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): April 24, 2002
EBIZ ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-27721 84-1075269
(State or other Jurisdiction (Commission File No.) (IRS Employer
of Incorporation Identification No.)
13715 Murphy Road, Suite D
Stafford, Texas 77477
(Address of Registrant's Principal Executive Offices) (Zip Code)
(281) 403-8588
(Registrant's telephone number, including area code)
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
(b) On April 11, 2002 the United States Bankruptcy Court for the District
of Arizona in Phoenix, Arizona executed an order confirming the Amended Joint
Plan of Reorganization (the "Plan") of Ebiz Enterprises, Inc., a Nevada
corporation (the "Company"), Case No. B-01-11843-ECF-CGC, and its wholly-owned
subsidiary, Jones Business Systems, Inc., a Texas corporation ("JBSI"), Case No.
B-01-11844-ECF-CGC, that the Company and JBSI filed jointly with the Bankruptcy
Court on January 4, 2002, as amended on January 24, 2002 and as modified by
three immaterial modifications to the Plan at the April 11, 2002 confirmation
hearing.
The Plan is referenced as an Exhibit to this Form 8-K. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Plan.
The principal provisions of the Plan are as follows:
* The effective date of the Plan is thirty (30) days following the date
all orders necessary for confirmation of the Plan become final orders
(the "Effective Date"). The Effective Date is anticipated to be May
21, 2002 assuming that all orders necessary for confirmation of the
Plan become final orders on April 21, 2002. On the Effective Date, all
of the assets and business operations of JBSI will be transferred to
the Company which shall become the reorganized, surviving entity ("New
Company") and JBSI shall be dissolved and cease to exist. Thereafter,
all purchases, manufacturing, sales and other business operations will
be conducted by New Company.
* Obligations to secured creditors are to be paid in full with interest.
Long-term periodic payments will be made to secured creditors until
full payment has been made.
* Upon the Effective Date, the general unsecured creditors will share
pro rata in a pool of securities consisting of (i) 660,000 shares of
shares of common stock in New Company, par value $0.001 ("New Common
Stock") and (ii) warrants to purchase 220,000 shares of New Common
Stock (each an "Unsecured Creditors Warrant"). The terms of the
Unsecured Creditors Warrants will provide for a two-year exercise
period from the Effective Date and an exercise price of $0.65 per
share. The total amount of New Common Stock issued directly to the
general unsecured creditors and from exercise of the Unsecured
Creditors Warrants (assuming exercise of all Unsecured Creditors
Warrants) equals approximately 9.46% of the New Common Stock that may
be issued under the Plan. In addition, each general unsecured creditor
will receive equal quarterly payments over a two year period,
beginning on the date that is three months after the Effective Date,
which aggregate 7% of such general unsecured creditor's allowed claim.
* On the Effective Date, all outstanding shares of preferred stock and
common stock of the Company will be cancelled. Warrants to purchase
shares of New Common Stock at $0.65 per share will be issued to the
former stockholders (each a "New Warrant") at the rate of one share of
New Common Stock for every ten (10) shares of the Company's common
stock owned as of the Effective Date. Terms of the New Warrants will
provide for a sixty-day exercise period from the Effective Date. For
purposes of calculating the exchange for the New Warrants set forth
above, the 7,590 outstanding shares of preferred stock of the Company
have been converted into 3,220,000 shares of common stock of the
Company. The total number of shares of New Common Stock for which the
New Warrants may be exercised is 3,728,185. The total amount of New
Common Stock issued to preferred and common shareholders of the
Company from exercise of the New Warrants (assuming exercise of all
New Warrants) equals approximately 40.09% of the New Common Stock that
may be issued under the Plan.
* The Canopy Group, Inc. ("Canopy") has the right, for the period that
ends thirty days after the Effective Date, to exchange up to
$1,500,000 of its secured debt for shares of New Common Stock. The
total number of shares of New Common Stock for which Canopy may make
such exchange is 2,538,462. In addition, Canopy will receive on the
Effective Date warrants to purchase 253,846 shares of New Common Stock
(each a "Canopy/FFEC Warrant"). The terms of the Canopy/FFEC Warrants
will provide for a three-year exercise period from the Effective Date
and an exercise price of $0.65 per share. The total amount of New
Common Stock issued to Canopy from the exchange of its secured debt
and the exercise of the Canopy/FFEC Warrants (assuming Canopy
exchanges the entire amount of its secured debt and exercises all of
its Canopy/FFEC Warrants) equals approximately 30.02% of the New
Common Stock that may be issued under the Plan.
* During the period ending on the date that is thirty days after the
Effective Date, holders of the secured promissory notes totaling
$591,000 (each a "DIP Note"), issued as debtor-in-possession financing
during the Chapter 11 cases, may exchange all or part of the debt
represented by a DIP Note for (i) shares of New Common Stock at the
price of $0.50 per share or (ii) a convertible secured promissory note
(each a "New Note") which provides for interest to accrue at various
rates until the maturity date which is seven years after the Effective
Date. At maturity, all principal and accrued interest will be due. For
the period ending on the date that is twenty-four months after the
Effective Date, each holder of a New Note may convert the amount of
such New Note to shares of New Common Stock at the conversion price of
$0.50 per share. The total number of shares of New Common Stock for
which the DIP Notes may be exchanged directly for shares or converted
through the New Notes for shares is 1,182,000 shares which equals
approximately 12.71% of the New Common Stock that may be issued under
the Plan. In addition, the agent for the holders of the DIP Notes,
which also served as the financial advisor to the Company in the
debtor-in-possession financing transaction, will receive 118,200
Canopy/FFEC Warrants which if exercised equals approximately 1.27% of
the New Common Stock that may be issued under the Plan.
* The Transition Management Team will collectively receive 300,000
shares of New Common Stock and warrants to purchase 300,000 shares of
New Common Stock (each a "Transition Warrant"). The terms of the
Transition Warrants will provide for a one-year exercise period from
the Effective Date and an exercise price of $0.65 per share. Fifty
percent of the total number of shares of New Common Stock and
Transition Warrants will be distributed to members of the Transition
Management Team on the Effective Date with the balance distributed on
the date that is 90 days after the Effective Date. The total amount of
New Common Stock issued directly to the Transition Management Team and
from exercise of the New Warrants equals approximately 6.45% of the
New Common Stock that may be issued under the Plan.
* The board of directors of New Company on the Effective Date will
consist of Bruce Parsons, up to three designees of Canopy (depending
upon the amount of its secured debt that is exchanged for New Common
Stock), and up to one designee of FFEC (depending upon the amount of
the DIP Notes that are exchanged for New Common Stock ).
The Plan requires that certain administrative claims be paid on the Effective
Date.
The total outstanding shares of the Company as of the confirmation date of the
Plan was 7,590 preferred shares and 34,061,851 common shares. The number of
shares of New Common Stock to be issued upon the Effective Date is 810,000, and
the total number of shares of New Common Stock that may be issued upon the
exercise of all warrants, the conversion of all convertible debt issued under
the Plan, and the issuance to the Transition Management Team of the balance of
its New Common Stock is 8,490,693. The combined total number of shares of New
Common Stock that may be issued under the Plan by all methods is 9,300,693.
As of April 11, 2002, the assets and liabilities of the Company on a historical
cost basis were approximately 4,531,737 and 21,910,899, respectively. On or near
the Effective Date, New Company will adopt provisions of "fresh start
accounting," which requires New Company to restate all assets and liabilities to
their fair values based upon the provisions of the Plan and certain valuation
plans currently underway. No determination of the impact of fresh start
accounting on the historical consolidated financial statements has been made.
Copies of the Order Confirming the Amended Joint Plan of Reorganization dated
April 11, 2002, the Amended Joint Plan of Reorganization and the Disclosure
Statement for the Amended Joint Plan of Reorganization, and the Immaterial
Modifications to Amended Joint Plan of Reorganization, the Second Immaterial
Modifications to Amended Joint Plan of Reorganization, and the Third Immaterial
Modifications to Amended Joint Plan of Reorganization are attached hereto as
Exhibits 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6, respectively, and are incorporated
herein by reference.
The Disclosure Statement for the Amended Plan of Reorganization filed as an
exhibit to this Form 8-K may contain certain forward-looking statements and
projections. Please refer to the Company's Quarterly Report on Form 10-QSB for
the quarter ended December 31, 2001 for disclosure relating to cautionary
statements that qualify such forward-looking statements and projections.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
(b) Semple & Cooper, LLP, Certified Public Accountants and Consultants, was
engaged as the Company's principal accountant on February 22, 2001. The decision
to engage Semple & Cooper was approved by the Company's board of directors.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit
Number Description
- ------ -----------
2.1 Order Confirming the Amended Joint Plan of Reorganization dated
April 11, 2002
2.2 Amended Joint Plan of Reorganization dated January 4, 2002
2.3 Disclosure Statement for the Amended Joint Plan of Reorganization
2.4 Immaterial Modifications to Amended Joint Plan of Reorganization
2.5 Second Immaterial Modifications to Amended Joint Plan of
Reorganization
2.6 Third Immaterial Modifications to Amended Joint Plan of
Reorganization
SIGNATURES
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 hereunto duly authorized.
EBIZ ENTERPRISES, INC.
By: /s/ Bruce Parsons
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Bruce Parsons
Chief Executive Officer