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SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
Pre-Effective Amendment No. 1
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
QUEST NET CORP.
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee required.
[ ] Fee computer on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: N/A
[ ] 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 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
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QUEST NET CORP.
1250 E. Hallandale Beach Blvd., Suite 502
Pembroke Park, Florida 33009
To Our Stockholders:
The holders of at least a majority of the outstanding shares of common
stock of Quest Net Corp. ("QNet" or the "Company") have executed written
consents approving:
(i) an amendment to the Company's Articles of Incorporation to increase
the number of shares of common stock authorized for issuance, from 50 million to
300 million;
(ii) an amendment to the Company's Articles of Incorporation to change
the name of the Company from "Quest Net Corp." to "Markland Technologies, Inc.";
(iii) an amendment to the Company's Articles of Incorporation to effect
a reverse split of the common stock of the Company whereby the Company would
exchange one share of common stock for each 40 shares of common stock then
issued and outstanding; and
The Board of Directors unanimously approved all of the above actions on
March 15, 2001, except for item (i), which the board and stockholders approved
on May 8, 2001, with an effective date of March 15, 2001. Since the consenting
stockholders, whose shares represent approximately 54% of the Company's
outstanding shares of common stock entitled to vote, have consented to the above
actions, no meeting of stockholders will be held.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement is being sent to the holders of record of
the Company's common stock at the close of business on May ___, 2001.
Your attention is directed to the enclosed Information Statement.
By Order of the Board of Directors
/s/ Charles Wainer
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Charles Wainer
President
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QUEST NET CORP.
1250 E. Hallandale Beach Blvd., Suite 502
Pembroke Park, Florida 33009
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INFORMATION STATEMENT
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INTRODUCTION
This Information Statement is furnished by the Board of Directors of
Quest Net Corp. to the stockholders of record of the Company's common stock at
the close of business on March 15, 2001 (the "Record Date"), and is being sent
to you in connection with the action taken by the holders of at least a majority
of the voting power of the Company. Those stockholders approved by written
consents dated March 15, 2001 and May 8, 2001 (i) an amendment to the Company's
Articles of Incorporation (the "Articles") to increase the number of shares of
common stock, par value $0.0001 (the "Common Stock"), authorized for issuance
from 50 million to 300 million (the "Authorized Stock Increase"); (ii) an
amendment to the Articles to change the name of the Company to "Markland
Technologies, Inc." (the "Name Change"), and (iii) an amendment to the Articles
to effect a reverse split (the "Reverse Split") of the Common Stock, in which
all shares of Common Stock that were issued and outstanding immediately prior to
the filing of the Articles (the "Existing Common Stock") will automatically be
converted into a number of new shares of Common Stock equal to 1 divided by 40
(the "New Common Stock").
This Information Statement and the enclosed materials are being mailed
on or before the close of business on May ___, 2001, to every security holder
entitled to vote or give an authorization or consent in regard to any matter to
be acted upon. The Company will cause each of the matters described above to
become effective as soon as practicable twenty (20) days after May ___, 2001,
the date the Information Statement is first sent to the stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
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OUTSTANDING SECURITIES AND VOTING RIGHTS
As of the Record Date, there were issued and outstanding 49,374,309
shares of the Common Stock, for the purpose of determining stockholders entitled
to receive this Information Statement. The Common Stock is the only security of
the Company that was entitled to vote on these matters. The stockholders who
consented in writing to these matters (the "Consenting Stockholders") held
approximately 26,810,000 shares of Common Stock, or approximately 54.3% of the
Company's issued and outstanding Common Stock.
Each holder of Common Stock is entitled to one vote in person or by
proxy for each share of Common Stock in his or her name on the books of the
Company on any matter submitted to the vote of the stockholders at any meeting
of the stockholders. However, under Florida law, any action that may be taken at
any stockholders' meeting may be taken by written consent of the requisite
number of stockholders required to take such action. The approval of the
amendment to the Articles requires the affirmative vote or written consent of
the holders of a majority of the Company's outstanding Common Stock.
On March 15, 2001, the Consenting Stockholders consented to the Name
Change and the Reverse Split. On May 8, 2001, the Consenting Stockholders
consented to the Authorized Stock Increase, which will be effective as of March
15, 2001.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OWNERSHIP
The following table sets forth information, as of the Record Date,
regarding the beneficial ownership of Common Stock owned by (i) each stockholder
known by the Company to be the beneficial owner of more than 5% of any class of
the Company's outstanding voting securities, (ii) each director of the Company,
(iii) each of the executive officers of the Company and (iv) all officers and
directors of the Company as a group. Unless otherwise indicated, each person
listed has sole voting and investment power over the shares beneficially owned
by him. This table reflects the following assumptions:
(a) that the Reverse Split has occurred;
(b) that James LLC ("James") has converted all of its $3.5 million
convertible promissory note into shares of Common Stock (at a
certain assumed exercise price), and
(c) that the conversion of the Series B Convertible Preferred
Stock has been consummated.
These assumptions affect the number of shares set forth in the table
below, but do not affect the percentage of shares owned in each class, relative
to the ownership interests of holders of stock of the same class. The shares
currently beneficially held by the stockholders (pre-reverse split and
pre-conversion of both the James promissory note and the Series B Convertible
Preferred Stock (the "Series B Stock")) are as follows: James, 26,810,000 shares
of common stock; Markland LLC ("Markland"), 10 shares of Series B Stock (which,
according to the terms of the Exchange Agreement, will convert into
approximately 85% of the outstanding common stock of the Company); and Charles
Wainer, 360,000. Under the terms of the Exchange Agreement (as defined below)
Markland will own approximately 85% of the total number of shares of outstanding
QNet common stock on a fully-diluted basis. The numbers in the "Amount and
Beneficial Ownership" column reflect the assumption that James will convert all
of its $3.5 million convertible promissory note. However, James is under no
obligation to do so. The numbers below would thus change were James not to
convert all of its promissory note or if James were to convert at a price
different from the one that we have relied on in our assumptions. However, the
relative stock ownership would remain the same, according to the terms of the
Exchange Agreement.
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NAME AND ADDRESS OF BENEFICIAL OWNER POSITIONS HELD AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
OUTSTANDING
Markland LLC Stockholder 31,800,200 85.0%
James LLC Stockholder 5,045,250 13.5%
Charles Wainer Director/President 9,000 0.02%
All executive officers and 9,000 0.02%
directors as a group
(1 person)
RECENT CHANGE IN CONTROL
On March 16, 2001, the Company acquired all of the outstanding capital
stock of Vidikron of America, Inc., a privately-held Delaware corporation based
in Hillside, New Jersey ("Vidikron"). The acquisition was made pursuant to an
Exchange Agreement and Plan of Reorganization among QNet, Vidikron and Markland,
the sole stockholder of Vidikron (the "Exchange Agreement"). Pursuant to the
terms of the Exchange Agreement, Vidikron's stockholders received 10 shares of
Series B Stock which, after giving effect to its conversion, will equal
approximately 85% of the total number of shares of outstanding QNet common stock
on a fully-diluted basis. Upon closing of the transaction, which is expected to
take place before the end of the second quarter of this year, Vidikron will
become a wholly-owned subsidiary of QNet (the "Vidikron Transaction").
The Board believes that the Vidikron Transaction provides the Company
with the most viable opportunity of pursuing a long-term growth strategy, and
that Vidikron will be a valuable partner with respect to conduct of the
Company's business. None of the Directors approving the transaction had a
relationship with Vidikron prior to the transaction. The Board determined that
Florida corporate law did not require the Company to seek stockholder approval
of the Vidikron Transaction.
In addition and as a condition to the Vidikron Transaction, Vidikron
representatives will constitute a majority of the Board of Directors of QNet.
THE NAME CHANGE
The Company's Board of Directors recommended the Name Change to the
stockholders so that the name of the company would reflect Vidikron's sole
stockholder, Markland LLC. The Name Change will be effected by the filing of the
Amendment with the Secretary of State of the State of Florida. The approval of
the holders of a majority of the outstanding Common Stock was necessary to
effect the Name Change. The Name Change was approved by the written consent of
the holders of approximately 54% of the outstanding Common Stock.
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1 Beneficial ownership is determined in accordance with the applicable
rules under the Securities Exchange Act of 1934, as amended. In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
convertible securities held by that person that are currently
exercisable or convertible, or will become exercisable or convertible
within 60 days from the date hereof, are deemed outstanding. However,
such shares are not deemed outstanding for purposes of computing the
percentage ownership deemed outstanding of any other person. Percentage
of ownership is based on (i) 37,412,000 shares of Common Stock
outstanding, which assumes (a) the occurrence of the Reverse Split, (b)
the conversion by James LLC of all of its $3.5 million convertible
promissory note into 4,375,000 shares of Common Stock, and (c) the
conversion of all outstanding shares of Series B Stock and (ii) with
respect to each beneficial owner, the assumption that all of such
owner's convertible securities that are currently exercisable or
convertible, or will become exercisable or convertible within 60 days
from the date hereof, are outstanding. As stated above, the number of
shares beneficially owned by James would of necessity change (i) if
James elects not to convert all of its $3.5 million convertible
promissory note or (ii) if James converts all or part of its promissory
note at a price that is different than the one that we have assumed for
purposes of beneficial ownership analysis.
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NO DISSENTERS' RIGHTS
Florida Law does not vest stockholders of the Company with dissenters'
rights with respect to the Name Change.
INCREASE IN NUMBER OF AUTHORIZED SHARES
The Company currently has authorized 50 million shares of Common Stock
for issuance. The Company's board of directors recommended the increase in our
common stock authorized for issuance from 50 million to 300 million shares, in
order to accommodate the conversion of the Series B Stock pursuant to the
Exchange Agreement and, generally, to make available for issuance from time to
time additional capital stock in connection with financings and acquisitions.
Additionally, because the market price for our common stock has remained
relatively low, it has been necessary to sell or otherwise issue more shares
than originally anticipated, in order to raise sufficient capital or to honor
past obligations under convertible debt instruments. Therefore, our board
believed it necessary to increase the number of shares of common stock the
Company is authorized to issue. The Authorized Stock Increase will be
retroactively effective as of March 15, 2001.
As of the Record Date, the number of issued and outstanding shares of
Existing Common Stock was 49,374,309. After (i) the Reverse Split, (ii) the
conversion by James of all of its $3.5 million promissory note and (iii) the
conversion of all of the Series B Stock, the number of issued and outstanding
shares of New Common Stock will be 37,412,000. Therefore, after giving effect to
the Authorized Stock Increase and all of the foregoing, the number of authorized
but unissued shares of Common Stock will increase from 625,691 to 262,588,000.
The Company currently has no immediate plans to issue additional shares
(except to consummate the Vidikron Transaction). However, if the Company were to
issue a significant number of shares, such issuance would result in a dilution
of the percentage ownership interest of existing stockholders. All our shares of
common stock will be equal to each other with respect to liquidation rights and
dividend rights and there are no preemptive rights to purchase any additional
shares of common stock.
In the event of a liquidation, dissolution or winding up of our
operations, whether voluntary or involuntary, and subject to the rights of any
preferred stockholders, the holders of our common stock would be entitled to
receive all of our remaining assets available for distribution to our
stockholders on a pro rata basis.
The Company anticipates that in the future it will consider a number of
financing and acquisition transactions, which may involve the issuance of
additional equity, debt or convertible securities. The Authorized Stock Increase
will allow the board to act without the necessity, and the related costs and
delays, of either calling a special stockholders meeting or of waiting for the
regularly scheduled annual meeting of stockholders in order to increase our
authorized capital. If, in a particular instance, stockholder approval were
required by law or otherwise deemed advisable by our board, then the matter
would be referred to our stockholders for their approval, regardless of whether
stockholders had previously approved a sufficient number of shares.
CERTAIN ANTI-TAKEOVER EFFECTS OF THE AUTHORIZED STOCK INCREASE
Under certain circumstances, the Board of Directors could create
impediments to, or delay persons seeking to effect, a takeover or transfer of
control of the Company by causing some or all of the additional authorized
shares to be issued to a holder or holders who side with the Board in opposing a
takeover bid that the Board of Directors determines is not in the best interests
of the Company and its
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stockholders. Such an issuance would diminish the voting power of existing
stockholders who favor a change in control, and the ability to issue the shares
could discourage an attempt to acquire control of the Company. While it may be
deemed to have potential anti-takeover effects, the Board is proposing the
Authorized Stock Increase solely for the purpose of poising itself for potential
financings and acquisitions. The amendment is not prompted by any specific
effort or takeover threat currently known or perceived by management.
VOTE REQUIRED
Approval of the Authorized Stock Increase required the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote on the proposal. Stockholders owning at least a majority of the
outstanding shares of Common Stock approved the Authorized Stock Increase by
written consent dated May __, 2001.
NO DISSENTERS' RIGHTS
Florida Law does not vest stockholders of the Company with dissenters'
rights with respect to the Authorized Stock Increase.
THE REVERSE SPLIT
The Company currently does not have a sufficient number of authorized
shares of Common Stock to convert the shares of Series B Stock issued as part of
the Exchange Agreement. Given this, the Company's Board of Directors believed
that it was prudent to recommend the Reverse Split (as well as the Authorized
Stock Increase) to the stockholders.
The Reverse Split, which will be effected by the filing of the
Amendment with the Secretary of State of the State of Florida and will become
effective upon the date of such filing (the "Effective Date"), will result in
each 40 shares of Common Stock issued and outstanding on the Effective Date
being automatically converted into one (1) share of New Common Stock. Without
any further action on the part of the Company or the stockholders, after the
Effective Date, the certificates representing shares of the Existing Common
Stock will be deemed to represent such number of shares of New Common Stock as
are in accordance with the terms of the Reverse Split. The Effective Date of the
Reverse Split will be no earlier than 20 days after the date the definitive
Information Statement is sent to the stockholders. Trades of the New Common
Stock will continue to be quoted on the NASD's OTC Bulletin Board under the
Company's symbol "QNet," but the Company intends to apply to have its symbol
changed to reflect the new name of the Company.
EFFECT OF REVERSE SPLIT ON STOCKHOLDERS
The Reverse Split will not affect any stockholder's proportionate
equity interest in the Company, except for those stockholders who would receive
one more share of Common Stock in lieu of fractional shares. Holders of Common
Stock will continue to be entitled to receive such dividends as may be declared
by the Board of Directors, although the Board of Directors does not currently
intend to declare or distribute any dividends. The Company's reporting
obligations under the Securities Exchange Act of 1934, as amended, will not be
affected by the Reverse Split.
The Company believes the completion of the Reverse Split may cause the
trading price of the Common Stock to increase proportionately to the Reverse
Split. However, there can be no assurance that the Reverse Split will result in
any change in the price of the Common Stock or that, if the price of the
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Common Stock does increase as a result of the Reverse Split, it would be
proportional to the Reverse Split.
EFFECT OF THE REVERSE SPLIT ON CAPITAL STOCK
The Company's Articles of Incorporation currently authorize the
issuance of 50,000,000 shares of Common Stock, of which 49,374,309 were
outstanding on the Record Date. Following the Reverse Split, the par value of
the Common Stock will remain at $0.0001 per share. Because the number of issued
shares of Common Stock will decrease but the par value will remain the same
after the Reverse Split, the Company's stated capital will decrease by
approximately $1,259, and the Company's surplus account will increase by a
corresponding amount. This change in the Company's capital accounts will be
reflected in subsequent financial statements, along with a notation of the
change in outstanding shares of Common Stock, as a result of the Reverse Split.
CERTAIN ANTI-TAKEOVER EFFECTS OF THE RESERVE SPLIT
Under certain circumstances, the Board of Directors could create
impediments to, or delay persons seeking to effect, a takeover or transfer of
control of the Company by causing the remaining authorized shares to be issued
to a holder or holders who side with the Board in opposing a takeover bid that
the Board of Directors determines is not in the best interests of the Company
and its stockholders. Such an issuance would diminish the voting power of
existing stockholders who favor a change in control, and the ability to issue
the shares could discourage an attempt to acquire control of the Company. While
it may be deemed to have potential anti-takeover effects, the Board is proposing
the Reverse Split solely for the purpose of increasing the number of authorized
but unissued shares of Common Stock. The amendment is not prompted by any
specific effort or takeover threat currently known or perceived by management.
The Reverse Split could have material adverse consequences to the
Company's independent stockholders. Such adverse consequences include, but are
not limited to the following:
o Although the Reverse Split will affect the outstanding stock on a pro
rata basis, thus affecting each of the stockholders equally, some stockholders
will own fewer than 100 shares, which could make it more difficult to sell the
shares. Stockholders holding fewer than 100 shares (otherwise known as "Odd
Lots") of the Company's Common Stock following the Reverse Split may have
difficulty in disposing of their shares because the commissions charged to sell
such shares may exceed the value of the shares.
o The present Board of Directors would have available authorized, but
unissued, shares of Common Stock, some or all of which could be issued without
stockholder approval. The issuance of a significant number of shares could
materially dilute the percentage ownership interest of the current stockholders
and there is no assurance that such issuance would result in benefits to the
existing stockholders such as greater market liquidity or a higher market price
for the shares.
EXCHANGE OF CERTIFICATES; NO FRACTIONAL SHARES
After the Effective Date, the Company will authorize the issuance of
certificates representing one share of Common Stock in exchange for each 40
shares of Common Stock presently outstanding upon surrender of an existing
certificate evidencing outstanding shares of Common Stock.
No fractional shares of common stock will be issued in connection with
the Reverse Split. A stockholder who would otherwise be entitled to receive, in
the aggregate, a number of shares of Common
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Stock that included a fraction of a share will receive, in lieu thereof, that
number of shares rounded up to the next highest whole share. All shares returned
to the Company as a result of the Reverse Split will be canceled and returned to
the status of authorized but unissued shares.
The Company's transfer agent will represent the Company as exchange
agent ("Exchange Agent") in connection with the Reverse Split. As soon as
practicable after the Effective Date, the holders of the Common Stock will be
notified that the Reverse Split has been effected and may surrender to the
Exchange Agent any certificate(s) representing outstanding shares of Common
Stock in exchange for new certificate(s) representing the reduced number of
shares of Common Stock that will result from the Reverse Split. To eliminate
confusion in the transactions of the Company's Common Stock, the Board of
Directors recommends that stockholders surrender their certificates for
exchange; however, stockholders are not required to do so. The Company will
continue to honor any old certificates, subject to the effect of the Reverse
Split prior to any future transfer. The Company will not pay any costs of
issuing new certificates. On the Effective Date, each certificate representing
shares of Existing Common Stock will be deemed for all purposes to represent the
reduced number of shares of New Common Stock that will result from the Reverse
Split, whether or not the certificates representing outstanding Common Stock are
surrendered for exchange.
NO DISSENTERS' RIGHTS
Florida Law does not vest stockholders of the Company with dissenters'
rights with respect to the Reverse Split.
RESALES OF RESTRICTED SECURITIES
The Reverse Split will not affect the transferability of shares of
Common Stock or any present restriction on the sale thereof. Therefore, for
purposes of determining the relevant holding period as prescribed by Rule 144
under the Securities Act of 1933, as amended, the shares of Common Stock to be
issued to each stockholder after the Effective Date will be deemed to have been
acquired on the date on which the stockholder acquired the shares of Common
Stock held immediately prior to the Effective Date.
FEDERAL INCOME TAX CONSEQUENCES
A summary of the federal income tax consequences of the Reverse Split
is set forth below. The discussion is based on present federal income tax law.
The discussion is not, and should not be relied on as, a comprehensive analysis
of the tax issues arising from or relating to the Reverse Split. We do not
purport to deal with all aspects of federal income taxation that may be relevant
to a particular stockholder in light of such stockholder's personal investment
circumstances or to certain types of stockholders subject to special treatment
under the Internal Revenue Code of 1986, as amended (the "Code") (including,
without limitation, financial institutions, broker-dealers, regulated investment
companies, life insurance companies, tax-exempt organizations, foreign
corporations and non-resident aliens). Accordingly, stockholders are urged to
consult their personal tax advisors for an analysis of the effect of the Reverse
Split on their own tax situations, including consequences under applicable
state, local or foreign tax laws.
The Company believes the Reverse Split will qualify as a
recapitalization under Section 368(a)(1)(E) of the Code, to the extent that
outstanding shares of Common Stock are exchanged for a reduced number of shares
of Common Stock. Therefore, neither the Company nor its stockholders will
recognize any gain or loss for federal income tax purposes as a result thereof.
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The shares of Common Stock to be issued to each stockholder to effect
the Reverse Split will have an aggregate basis, for computing gain or loss,
equal to the aggregate basis of the shares of Common Stock held by such
stockholder immediately prior to the Effective Date. A stockholder's holding
period for the shares of Common Stock to be issued will include the holding
period for shares of Common Stock exchanged therefore, provided that such
outstanding shares of Common Stock were held by the stockholder as capital
assets on the Effective Date.
VOTE REQUIRED
Approval of the Reverse Split required the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
on the proposal. Stockholders owning at least a majority of the outstanding
shares of Common Stock approved the Reverse Split by written consent dated March
15, 2001.
OTHER ACTION
CHANGE IN THE TERMS OF THE SERIES B CONVERTIBLE PREFERRED STOCK CONVERSION
An Amendment to the Company's Articles of Incorporation designating the
preferences, rights and limitations of the Series B Convertible Preferred Stock
(the "Series B Stock") was filed with the Florida Secretary of State on or about
March 24, 2001. Currently, the terms of the Series B Stock provide for automatic
conversion of the Series B Stock into 31,800,000 shares of Common Stock. The
Company's Board of Directors recommended to the holders of the Series B Stock a
change in the terms of the automatic conversion of the Series B Stock, so that
the automatic conversion would result in the conversion of the Series B Stock
into 85% of the Common Stock then outstanding, on a fully diluted basis, after
giving effect to the conversion of all warrants and outstanding convertible
securities. The board of directors, after due consideration, determined that
such an amendment was consonant with the terms of the Exchange Agreement, which
called for such percentage ownership by the holders of our Series B Stock. This
amendment will be effected by the filing of the Articles of Amendment with the
Secretary of State of the State of Florida.
OTHER BUSINESS
No further business will be transacted by Written Consent to corporate
action in lieu of a meeting of stockholders regarding matters to which this
Information Statement pertains.
COSTS OF INFORMATION STATEMENT
This Information Statement has been prepared by the Company and its
Board of Directors. The Company will bear the costs of distributing this
Information Statement to stockholders, including the expense of preparing,
assembling, printing and mailing the Information Statement and attached
materials. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses in forwarding this Information Statement and
related materials to stockholders. The Company may pay for and use the services
of other individuals or companies not regularly employed by the Company in
connection with the distribution of this Information Statement if the Board of
Directors of the Company determines that this is advisable.
The following document is being delivered to the Company's stockholders
together with this Information Statement:
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Exhibit A - Form of Amendment to the Company's Articles of Incorporation
reflecting Name Change, Authorized Stock Increase, the Reverse Split and the
Series B Conversion Change
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EXHIBIT "A"
Articles of Amendment of Quest Net Corp.
Reflecting Name Change, Authorized Stock Increase, the Reverse Split and the
Series B Conversion Change
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
QUEST NET CORP.
The undersigned does hereby certify that, pursuant to the authority
conferred upon the Board of Directors of QUEST NET CORP. (the "Corporation") a
corporation organized and existing under the Florida Business Corporation Act,
by Florida Statute 607.0821 and pursuant to (i) a Board of Directors meeting
held on March 15, 2001 and May 8, 2001, whereby all of the members of the
Corporation's Board of Directors voted for certain amendments to the
Corporation's Articles of Incorporation and (ii) the written consents of holders
of at least 50% of the common stock then outstanding executed on March 15, 2001
and May 8, 2001, the Corporation's Articles of Incorporation are hereby amended
as follows on this ___ day of June but effective as of March 15, 2001:
ARTICLE I
The name of the corporation is Quest Net Corp.
ARTICLE II
The amendment alters ARTICLE ONE of the Corporation's Articles of
Incorporation, which ARTICLE ONE shall be and read as follows:
The name of the corporation is Markland Technologies, Inc.
ARTICLE III
The amendment alters ARTICLE FIVE of the Corporation's Articles of
Incorporation, the first sentence of which ARTICLE FIVE shall be and read as
follows:
This corporation is authorized to issue 300,000,000 shares of common
stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par
value $0.0001 per share, the rights and preferences of which shall be
established by the corporation's Board of Directors.
The amendment further alters Section 2 of the Certificate of
Designation of Preferences, Rights and Limitations of Series B Convertible
Preferred Stock contained in ARTICLE FIVE, so that the first sentence shall be
and read as follows:
2. AUTOMATIC CONVERSION. Immediately upon the effective date of a
reverse split of the outstanding common stock of the Corporation, without any
further action on the part of the Corporation
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or the holders of the then-outstanding Series B Stock, the Series B Stock shall
be automatically converted into such number of shares as equals 85% of the
Corporation's then-outstanding common stock on a fully-diluted basis, after
giving effect to the conversion of all options, warrants and outstanding
convertible securities.
ARTICLE IV
These Articles of Amendment were adopted by the stockholders of the
Corporation on March 15, 2001, but effective as of May 8, 2001.
ARTICLE VI
The number of shares outstanding was 49,374,309, all of which were
entitled to vote on this amendment. The number of shares voted for the amendment
was 26,810,000; and the number shares voted against the amendment was
22,564,309.
Dated this the ____ day of June, 2001.
QUEST NET CORP.
a Florida corporation
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Charles Wainer
President
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