaction
The Company's sale of its shares in 24STORE to InfiniCom will occur as a
part of InfiniCom's sale of its shares of the Company to Moyo Partners, LLC and
R&R Biotech Partners LLC. The decision by the Company to sell its shares in
24STORE is based primarily on steadily declining net sales and gross profits of
24STORE, due in part to increased competition from large retailers moving into
the market and continued reduction in the unit cost of a laptop computer. The
sale of 24STORE shares will result in the Company continuing its existence as a
shell corporation with no subsidiaries. It is the Company's belief that the
proposed purchasers of InfiniCom's majority interest intend to cause the Company
to merge with or acquire an existing business, although the Company cannot give
any assurance that such a secondary transaction will occur or that, if such a
secondary transaction were to occur, such a transaction would enhance the
Company's future operations and financial results.
Tax Consequences of the Sale
The sale of its shares of 24STORE by the Company will be a taxable
transaction for the Company, but not for our stockholders. The sale will result
in a gain for the Company.
Regulatory Approvals
Other than with respect to providing this information statement, the
Company is not required to comply with any United States federal or state
regulatory requirements or obtain any United States federal or state regulatory
approvals in connection with the consummation of the sale of 24STORE stock.
Opinions, Reports and Appraisals
In connection with the sale of 24STORE stock, 24STORE retained Tenon Group
PLC, a company registered in England ("Tenon") to provide the Company with a
valuation report regarding 24STORE and its subsidiaries, 24Store Limited, Mobile
Planet Limited and Cyberia Limited, as at March 31, 2005. Tenon provides
corporate consultancy services, which are performed by members of the Institute
of Chartered Accountants in England and Wales. Tenon was selected by 24STORE
based on its reputation as a well-respected firm, the locale of its offices and
its competitive prices. For the past four years, an affiliate of Tenon, Tenon
Audit Limited, a company registered to carry out audit work by the Institute of
Chartered Accountants in England and Wales, has carried out statutory audit
requirements and produced filed Statutory Accounts for 24STORE and its United
Kingdom affiliates. In addition, another affiliate of Tenon prepares corporate
tax returns to be filed by 24STORE and its affiliates in the United Kingdom. The
annual fees charged by Tenon and its affiliates for services provided to 24STORE
and its affiliates are as follows: approximately US$40,000 for audit services
and approximately US$12,000 for corporate tax services. Tenon's fee for services
rendered in connection with the preparation of the Report (as defined and
described below) was approximately US$14,000.
In April 2005, Tenon delivered a written valuation report (the "Report") to
the Company. The Report was only one of many factors considered by the Company
in its evaluation of the sale of 24STORE stock and should not be viewed as
determinative of the position of the Company with respect to the sale or the
consideration provided for
-4-
in the sale. The terms of the sale were based on negotiations between the
Company and InfiniCom and were not based on any recommendations by Tenon.
Following is a summary of the Report, which is qualified in its entirety by
reference to the complete text of the Report, which is attached hereto as
Exhibit B and incorporated herein by reference:
Procedures Followed. Tenon undertook in the Report to determine the fair
market value of 24STORE stock. Tenon defined market value as the price at which
24STORE stock might reasonably be sold in a sale between an independent buyer
and seller, both equally well informed about 24STORE, the market in which it
operates and its anticipated prospects. For purposes of its opinion, Tenon
reviewed historical, structural, financial and market information and
documentation provided by 24STORE.
Instructions and/or Limitations on Scope. There were no limitations placed
on the scope of Tenon's investigation by the Company or 24STORE.
Valuation Methodologies. Tenon utilized an asset basis methodology to
determine the value of 24STORE stock. The asset basis methodology is typically
used to value under-performing or loss-making businesses, or high asset based
companies. A company is thereby valued by deducting liabilities from assets and
taking into account any goodwill attaching.
Conclusions. Tenon concluded that an appropriate value for 24STORE and its
subsidiaries at March 31, 2005 to be approximately zero.
Past Contacts, Transactions or Negotiations
The Company and InfiniCom have not had any negotiations, transactions or
material contacts during the past two (2) years, except with respect to the
transactions described herein and those arising in the ordinary course as a
result of InfiniCom's position as majority stockholder of the Company. As the
majority stockholder, InfiniCom is able to exercise control over matters
requiring stockholder approval, including the election of directors.
Interest of Certain Persons in the Transaction
Urban von Euler is both a director and Chief Executive Officer of the
Company and Chief Executive Officer of InfiniCom. Larsake Sandin is both a
director of the Company and a director and former Chief Executive Officer of
InfiniCom.
FINANCIAL DATA
Selected Financial Data
Year Ended December 31,
2004 2003 2002 2001 2000
Revenue - - - - -
Loss from (129,430) (95,434) (592,186) (132,544) (447,478)
Continuing
Operations
Loss from (356,968) 20,098 (235,093) (1,690,427) (1,375,684)
Discontinued
Operations
-5-
Year Ended December 31,
2004 2003 2002 2001 2000
Loss per Common (0.00) (0.00) (0.01) (0.00) (0.01)
Share, Continuing
Operations, Basic
and Diluted
Loss per Common (0.00) (0.00) (0.00) (0.02) (0.02)
Share, Discontinued
Operations, Basic
and Diluted
Total Assets 985,554 3,979,477 3,978,041 5,327,740 10,456,258
Long-Term Debt 149,976 89,976 212,414 780,632 381,396
For a discussion of factors affecting the comparability of the information
reflected in the foregoing selected financial data, please see Items 6 and 7 of
the Company's 10-K Annual Report for the fiscal year ended December 31, 2004.
CAUTION AGAINST FORWARD-LOOKING STATEMENTS
This information statement contains certain forward-looking statements. We
intend such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and are including this statement for purposes of
invoking these safe harbor provisions. Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors that could
cause our actual results, performance or achievements, to differ materially from
our expectations of future results, performance or achievements expressed or
implied by such forward-looking statements. These factors include, among others,
the risk that we may incur additional liabilities and that our expenses may be
higher than estimated. Although we believe that the expectations reflected in
any forward-looking statements are reasonable, we cannot guarantee future events
or results. Except as may be required under federal law, we undertake no
obligation to update publicly any forward-looking statements for any reason,
even if new information becomes available or other events occur.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
The Company files annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
You may read and copy any document the Company files at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. The Company's SEC filings are also available to the public at
the SEC's website at http://www.sec.gov.
Statements contained in this information statement, or in any document
incorporated in this Information Statement by reference regarding the contents
of any contract or other document, are not necessarily complete and each such
statement is qualified in its entirety by reference to such contract or other
document filed as an exhibit with the SEC.
-6-
The SEC allows the Company to "incorporate by reference" into this
information statement documents it files with the SEC. This means that the
Company can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be a part
of this information statement.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
The SEC has adopted rules that permit companies and intermediaries such as
brokers to satisfy delivery requirements for stockholder communications such as
this information statement with respect to two (2) or more stockholders sharing
the same address by delivering a single information statement addressed to those
stockholders. The Company may deliver a single information statement to multiple
stockholders sharing an address unless the Company has received contrary
instructions from the affected stockholders. The Company will undertake to
deliver promptly upon written or oral request a separate copy of this
information statement to a stockholder at a shared address to which a single
copy of this information statement was delivered. Any such request should be
directed to Mr. Roger Woodward at 24Holdings Inc., Cyberia House, Church Street,
Basingstoke, Hampshire RG21 7QN, United Kingdom, telephone number: +44 1256 867
800. If, at any time, you decide you wish to receive a separate copy of all
future stockholder communications, or if you are receiving multiple copies of
such stockholder communications and wish to receive only one, please notify us
of your request at the foregoing address or telephone number.
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DATED 26 MAY 2005
24 HOLDINGS INC
- and -
INFINICOM AB
-----------------------------------------------
AGREEMENT FOR THE SALE OF SHARES
IN 24 STORE (EUROPE) LIMITED
-----------------------------------------------
THIS AGREEMENT is made the 26th Day of May, 2005
BETWEEN:
(1) 24 Holdings Inc a company registered in Delaware whose registered
office is at c/o Cyberia House Church Street Basingstoke Hampshire
RG21 7QN ("the Seller")
(2) InfiniCom AB whose registered office is at Karlaplan 2, 114 60
Stockholm Sweden ("the Buyer")
NOW IT IS AGREED as follows:
1. Definitions
1.1 In this Agreement:
"the Act" means the UK Companies Act 1985.
"Completion Date" means the performance by the parties of
their obligations contained in clauses 3
and 4 of this Agreement
"Consideration" means the sum of one hundred thousand US
dollars (USD 100,000).
"Consideration Shares" means the 34,651,552 ordinary shares of
GBP (pound)0.10 pence each in the
Company.
"the Company" means 24 Store (Europe) Limited whose
registered office is at Cyberia House
Church Street Basingstoke Hampshire
whose details are set out in Schedule 1
hereto to include its subsidiaries.
1.2 In this Agreement, unless the context otherwise requires, a reference
to:
1.2.1 a Clause or Schedule is a reference to a clause of and
schedule to this Agreement;
1.2.2 a document "in the agreed form" is a reference to a document
in the form approved by the parties to this Agreement;
1.2.3 "costs" includes a reference to costs, charges and expenses
of every description;
1.2.4 a "person" includes a reference to an individual,
partnership, unincorporated association or body corporate
wherever situate;
1.2.5 a "subsidiary", "holding company" and "body corporate" has
the respective meaning set out in sections 736 and 740 of
the Act;
1.2.6 a "company" has the meaning set out in sections 735 of the
Act;
1.2.7 words, expressions or abbreviations detailed in the
Schedules shall have the same meaning in this Agreement
except where otherwise provided.
1.3 The Schedules form part of this Agreement and shall be interpreted and
construed as though they were set out in this Agreement.
1.4 The headings to Clauses, Schedules and paragraphs of the Schedules are
for convenience only and shall not affect the interpretation or
construction of this Agreement.
2/6
2. Recitals
2.1 The Seller is the holder of the entire issued share capital in the
Company.
2.2 The Seller wishes to sell to the Buyer the entire issued share capital
in the Company.
3. Transfer of Shares and Sale and Purchase
3.1 Subject as hereinafter provided the Seller shall sell as beneficial
owner free from all options liens charges equities and encumbrances
and with all rights now or hereinafter attaching thereto the
Consideration Shares to the Buyer.
3.2 The Seller and the Buyer hereby agrees to waive all pre-emption rights
in the Articles of Association of or relating to the Consideration
Shares so that the Consideration Shares may be transferred to the
Seller free from all such rights (if any).
3.3 The purchase price for the Consideration Shares shall be the
Consideration (USD 100,000).
4. Completion
4.1 Completion of the share transfer shall take place at the office of
Phillips Solicitors, Town Gate, 38 London Street, Basingstoke,
Hampshire RG21 7NY on the Completion Date or such other place as may
be agreed and upon completion the matters referred to at clause 4.2
below will be dealt with.
4.2 On Completion:
4.2.1 A board meeting of the Seller and the Buyer shall be held at
which business will be transacted and resolutions passed as
set out in the Board Minutes specifically the transfer of
the Consideration Shares shall be approved (subject to
stamping).
4.2.2 The Seller will deliver to the Buyer duly executed transfers
of the Consideration Shares together with the share
certificates for the Consideration Shares and other company
documents required to complete the transfer.
4.2.3 The Buyer shall procure that within the time limits
prescribed by statute all necessary documents and forms
which as a consequence of this transaction require filing
with the Registrar of Companies shall be so filed.
4.2.4 The Consideration shall be transferred from the Buyer to the
Seller in cleared funds.
5. Intellectual Property Rights
5.1 The Seller represents and warrants that all patents, trade marks,
registered designs, design rights, internet domain names, applications
for any of the foregoing, copyrights, trade or business names,
inventions, processes, know-how and other industrial property rights
purported to be used or required by the Company (`Intellectual
Property Rights') are in full force and effect and are vested in and
beneficially owned by the Company or the Seller and free from
incumbrances.
5.2 The Seller has disclosed to the Buyer in writing prior to the date of
this Agreement details of all Intellectual Property Rights in respect
of which the Company and Seller has been registered as proprietor or
in respect of which application has been made. None of the
Intellectual Property Rights is being claimed, opposed or attacked by
any other person.
5.3 No licences or registered user or other rights have been granted or
agreed to be granted to any third party in respect of the Intellectual
Property Rights.
5.4 Except as stated in this Agreement, the Seller disclaims all other
representation and warranties, express or implied, with regard to the
Intellectual Property Rights.
3/6
6. General
6.1 The Seller and the Buyer shall procure that such resolutions of their
respective boards of directors shall be passed and shall make or do or
procure to be made or done such other deeds acts or things as may be
necessary or appropriate to implement the terms of this Agreement.
6.2 This Agreement and its contents shall be confidential to the parties
and subject as set out below shall not be disclosed to third parties
by either party without the express written consent of the other
party. The provisions of this clause shall not apply to information
that:
(i) is in or enters the public domain without breach of this
Agreement
(ii) is lawfully obtained by the receiving party from another
source without breach of confidentiality obligation
(iii) is independently developed without use of or reference to
any confidential information or
(iv) was already in the possession of the receiving party as
demonstrated by that party's contemporaneous records.
The obligations of this clause 6.2 shall not apply to the extent that
any disclosure is required by law or by order of government, court or
other body of competent jurisdiction.
6.3 Any notice or other communication pursuant to, or in connection with,
this Agreement shall be in writing and delivered personally, or sent
by first class pre-paid recorded delivery post (air mail if overseas)
to the party due to receive such notice at its registered office from
time to time if a company and at the personal address of the Seller
6.4 This Agreement constitutes the entire and only agreement and
understanding between the parties in relation to its subject matter
and replaces and extinguishes all prior agreements, undertakings,
arrangements or written statements with respect to such subject
matter.
6.5 If any provision of this Agreement is held to be unenforceable or
illegal, in whole or in part, such provision or part shall to that
extent be deemed not to form part of this Agreement but the
enforceability of the remainder of this Agreement shall remain
6.6 This Agreement shall be governed by and construed in accordance with
the laws of England. The parties hereby submit to the non-exclusive
jurisdiction of the High Court of England in relation to any dispute
or claim arising out of or in connection with this Agreement. The
parties hereby agree that any legal proceedings may be served on them
by delivering a copy thereof to them at their respective addresses set
out in this Agreement.
* * * * *
4/6
EXECUTED as a Deed by )
24 HOLDINGS INC )
)
)
in the presence of:
/s/ Roger Woodward
--------------------------
Director
Roger Woodward
Director/Secretary
CFO/Secretary
EXECUTED as a Deed by
INFINICOM AB
in the presence of:
/s/ Per-Anders Johansson
--------------------------
Per-Anders Johansson
Director
Chairman
Director/Secretary
5/6
FIRST SCHEDULE
24 STORE (EUROPE) LIMITED
1. Registered number: 03605559
2. Registered office: Cyberia House Church Street Basingstoke Hampshire
RG21 7QN
3. Date and place of
incorporation: 28 July 1998 England and Wales
4. Authorised share
capital: (pound)4,000,000 shares of (pound)0.10 pence each
5. Issued share capital: 34651552 shares of (pound)0.10 pence each
6. Directors:
Name Address
Roger Woodward Zenor Cherry Tree Ealk Rowledge Farnham
Surrey GU10 4AD
Larsake Kennet Sandin Frensham Court Summerfield Lane Frensham
Farnham Surrey GU10 3AN
Urban Von Euler Valkallavagen 108 Stockholm S-111 41 Sweden
7. Secretary:
Name Address
Roger Woodward Zenor Cherry Tree Ealk Rowledge Farnham
Surrey GU10 4AD
8. Accounting reference
date: 31 December
9. Auditors:
Name Address
Blueprint Audit Limited Clifton House
Bunnian Place
Basingstoke
Hampshire
RG21 7JE
6/6
VALUATION REPORT
For 24Store (Europe) Limited
April 2005
VALUATION REPORT
for 24Store (Europe) Limited
Contents Page
1 Introduction
1.1 Purpose of valuation 3
1.2 Work undertaken and restrictions on use of report 3
1.3 Basis of valuation 3
1.4 Principles of valuation and valuation methodologies 4
1.5 Appropriate valuation method 4
1.6 Cash flow basis 5
2 Company Background
2.1 Introduction 6
2.2 Capital structure 7
3 Financial Analysis
3.1 Trading history 8
3.2 Net assets 9
3.3 Financial position, projections and revised net assets 9
4 Conclusion
4.1 Valuation of 24 Stores (Europe) Limited 11
- --------------------------------------------------------------------------------
Tenon 2 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
1. Introduction
We have been instructed to provide 24Store (Europe) Limited ("the Company")
with a valuation of the company and its subsidiaries - 24Store Limited,
Mobile Planet Limited and Cyberia Limited, as at 31 March 2005.
1.1. Purpose of valuation
We understand that the valuation is required for the purpose of disposing
of 24Store (Europe) Limited to InfiniCom AB, the Company's ultimate parent
company.
1.2. Work undertaken and restrictions on use of report
This valuation constitutes our opinion of value according to the
information, documentation and explanations made available to us, referred
to or detailed in this report, and whilst our valuation is one which we
consider to be both reasonable and defensible, we point out that others may
place a different value on the Subsidiaries. During our work we have
liaised with the Company Secretary and Finance Director, Roger Woodward.
The valuation procedures performed by us do not constitute an audit
examination in accordance with generally accepted auditing standards and
accordingly we do not express an opinion upon the financial information
contained within this report, either in part or as a whole. We have not
independently verified information provided to us for the purposes of this
valuation.
This report is intended for your sole and private use. No responsibility to
any third party is accepted. This report should not be disclosed to any
third party without prior written consent of Tenon Limited.
1.3. Basis of valuation
We have considered the fair market value of shares in the company. For this
purpose we define market value as the price which shares might reasonably
be expected to fetch in money or monies worth in a sale between a willing
buyer and willing seller, each of whom is deemed to be acting for self
interest and gain and both of whom are equally well informed about the
company, the market in which it operates and its anticipated prospects.
Within our valuation we have assumed that the company will continue to
operate as a going concern under its present management and that there are
no current plans to float on a public exchange or otherwise change the
status of the company.
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Tenon 3 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
1.4. Principles of valuation and valuation methodologies
The valuation of a trading enterprise is generally regarded as relating to
the future expectations of a potential purchaser and is based on or
directly related to the return, which can be expected from the investment.
This may take the form of:
o Future cash flows by way of dividends or remuneration
o Future realisable value from marketing the investment
o Future realisable value on liquidation
The methodologies, which can generally be used to value a shareholding in
an unquoted company are as follows:
o The dividend basis valuation, whereby the value of the company is
calculated as the present value of the future cash flows associated
with the ownership of the shares.
o The earnings basis valuation, whereby the value is a function of the
company's earnings and an appropriate multiple thereof.
o The assets valuation whereby assets less liabilities and any goodwill
attaching determine the value of the company.
1.5. Appropriate valuation method
Dividend basis
The dividend basis of valuation is considered appropriate for minority
holdings where there is a constant dividend policy. The Company has no
history of constant annual dividend payments, which makes this methodology
inappropriate.
Earnings basis
The earnings basis of valuation is appropriate when valuing profitable
companies. The subsidiary, 24Store Limited, has a history of profit
generation up to December 2003. However, the level of profits generated up
to December 2003 and the trading losses made by 24Store Limited in 2004 and
the first quarter of 2005 combined with recent multiples achieved by
unquoted companies would suggest that this methodology will not produce an
appropriate valuation compared to the level of assets currently owned by
the company. The subsidiary, Mobile Planet, ceased trading in March 2003
and has incurred losses in the last two financial years. Cyberia Limited
has never traded as it has merely been a vehicle to provide property
services for the property occupied by the Company.
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Tenon 4 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
Asset basis
The asset basis of valuation is usually appropriate when valuing
under-performing or loss making businesses. This methodology can also be
appropriate when valuing high asset based companies such as insurance
companies. Recent trading performance by the Company would indicate that
this methodology is the most appropriate in this case.
Appropriate methodology for 24Store (Europe) Limited
As discussed above we believe that the most appropriate methodology to use
for valuing the Company is the asset basis.
1.6. Cash Flow Basis
The cash flows of a business are different from its accounting profits,
mainly due to depreciation and capital expenditure. Several methods can be
used in appraising a business including accounting rates of return, payback
periods and discounted cash flow. Only discounted cash flow gives proper
recognition to the time value of money.
The above methods are more suited to mutually exclusive investment
decisions than to ongoing business valuations and we have, therefore,
ignored this method in the case of the Company.
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Tenon 5 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
2. COMPANY BACKGROUND
2.1 Introduction
The Company - 24Store Europe Limited is the parent company of three wholly
owned subsidiaries - 24Store Limited, Mobile Planet Limited and Cyberia
Limited. The Company itself does not trade.
24Store Limited began trading as Lapland (UK) Limited selling computer
hardware, via mail order, to customers ranging from small businesses to
large corporations. Infincom AB, whose strategy was to create a European
wide computer hardware sales company based on the Internet, acquired the
company five years ago. A group structure was established, which is
detailed below, with the intention of floating the group.
Mobile Planet was established to sell computer hardware to distributors
rather than end users. The trade of this company was absorbed into 24Store
in March 2003 and the company ceased trading.
Cyberia Limited was, until the property it owned from which 24Store
operated was sold in 2004, a property services company. The company has now
ceased trading.
In recent years 24Store has experienced increased competition from hardware
manufacturers, who have started to deal direct with the large corporations,
and retail stores such as PC World, who have specifically targeted the
computer hardware needs of small businesses.
In order to compensate for its reducing target market 24Store expanded into
software solutions and is now an authorised reseller for Sage Line 100
software. The company also offers clients installation and training for the
software.
The three principals areas of activity at 31 March 2005 for the Company
are:
o The provision of computer hardware by mail order
o Software solutions with some hardware element ( Sage )
o Web sales
Sales of Computer hardware have slowed for the reasons given above but
still contribute around (pound)10k a month.
Software solutions activity is currently on a breakeven contribution.
Web sales are not producing a positive contribution at present.
The Company has a fixed cost base of (pound)5k a month.
The finance director has not finalised the 2005 forecast but stated that
the Company had lost (pound)70k in the first quarter of the year.
Management's strategy is to focus specifically on expanding the software
solutions business in order to compensate for the reducing sales from
computer hardware.
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Tenon 6 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
2.2 Company Structure
The diagram below depicts the ownership of 24Store (Europe) Limited as at
31 December 2004.
Ultimate Parent Minority
Company Shareholders
InfiniCom AB |
| 95% | 5%
| |
| |
24 Holdings Inc. ----------------
|
| 100%
|
-------------- 24Store (Europe) ----------------
| Limited |
100% | | |
| | 100% | 100%
Mobile Planet | |
Limited 24Store Limited Cyberia Limited
The Company (24Store Europe Limited) has an Authorised Share Capital of
40,000,000 ordinary shares of 10p each.
Allocated, called up and paid at 31December 2004 were 34,651,550 ordinary
shares of 10p each giving a share capital of (pound)3,465,155.
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Tenon 7 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
3. FINANCIAL ANALYSIS
3.1 Trading History
Audited Audited Audited Audited Draft
2000 2001 2002 2003 2004
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
24STORE (Europe) LIMITED and Subsidiary Companies
Turnover 18,111 15,275 12,412 8,836 4,401
====== ====== ====== ====== ======
Gross Profit 1,956 1,644 1,298 1,205 644
====== ====== ====== ====== ======
10.8% 10.8% 10.5% 13.6% 14.6%
Net (Loss)/Profit Before Tax (850) (1,171) (414) 5 (243)
Taxation 36 - - (4) -
------ ------ ------ ------ ------
Retained Profit (814) (1171) (414) 1 (243)
====== ====== ====== ====== ======
Fixed Assets 2452 1134 850 827 36
Net Current Assets (79) 14 (170) (201) 280
Long term liabilities (228) (176) (123) (68) 0
Net Assets 2145 972 557 558 316
====== ====== ====== ====== ======
Mike Neame, who was a director and one of the original founders of the
company left in February 2004. Mike Neame was not replaced and as a result
the company reduced its monthly overhead by approximately (pound)10k per
month. This did not however prevent a substantial loss being made during
2004 of (pound)243k on a much reduced turnover of only (pound)4,401k. The
original forecasted turnover for this year was in excess of
(pound)8million.
We were informed that turnover for the year ending 31 December 2005 was now
expected to be in the region of (pound)3 million.
Furthermore we understand that the company has incurred losses to 31 March
2005 of approximately (pound)70k. These losses are in line with management
expectation for the same period and according to Roger Woodward, management
is hopeful of breaking even in the year ending 31 December 2005.
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Tenon 8 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
The Company is going through a substantial change in its focus to try to
offer more solutions based product which would return higher margins. This
is a slow process however and we suggest that there is considerable doubt
on the Company's ability to return break even for 2005 after its loss in
the first three months . We recognise the 4th Quarter as being the largest
opportunity historically for the mail order activity but this is not
necessarily the case for the solution provision activity.
3.2 Net Assets
As mentioned above the net asset basis of valuation is the most appropriate
methodology to use in the case of the Company.
The results of the company in recent years confirms that an earnings based
Valuation will produce a negative value.
3.3 24Store (Europe) Limited
The company's balance sheet indicates that it has minimal fixed assets
((pound)36k). We have not undertaken a fair value review of the company's
fixed assets, however, Roger Woodward believes that their recoverable value
would be in line with their net book value.
Included in current assets at 31 December 2004 is an amount totalling
(pound)346k due from 24 Holdings Inc. This balance was created when 24Store
Limited financially supported 24 Holdings Inc.
In early 2004 freehold property held by another group company, Cyberia (UK)
Limited, was sold. The cash generated by this sale has been used to settle
some of the inter company balances due to 24Store.
We understand that 24 Holdings Inc is a non-trading company and as a result
the recoverability of the inter company balance is unlikely. As 24 Holdings
Inc owns 100% of the Company we would expect that this balance be written
off prior to any disposal of the company. We have therefore, excluded this
asset from our assessment of value.
Similarly there is a balance at 31 December 2004 of (pound)85k owed by the
Company to its immediate parent and we would again expect this liability to
be waived prior to any disposal of the company to its ultimate parent .
It is understood that both these amounts will be waived at completion of
the transaction. We were informed of this by Roger Woodward.
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Tenon 9 April 2005
VALUATION REPORT
for 24Store (Europe) Limited
The table below depicts our revised net asset position of the Company as at
31 December 2004:
Revised Net Asset Position 31 Dec 2004
------------------------------------------------------------------------
(pound)'000
Net assets per Statutory Accounts 316
Net irrecoverable debt from 24 Holdings Inc. (260)
------------------------------------------------------------------------
Revised Net Assets 56
========================================================================
With the knowledge that in the first quarter of 2005 the Company has made a
loss of approximately (pound)70k, as at the 31 March 2005 the Company has
reached a position of having a net liability position on its Balance Sheet.
This raises questions in relation to the business as a going concern and we
obviously need to point out to the Directors this situation.
It does not however alter the position in relation to providing a valuation
and normally we would expect to ascribe a goodwill value to the business
which has an established customer base and has positive contribution on
certain of its activities.
The amount of goodwill receivable on the sale of the Company will be
dependant on the purchaser. The increased competition and reducing turnover
that the company is currently experiencing combined with limited short to
medium term improvement indicates that goodwill attached to the Company at
31 March 2005 is likely to be minimal.
We should also state that at 31 December 2004, the current assets were
primarily made up of stock and debtors (after eliminating the inter-company
debt) and on a realisation, full book value would have to be achieved for
these assets. We would not expect this to be achievable and therefore would
be concerned as to the ability for the Company to pay in full its external
creditors.
Roger Woodward indicated that it was his belief that the book value and
realisable value of stock were the same.
We believe that at 31 March 2005 there would be no positive value for
goodwill attributed to the valuation.
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Tenon 10 April 2005
4. CONCLUSION
4.1 24Store (Europe) Limited
Based on our revised net asset position for the Company, as detailed in
section 3.2 above, combined with consideration being given for a valuation
of goodwill, we consider an appropriate value for the Company at 31 March
2005 to be in the region of (pound)nil.
The above value assumes that any cash balances remain in the business and
the amounts due to and from 24Holdings Inc. are written off.
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Tenon 11 April 2005