UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 of 15(d)of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 6, 2002
Federal Security Protection Services, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 000-28335 84-1080043
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number
400 Poydras Street, New Orleans, LA 70130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (866) 932-2628
(Former name or former address, if changed since last report)
1616 Warren Avenue, Suite 34, PO Box 3171, Cheyenne, Wyoming 82003
(Former Address of principal executive offices) (Zip Code)
Item 1. Changes in Control of Registrant
(a) The following persons controlled Registrant prior to September 6, 2002,
the effective date of the Merger Agreement with Iris Broadband, Inc. Total
Common Stock outstanding prior to the effective date of the merger was
6,065,209 shares. Total voting rights of Preferred Stock was 700,000.
Grand total voting rights prior to the effective date of the merger was
6,765,209.
Table 1. Control of Registrant Prior to September 6, 2002
Number of Shares Number of Voting Rights Percentage of then
Name Of Common Stock of Series A Preferred Stock (3) Total Voting Rights
Dennis Schlagel 1,620,000 (1) 250,000 27.6%
(Director)
Blair J. Merriam 1,869,000 (2) 250,000 31.3%
(Director)
Daniel W. Thornton 212,500 none 3.1%
(Director and Secretary)
William Livingston 50,000 none .7%
(Director)
Total Percentage of then
Total Voting Rights 62.7%
(1) Includes 600,000 shares of common stock issued to Latin Foods, Inc., and
650,000 shares of common stock issued to Web Consultants, Inc., companies
wholly owned by Mr. Schlagel. Does not include 1,500,000 shares of common
stock which Mr. Schlagel may acquire should he exercise certain options
granted to him, covering said number of shares. Does not include 280,000
shares of common stock which may be acquired by Latin Foods, Inc., should
Latin Foods, Inc. exercise the options held by it.
(2) Does not include 1,340,000 shares of common stock which Mr. Merriam may
acquire should he exercise certain options granted to him covering said
number of shares. Does not include 180,000 shares of common stock which
may be acquired by Beltropic Inc., a company wholly owned by Mr. Merriam,
should Beltropic, Inc. exercise the options held by it.
(3) There are 70,000 shares of Series A Preferred Stock outstanding. One
Preferred Series A share converts to 100 shares of common stock, however
these shares are then reverse split 10 for 1, per the reverse split of common
stock approved by the shareholders on March 12th, 2002, so that the net
effect is a conversion to 700,000 shares of common stock (and voting rights).
On September 6, 2002, control of the Registrant potentially shifted to the
former shareholders of Iris Broadband, Inc., a corporation organized and
existing under and pursuant to the laws of the Louisiana (hereinafter
referred to as "Iris"). On that date, the shareholders of Iris received
the number of shares of Registrant's Series B Preferred Stock as shown in
Table 2. The Series B Preferred Stock is identical to the Series A Preferred
Stock except for the date as of which said stock can be converted to Common
Stock of Registrant and the holding period for conversion. Said date is
March 6, 2003, six months as and from the date of its issuance.
On September 6, 2002, shares of Series B Preferred Stock were issued to the
following named persons, each such person being both the beneficial and record
owner of said shares. Total Common Stock outstanding at the effective date of
the merger was unchanged at 6,065,209 shares. Total voting rights of Series
A Preferred Stock is unchanged at 700,000. Total voting rights of Series B
Preferred Stock is 7,000,000. Grand total voting rights at the effective date
of the merger is 13,765,209.
Table 2. Control of Registrant on September 6, 2002
Number of Shares Number of Voting Rights Percentage of
Name Of Common Stock of Series B Preferred Stock (4) Total Voting Rights
Gary S. O'Neal (1) none 2,600,000 18.9%
Edward E. Reynolds (2) none 1,830,000 13.3%
Michael T. Landers (3) 10,000 2,085,000 15.2%
Richard J. Schluter none 165,000 1.2%
ChristopherL. Courtright none 50,000 .4%
Lynn S. Yeldell none 50,000 .4%
Nicholas A. Robins none 165,000 1.2%
Thomas W. Wilson none 55,000 .4%
Total 10,000 7,000,000 51.0%
(1) Does not include 2,000,000 shares of common stock which Mr. O'Neal may
acquire should he exercise certain options granted to him, covering said
number of shares.
(2) Does not include 1,700,000 shares of common stock which Mr. Reynolds may
acquire should he exercise certain options granted to him covering said
number of shares.
(3) Does not include 2,000,000 shares of common stock which Mr. Landers may
acquire should he exercise certain options granted to him covering said
number of shares.
(4) There are 70,000 shares of Series B Preferred Stock outstanding. One
Preferred Series B share converts to 100 shares of common stock, so that the
net effect is a conversion to 7,000,000 shares of common stock (and voting
rights).
The shares of Series B Preferred Stock of Registrant were issued pursuant to
a Plan and Agreement of Reorganization by Exchange of Voting Stock of
Registrant and Iris dated August 15, 2002 (hereinafter referred to as the
"Plan and Agreement"), with a Closing Date of September 6, 2002. Pursuant to
the Plan and Agreement Iris became a wholly-owned subsidiary of Registrant.
Each of the recipients of the shares of Series B Preferred Stock surrendered
and delivered to Registrant all of the stock of Iris which each such person
owned. There follows a table showing the number of shares of Iris
surrendered and the number of shares of Registrant's Series B Preferred Stock
received in consideration of the stock of Iris which was surrendered. This
was the only consideration given by the recipients of the shares of Series B
Preferred Stock.
Table 3. Iris Shares Surrendered and Registrant Shares Issued
Number of Shares of Registrant's Series B
Name Number of Shares of Iris Preferred Issued
Gary S. O'Neal 2,600,000 26,000
Edward E. Reynolds 1,830,000 18,300
Michael T. Landers 2,085,000 20,850
Richard J. Schluter 165,000 1,650
Christopher L. Courtright 50,000 500
Lynn S. Yeldell 50,000 500
Nicholas A. Robins 165,000 1,650
Thomas W. Wilson 55,000 550
Total 7,000,000 70,000
A copy of the Plan and Agreement is appended to Registrant's Annual Report
for the fiscal year ended March 31, 2002, filed with the Commission on August
14, 2002 and referred to herein as the Form 10.
As is disclosed in the Form 10, in contemplation of the consummation of the
Plan and Agreement certain officers of Registrant resigned their offices and
were replaced by persons who had been officers of Iris. The new officers of
Registrant all became directors of Registrant.
Ownership of the outstanding stock of Registrant, as of the consummation of
the Plan and Agreement by officers and directors of Registrant, giving effect
to the conversion of both series of Preferred Stock is as follows:
Table 4. Ownership by Executive Officers and Directors
Name and Office Number of Voting Rights Percentage of Voting Rights
Gary S. O'Neal 2,600,000 18.9%
(President and Chief Executive
Officer and Director)
Michael Landers 2,095,000 15.2%
(Vice President, Finance and
Treasurer and Director)
Daniel Thornton 212,500 1.5%
(Vice President, Business
Development and Secretary
and Director)
Blair Merriam 2,119,000 15.4%
(Director)
William Livingston 50,000 .4%
(Director)
Dennis Schlagel 1,870,000 13.6%
(Director)
All Current Executive Officers
And Directors as a Group 8,946,500 65.0%
Total voting rights of all officers and directors expressed as a percentage
of all stock issued and outstanding and giving effect to the conversion
rights as to all shares of Preferred Stock, regardless of series, is sixty
five percent (65.0%).
Item 2. Acquisition of Assets
On September 6, 2002, Registrant acquired all of the outstanding stock of
Iris and thus acquired the business of Iris.
Registrant intends to become a full-service managed security services company
and a secure Internal Protocol ("IP") network provider. Registrant provides
its products and services to its customers (carriers, other IP-based service
providers, systems integrators, business enterprises) on a turnkey or per-
requirement basis. Registrant, pursuant to the acquisition of Iris, develops
custom solutions for securing virtual private networks, email/document
security management, digital rights management, content delivery networks,
IP-based video products suite and others requiring IP based network security
solutions. Registrant develops and deploys these integrated solutions on a
secure Tier 1 Backbone Network and provides integrated access to Tier 2 - 4
and rural access to cover 85% of the United States and 115 countries.
Registrant provides desktop-to-desktop managed security network solutions and
other policy-based services.
Iris' business will continue along these same lines following Iris' becoming
a wholly-owned subsidiary of Registrant. Iris provides IP-based products and
services with emphasis on Internet and data security. Iris is developing and
deploying an integrated broadband network utilizing wireless technology as
well as fiber optic infrastructure. Wireless network development is
concentrated initially in the Southeastern United States, particularly in
Tier 2 - 4 cities and rural areas. Iris has executed a joint venture
agreement to implement a wireless network in Alexandria, Louisiana. The
network is in place and services are now being offered. Expansion to other
cities is expected to occur as quickly as capital can be secured. No
assurance can be given that such capital can be secured on terms acceptable
to Iris and Registrant, or upon any terms. There is no timetable at this
time as to when these services will be activated.
Services can also be provided in major metropolitan areas of Denver, Houston,
Dallas, Atlanta, Miami, Austin, Orlando, Tampa and New Orleans via DSL and
fiber optic networks with which Iris has contracted for access and transport
services.
Services offered by Iris include:
* IP Virtual Private Networks (VPN) set-up
* ATM/Frame Relay Virtual Private Networks set-up
A VPN is a means of augmenting a shared network on a secure basis through
"encryption" or "tunneling." Such a shared network could be an IP network
such as X.25, or the Internet, or an Intranet, or an ATM or Frame Relay
network. Tunneling involves encapsulation of that encrypted data inside IP
or ATM packets or frame relay frames. Additional security is provided
through firewalls at the user sites and, perhaps, in the carrier network.
(Source: Newton's Telecom Dictionary, p. 858, Miller Freeman, Inc.,
February 1999)
* IP Video Services utilizing advance video software compression, including
-Surveillance
-Point-to-point and Point-to-multipoint videoconferencing
- -Streaming media
- -Video kiosks
Video surveillance utilizing a wireless Local Area Network (LAN) or Wide Area
Network (WAN) and software licensed to Iris is very simple to setup, monitor
and change as desired. Changing camera locations is easy because there is no
fixed wiring to move or install. The wireless infrastructure provides
complete mobility within the umbrella of the wireless coverage area. Indoor
and outdoor applications are established with ease, ranging from a one camera,
one room set-up to up to 16 cameras in a large outdoor area.
* Secure e-mail setup and maintenance
* VPN monitoring and maintenance
Most companies in the Internet and data security sector provide only the
product or service to the customer and leave network interconnection problems
to the customer. Iris recognizes that without the network or interconnection
to a customer, a security service is ultimately of little or no use.
Development of wireless networks in particular provides a cost effective,
high bandwidth solution to reaching businesses in smaller cities that would
otherwise not have cost-effective choices for high speed Internet access.
Services requiring high bandwidth connections would become useful to
businesses that would be unavailable or impractical on dial-up connections.
The ability to integrate network access and delivery with an array of
complementary products and services allows Iris to provide a less confusing,
more convenient and efficient service to customers while expanding its target
customer base beyond that of companies without network interconnection
capability.
The business of Iris is the sum total of the assets acquired by Registrant.
There is appended hereto an unaudited financial statement of Iris, dated June
30, 2002. All assets reflected on the Balance Sheet of Iris in existence as
at September 6, 2002 were acquired by Registrant upon acquisition of all of
the outstanding stock of Iris.
SIGNATURE
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed in its behalf by the undersigned, thereunto duly
authorized.
Federal Security Protection Services, Inc.
Date: September 19, 2002 / s/ Gary S. O'Neal
Gary S. O'Neal, President and Chief Executive Officer
APPENDIX
UNAUDITED FINANCIAL STATEMENT OF IRIS BROADBAND, INC.
AS OF JUNE 30, 2002
The accompanying balance sheet of Iris Broadband, Inc. was compiled as of
June 30, 2002, and the related statements of income for the six months then
ended in accordance with Statements on Standards for Accounting and Review
Services by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statement,
information that is the representation of management. Management has elected
to omit substantially all of the disclosures and the statements of retained
earnings and cash flows required by generally accepted accounting principles.
If the omitted disclosures and the statements of retained earnings and cash
flows were included in the financial statements, they might influence the
user "conclusions about the company", financial position, results of
operations and cash flows. Accordingly, these financial statements are not
designed for those who are not informed about such matters.
IRIS BROADBAND, INC.
FKA Pangaea.Tel, Inc.
BALANCE SHEET
As of June 30, 2002
June 30, 2002
ASSETS
Current Assets
Cash 30,362
Accounts Receivable 42,648
Other Current Assets 1,005,507
Total Current Assets 1,078,517
Fixed Assets - net of depreciation 51,984
Other Assets 26,025
TOTAL ASSETS 1,156,526
LIABILITIES AND EQUITY
Liabilities
Current Liabilities
Accounts Payable 139,341
Other Current Liabilities 687,355
Income Taxes Payable 61,227
Total Current Liabilities 887,923
Long Term Liabilities 18,331
Total Liabilities 906,254
Equity
Common Stock 10,000
Opening Balance Equity 23,454
Retained Earnings 157,895
Net Income 58,923
Total Equity 250,272
TOTAL LIABILITIES AND EQUITY 1,156,526
IRIS BROADBAND, INC.
FKA Pangaea.Tel, Inc.
Profit and Loss
January 2002 through June 30, 2002
Jan. - June 30, 2002
INCOME
Ordinary Income 147,682
Cost of Goods Sold 2,667
Gross Profit 145,015
EXPENSE
Operating Expense 86,092
NET INCOME 58,923