U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM F-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INTERNATIONAL FINANCIAL GROUP INC.
INCORPORATED PURSUANT TO THE LAWS OF THE CAYMAN ISLANDS
PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NO.
No.: 6199-7
INTERNATIONAL FINANCIAL GROUP INC.
----------------------------------
P.O. BOX 10098APO
GEORGETOWN, GRAND CAYMAN
BRITISH WEST INDIES
TEL: (345) 946-4170
With copy to:
STEPP LAW GROUP
SUITE 460-1301 DOVE STREET
NEWPORT BEACH, CALIFORNIA 92660
TEL: (949) 660-9700 FAX: (949) 660-9010
(AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE UNITS TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
"Securities Act of 1933", as amended, or until this Registration Statement shall
become effective on such date as the Commission acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
Title of each
Class of Proposed Proposed Amount
Securities Amount maximum maximum of
To be to be offering price aggregate registration
registered registered per unit offering price fee
-----------------------------------------------------------------------------------------
Offering Units:(1)
Ordinary Shares: 5,000,000 $0.10 USD $ 500,000 USD $ 132 USD
Share Warrants 5,000,000 $2.00 $10,000,000 USD $2,640 USD
Ordinary Shares
Underlying Warrants: 5,000,000
Existing Shares
and Warrants:(2)
Ordinary Shares: 20,000,000 $0.10 USD(3) $ 2,000,000 USD $ 528 USD
Ordinary Shares
Underlying Warrants: 4,000,000 $2.00 $ 8,000,000 USD $2,112 USD
Total Registration Fee: $5,412 USD
1. 5,000,000 units with each unit consisting of one ordinary share, and one
(1) share purchase warrant that allows the holder of each warrant to
purchase one (1) ordinary share at an exercise price of $2.00 USD, to be
exercised not later than December 31, 2002 after which date the warrant
will become null and void (herein collectively referred to as "Units"), at
an offering price of $0.10 per Unit for gross offering proceeds of
$500,000. The offering price of the Units and exercise price of warrants
were arbitrarily determined by Management and do not bear any relationship
to the assets, results of operations or book value of IFG, or to any other
historically-based criteria of value.
2. 20,000,000 ordinary shares and 4,000,000 share purchase warrants to
purchase ordinary shares exercisable at $2.00 USD having an expiry date of
December 31, 2002, are owned by IFG World Holdings Inc. International
Financial Group, Inc. is owned by IFG World Holdings and Sound Refuge
Trust. IFG World Holdings is solely owned by IFG World Holdings Trust. Mr.
Kevin Mellor is the sole beneficial owner of that trust. After this
offering, Mr. Mellor will continue to own approximately 79% of IFG's
shares. The 4,000,000 share purchase warrants represent the total issued
and outstanding share purchase warrants of International Financial Group,
Inc.
3. Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o) and based on a bona fide estimate
of the maximum offering price.
-----------------------------------------------------------------------------
Preliminary Prospectus
----------------------
The information in this prospectus is not complete and may be changed. We may
not sell these securities, and the selling securityholder may not sell his
ordinary shares, until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities, and we are not soliciting offers to buy these securities, in any
state where the offer or sale is not permitted.
Subject to completion, dated October 22, 2001
25,000,000 Ordinary Shares
5,000,000 Share Purchase Warrants
International Financial Group, Inc.
International Financial Group, Inc. ("IFG") is registering 20,000,000 of its
20,250,000 ordinary shares presently issued and outstanding and 4,000,000
ordinary shares that can be issued pursuant to warrants outstanding at the date
of this prospectus. The 20,000,000 ordinary shares and 4,000,000 share purchase
warrants to purchase 4,000,000 ordinary shares exercisable at $2.00 USD having
an expiry date of December 31, 2002, are owned by IFG World Holdings Inc.
International Financial Group, Inc. is therefore 99% owned by IFG World Holdings
and Sound Refuge Trust. IFG World Holdings is solely owned by IFG World Holdings
Trust. Mr. Kevin Mellor is the sole beneficial owner of that trust. Mr. Mellor
is therefore the beneficial owner of those 20,000,000 ordinary shares and
4,000,000 share purchase warrants held in the name of IFG World Holdings Inc.
Mr. Mellor is registering the shares he owns beneficially so that he may offer
those shares for resale at the offering price of $0.10 USD. After this offering
of IFG's securities, if Mr. Mellor does not resell any of his offered shares,
Mr. Mellor will continue to beneficially own approximately 79% of International
Financial Group Inc.'s shares. The 4,000,000 share purchase warrants
beneficially owned by Mr. Mellor represent the total issued and outstanding
share purchase warrants of International Financial Group, Inc. (see risk
factor-"Another Company Controls" at page 7). International Financial Group Inc.
will not receive any proceeds from the sale of shares by IFG World Holdings Inc.
There is no guarantee Mr. Mellor will sell all or any portion of his shares
being offered.
We are also offering 5,000,000 units at an offering price of $0.10 USD per unit
with each unit consisting of one (1) ordinary share, and one (1) share purchase
warrant. The share purchase warrant allows the holder of each warrant to
purchase one (1) ordinary share at an exercise price of $2.00 USD, to be
exercised not later than December 31, 2002, after which date the warrant will
expire. The unit price was arbitrarily set, for gross offering proceeds of
$500,000 USD. This is the initial public offering and no public market currently
exists for our shares. It is our objective to self-underwrite this offering and
our officers and directors will sell these units on a best efforts basis with no
additional compensation and therefore any or all the units being registered may
be unsold.
------------------------------
Investing in the Common Shares Involves Risks,
See "Risk Factors" beginning on page 2.
------------------------------
Per Share Total
--------- -----
Public Offering Price $0.10 USD $ 500,000 USD
Exercise Price (Warrants) $2.00 USD $10,000,000 USD
Offering Expenses $0.02 USD $ 100,000 USD
Proceeds to IFG if no Warrants Exercised $0.08 USD $ 400,000 USD
Proceeds to IFG if all Warrants Exercised $2.08 USD $10,400,000 USD
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------------
The date of this prospectus is October 22, 2001.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, units, only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of our ordinary shares.
Until a date, which is 25 days after the date of this prospectus, all dealers
that buy, sell or trade our common shares, whether or not participating in this
offering, may be required to deliver a prospectus. This requirement is in
addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
[LOGO - IFG}
Table of Contents
SUMMARY.......................................................................1
THE COMPANY...................................................................1
THE OFFERING..................................................................2
RISK FACTORS..................................................................2
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS...........................12
USE OF PROCEEDS..............................................................13
DETERMINATION OF OFFERING PRICE..............................................14
CAPITALIZATION...............................................................14
DILUTION.....................................................................14
SELLING SECURITY HOLDERS..................................................15
PLAN OF DISTRIBUTION......................................................16
DESCRIPTION OF SECURITIES TO BE REGISTERED...................................17
SELECTED CONSOLIDATED FINANCIAL DATA.........................................21
CONSOLIDATED STATEMENTS OF OPERATIONS........................................22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS...................................................................22
OVERVIEW..................................................................22
LIQUIDITY AND CAPITAL RESOURCES..............................................24
BUSINESS.....................................................................25
HISTORY AND BACKGROUND....................................................25
The Company............................................................25
The Subsidiaries.......................................................27
IFG Investment Services.............................................27
IFG Trust Services..................................................28
IFG Corporate Services..............................................28
IFG Management Services.............................................29
IFG Systems.........................................................30
The Proposed Subsidiaries..............................................31
IFG Bank............................................................31
IFG Insurance.......................................................32
--------------------------------------------------------------------------------
October 22, 2001 Table of Contents Page i
[LOGO - IFG]
CORPORATE CHART..............................................................34
ASSOCIATED COMPANIES AND TRUSTS...........................................34
IFG World Holdings Trust...............................................35
IFG World Holdings Inc.................................................35
INDUSTRY BACKGROUND.......................................................35
Growth of the Internet and Online Commerce.............................35
Market Opportunity.....................................................36
Marketing Strategy.....................................................37
REVENUES.....................................................................38
BUSINESS STRATEGY............................................................38
Main Objectives........................................................38
Full and Discount Products and Services.............................39
Confidential and Secure Environment.................................39
Cost Effective and Convenient Service...............................40
Prompt, Reliable, Efficient and Professional Service................40
Reliability Through Redundancy......................................41
REPUTATION................................................................41
COMPETITION...............................................................41
GOVERNMENT REGULATION........................................................42
THE COMPANY...............................................................42
IFG Bank...............................................................42
IFG Investment Services................................................43
IFG Insurance..........................................................43
IFG Trust Services.....................................................43
IFG Corporate Services.................................................43
FACILITIES, EQUIPMENT AND SYSTEMS.........................................44
Offices................................................................44
Computer Hardware......................................................44
Computer Software......................................................44
Security...............................................................44
MANAGEMENT...................................................................45
KEY PERSONNEL QUALIFICATIONS..............................................45
Independent Development and Support Contracts..........................47
Director and Officers Compensation.....................................47
Employment and Consulting Contracts....................................48
PRINCIPAL SHAREHOLDERS.......................................................48
RELATED PARTY TRANSACTIONS...................................................49
DESCRIPTION OF SHARE CAPITAL.................................................50
SHARE PURCHASE WARRANTS......................................................51
--------------------------------------------------------------------------------
October 22, 2001 Table of Contents Page ii
[LOGO - IFG]
CERTAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION............................51
LOCK UP AGREEMENT............................................................52
PLACEMENT....................................................................52
TRANSFER AGENT AND REGISTRAR.................................................52
SHARES ELIGIBLE FOR FUTURE SALE..............................................53
U.S. RESALE RESTRICTIONS.....................................................53
AUDITORS.....................................................................54
MATERIAL AGREEMENTS AND DOCUMENTS............................................54
ADDITIONAL INFORMATION.......................................................54
TAXATION IN THE CAYMAN ISLANDS...............................................54
TAXATION IN THE UNITED STATES OF AMERICA.....................................54
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS..............................55
PERSONAL HOLDING COMPANIES...................................................56
FOREIGN PERSONAL HOLDING COMPANIES...........................................56
PASSIVE FOREIGN INVESTMENT COMPANIES.........................................56
CONTROLLED FOREIGN CORPORATION...............................................57
LEGAL MATTERS................................................................57
EXPERTS......................................................................58
WHERE YOU CAN FIND MORE INFORMATION..........................................58
THE COMPANY'S LOCATIONS...................................................58
REPRESENTATIONS..............................................................59
SCHEDULE "A" - Financial Statements..........................................59
SCHEDULE "B" - SUBSCRIPTION DOCUMENTS........................................74
SECTION A - HOW TO SUBSCRIBE.................................................77
SECTION B - SUBSCRIPTION AGREEMENT...........................................79
SCHEDULE "C" - WARRANT AGREEMENT.............................................82
--------------------------------------------------------------------------------
October 22, 2001 Table of Contents Page iii
[LOGO - IFG]
SCHEDULE "D" - LOCK-UP AGREEMENT.............................................88
SCHEDULE "E" - MEMORANDUM AND ARTICLES OF ASSOCIATION........................93
--------------------------------------------------------------------------------
October 22, 2001 Table of Contents Page iv
[LOGO - IFG]
SUMMARY
You should read the following summary together with the more detailed
information about International Financial Group, Inc. and the common shares
being sold in this offering, including our consolidated financial statements and
the related notes appearing elsewhere in this prospectus.
THE COMPANY
International Financial Group Inc., and its subsidiaries discussed herein is a
development stage company that provides offshore financial services to the
business-to-consumer and business-to-business markets. We utilize traditional
delivery channels including in-person consultation, telephone and facsimile, and
the Internet to deliver our products and services. We commenced full service
offshore investment, trust and corporate services activities in February 2001,
and during the same month, also launched the websites www.ifg.com, www.apiip.com
and www.ifgtrust.com to provide ----------- ------------- ----------------
Internet-based discount offshore investment, trust and incorporation services.
It is our objective to provide to our clients an efficient, professional and
confidential environment in which to conduct their financial affairs, with a
focus on asset protection. It is also our objective to satisfy all financial
services and money laundering regulations in each jurisdiction that we operate
within.
To accomplish these goals, we hope to establish ourselves as a comprehensive
provider of full service and discount offshore financial products and services
through wholly-owned subsidiaries currently incorporated in over 30 offshore
jurisdictions. Customer convenience and operating efficiency, along with
offering "bundled" financial services, are two key components of our strategy.
During the remaining part of 2001 and 2002, we intend to conduct research and
development of our proposed full service and discount offshore banking and
insurance to facilitate our future expansion in these service areas. This
research and development will be contingent upon the success of this offering.
By offering these services from multiple jurisdictions, we hope our clients will
be able to develop a financial plan utilizing multiple layers of confidentiality
while also offering the client the ability to utilize the best available
jurisdiction for each distinctive part of their offshore financial strategy. As
we expand our products and services offered, we will continue to utilize both
full service traditional and discount Internet-based delivery channels.
We have established our investment services subsidiary, IFG Investment Services,
Inc., in the Cayman Islands and intend to make an application to the Cayman
Islands Monetary Authority for a Trade and Business License for the Cayman
subsidiary. International Financial Group Inc. has received its Internet-based
offshore financial services license to operate in the Cayman Islands, which
includes brokerage services. It is also our intention to establish an investment
services subsidiary in the Isle of Man. We have established our trust services
subsidiary, IFG Trust Services, Inc., head office in St. Kitts and Nevis, West
Indies and we have received our license to conduct trust activities. IFG Trust
Services, Inc. owns IFG Investments Services, Inc. a Nevis subsidiary that
facilitates brokerage services for our clients. In February 2001, we established
an offshore trust services subsidiary in The Isle of Man. We also have applied
for Trust licenses in Anguilla and St. Lucia of the British West Indies. We have
established our corporate services, IFG Corporate Services, Inc., holding
company in the Cayman Islands and are intending to apply to the Cayman Islands
Monetary Authority for a Trade and Business License. We have established
corporate services subsidiaries in Antigua, Barbados, Costa Rica, Panama, Hong
Kong, Isle of Man, Labaun and Marshall Islands. Further we intend to apply for
licenses to carry on corporate services activities in these jurisdictions where
applicable. We have also established a technology, IFG Systems, Inc., subsidiary
in the Cayman Islands for the purpose of managing all systems and technology
developed by, and for, IFG.
In February 2001, we made applications for offshore bank licenses, IFG Bank,
Inc., in Belize and St. Vincent and the Grenadines. In 2002, we intend to
establish insurance services subsidiaries, IFG Insurance, Inc., in Bermuda and
the Cayman Islands. The launch of these subsidiaries and the services they may
provide will be contingent upon the success of this offering to finance the
research and development that is necessary to develop the systems necessary to
operate banking and insurance systems and subsidiaries.
We selected these offshore jurisdictions because we believe they are credible
jurisdictions within which to conduct business as they embrace asset protection,
wealth enhancement, wealth preservation and freedom of succession. The basis of
our belief is that the aforementioned countries' have stable political systems,
have modern telecommunications systems, government infrastructure such as
financial services departments formed to facilitate businesses such as ours and
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 1
[LOGO - IFG]
have enacted legislation to support trusts and corporations and secrecy of
client disclosure. From this corporate structure, we intend to continue our
expansion by establishing trust and corporate services subsidiaries in up to 20
offshore jurisdictions worldwide by the end of year 2001.
THE OFFERING
The company is offering 5,000,000 Units for sale at $0.10 USD per Unit. The
Units consist of 5,000,000 ordinary shares and 5,000,000 warrants to purchase an
additional 5,000,000 ordinary shares at an exercise price of $2.00 USD to be
exercised not later than December 31, 2002.
Mr. Mellor is offering 20,000,000 ordinary shares which he beneficially owns for
resale at $0.10 USD per share.
Immediately after the offering, there will be 25,250,000 ordinary shares issued
and outstanding. If all warrants, both outstanding and new, are exercised, there
will be 34,250,000 ordinary shares outstanding.
Units Offered 5,000,000 Units
Common shares to be
Outstanding after the
Offering 25,250,000
Use of Proceeds
Use of Proceeds Minimum Proceeds - Sale of Units Maximum Proceeds - Sale of Units
--------------- -------------------------------- plus exercised Warrants
--------------------------------
Cost of Offering $100,000 $ 100,000
Salaries and Employee Benefits $ 75,000 $ 3,075,000
Expand Corporate offices - Nevis $ 25,000 $ 25,000
Reseach, testing, development, $300,000 $ 7,300,000
maintenance of software (1)
Total $500,000 $10,500,000
(1) Research, evaluation, testing, development, operation and maintenance of
software, for the various subsidiaries of IFG, and the establishment, operation,
enhancement and maintenance of various websites required by IFG to provide its
services, or other contingent expenditures deemed necessary by IFG.
(2) If all of Mr. Mellor's offered shares are sold at the offering price, Mr.
Mellor will receive $2,000,000 USD. These funds will not go to the company. If
Mr. Mellor exercises all of the 4,000,000 outstanding warrants which he holds,
the company will receive an additional $8,000,000 USD from Mr. Mellor, and Mr.
Mellor will receive 4,000,000 ordinary shares. Mr. Mellor does not currently
have funds available to exercise his 4,000,000 outstanding warrants, and, even
if such funds were available, Mr. Mellor does not intend to exercise all or any
portion of his warrants until and unless the market value of the ordinary shares
meets or exceeds the $2.00 USD exercise price.
Proposed OTCBB Symbol: IFGPF
RISK FACTORS
Investing in IFG's units will subject you to risks inherent in our business. You
should carefully consider the following factors as well as other information
contained in this prospectus before deciding to invest in our units. If any of
the risks described below occurs, our business, results of operations and
financial condition could be adversely affected. In such cases, the price of our
ordinary shares could decline, and you may lose part or all of your investment.
BECAUSE WE ARE A DEVELOPMENT STAGE COMPANY, WE CANNOT GUARANTEE OUR
PROFITABILITY.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 2
[LOGO - IFG]
IFG has a limited operating history. From the date of our incorporation on July
14th, 1997, until February 1st, 2001, we were a development-stage company that
had no revenues. Our operating activities during this period consisted primarily
of conducting research and developing our products and services to be provided
to clients desiring offshore financial products and services. Effective February
1, 2001, IFG Trust Services, Inc. and IFG Investments Services, Inc. commenced
business and have derived revenue from the businesses; however, we remain a
development-stage company. Our prospects are subject to the risks and expenses
encountered by development stage companies, companies entering the traditional
financial products and services market, and companies planning to move into the
Internet financial products and services market. Our limited operating history
and the uncertain nature of the markets addressed by us make it difficult or
impossible to predict future results of our operations. We cannot assure our
investors that we will establish a clientele that will make us profitable, which
might result in the loss of some or all of your investment in IFG.
BECAUSE IFG AND ITS OFFICERS AND DIRECTORS ARE LOCATED IN NON-U.S.
JURISDICTIONS, INVESTORS MAY HAVE NO EFFECTIVE RECOURSE AGAINST IFG OR ITS
MANAGEMENT FOR MISCONDUCT AND YOU MAY NOT BE ABLE TO ENFORCE JUDGMENTS AND CIVIL
LIABILITIES AGAINST IFG AND ITS OFFICERS, DIRECTORS, EXPERTS AND AGENTS.
International Financial Group Inc. has been incorporated under the laws of the
Cayman Islands, and our executive offices are located in the Federation of St.
Kitts and Nevis. Many of our directors, controlling persons and officers, and
representatives of the experts named in this prospectus, are residents of the
Federation of St. Kitts and Nevis, Cayman Islands, Canada, Bermuda and Barbados,
and a substantial portion of their assets and all of our assets are located
outside the United States. As a result, it may be difficult for investors to
effect service of process within the United States upon the directors,
controlling persons, officers and representatives of experts who are not
residents of the United States or to enforce against them judgments of courts of
the United States based upon civil liability under the federal securities laws
of the United States. There is doubt as to the enforceability in Cayman Islands
against us or against any of our directors, controlling persons, officers or
experts who are not residents of the United States, in original actions or in
actions for enforcement of judgments of United States courts and of liabilities
based solely upon the federal securities laws of the United States.
BECAUSE THE REGULATORY AND TECHNOLOGICAL ENVIRONMENT AFFECTING INTERNET OFFSHORE
FINANCIAL SERVICES IS RAPIDLY CHANGING, IF WE CANNOT COMPLY WITH CHANGING
INDUSTRY REGULATIONS, OR ADOPT ADVANCES IN TECHNOLOGY, WE MAY BE UNABLE TO
COMPETE EFFECTIVELY.
The offshore financial services industry is characterized by rapid technological
change, changes in customer requirements, new service and product introductions
and enhancements, evolving industry standards and regulation from state, federal
and foreign governments. At present the G7 countries, the United Nations and the
Organization for Economic Cooperation and Development are lobbying for new
legislation and regulation that would require the disclosure of information
regarding participants in the offshore finance industry, with an eye toward
preventing tax evasion and money laundering. In this regard, the Cayman Islands,
has recently introduced legislation to criminalize failure to disclose to the
Cayman authorities knowledge or suspicion of money laundering.
If the Cayman Islands discontinued their policy of providing privacy in
financial dealings, and our customers lost confidence in our ability to protect
their confidential financial information, we might lose much of our business,
and investors might lose some or all of their investment in IFG.
Changing government regulations go hand-in-hand with changing technology,
including encryption technology that is routinely used on the Internet to
protect confidential financial information and transactions. Because encryption
and related technology is constantly advancing, we will be required to spend
considerable assets keeping current with evolving industry standards. If we are
unable to do so, we will probably lose our customers to competitors who keep
current with technological advances, which might result in the loss of some or
all of your investment in IFG.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 3
[LOGO - IFG]
IF WE ARE NOT ABLE TO OBTAIN FUTURE FINANCING WHEN REQUIRED, WE MIGHT BE FORCED
TO DISCONTINUE OUR BUSINESS.
We will need to raise additional funds in order to complete our infrastructure,
develop new or enhanced services and products, respond to competitive pressures,
acquire complementary businesses or technologies or respond to unanticipated
requirements. There can be no assurance that additional financing will be
available when needed on terms favorable to us. There is no assurance that we
will not incur debt in the future, that we will have sufficient funds to repay
our indebtedness or that we will not default on our debt, jeopardizing our
business viability. Furthermore, we may not be able to borrow or raise
additional capital in the future to meet our needs or to otherwise provide the
capital necessary to conduct business, which might result in the loss of some or
all of your investment in IFG.
BECAUSE A SUBSTANTIAL PORTION OF OUR REVENUES IS DERIVED FROM OUR SECURITIES
BUSINESS, WE ARE PARTICULARLY VULNERABLE TO CHANGES IN MARKET CONDITIONS BEYOND
OUR CONTROL.
A substantial portion of our revenues are expected to be derived from execution
of securities brokerage transactions through our securities subsidiaries. The
securities brokerage business is subject to fluctuations and is directly
affected by global economic conditions, broad trends in business and finance and
fluctuations in volume and price levels of securities transactions, all of which
are beyond our control. Reduced trading volume generally results in reduced
transaction revenues and decreased profitability. Severe market fluctuations in
the future could have a material adverse affect on our business, financial
condition and operating results. The securities business is also subject to
various other risks, including customer default and employee misconduct, errors
and omissions. We may be responsible for any such losses that may occur as a
result of these risks. The securities industry has undergone many fundamental
changes during the last two decades, including regulation and deregulation in
many countries, as well as consolidation. There can be no assurance that future
changes will not have a material adverse affect on our business, financial
condition and operating results. In addition, commissions charged to customers
for brokerage services have steadily decreased, and we expect such decreases to
continue. There can be no assurance that such decreases will not have a material
adverse affect on our business, financial condition and operating results and,
therefore, the prospect of a return of capital invested in the Company.
BECAUSE A SUBSTANTIAL PORTION OF OUR REVENUES IS TO BE DERIVED FROM OUR PROPOSED
BANKING BUSINESS, WE MAY NOT BE PROFITABLE DUE TO CHANGES IN INTEREST RATES AND
OTHER GLOBAL ECONOMIC FACTORS BEYOND OUR CONTROL.
The banking business is directly affected by global economic conditions, broad
trends in business and finance and government regulation, all of which are
beyond our control. Government regulation in the future and initiatives by the
G7 nations, the Organization for Economic Cooperation and Development and the
United Nations regarding offshore banking could materially affect our proposed
banking operations. The banking business is also subject to various other risks,
including customer default on loans, monetary control by the offshore banking
jurisdictions central banks, employee misconduct, errors and omissions. We may
be responsible for any such losses that may occur as a result of these risks.
There can be no assurance that we will be able to establish and maintain
correspondent relationships with other banks, and this may have an adverse
affect on our ability to conduct our proposed business affairs. There can be no
assurance that these risks, if materialized, will not have a material adverse
affect on our business, financial condition and operating results and,
therefore, the prospect of a return of capital invested in IFG.
THE POTENTIAL EFFECTS OF CHANGES IN INTEREST RATES WILL AFFECT THE ABILITY OF
OUR PROPOSED BANKING BUSINESS TO EARN SUBSTANTIAL PROFIT.
The operations of IFG and in particular its proposed banking subsidiary may be
substantially dependent on its net interest income, which is the difference
between the interest income earned on its interest-earning assets and the
interest expense paid on its interest-bearing liabilities. Like most depository
institutions, our earnings may be affected by changes in interest rates and
other economic factors beyond our control. If an institution's interest-earning
assets have longer effective maturities than its interest-bearing liabilities,
the yield on the institution's interest-earning assets generally will adjust
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 4
[LOGO - IFG]
more slowly than the cost of its interest-bearing liabilities and, as a result,
the institution's net interest income generally would be adversely affected by
material and prolonged increases in interest rates and positively affected by
comparable declines in interest rates. In recent years, the assets of many
financial institutions have been negatively "gapped" - which means that the
dollar amount of interest-bearing liabilities which re-price within specific
time periods, either through maturity or rate adjustment, exceeds the dollar
amount of interest-earning assets which re-price within such time periods. As a
result, the net interest income of these institutions, including our Company,
would be expected to be negatively impacted by an increase in interest rates.
In addition to affecting interest income and expense, changes in interest rates
also can affect the value of our interest-earning assets, which may be comprised
of fixed and adjustable-rate instruments, and the ability to realize gains from
the sale of such assets. Generally, the value of fixed-rate instruments
fluctuates inversely with changes in interest rates.
OUR PROPOSED INSURANCE BUSINESS MAY NOT BE PROFITABLE DUE TO FACTORS BEYOND OUR
CONTROL, WHICH MIGHT CAUSE INVESTORS TO LOSE THEIR INVESTMENTS.
The insurance business is directly affected by global economic conditions, broad
trends in business and finance and government regulation, all of which are
beyond our control. In addition, we may not be able to control the risk that our
portfolio of life insurance policies will not satisfy the life expectancy tables
established for individuals we have issued policies to. We will also be subject
to the risk that our investments from monies received pursuant to insurance
premiums and insurance products will not be profitable and, therefore, not
capable of re-paying insurance benefits or returns on our insurance policies and
products. There can be no assurance that these risks, if materialized, will not
have a material adverse affect on our business, financial condition and
operating results and, therefore, the prospect of a return of capital invested
in IFG.
BECAUSE OUR BUSINESS DEPENDS ON NEW AND EVOLVING MARKETS AND PRODUCTS, AN
INVESTMENT IN OUR COMPANY IS HIGHLY SPECULATIVE.
It is anticipated that, in the years that follow completion of our full-service
website, a large portion of our future business may be conducted over the
Internet. The market for electronic financial products and services offered over
the Internet is at an early stage of development and is continually evolving. As
is typical for new and rapidly evolving industries, demand and market acceptance
for recently introduced services and products are subject to a high level of
uncertainty. Our current and proposed products and services to be offered
through the Internet involve an alternative approach and, as a result, some
limited marketing and sales efforts may be necessary to educate prospective
users regarding the uses and benefits of our products and services. Consumers,
who already obtain their financial services from more traditional providers such
as banks, brokerage firms, lawyers, trust companies, insurance brokers etc., may
be reluctant or slow to change to utilizing our current and proposed products
and services over the Internet.
The future of our success will depend, in part, on our ability to attract
offshore financial services clients, to develop and use leading technologies,
respond to technological advances, enhance our existing products and services
and develop new products and services on a timely and cost-effective basis.
There can be no assurance that the market for our offshore financial services
will develop or, if it does develop, will continue to grow, or that we will be
successful in effectively developing or using new technologies, responding to
technological advances or developing, introducing or marketing new products and
services to establish, maintain or enhance our client base.
Acceptance of our products and services will depend upon the broader adoption of
the Internet by consumers as a medium for commerce and communication. Use of the
Internet depends on the continued development of the necessary infrastructure
and complementary services and products, such as high-speed modems and
high-speed communication lines. As the number of users and amount of traffic on
the Internet continues to increase, there can be no assurance that the Internet
infrastructure will continue to be able to support the demands placed on it. In
addition, delays in the development or adoption of new standards and protocols
to handle increased levels of Internet activity or increased governmental
restrictions could impede further use of the Internet. Moreover, consumer
concerns about the Internet (including security, reliability, cost, ease of use,
accessibility and quality of service) remain unresolved and may negatively
affect the growth of Internet use. As a result, there can be no assurance that
the number of future transactions generated through us will be enough to
maintain IFG.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 5
[LOGO - IFG]
BECAUSE WE FACE INTENSE COMPETITION, AN INVESTMENT IN OUR COMPANY IS HIGHLY
SPECULATIVE.
We will compete with other financial service providers in the offshore industry.
Those competitors currently include brokerage firms, trust companies, corporate
and management service providers and in the future are intended to include
banks, insurance companies, and other business entities that provide offshore
financial products and services. We expect such competition to continue and
intensify in the future. Further, other financial service providers may be
established in offshore jurisdictions with the same business strategy as us and
may attempt to compete directly with us for the same customers. We expect many
of our competitors to have significantly greater financial, technical, marketing
and other resources than us. Our current competitors include, but are not
limited to, Merrill Lynch, First Nevisian, SEGOES, Freedom Trade, Trident Trust,
Royal Bank of Scotland, Fiduciary Trust, HWR Services, Caribbean Management, the
Sovereign Group, and OCRA.
Competitors of IFG's proposed business operations include, but are not limited
to, Barclays, UBS, Cayman National Bank, www.fsharpbank.com,
www.bayshorebank.com, Prudential Insurance, London Life, and Lloyds of London.
These potential competitors may be able to respond more quickly to new or
changing opportunities, technologies and customer requirements than IFG and may
be able to undertake more extensive promotional activities, offer more
attractive terms to customers and adopt more aggressive pricing policies than
IFG. Moreover, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
enhance their services and products. We cannot guarantee that new competitors or
alliances among competitors will not emerge, and these competitors may acquire a
significant market share of the offshore financial industry.
There can be no assurance that we will be able to compete effectively with
current or future competitors or that the competitive pressures faced by us will
not have a material adverse affect on our business, financial condition and
operating results and, therefore, the prospect of an investor return of capital
invested in IFG.
BECAUSE WE DEPEND ON OUR COMPUTER SYSTEMS FOR ALL OF OUR OPERATIONS, ANY SYSTEM
FAILURE WOULD DAMAGE OUR BUSINESS AND A PROLONGED FAILURE COULD FORCE US OUT OF
BUSINESS.
Our success is dependent on the integrity and reliability of our computer
systems (hardware and software) and electronic systems supporting our
operations, websites and Internet applications. Extraordinary volumes of
activity could cause our computer systems and Internet applications to operate
at an unacceptably low speed or even fail. Any significant degradation or
failure of the computer systems or any other systems (including third party
providers integrated with our computer and Internet system) could cause users of
our system to suffer delays in carrying out their business activities. Such
delays could cause substantial losses for users of our system and could subject
us to claims from users for losses, including litigation claiming fraud or
negligence. There can be no assurance that our computer systems and Internet
applications will not fail for a variety of reasons, including, but not limited
to, an act of God, natural disaster, fire, power or telecommunications failure,
war, political instability or failure by a third-party software or hardware
provider. Any computer systems failure that causes interruptions in our
operations and delivery of service could have a material adverse affect on our
business, financial condition and operating results and, therefore, the prospect
of an investor's return of capital invested in IFG.
IF OUR SECURITY SYSTEMS ARE BREACHED, OR OUR SYSTEMS ARE SABOTAGED, WE WOULD
LOSE BUSINESS AND INVESTORS COULD LOSE THEIR INVESTMENT.
We rely on encryption and other online security technology, necessary to effect
secure transmission of confidential information over the Internet by users of
our computer systems and Internet systems. There can be no assurance that
advances in computer capabilities; new discoveries in the field of cryptography
or other events or developments will not result in a compromise or breach of our
security technologies. Any such compromise of the security available through our
system could have a material adverse affect on our business, financial condition
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 6
[LOGO - IFG]
and operating results and, therefore, the prospect of an investor's return of
capital invested in IFG. We cannot assess the risk that our own Internet-based
applications will not be sabotaged by computer hackers.
BECAUSE WE DEPEND ON A SMALL GROUP OF QUALIFIED PEOPLE, IF WE CANNOT HIRE AND
RETAIN QUALIFIED PERSONNEL, WE MIGHT BE FORCED TO DISCONTINUE OUR OPERATIONS.
Our business is dependent upon a small number of directors, executive officers
and key personnel. We do not maintain any life insurance policies on any of our
directors, executives, or key personnel for the benefit of IFG. The loss of the
services of any of the aforementioned directors, executive officers or key
personnel, or the inability to identify, hire, train and retain other qualified
directors, executive officers or personnel in the future could have a material
adverse affect on our business, financial condition and operating results and,
therefore, the prospect of an investor's return of capital invested in IFG.
BECAUSE ANOTHER COMPANY CONTROLS A MAJORITY OF OUR COMMON STOCK, INVESTORS WILL
HAVE LITTLE OR NO CONTROL OVER IFG OR ITS MANAGEMENT.
Upon completion of the Offering, we will remain controlled by IFG World Holdings
Inc., the major controlling shareholder to IFG. As a result, IFG World Holdings
Inc. will have the ability to control matters affecting IFG, including the
election of our directors, the acquisition or disposition of our assets, and the
future issuance of IFG's shares. Because Mr. Kevin Mellor currently owns over
99% of IFG's shares and will continue to own 79% of IFG shares following the
offering, investors will not be able to replace our management if they disagree
with the way IFG's business is being run. Because control by "insiders" could
result in management making decisions that are in the best interest of those
insiders and not in the best interest of the investors, you may lose some or all
of the value of your investment in IFG.
IF WE CANNOT ESTABLISH INTERNATIONAL ALLIANCES AND BUSINESS RELATIONSHIPS, WE
MAY NOT BE ABLE TO OPERATE OUR VARIOUS BUSINESSES EFFECTIVELY, AND INVESTORS
COULD LOSE THEIR INVESTMENT IN IFG.
We intend to accomplish our goals by establishing strategic alliances with other
corporations, partnerships, and individuals, including banks, securities
dealers, insurance companies, trust and corporate service providers, online
service providers, and domestic and offshore professionals around the world.
Such strategic alliances entail numerous risks, including difficulties in
assessing the integrity, professional ability and/or efficiency and reliability
of the corporations, partnerships, professionals and individuals around the
world. There can be no assurance that any such relationships will be maintained,
that if such relationships are maintained, that they will be successful or
profitable or that we will be successful in developing any new strategic
alliances.
BECAUSE WE RELY ON THE HONESTY OF OUR CLIENTS, WE MAY BREACH MONEY-LAUNDERING
LAWS IF OUR CLIENTS LIE TO US, WHICH MIGHT PUT US OUT OF BUSINESS.
Although most offshore regulatory regimes contemporarily require the production
of extensive due diligence representation (in order to comply with the "know
your client" rule) from new parties involved in offshore financial structures
(e.g., directors, beneficiaries and beneficial owners, settlors, bank account
signatories, etc.), we cannot guarantee that required information and due
diligence provided by each new client will not be mistaken, misrepresented, the
product of forgery and/or fraud or otherwise inaccurate for reasons beyond our
control or the client.
Such inaccuracies may put us in breach of local laws and regulations which could
result in censure, fine, incarceration, revocation of work permits, the issuance
of cease-and-desist orders or the suspension or expulsion of our officers or
employees from certain countries. Such errors, omissions or inaccuracies may
also damage our international reputation as an offshore financial provider.
Either scenario could have a material adverse affect on our ability to carry on
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 7
[LOGO - IFG]
business, which would, in turn, have a material adverse affect on our financial
condition and operating results and, therefore, the prospect of an investor's
return of capital invested in IFG.
BECAUSE WE RELY ON THIRD PARTY SERVICE PROVIDERS, THEIR ERRORS OR OMISSIONS
COULD HAVE A MATERIAL ADVERSE AFFECT ON OUR BUSINESS AND CAUSE A LOSS OF YOUR
INVESTMENT.
We intend to rely on third party providers in all aspects of our business.
Errors and omissions in the various services performed by these third party
providers, although not the fault of ours, may expose us to criminal or civil
liability, and/or directly affect the quality and efficiency of goods and
services delivered by IFG. Such errors or admissions may have a material adverse
affect on our business, financial condition and operating results and,
therefore, the prospect of an investor's return of capital invested in IFG.
BECAUSE OUR MANAGEMENT HAS BROAD DISCRETION OVER THE USE OF PROCEEDS FROM THIS
OFFERING, YOU COULD LOSE YOUR INVESTMENT IF THE PROCEEDS ARE NOT SPENT
PRUDENTLY.
The net proceeds of this Offering are to be utilized for:
o payment of costs associated with this offering;
o paying salaries and benefits to employees;
o expanding corporate offices in Nevis; and
o research, evaluation, testing, development, operation and maintenance
of software, for the various subsidiaries of IFG, and the
establishment, operation, enhancement and maintenance of various
websites required by IFG to provide its services or other contingent
expenditures deemed necessary by IFG.
However, the Board of Directors and the management of IFG may not spend funds
pursuant to the uses indicated above due to events both within and beyond
management's control such as mismanagement of funds, inaccuracies of estimates,
and government changes in net capital requirements, etc. However, inaccuracies
in estimations for funds required in each area, mismanagement of funds in any
area and/or events beyond our control may result in the allocation of funds in a
manner not represented in this Memorandum. Unallocated net proceeds will be
spent at the discretion of our Board of Directors and management. If management
does not use the proceeds from this offering effectively, we may go out of
business, and investors would lose their entire investment in IFG.
IF GOVERNMENT REGULATIONS CHANGE TO IMPEDE OR ELIMINATE OUR ABILITY TO FUNCTION
AS AN OFFSHORE FINANCIAL SERVICE PROVIDER, WE COULD BE FORCED TO CEASE OUR
OPERATIONS.
In conducting various aspects of our business, we are subject to various laws
and regulations within the jurisdictions, which it operates in relating to
international commercial transactions. Given the expansion of the electronic
commerce market, it is possible that any of the foregoing agencies could revise
existing regulations or adopt new regulations governing or affecting our plan
and ability to conduct our business through traditional channels and through the
Internet. If enacted, such laws, rules and regulations could have a material
adverse effect on our business, operating results and financial condition.
We intend to be engaged in marketing financial products and services in up to 40
jurisdictions. As a result, it will be required to uphold all local laws,
including those laws related to the business of selling financial products and
services and all local money laundering laws. There can be no guarantee that we,
or our subsidiaries will obtain and retain licenses to conduct our business in
the various jurisdictions in which we are proposing to operate. Failure to
comply with any of these laws, rules or regulations could result in censure,
fine, incarceration, revocation of work permits, the issuance of
cease-and-desist orders or the suspension or expulsion of our officers or
employees from certain countries, any of which could have a material adverse
affect on the ability for us to carry on business, which would, in turn, have a
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 8
[LOGO - IFG]
material adverse affect on the our financial condition and operating results
and, therefore, the prospect of an investor's return of capital invested in IFG.
It is our intent to expand our business to a number of offshore financial
centers. In order to expand our services globally, we must comply with
regulatory controls of each specific country in which it conducts business,
which may include finding qualified professionals and business people capable of
providing correspondent services. The varying compliance requirements of these
different regulatory jurisdictions may also limit our ability to expand
internationally.
We intend to conduct a significant portion of our business through the Internet
and other electronic media and intend to expand our use of such media. To date,
the use of the Internet to conduct financial transactions has been relatively
free from regulatory restraints. However, a number of governments, including the
United States, are beginning to address the regulatory issues that may arise in
connection with use of the Internet. Accordingly, there can be no assurance that
these authorities will not adopt new regulations (or interpret their existing
regulations) in a manner that constrains our ability to transact business
through the Internet or other electronic media. Any additional regulation of our
use of electronic media could render our business or operations more costly,
less efficient or even impossible, any of which could have a material adverse
affect on the our business, financial condition and operating results.
In addition to the above risks, our cannot assess the effect that the
Organization for Economic Cooperation and Development, the United Nations and
the G7 countries initiatives will have upon the offshore financial industry and,
in particular, the jurisdictions that we will carry on business in and our
proposed clients.
BECAUSE WE ARE SUBJECT TO NET CAPITAL AND INSURANCE REQUIREMENTS, WE WILL HAVE
TO MAINTAIN SIGNIFICANT CASH RESERVES, WHICH MAY LEAVE US WITH LESS WORKING
CAPITAL AND MIGHT RESULT IN LIQUIDATION OF IFG.
IFG and or its subsidiaries will be subject to certain net capital and insurance
requirements to carry on their current brokerage, trust, corporate and
management and proposed banking and insurance activities. Failure to satisfy or
maintain the required net capital and insurance may prevent us from obtaining
the required licenses to carry on business in each offshore jurisdiction we
carry on business in and may subject the us or our subsidiaries to fines,
suspension or revocation of license's and registration's granted by certain
governmental bodies, which could require liquidation of IFG and/or its
subsidiaries. In addition, a change in the net capitalization or insurance laws
that we or our subsidiaries are subject to, the imposition of new rules or any
unusually large charge against net capital or insurance requirement could limit
our operations and/or those of our subsidiaries that require the intensive use
of capital, such as the financing of infrastructure completion, expansion and
maintaining and improving technology which would require funding from our
operating income, thereby reducing our funds available for dividends, which in
turn, could limit our ability to pay dividends. A significant operating loss or
any unusually large charge against net capital could adversely affect the our
ability to expand or even develop the level of business currently planned, which
could have a material adverse affect on our business, financial condition and
operating results and, therefore, the prospect of an investor's return of
capital invested in IFG.
BECAUSE WE DO NOT INTEND TO PAY ANY DIVIDENDS ON OUR ORDINARY SHARES, INVESTORS
SEEKING DIVIDEND INCOME OR LIQUIDITY SHOULD NOT PURCHASE UNITS IN THIS OFFERING.
We do not currently anticipate declaring and paying dividends to our
shareholders in the near future. It is our current intention to apply net
earnings, if any, in the foreseeable future to increasing our capital base and
marketing. Prospective investors seeking or needing dividend income or liquidity
should, therefore, not purchase the Units. There can be no assurance that we
will ever have sufficient earnings to declare and pay dividends to the holders
of IFG's shares, and in any event, a decision to declare and pay dividends is at
the sole discretion of our Board of Directors. The subsequent sale of the shares
purchased pursuant to this offering will be subject to market conditions for the
sale of the shares and any sanctions imposed by regulatory authorities upon the
shares such as an order to halt trading, cease trade orders and registration
requirements. The warrants exercised pursuant to this offering will be subject
to the registration requirements of the SEC and other regulatory bodies that
regulate securities trading before they will be allowed to be resold.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 9
[LOGO - IFG]
BECAUSE WE DO NOT HAVE ANY TRADEMARK PROTECTION, OUR COMPETITION COULD
APPROPRIATE OUR PRODUCTS AND SERVICES, RESULTING IN DECREASED REVENUES AND
INCREASING THE POSSIBILITY THAT YOU WOULD LOSE YOUR INVESTMENT.
We have not been issued any registered trademarks for our legal or Internet
trade name. We intend to file trademark and trade name applications with the
United States Office of Patents and Trademarks for our proposed trade names and
trademarks in the future. No assurance can be given that we will be successful
in obtaining any trademarks, or that the trademarks, if obtained, will afford us
any protection or competitive advantages.
We may not own the property or intellectual property rights to the software that
we may use to conduct our business. Copyright, trade secret and trademark laws
will primarily be relied upon by the intended software providers to protect the
technology employed by IFG. We currently have no patents. In addition, effective
trademark protection may not be available for trademarks we may utilize or
develop. Notwithstanding the intended precautions to be taken by us, a third
party may copy or otherwise obtain and use software or other proprietary
information without authorization or may develop similar software independently.
Policing unauthorized use of technology is difficult, particularly because the
global nature of the Internet makes it difficult to control the ultimate
destination or security of software or other data transmitted. The laws of other
countries may afford little or no effective protection of intellectual property.
The steps we will take may not prevent misappropriation of our technology or the
agreements entered into for that purpose might not be enforceable. In addition,
litigation may be necessary in the future to enforce intellectual property
rights, to protect trade secrets, to determine the validity and scope of the
proprietary rights of others or to defend against claims of infringement or
invalidity respecting our products or services. Such litigation could result in
substantial costs and diversions of resources, either of which could have a
material adverse affect on our business, financial condition and operating
results. Our financial resources may not be sufficient to successfully prevail
in litigation even when the merits are clearly on the side of IFG.
BECAUSE WE DO NOT HAVE SUFFICIENT INSURANCE TO COVER OUR BUSINESS LOSSES, WE
MIGHT HAVE UNINSURED LOSSES, INCREASING THE POSSIBILITY THAT YOU WOULD LOSE YOUR
INVESTMENT.
There is no assurance that we will not incur uninsured liabilities and losses as
a result of the conduct of our business. We intend to maintain comprehensive
liability and property insurance at customary levels but it is not assured that
we will receive insurance coverage to satisfy potential claims or that we will
receive insurance coverage at all. We will also evaluate the availability and
cost of business interruption insurance but cannot guarantee that we will
receive coverage to satisfy our potential business loss or that we will receive
business interruption insurance coverage at all. Should uninsured losses occur,
the shareholders could lose their invested capital.
IF WE DO NOT SELL ENOUGH UNITS IN THIS OFFERING, WE MAY NOT HAVE SUFFICIENT
CAPITAL TO CONDUCT OUR BUSINESS AND YOU MIGHT LOSE YOUR ENTIRE INVESTMENT IN
IFG.
There is no minimum capitalization required in this Offering. There is no
assurance that all or a significant number of Units will be sold in this
Offering. Investors' subscription funds will be used by us as soon as they are
received, and no refunds will be given if an inadequate amount of money is
raised from this Offering to enable us to conduct our business. If only a small
portion of the Units are placed, then we may not have sufficient capital to
operate. There is no assurance that we could obtain additional financing or
capital from any source, or that such financing or capital would be available to
us on terms acceptable to us. Under such circumstances, investors in the Units
would likely lose their entire investment in IFG.
BECAUSE WE DETERMINED THE OFFERING PRICE OF THE UNITS ARBITRARILY, THE VALUE OF
YOUR INVESTMENT IN IFG IS HIGHLY SPECULATIVE.
The offering price of the Units and exercise price of warrants were arbitrarily
determined by Management and do not bear any relationship to the assets, results
of operations or book value of IFG, or to any other historically-based criteria
of value. Therefore, the value of an investor's investment in IFG is highly
speculative. Because there is no objective basis for the monetary value of the
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 10
[LOGO - IFG]
Units or their constituent securities, investors may be paying more for the
Units than the Units are worth, and might not be able to recover all or even a
portion of their investment if they were forced to sell the Units or their
constituent securities.
BECAUSE WE CAN ISSUE ADDITIONAL ORDINARY SHARES, INVESTORS WILL INCUR IMMEDIATE
DILUTION AND MAY EXPERIENCE FURTHER DILUTION.
We are authorized to issue up to 50,000,000 shares. The Board of Directors has
the authority to cause IFG to issue more of its shares, and to determine the
rights, preferences and privileges of such shares, without the consent of any of
our shareholders. Consequently, the shareholders may experience more dilution in
their ownership of IFG in the future. Purchasers of Units and the constituent
shares in this Offering will experience immediate and substantial dilution in
the net tangible book value per share of their investments in the shares.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 11
[LOGO - IFG]
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements under "Summary," "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and elsewhere. These include statements about
our expectations, beliefs, intentions or strategies for the future, which we
indicate by words or phrases such as "anticipate," "expect," "intend," "plan,"
"will," "we believe" and similar language. We base all forward-looking
statements on our current expectations, and these statements are subject to
risks and uncertainties and to assumptions we have made. Important factors that
could cause our actual results to differ materially from those expressed or
implied by these forward-looking statements include those listed under "Risk
Factors" or described elsewhere in this prospectus.
This prospectus contains market data related to the Internet, e-commerce and the
IT services industry that have been included in studies published by the market
research firms of Jupiter Research and International Data Corporation as well as
other sources of information such as The Standard, Offshore Financial Centers
IMF Background Paper, Offshore Finance Yearbook and Offshore Finance USA. These
market data include projections that are based on a number of assumptions,
including:
o The Offshore Financial Centres IMF Background Paper prepared by the
Monetary and Exchange Affairs Department on June 23, 2000, states that, "In
addition to banking activities, other services provided by offshore centers
include fund management, insurance, trust business, tax planning, and IBC
activity. Statistics are sparse - but impressions are of rapid growth in
many of these areas in recent years, in contrast to some decline in
banking ... the available statistics nonetheless indicate that offshore
banking is a very sizeable activity." Based on data on BIS, staff
calculations on the balance sheet OFC Cross-border assets reached a level
of US$4.6 trillion at end-June, 1999 (about 50 percent of total
cross-border assets), of which US$0.9 trillion in the Caribbean.
In 1997, some 60,000 offshore companies were incorporated in the various
Caribbean centers. It estimated that 130,000 companies are formed for
offshore purposes per annum.
It is expected that the growth of the offshore industry will continue to
grow for the next two decades due to the political and economic and tax
catalysts such as:
o Political and economic instability
o Market globalization and deregulation
o The internationalization of business
o The lifting of trade barriers
o Trends towards steady global economic growth
o A global relaxation of foreign exchange controls
o High tax regimes
o More effective tax recovery
o A global relaxation of foreign exchange controls
Several articles state that the growth of online banking and investing continues
to grow.
o In its February-March 2001 issue, The Standard, a Internet financial
magazine, states the following:
o that by 2005, more than half of US households online - 44 million
homes - will bank on the Internet, and 34 million households will
trade stocks. These statistics were provided by Jupiter Research.
o "according to American Express, a quarter of online consumers around
the world are banking and trading online - or plan to start soon."
o "according to IDC, worldwide demand for financial services online is
growing. Western Europe will supply the most new customers to Net
banks and brokerages, and by 2004 it will lead both sectors."
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 12
[LOGO - IFG]
o Internet usage and online commerce continue to grow worldwide.
Offshore Financial USA estimates that there will be 510 million people
estimated to be online by the summer of 2001 and they also predict
on-line revenue collected by Canadian and American companies by the
end of 1999 to be $36.6 billion.
o Offshore Finance Yearbook states European private banking assets at $5
trillion with worldwide private assets estimated to be at $16.6
trillion USD.
o This tremendous growth comes from an increasing number of individuals
and corporations that look to the international offshore marketplace
for asset protection, testamentary freedom, greater investment
returns, tax and succession planning and increased confidentiality in
business dealings. For example, it is estimated by Offshore Financial
USA that the number of lawsuits filed in the USA in 1999 were 18
million and the estimated cost of litigation was $300 billion.
o Worldwide Internet users demand for online services is growing
according to IDC. According to Global Research in March 2001, there
were estimated to be 453.4 million Internet users worldwide.
If these assumptions turn out to be incorrect, actual results may differ from
the projections based on these assumptions.
USE OF PROCEEDS
We expect to receive approximately $400,000 in net proceeds from the sale of
Units in this offering, assuming an initial public offering price of $0.10 per
Unit. We shall receive up to an additional $10,000,000 if the warrants are
exercised. The principal purposes of this offering are to fund the following
uses:
Use of Proceeds Minimum Proceeds - Sale of Units Maximum Proceeds - Sale of Units
--------------- -------------------------------- plus exercised Warrants
--------------------------------
Cost of Offering $100,000 $ 100,000
Salaries and Employee Benefits $ 75,000 $ 3,075,000
Expand Corporate offices - Nevis $ 25,000 $ 25,000
Research, testing, development, $300,000 $ 7,300,000
maintenance of software (1)
Total $500,000 $10,500,000
(1) Research, evaluation, testing, development, operation and maintenance of
software, for the various subsidiaries of IFG, and the establishment, operation,
enhancement and maintenance of various websites required by IFG to provide its
services, or other contingent expenditures deemed necessary by IFG.
(2) If all of Mr. Mellor's offered shares are sold at the offering price, Mr.
Mellor will receive $200,000 USD. These funds will not go to the company. If Mr.
Mellor exercises all of the 4,000,000 outstanding warrants which he holds, the
company will receive an additional $8,000,000 USD from Mr. Mellor, and Mr.
Mellor will receive 4,000,000 ordinary shares. Mr. Mellor does not currently
have funds available to exercise his 4,000,000 outstanding warrants, and, even
if such funds were available, Mr. Mellor does not intend to exercise all or any
portion of his warrants until and unless the market value of the ordinary shares
meets or exceeds the $2.00 USD exercise price.
The amounts and timing of these expenditures will vary depending on a number of
factors, including future revenue growth, if any, the amount of cash we generate
from operations, if any, and the progress of our product and service development
efforts.
We may also use a portion of the net proceeds of this offering to fund
acquisitions of, or investments in, businesses, products, services or
technologies that expand, complement or are otherwise related to our current
business and our products and services. However, we have no present plans,
agreements or commitments, and are not currently engaged in any negotiations,
with respect to any such acquisition or investment. Pending the uses described
above, we intend to invest the net proceeds in short-term, interest-bearing,
investment-grade securities.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 13
[LOGO - IFG]
DETERMINATION OF OFFERING PRICE
Factors Used to Determine Share Price. The offering price of the 5,000,000 Units
being offered by us and the exercise price of the warrants has been determined
primarily by our capital requirements and has no relationship to any established
criteria of value, such as book value or earnings per share. Additionally,
because we have no significant operating history and have not generated any
material revenues to date, the price of the Units is not based on past earnings,
nor is the price of the Units indicative of current market value for the assets
owned by us. No valuation or appraisal has been prepared for our business and
potential business expansion.
CAPITALIZATION
The following table sets forth our capitalization as of April 30, 2001:
o on an actual basis; and
o on a pro forma as adjusted basis to give effect to the sale of the
5,000,000 ordinary shares offered by this prospectus at an assumed
initial public offering price of $0.10 USD per share after deducting
estimated offering expenses of $100,000.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our consolidated
financial statements and related notes appearing elsewhere in this prospectus.
April 30, 2001
Actual Pro Forma As Adjusted (1)
------- -------------------------
Shareholders' equity (deficiency):
Ordinary shares; 50,000,000 shares of
$0.001 par value authorized with
contributed surplus;
Shares issued and outstanding:
Actual (20,250,000) $ 2,162,500 $ 2,162,500
Pro forma as adjusted (25,250,000)(1) $ 500,000
Accumulated deficit $(1,357,263) $(1,457,263)(2)
--------- ---------
Total shareholders Equity (deficiency) $ 805,237 $ 1,205,237
========= =========
(1) This table does not include the 5,000,000 ordinary shares that can be
issued upon the exercise of the $2.00 share purchase warrants attached to
the Units offered pursuant to this offering.
(2) The accumulated deficit was increased by $100,000 representing underwriting
and offering expenses.
Note: The numbers utilized in calculating the Capitalization are unaudited.
DILUTION
If you invest in the Units, your interest will be diluted by the amount of the
difference between the public offering price per ordinary share and the actual
net tangible book value per ordinary share after this offering without
accounting for the exercise of any existing share purchase warrants.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 14
[LOGO - IFG]
Our actual net tangible book value as of April 30, 2001 was $785,237 [(805,237 -
20,000 intangible) x 1/20,250,000], or $0.038 per ordinary share. Actual net
tangible book value per share is equal to our total tangible assets less total
liabilities, divided by the number of outstanding ordinary shares without giving
effect to the exercise of all our outstanding share purchase warrants.
After giving effect to our sale of 5,000,000 ordinary shares in this offering at
an assumed public offering price of $0.10 per ordinary share and after deducting
the estimated underwriting commissions and/or estimated offering expenses
(estimated to be $100,000), our adjusted actual net tangible book value as of
April 30, 2001 would have been $1,185,237 [(805,237 + 500,000 proceeds -100,000
offering expenses - 20,000 intangible) x 1/25,250,000], or $0.046 per ordinary
share. This amount represents an immediate increase in pro forma net tangible
book value of $0.008 per ordinary share to existing shareholders and an
immediate dilution of $0.054 per ordinary share to new investors. The following
table illustrates this dilution to new investors:
Assumed public offering price per ordinary share $0.100
actual net tangible book value per ordinary share
as of April 30, 2001 $0.038
Increase per common share attributable to this offering $0.008
------
Adjusted actual net tangible book value per ordinary share
after this offering $0.046
------
Dilution per ordinary share to new investors in this offering $0.054
=====+
The table below shows on a pro forma basis as of April 30, 2001, the difference
between our existing shareholders and our new investors with respect to the
number of ordinary shares purchased, the total consideration paid and the
average price per share paid, before deducting estimated underwriting
commissions and/or estimated offering expenses:
Shares Purchased Total Consideration Average
---------------- ------------------- Price Per
Number Percent Amount Percent Share
------ ------- ------ ------- -----
Existing Shareholders 20,250,000 80% $2,162,500 81% $0.11
New Investors 5,000,000 20% $ 500,000 19% $0.10
--------- --- ---------- ---
Total 25,250,000 100% $2,662,500 100%
========== ==== ========== ====
Selling Security Holders
------------------------
The following table sets forth the number of shares, which may be offered for
sale from time to time by the selling security holder. The shares offered for
sale constitute all of the shares known to us to be beneficially owned by the
selling security holder.
Selling Security Number of Shares Number of shares The number of shares Percentage of shares
Holder Owned prior to the offered for sale owned upon completion of owned upon completion
Offering the offering of the offering
---------------- ------------------ ---------------- ------------------------ ---------------------
IFG World Holdings, 20,000,000 20,000,000 0 0%
Inc. (1)
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 15
[LOGO - IFG]
(1) International Financial Group Inc., is owned by IFG World Holdings Inc. and
Sound Refuge Trust. IFG World Holdings Inc. is solely owned by IFG World
Holdings Trust. Mr. Kevin Mellor, President, Director and Chairman, is the
sole beneficiary of that trust. The address for IFG World Holdings Inc. is:
Suite 205 - 207 Dowell House, Roebuck & Palmetto Streets, Bridgetown,
Barbados, WI. Attn: GDA International Trustees, Inc.
Plan of Distribution
--------------------
Plan of Distribution of Units. We are registering 5,000,000 units in
contemplation of offering units to the public. The termination date of the
offering will occur no later than 6 months from the date this registration
statement is declared effective by the Securities and Exchange Commission.
There is no minimum number of units that must be purchased by each prospective
purchaser and the maximum number of units we will sell is 5,000,000. It is IFG's
objective to self-underwrite this offering and IFG's officers and directors will
sell these units on a best efforts basis with no additional compensation and
therefore any or all the units being registered may be unsold. We will not place
the funds raised in an escrow account; therefore, all funds will be available
for immediate utilization.
None of our officers, directors, or other "associated persons" are participating
in the offer or sale of our securities, except to the extent permitted by
Exchange Act Rule 3a4-1. Moreover, we will not represent to any person, and we
have informed the selling security holder that it must not represent to any
person, that the registered shares are being offered on an "all-or-none" basis
or being offered or sold on any other basis whereby all or part of the
consideration paid for any such security will be refunded to the purchaser if
all or some of the securities are not sold.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any
person engaged in a distribution of the shares of our ordinary shares offered by
this prospectus may not simultaneously engage in market making activities with
respect to our ordinary shares during the applicable "cooling off" periods prior
to the commencement of such distribution. Also, the selling security holder is
subject to applicable provisions, which limit the time of purchases and sales of
our ordinary shares by the selling security holder. We have informed the selling
security holder that, during such time as it may be engaged in a distribution of
any of the shares we are registering by this registration statement, it is
required to comply with Regulation M.
In general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security, except
as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holder that stabilizing transactions permitted by Regulation M allow
bids to purchase our ordinary shares if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. The selling security
holder and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
Plan of Distribution of Shares by Selling Security Holder.
The selling security holder may sell our ordinary shares in the over-the-counter
market, or on any securities exchange on which our ordinary shares are or become
listed or traded, in negotiated transactions or otherwise. The shares will not
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 16
[LOGO - IFG]
be sold in an underwritten public offering. The shares may be sold directly or
through brokers or dealers. The methods by which the shares may be sold include:
o Purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o Ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o Privately negotiated transactions.
Brokers and dealers engaged by the selling security holder may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions or
discounts from the selling security holder (or, if any such broker-dealer acts
as agent for the purchaser of such shares, from such purchaser) in the amounts
to be negotiated. Broker-dealers may agree with the selling security holder to
sell a specified number of such shares and, to the extent such broker-dealer is
unable to do so acting as agent for the selling security holder, to purchase as
principal any unsold shares. The selling security holder and any broker-dealers
participating in the distributions of the shares may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act of
1933. Any profit on the sale of shares by the selling security holder and any
commissions or discounts given to any such broker-dealer may be deemed to be
underwriting commissions or discounts. The shares may also be sold pursuant to
Rule 144 under the Securities Act of 1933 beginning one year after the shares
were issued.
There can be no assurance that the selling security holder will sell any or all
of the shares.
None of our officers, directors, or other "associated persons" are participating
in the offer or sale of our securities, except to the extent permitted by
Exchange Act Rule 3a4-1. Moreover, we will not represent to any person, and we
have informed the selling security holder that it must not represent to any
person, that the registered shares are being offered on an "all-or-none" basis
or being offered or sold on any other basis whereby all or part of the
consideration paid for any such security will be refunded to the purchaser if
all or some of the securities are not sold.
Expenses of the Offering:
Printing and Engraving Costs $ 17,500 estimated
Registration Fee to SEC $ 5,412
Delivery and Postage Charges $ 7,500 estimated
Edgar - DTCFP $ 6,000 estimated
Federal Taxes n/a
Trustees n/a
State Taxes and Fees n/a
Transfer Agent Fees $ 23,088 estimated
Legal Fees $ 20,000 estimated
Accounting Fees $ 25,000 estimated
Description of Securities to be Registered
------------------------------------------
The following gives you a brief synopsis of the rights attaching to the shares
and warrants. We urge all potential investors to read with their advisors the
Articles and Memorandum of Association (Schedule "E") and the Share Purchase
Warrant Agreement (Schedule "C") attached to this prospectus.
General
-------
The Ordinary Shares have a $0.001 par value per share. There have been
50,000,000 ordinary shares authorized and at the date of this offering
20,250,000 have been issued and are outstanding.
Subject to applicable laws and our Articles and Memorandum of Association, all
shares in the capital of IFG for the time being and from time to time unissued
shall be under the control of the Directors, and may be re-designated, allotted
or disposed of in such manner, to such persons and on such terms as the
Directors in their absolute discretion may think fit.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 17
[LOGO - IFG]
We may in so far as may be permitted by law, pay a commission to any person in
consideration of his subscribing or agreeing to subscribe whether absolutely or
conditionally for any shares. Such commissions may be satisfied by the payment
of cash or the lodgment of fully or partly paid-up shares or partly in one way
and partly in the other. We may also on any issue of shares pay such brokerage
as may be lawful.
Voting rights
-------------
Subject to any rights and restrictions for the time being attached to any class
or classes of shares, on a show of hands every Member present in person and
every person representing a Member by proxy shall at a general meeting of IFG
have one vote and on a poll every Member and every person representing a Member
by proxy shall have one vote for each share of which he or the person
represented by proxy is the holder.
Dividend Rights
---------------
Purchasers of our shares offered hereby will participate in dividends based upon
the number of shares held as of a dividend record date.
Our Articles of Association provide, in part, that holders of IFG's shares will
participate in dividends of IFG, subject to any rights and restrictions of the
time being attached to any class or classes of shares, the Directors may from
time to time declare dividends (including interim dividends) and other
distributions on shares issued and authorize payment of the same out of the
funds to IFG lawfully available therefor; subject to any rights and restrictions
for the time being attached to any class or classes of shares; we, by ordinary
resolution, may declare dividends, but no dividend shall exceed the amount
recommended by the directors; the directors, when paying dividends to the
shareholders in accordance with the foregoing provisions, may make such payment
either in cash or in specie; and no dividend shall be paid otherwise than out of
profits or, subject to the restrictions of the Companies Law, the share premium
account.
We have never declared or paid any cash dividends on our shares. Any future
payment of dividends will be made at the discretion of our Board of Directors
based upon conditions then existing, including earnings, financial conditions
and capital requirements, as well as such economic and other conditions as our
Board of Directors may deem relevant.
There are no Cayman Islands laws, decrees or regulations affecting the actual
remittance of dividends, interest and other payments to nonresident holders of
shares in IFG. However no dividend shall be paid otherwise than out of
profits or, subject to the restriction of the Companies Law Act regarding the
share premium account. The Companies Law Act provides that no dividend or
distribution may be made to members out of the share premium account unless,
immediately following the date on which the distribution or dividend is proposed
to be paid, we shall be able to pay our debts as they fall due in the ordinary
course of business.
Redemption and Purchase
-----------------------
Subject to the provisions of the Companies Law Act, IFG may:
o issue shares on terms that they are to be redeemed or are liable to be
redeemed at the option of IFG or the Member on such terms and in such
manner as the Directors may, before the issue of such shares,
determine;
o purchase its own shares (including any redeemable shares) on such
terms and in such manner as the Directors may determine and agree with
the Member; and
o make a payment in respect of the redemption or purchase of its own
shares otherwise than out of profits or the proceeds of a fresh issue
of shares.
Any share in respect of which notice of redemption has been given shall not be
entitled to participate in the profits of IFG in respect of the period after the
date specified as the date of redemption in the notice of redemption. The
redemption or purchase of any share shall not be deemed to give rise to the
redemption or purchase of any other share. The Directors may when making
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 18
[LOGO - IFG]
payments in respect of redemption or purchase of shares, if authorised by the
terms of issue of the shares being redeemed or purchased or with the agreement
of the holder of such shares, make such payment either in cash or in specie.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 19
[LOGO - IFG]
Taxes and Treaties
------------------
There are no stamp duties, income taxes, withholding taxes, registrations taxes,
or other duties or taxes or similar charges imposed in connection with the
issuance or registered ownership of shares in IFG. The holder of shares in IFG
with respect to their ownership of the shares is exempt from taxes in the Cayman
Islands. There is no reciprocal tax treaty between the Cayman Islands and the
United States of America. Please review the tax discussion regarding the Cayman
Island and the Unites States of America contained at page 52 to 56.
Warrants
---------
The share purchase warrants allow you the investor to purchase one ordinary
share at an exercise price of $2.00 USD. The share purchase warrants forming
part of the units offered will expire on December 31, 2002. There are presently
4,000,000 warrants outstanding exercisable at $2.00 USD that expire on December
31, 2002. The exercise price of all the warrants is subject to change upon the
happening of the following events:
o Stock dividends;
o Stock splits;
o Reverse stock splits;
o Reclassifications
Upon the aforementioned events occurring the exercise price shall be adjusted by
multiplying such exercise price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of shares of ordinary
shares purchasable upon the exercise of each warrant immediately prior to such
adjustment, and the denominator of which shall be the number of shares of
ordinary shares so purchasable immediately thereafter.
Please review the share purchase warrant agreement (Schedule "C") attached to
this prospectus for all material terms and conditions.
Limitation on holding shares by Nonresident or Foreign Owners
-------------------------------------------------------------
There is no limitation on nonresidents or foreign owners to hold or vote the
ordinary shares.
Interest of Named Experts and Counsel
-------------------------------------
No "expert", as that term is defined pursuant to Regulation Section 229.509(a)
of Regulation S-K, or our "counsel", as that term is defined pursuant to
Regulation Section 229.509(b) of Regulation S-K, was hired on a contingent
basis, or will receive a direct or indirect interest in us, or was a promoter,
underwriter, voting trustee, director, officer, or employee of IFG, at any time
prior to the filing of this registration statement.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 20
[LOGO - IFG]
SELECTED CONSOLIDATED FINANCIAL DATA
You should read the selected consolidated financial data set forth below in
conjunction with our consolidated financial statements and the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this prospectus. The selected consolidated
financial data are derived from our consolidated financial statements that have
been audited by Miller and McCollom, independent auditors, and are included
elsewhere in this prospectus.
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Consolidated Balance Sheets
January 31, 2001 July 31, 2000
------------------ ----------------
ASSETS
CURRENT ASSETS:
Cash $ 922,041 $ 714,035
Restricted cash 200,000 200,000
Accounts receivable 26,000 26,000
Subscription receivable - 500,000
Due from parent 5,000 -
Prepaid expenses 61,984 10,000
Loan receivable from related parties 70,500 5,000
---------------- --------------
1,285,525 1,455,035
PROPERTY AND EQUIPMENT:
Office furniture and equipment 38,020 -
Computer equipment 68,225 5,428
---------------- --------------
106,245 5,428
Less accumulated depreciation (8,297) -
---------------- --------------
97,948 5,428
OTHER ASSETS:
Intangible asset 20,000 20,000
---------------- --------------
Total assets $ 1,403,473 $ 1,480,463
================ ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILTIES:
Loans payable to related parties $ 20,200 $ 37,200
Accounts payable & accrued expenses 74,517 34,833
---------------- --------------
94,717 72,033
SHAREHOLDERS' EQUITY:
Common stock 50,000,000 shares of $0.001
par value authorized; 20,000,000
issued and outstanding 20,000 20,000
Contributed surplus 2,140,000 2,140,000
Subscription receivable - (500,000)
Deficit accumulated during the development stage (851,244) (251,570)
---------------- --------------
1,308,756 1,408,430
---------------- --------------
Total liabilities and shareholders' equity $ 1,403,473 $ 1,480,463
================ ==============
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 21
[LOGO - IFG]
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Consolidated Statements of Operations
Six Months Ended Years Ended July 14, 1997
January 31, July 31, (Date of
2001 2000 2000 1999 1998 Incorporation)
through
January 31, 2001
------------ ---------- --------------- ------- ------ ----------------
INCOME $ - $ - $ - $ - $ - $ -
------------ ---------- -------------- ------- ------ -----------------
EXPENSES:
Legal and
professional
fees 120,845 - 149,712 - - 270,557
Salaries 243,357 - 78,468 - - 321,825
Depreciation 8,297 - - - - 8,297
Other
administrative
expenses 227,175 - 23,390 - - 250,565
------------ ---------- -------------- ------- ------ -----------------
Total expenses 599,674 - 251,570 - - 851,244
------------ ---------- -------------- ------- ------ -----------------
Net Loss $ (599,674) $ - $ (251,570) $ - $ - $ (851,244)
============ ========== ============== ======= ====== =================
Basic and diluted
loss per share $ (.03) $ - $ (.09) $ - $ - $ (.05)
============ ========== ============== ======= ====== =================
Weighted average
shares outstanding 20,000,000 - 2,918,650 - - 15,729,662
============ ========== ============== ======= ====== =================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with our consolidated
financial statements and the related notes appearing at Schedule "A" in this
prospectus.
Overview
--------
From the date of our incorporation on July 14th, 1997, until February 1st, 2001,
we were a development-stage company that had no revenues. Our operating
activities during this period consisted primarily of conducting research and
developing our products and services to be provided to clients desiring offshore
financial products and services. Effective February 1, 2001, IFG Trust Services,
Inc. and IFG Investments Services, Inc. commenced business. The products and
services we currently provide include full service discount offshore investment,
trust and corporate services. To date, there have been limited revenues realized
from our business.
Our financial statements are prepared in accordance with U.S. generally accepted
accounting principles. We have expensed all development expenses related to the
establishment of our subsidiary corporations and the corresponding professional
fees incurred to establish these corporations around the world.
Our operating expenses are classified into four categories:
o Legal and professional fees;
o Salaries;
o Depreciation; and
o Other administrative expenses.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 22
[LOGO - IFG]
Legal and professional fees consist primarily of accounting, legal and
professional fees incurred by us in establishing our infrastructure.
Salary consists primarily of wages and salary paid to our eight employees and
independent contractors, social security and withholding payments made to
various government authorities, work permits, and directors fees for
International Financial Group, Inc.
Depreciation consists of depreciation and amortization of our assets.
Other administrative expenses consist primarily of employee medical expenses and
health insurance, director fees, advertising and promotion, courier, postage,
credit card charges, currency exchanges and rounding, insurance, interest and
bank charges, office supplies, printing and design, office equipment lease
expense, conference expense, computer development expense, rent, rent
residential, vehicle rental, living allowance, telephone travel and
entertainment, brokerage fees, incorporation fees, security and parking.
In our development of new products and services, the technical feasibility of
the software is not established until substantially all product development is
complete. Historically, our software development costs eligible for
capitalization have been insignificant and all costs related to internal product
development have been expensed as incurred.
We believe that period-to-period comparisons of our historical operating results
are not necessarily meaningful and should not be relied upon as a good
indication of our future performance. Our prospects must be considered in light
of the risks, expenses and difficulties frequently experienced by companies in
early stages of development, particularly companies in new and rapidly evolving
markets like ours.
Results of operations:
Six months ended January 31, 2001, compared to the period from July 14, 1997
(inception) to July 31, 2000. For the period July 14, 1997, to July 31, 2000,
IFG commenced business operations March 14, 2000. Therefore, the following
comparison compares the activity for the six months ended January 31, 2001, to
the five months ended July 31, 2000.
Legal and professional fees decreased from $149,712 for the period ended July
31, 2000 to $120,845 for the six months ended January 31, 2001. This decrease
was attributable primarily to expenses remaining relatively constant for the
inception period as compared to the last six months. We anticipate that legal
and professional fees will increase in the future because the infrastructure of
our corporation will continue to increase as offices are established in
strategic locations around the offshore world. In addition, professional fees
will be incurred related to the recent bank licenses and trust licenses that we
are presently undertaking to achieve.
Salaries increased from $78,468 for the period ended July 31, 2000 to $243,357
for the six-months ended January 31, 2001, due primarily to the addition of more
employees, social security fees and the payment of work permits and living
allowances, and the travel and entertainment undertaken by those in IFG
responsible for establishing our infrastructure worldwide.
Depreciation has increased from nil for the period ended July 31, 2000 to $8,297
for the six months ended January 31, 2001. This increase is attributable to
taking depreciation on our assets for the first time.
Other administrative expenses increased from $23,390 for the period ended July
31, 2000, to $227,175 for the six months ended January 31, 2001. This increase
was attributable primarily to increased courier and postage charges, bank
charges, computer development expenses, printing, rents, living allowances,
vehicle rentals, telephone charges and travel and entertainment expenses to
establish our infrastructure.
Due to the foregoing factors, our operating results are difficult to forecast.
We believe that period-to-period comparisons of our operating results are not
meaningful and you should not rely on them as indicative of our future
performance. You should also evaluate our prospects in light of the risk,
expenses and difficulties commonly encountered by comparable development-stage
companies in new and rapidly evolving markets. We cannot assure you that we will
successfully address such risks and challenges. In addition, even though we have
successfully launched our IFG Investments Services, IFG Trust Services and IFG
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 23
[LOGO - IFG]
Corporate Services subsidiaries and carry on investment, trust and corporate
services activities, we cannot assure you that our revenues will increase or
that we will become profitable in the future.
Liquidity and Capital Resources
-------------------------------
Since the date of our incorporation, we have raised an aggregate of $2,160,000
through private placements of our ordinary shares.
Our operating activities have used cash resources of approximately $1,056,414
from inception to the period ending January 31, 2001. Our negative operating
cash flow resulted principally from the net losses that we have incurred during
the start-up period as funds were invested in the development of our products
and services.
Our investing activities consist of the purchase of computer equipment,
software, furniture and equipment to support our infrastructure and loans to
related parties. Cash resources of $201,745 were used for the period from
inception to January 31, 2001.
Our financing activities consisted of raising money from the sale of ordinary
shares and loans from related parties. Cash resources from the sale of shares
was $2,160,000 and cash resources received from IFG World Holdings Inc. in the
form of a related party loan was $20,200. The loan is unsecured, non-interest
bearing and repayable upon demand.
Our capital requirements depend on a number of factors. We expect to devote
substantial resources to continue the growth of our infrastructure, research and
development of new products and services, expand our sales force, and support
and increase our marketing efforts. Our expenditures have increased
substantially since the date of incorporation, and we anticipate that capital
expenditures will continue to increase in absolute dollars in the foreseeable
future.
At January 31, 2001, we had cash and cash equivalents of $922,041USD. We believe
that our cash and cash equivalents are sufficient to fund our operations for the
next fiscal year without the offering. The material commitments that IFG
endeavours to undertake in the next year in the following order of priority are:
o Research and Development of IFG Bank Inc.'s systems;
o Research and Development of IFG Insurance Inc.'s systems.
The research and development will entail a needs assessment of each system,
evaluation of competitors' systems, the preparation of a specification paper and
thereafter a request for proposal, an evaluation of system programmers in Asia
Europe, India and the Unites States, testing of prototypes in real time
situations and modifications to proposed systems with the view to tailoring the
systems software created by third party programmers to our hardware
specifications and client needs.
We estimate over the next year that the research and development of IFG Bank
Inc.'s systems will cost approximately $150,000.
We estimate over the next year that the research and development of IFG
Insurance Inc.'s systems will cost approximately the same as the bank at
$150,000.
Depending on how successful IFG is regarding the sale of the offering will
dictate how we approach each of these projects. If we do not raise money
pursuant to the offering we will not be able to finance these projects and we
will continue to function as a trust, corporate and investment services
provider. If we are fully subscribed it is our intention to finance each of the
projects simultaneously so that our bank and insurance subsidiaries can complete
their research and development. If however we only raise net proceeds of
approximately $250,000 to $300,000 we would concentrate on IFG Bank Inc. as we
feel the bank has the greatest potential to earn revenues and to be profitable
because a bank is an integral component of an offshore asset protection
strategy.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 24
[LOGO - IFG]
The launching of the bank and insurance subsidiaries will be contingent upon the
success of this offering to fund the necessary research and development to
finance the development of the systems to operate a full and online banking
service. Upon the research and development being completed, IFG estimates that
it will require approximately $400,000 to $500,000 to operate each subsidiary.
This will include costs to staff the subsidiaries, hardware to operate the
systems and overhead to operate the facilities. IFG would finance this expansion
through profits it has earned from its operations at the time of the expansion
or it would proceed with the raising of funds through traditional means such as
a further public offering.
We believe that the net proceeds from this offering, if fully subscribed, plus
profits from operation, together with our cash and cash equivalents, will be
sufficient to fund our operations for the next two years. Upon the completion of
the research and development of systems for IFG Bank and/or IFG Insurance, we
will need to raise additional funds through a public offering to establish the
bank and insurance subsidiaries and to increase personnel and office facilities
to accommodate these subsidiaries, to launch these new products or enhance
existing products and services, to respond to competitive pressures, or to
acquire or invest in complementary businesses, technologies, services, or
products.
In addition, if cash generated from operations is insufficient to meet our
long-term liquidity needs, we may need to raise additional funds or seek other
financing arrangements. Additional funding may not be available on favorable
terms or at all. In addition, although there are no present understandings,
commitments, or agreements with respect to any acquisition of other businesses,
products or technologies, we may, from time to time, evaluate potential
acquisitions of other businesses, products and technologies to enhance our
offshore presence. In order to consummate potential acquisitions, we may issue
additional securities or need additional equity or debt financing and any such
financing may be dilutive to existing investors.
BUSINESS
History and Background
----------------------
The Company
-----------
International Financial Group Inc., through its subsidiaries, provides offshore
financial services to the business-to-consumer and business-to-business markets.
We utilize traditional delivery channels including in-person consultation,
telephone and facsimile, as well as the Internet to deliver its products and
services. We commenced full service offshore investment, trust and corporate
services activities in February 2001, and during the same month, also launched
the websites www.ifg.com, www.apiip.com and www.ifgtrust.com to provide
----------- ------------- ----------------
Internet-based discount offshore investment, trust and incorporation services.
It is our objective to provide to our clients an efficient, professional and
confidential environment in which to conduct their financial affairs, with a
focus on asset protection.
Recent global increases in the use, by individuals and corporations, of
international financial planning strategies have led management to believe there
will continue to be a substantial and growing market for full service offshore
financial service providers. We believe that individuals and corporations around
the world have demonstrated an increasing desire to use financial strategies
that allow them to control their own financial affairs in a convenient,
confidential and efficient manner, while protecting their assets, preserving
their wealth, and providing flexibility in wealth transfer. Furthermore, in the
third quarter of 2000, The Standard (February - March 2001) quotes, Salomon
Smith Barney, that 30.5% of all NYSE and NASDAQ trades were performed online.
These transactions were facilitated by discount brokerages such as E-Trade,
Ameritrade and National Discount Brokers via the Internet. While use of the
Internet has continued to grow at an exponential rate, Internet consumers have
become increasingly confident in the security, reliability and confidentiality
of e-commerce transactions. We have developed our business plan and corporate
structure to accommodate these emerging consumer trends and demands.
To accomplish these goals, we are establishing ourselves as a comprehensive
provider of full service discount offshore financial products and services with
wholly-owned subsidiaries currently incorporated in over 30 offshore
jurisdictions. Customer convenience and operating efficiency, along with
offering "bundled" financial services, are two key components of our strategy.
The products and services we currently provide include full service and discount
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 25
[LOGO - IFG]
offshore investment, trust and corporate services. During 2002, we intend to
expand our products and services offerings to include full service and discount
offshore banking and insurance. By offering these services from multiple
jurisdictions, our clients are able to develop a financial plan utilizing
multiple layers of confidentiality and secrecy, while also offering the client
the ability to utilize the best available jurisdiction for each distinctive part
of their offshore financial strategy. As we expand our products and services
offered, we will continue to utilize both full service traditional and discount
Internet based delivery channels.
We have established our investment services subsidiary, IFG Investment Services,
Inc., in the Cayman Islands. We intend to make an application to the Cayman
Islands Monetary Authority for a Trade and Business License for the Cayman
subsidiary and we are also intending to establish an investment services
subsidiary in the Isle of Man. International Financial Group, Inc. has received
its Internet-based offshore financial services license to operate in the Cayman
Islands which includes brokerage services. We have established our trust
services subsidiary IFG Trust Services, Inc.'s, head office in St. Kitts and
Nevis, West Indies and have received our license to conduct trust activities.
IFG Trust Services, Inc. owns IFG Investments Services, Inc., a Nevis subsidiary
that conducts brokerage services for our clients. In February 2001, we
established an offshore trust services subsidiary in The Isle of Man and applied
for Trust licenses in Anguilla and St. Lucia of the British West Indies. We have
established our corporate services subsidiary IFG Corporate Services, Inc.'s,
holding company in the Cayman Islands and we are intending to apply to the
Cayman Islands Monetary Authority for a Trade and Business License to conduct
corporate services activities. We have established corporate services
subsidiaries in Antigua, Barbados, Costa Rica, Panama, Hong Kong, Isle of Man,
Labaun and The Marshall Islands. We intend to apply, where necessary, for
licenses to carry on corporate services activities in these jurisdictions. We
have also established a technologies subsidiary IFG Systems, Inc., in the Cayman
Islands for the purpose of managing all systems and technology developed by, and
for, IFG.
In February 2001, we made applications for offshore bank licenses to be held by,
IFG Bank, Inc., in Belize and St. Vincent and the Grenadines. By the second
quarter 2002, we intend to establish insurance services subsidiaries, IFG
Insurance, Inc., in Bermuda and the Cayman Islands.
We selected these offshore jurisdictions because we believe they are credible
jurisdictions within which to conduct business as they embrace asset protection,
wealth enhancement, wealth preservation and freedom of succession. The basis of
our belief is that the aforementioned countries have stable political systems,
have modern telecommunications systems, government infrastructure such as
financial services departments formed to facilitate businesses such as ours and
have enacted legislation to support trusts and corporations and secrecy of
client disclosure. From this corporate structure, we intend to continue to
expand by establishing trust and corporate services subsidiaries in up to 20
offshore jurisdictions worldwide by the end of year 2001.
On June 13, 2000 we distributed an offering memorandum pursuant to Regulation
"S", for the issuance of 4,000,000 units that were comprised of one (1) share of
our ordinary stock, and one (1) warrant. The price per unit was $0.50 USD. We
realized gross offering proceeds of $2,000,000. The warrants allow the holders
to purchase one (1) ordinary share at an exercise price of $2.00 USD, to be
exercised not later than December 31, 2002, after which date the warrant will
become null and void. This offering was distributed to persons that were not
residents of the Cayman Islands or the United States of America. On January 31,
2001, IFG World Holdings Inc. purchased all of the 4,000,000 units from the
minority shareholders that held the units by issuing a promissory note to each
minority shareholder to pay $0.50 USD per unit, together with interest payable
on December 31, 2002.
The following websites have been registered by IFG. The websites marked "active"
are functional and the websites that are marked "not active" are not functional
at the date of this filing.
International Financial Group, Inc. www.ifg.com Active
-----------
IFG Investment Services, Inc. www.ifginvestments.com Active
----------------------
APIIP www.apiip.com Active
-------------
IFG Trust Services, Inc. www.ifgtrust.com Active
----------------
IFG Corporate Services Inc. www.ifgcorporate.com Not Active
--------------------
IFG Management Services. Inc. www.ifgmanagement.com Not Active
---------------------
IFG Bank www.ifgbank.com Not Active
---------------
IFG Insurance www.ifginsurance.com Not Active
--------------------
IFG Systems www.ifgsystems.com Not Active
------------------
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 26
[LOGO - IFG]
The Subsidiaries
----------------
IFG Investment Services
-----------------------
IFG Investments Services, Inc., was incorporated in St. Kitts and Nevis in
December 2000 and commenced operations in Nevis in February 2001, offering
services via traditional offshore service delivery channels including in-person
consultation, telephone and facsimile. In May 2001, we commenced our online
investment services activities from our website located at www.ifg.com and
-----------
www.ifginvestments.com. This subsidiary to date has not earned any revenue,
----------------------
however, we expect to commence earning revenue by August, 2001.
When contacting IFG Investments, clients are able to place orders, conduct order
tracking, request market information, and conduct other investment business in
an offshore environment. IFG Investments' office also provides in-person
consultations. Clients may contact us via telephone and fax as long as the
customer pre-approves this type of order communication and provides an account
number and password. All of these service channels are currently available
during North American stock market hours.
We believe advancements in telecommunications and information technology have
fundamentally altered the way individuals conduct investment business. Just as
the microprocessor dramatically changed the way individuals used computers, the
emergence of the Internet as a tool for communications and commerce, is bringing
about a revolution in the world of financial transactions and information
services. The Internet provides individual investors with direct access to
information and transaction processing capabilities once available only through
full-commission securities brokerage firms. As a result, consumers are
increasingly taking direct control over their personal investment transactions,
not simply because they are able to, but because they find it more convenient
and cost-effective than relying on full-commission or even traditional discount
brokers.
In May 2001 IFG Investments, utilizing proprietary technology developed by IFG,
commenced online investment activities from its website located at www.ifg.com.
-----------
The services provided on the website allow clients to place orders, conduct
order tracking, request market information, and conduct other investment
business in an offshore environment 24 hours a day, seven days a week, 365 days
a year in respect of certain American markets. It is our intention to expand
into other markets so that our customers can perform trading activities 24 hours
a day.
We have developed a technology and Internet platform capable of providing our
users with comprehensive selection of financial products and services available.
It is our intent to establish correspondent and clearing relationships with
major financial institutions in Europe and Asia, to allow our clients to access
the major investment markets within these areas.
IFG Investment Services Inc. is a Cayman Islands exempt company, incorporated on
May 31, 2000, that intends to apply to Caymans Islands Monetary Authority for a
Trade and Business license. If we are granted such license, we intend to offer
investment services through full-service delivery channels and discount online
services over the Internet from IFG Investments' head office in Grand Cayman.
This subsidiary to date has not earned any revenue, however, we expect to
commence earning revenue two months subsequent to our trade and business license
being approved and it is our estimation this will occur by September 2001.
International Financial Group Inc., as the parent has received its license to
conduct international offshore financial services, which includes providing
brokerage services. We are researching whether this license will allow IFG
Investment Services Inc. to conduct brokerage activities. The parent company to
date has not earned significant revenue, however, we expect to commence earning
revenue by September 2001.
We intend to make an application to the Cayman Island Stock Exchange for a seat
on its exchange. We feel that acquiring a seat on the CSX will lend it a certain
acceptable level of integrity, stability and expertise to prospective clients
and partners worldwide. There is no guarantee that we, or our subsidiary will be
approved for a seat on the CSX.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 27
[LOGO - IFG]
We believe that we can best serve our clients by offering jurisdictional
alternatives in licensed offshore investment service jurisdictions. Thus, should
either St. Kitts and Nevis or the Cayman Islands gain cumbersome financial
regulations that inhibit investment options for our clients, we will have the
ability to immediately offer an alternative investment jurisdiction.
IFG Investment Services Inc. applied to obtain Qualified Intermediary status
with the Internal Revenue Services on December 28, 2000. As of the date of this
prospectus, the application remains pending. We are also in discussion with the
IRS to have IFG Investments Services Inc. obtain a qualified intermediary status
pursuant to the aforementioned application. The purpose of obtaining Qualified
Intermediary status and entering into an agreement with the IRS is to simplify
withholding and reporting obligations for payments of income made to an account
holder through foreign intermediaries such as IFG Investment Services Inc.
IFG Trust Services
------------------
On July 13, 2000, IFG Trust's application for authorization to conduct trust
activities was approved by the Government of Nevis, West Indies. We have
established a physical office in Nevis to function as our head office for
worldwide trust service activities. Our Trust services include, but are not
limited to, the establishment of trusts, the provision of professional trustees,
the provision of professional trust protectors, the drafting of trust documents
(trust deeds, letters of wishes, etc.) and the filing of all necessary
government documentation. It is anticipated that many clients will use a trust
in an offshore jurisdiction for the purpose of asset protection. This typically
serves to add an additional layer of confidentiality, control and versatility to
overall financial strategy. This subsidiary to date has not earned significant
revenue.
IFG Trust commenced full-service offshore trust activities in January 2001. Our
full service division provides trust services through traditional means
including in-person consultation, telephone, facsimile, mail and courier. We
maintain a website at www.ifgtrust.com that serves as the online brochure
----------------
detailing our products and services.
IFG Trust has commenced the provision of online discount trust services from our
websites located at www.apiip.com and www.ifg.com in March 2001. Through the use
------------- -----------
of proprietary technology and a unique three-step process, clients are able to
establish a customized offshore structure in a secure environment 24 hours a
day, seven days a week, 365 days a year. One of the major barriers in attracting
the middle-income market segment to the offshore financial sector, has been the
high cost traditionally associated with the establishment and maintenance of
offshore legal structures. By utilizing our technology and business model, IFG
Trust has been able to reduce the cost of providing and utilizing sophisticated
offshore structures, thereby reducing the barrier to making these services
available to a whole new segment of the market. Our technology, developed
in-house, also allows us to automate the process of establishing corporations
and trusts which reduces our corporate labour costs and corporate overhead such
as offices, equipment and fixtures.
In February 2001, we established a Trust subsidiary in The Isle of Man, United
Kingdom and applied for Trust licenses in Anguilla and St. Lucia of the British
West Indies. It is our intention to offer trust services in up to 15 offshore
jurisdictions worldwide. We intend to obtain additional trust licenses to
satisfy consumer demand and to provide alternative trust services from multiple
jurisdictions. There is no guarantee that we, or our subsidiary will be approved
for any additional trust licenses. These subsidiaries to date have not earned
revenue, however, we expect to commence earning revenue by September, 2001.
IFG Corporate Services
----------------------
Our subsidiary, IFG Trust Services Inc. (Nevis), established IFG Corporate Inc.
in the Federation of St. Kitts and Nevis on January 29, 2001. We have
established our office in Nevis to function as the worldwide head office for
corporate services activities supplied to IFG clients and we share these office
facilities with IFG Trust. The corporate services we provide include, but are
not limited to, incorporation services, the provision of registered offices,
professional directorships, corporate drafting services, and corporate
secretarial services. It is anticipated that many of our clients will use a
corporation in an offshore jurisdiction for the purpose of asset protection as
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 28
[LOGO - IFG]
well as investment management. This typically serves to add an additional layer
of confidentiality, control and versatility to overall financial strategy.
Offshore corporate services are currently available through traditional service
channels including in-person consultation, telephone, facsimile, mail, courier
and the Internet.
IFG Corporate Inc. commenced full-service offshore corporate services activities
in February 2001. Our full service division provides corporate services through
traditional means including in-person consultation, telephone, facsimile, mail
and courier. We intend to maintain a website at www.ifgcorporate.com that will
--------------------
serve as an online brochure detailing our products and services offered. This
subsidiary to date has not earned significant revenue, however, we expect to
commence earning revenue by December 2001.
IFG Corporate Inc. commenced the delivery of online discount corporate services
from the websites located at www.apiip.com and www.ifg.com in or around March
------------- -----------
2001. Through the use of proprietary technology and a three-step process, our
clients will be able to establish a customized offshore corporation 24 hours a
day from any personal computer in the world. As with trusts, one of the major
barriers in attracting the middle-income market segment to the offshore
financial sector, has been the high cost traditionally associated with the
establishment and maintenance of offshore corporations. By utilizing our
technology and business model, IFG Corporate intends to substantially reduce the
cost of providing and utilizing sophisticated offshore structures, thereby
reducing the barrier to making these services available to a whole new market
(the market for whom the previously high costs had been prohibitive.) By
offering these services from multiple jurisdictions, our clients are able to
develop a financial plan utilizing multiple layers of confidentiality and
secrecy, while also offering the client the ability to utilize the best
available jurisdiction for each distinctive part of their offshore financial
strategy. As we expand our products and services offered, we will continue to
utilize both full service traditional and discount Internet based delivery
channels.
We have established additional Corporate Services Providers ("CSP") subsidiaries
in the Federation of St. Kitts and Nevis, Antigua, Barbados, Cayman Islands,
Costa Rica, Panama, Hong Kong, Isle of Man, Labaun, Marshall Islands, Belize,
Cook Islands, Niue, and Seychelles, and where necessary, will be applying for
Corporate Service Providers' licenses and establishing offices in these
jurisdictions. We are in the process of establishing additional CSP's in The
Isle of Man and the Cayman Islands. We intend to offer corporate services, from
up to 30 offshore jurisdictions worldwide. We intend to obtain additional
corporate services licenses to satisfy consumer demand and to provide
alternative corporate services from multiple jurisdictions thereby allowing
clients the ability to use the most advantageous corporate legislation available
to meet their own particular needs. There is no guarantee that we, or any of our
subsidiaries will be approved for any CSP licenses. These subsidiaries to date
have not earned any revenue, however, we expect to commence earning revenue by
December 2001.
IFG Management Services
-----------------------
We established IFG Management, Inc., in the Federation of St. Kitts and Nevis on
January 29, 2001. We have established our office in Nevis to function as the
worldwide head office for management services activities supplied to our IFG
clients and share these office facilities with IFG Trust and IFG Corporate. The
management services we provide include, but are not limited to, office
management, secretarial, bookkeeping, mail forwarding, and general
administration. We have established management services subsidiaries in over 20
jurisdictions worldwide from which it provides offshore management services. The
purpose for establishing over 20 offshore management services subsidiaries is to
satisfy consumer demand and to provide management services from multiple
offshore jurisdictions. This subsidiary to date has not earned any revenue,
however, we expect to commence earning revenue by December 2001.
IFG Management Inc. commenced full-service offshore management service
activities in February 2001. Our full service division provides management
services through traditional means including in-person consultation, telephone,
facsimile, mail and courier. We maintain a website at www.ifgmanagement.com that
---------------------
serves as the online brochure detailing the products and services offered by us.
IFG Management also commenced the delivery of online discount management
services from our websites located at www.apiip.com and www.ifg.com in March
------------- -----------
2001. Through the use of proprietary technology and a three-step process, our
clients are able to establish a customized offshore structure that can include
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 29
[LOGO - IFG]
both a trust and corporation. Once a client has established their offshore
structure, they are able to contact and access our discount management services
24 hours a day through a secure online proprietary messaging system.
Where IFG Trust and/or IFG Corporate are unable to acquire a local trust and/or
CSP license or the acquisition of such licenses is determined by management to
be impractical, we anticipate we will offer trust and/or CSP services,
indirectly, from that jurisdiction, through the existing IFG Management
subsidiary and the local CSP and/or trust affiliate we retain. In the period
before our other subsidiaries have obtained licenses to directly offer trust and
corporate services locally, these subsidiaries are anticipated to be able to
offer these services through local affiliation under a revenue sharing
arrangement. It is anticipated that delivering trust and corporate services
initially through local affiliation will allow us to establish an extensive
global presence quickly and efficiently.
IFG Management Services subsidiaries have been established in Anguilla, Bahamas,
Turks & Caicos, Cayman Islands, Samoa, British Virgin Islands, Niue, Marshall
Islands, Belize, Isle of Man, Labuan, Seychelles, Antigua, Barbados, St. Lucia,
Grenada, St. Vincent, Gibraltar, Jersey, Liberia, Guernsey, Dominica, Mauritius
and Singapore. Where necessary we will establish offices in these jurisdictions
to carry out our business activities. These subsidiaries to date have not earned
any revenue, however, we expect to commence earning revenue by December 2001.
Through the International Financial Group subsidiaries, we offer clients
unprecedented flexibility and convenience in constructing and managing an
offshore financial strategy using full-service and discount Internet-based
delivery channels. Each client has very specific structural needs based on their
own specific circumstances and goals. Our infrastructure allows clients to
utilize a wide variety of products and services, available separately and in
bundled formats, and to utilize specific offshore jurisdictions that
particularly strive to meet these goals. There is no guarantee we will be
effective in penetrating the offshore financial services market in a timely
manner, or at all.
IFG Systems
-----------
IFG Systems, Inc., is a Cayman Islands' company, established on August 7, 2000,
that develops, licenses, owns and operates all of our Internet technologies,
computer software and systems. We have developed proprietary software and
systems and have licensed software from various providers, which software
enables us to provide clients with confidential and secure online financial
transaction processing. We store account records and communication archives in
secure computer files and systems in The Federation of St. Kitts and Nevis and
is in the process of establishing a redundant server in another offshore
jurisdiction. This subsidiary to date has not earned any revenue, however, we
expect to commence earning revenue by July 2001.
We have all financial services related communications conducted through
encryption to provide confidentiality and security. There is no guarantee this
technology will not be breached. Confidentiality is typically a principal
motivation behind many decisions to initiate an offshore financial plan. Thus,
we have developed a technical infrastructure that allows our clients a degree of
autonomy when establishing, modifying and controlling their offshore financial
plans. Application and maintenance systems have been designed to simplify human
interaction, while clients will have the opportunity to contact our
representatives directly should they choose to do so. We currently make it
possible for clients to establish offshore corporations and trusts, and trade
securities; and in the future we intend to enable clients to establish bank
accounts, credit cards, and purchase insurance, all directly from any computer
terminal in the world connected to the Internet, 24 hours a day. Provided
transactions do not violate anti-money laundering legislation, it is anticipated
that they can be performed through automation.
It is our intention to utilize Internet-based technology that uses the latest in
security measures, including, but not limited to, the following:
o We hope to employ a password entry system to attempt to prevent
unauthorized users from accessing our system. Clients select a "user
name" and "password," which must be correctly entered each time they
attempt to access systems.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 30
[LOGO - IFG]
o A strong encryption. Users of our system are required to utilize a
Secure Socket Layer (SSL) capable browser, which allows the user to
select and approve their own certifying authority and to use strong
encryption.
o Stand-alone web server located at a secured site and backed up with
redundant servers located in other offshore jurisdictions. The web
server hosting our system utilizes a closed operating system.
o We intend to employ a firewall and IP filter to prevent "active
attacks".
We have contracts with third-party organizations that offer server-collocation
services. We hope to acquire and maintain the additional premises necessary for
hosting our servers internally. To ensure sufficient capacity and uninterrupted
service, it is our intention to have redundant facilities located at the
different Company operating sites.
We intend to continue to evaluate software from third-party providers and
developers that can be customized, developed and integrated into our systems.
Where necessary to meet the diverse needs for integrated data of our different
operating units, custom database and web page software may be contracted out to
third-party software developers retained by IFG Systems. The latest hardware and
software environments and development tools are intended to continue to be
utilized.
To ensure the integrity and privacy of client data and correspondence over the
Internet, we utilize the latest technologies for user authentication and data
encryption. We incorporated Secure Socket Layer technology into our websites,
which includes the use of digital certificates and public key encryption
techniques. Our web servers utilize industry standard SSL encryption
capabilities of Microsoft Windows 2000 Web Server to protect communications
between our client's web browser and our web server. SSL will ensure information
passed between our client's computer and our server is private and confidential.
To enable SSL protection, we have purchased digital certificates (a small
computer text file that contains encryption key information) from Thawte.com.
Thawte.com verified and confirmed our company's identity, and then the digital
certificates were issued to us for enabling SSL encryption between our client's
web browser and our web server. The phrase "public key encryption techniques"
refers to the underlying technology that SSL compliant web servers deploy to
protect information. This is an industry standard feature for most Internet
websites today. We monitor new developments to ensure that it continues to offer
the highest level of data integrity and privacy. Beyond using the best security
technologies, we monitor our systems for any possible weaknesses in our security
policies and practices, and for any external threats to our security system.
The Proposed Subsidiaries
-------------------------
IFG Bank
--------
Our objective is to offer a broad range of offshore banking and financial
service products through traditional service delivery channels and over the
Internet. In February 2001, we made applications for offshore bank licenses in
Belize and St. Vincent and the Grenadines. The Bank Charters applied for are
commonly referred to as "unrestricted offshore banking charters", which would
authorize us to conduct a wide range of Banking activities with an unlimited
number of customers and companies so long as annual reporting requirements are
met, a minimum capital requirement is maintained, and no business is conducted
with residents of the jurisdiction granting the license.
We believe customer convenience, operating efficiency and reliable access to an
offshore environment will be the key components of the proposed bank's
operational strategies. It is anticipated that customers will access banking
services by in-person consultation (visiting the bank itself during business
hours, or by pre-arranging a consultation in advance), telephone or facsimile.
It is also anticipated that banking services will be accessible via the Internet
on a 24-hour a day basis at the websites www.ifg.com and www.ifgbank.com. Our
----------- ---------------
proposed banking services will not incur the cost of supporting an extensive
branch system, which management believes will benefit customers through the IFG
Bank's ability to offer attractive deposit rates. Management believes IFG Bank's
anticipated lower overhead, customer convenience and ability to provide a broad
choice of offshore financial services cost-effectively through efficient
delivery systems will give IFG Bank a competitive advantage over other offshore
banks and offshore financial service providers and onshore banks, both
traditional and Internet based. The activities of IFG Bank are intended to
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 31
[LOGO - IFG]
include, but will not necessarily be limited to: deposit taking; asset backed
loans; portfolio management; and issuance of credit cards, debit cards, bonds,
debentures, bank guarantees, letters of credit and numbered accounts.
During 2002, we intend to obtain a Bank Charter in one of the world's leading
offshore banking centers, such as the Cayman Islands, Bahamas, Hong Kong or
Switzerland. However, since these aforementioned jurisdictions require new Bank
Charter applicants to be "existing and established financial institutions", we
intend to establish our initial primary Bank Charters in alternative
jurisdictions. The jurisdictions selected by management are accepting
applications for new offshore Bank Charters and, in management's view, are
considered stringent in their capitalization and management requirements and
thereby have and will continue to maintain a good reputation within the offshore
banking industry.
The launching of these subsidiaries will be contingent upon the success of this
offering to fund the necessary research and development to finance the
development of the systems to operate a full and online banking service. Upon
the research and development being completed, IFG estimates that it will require
approximately $400,000 to $500,000 to operate one banking subsidiary. This will
include costs to staff the banking subsidiary, hardware to operate the banking
system and overhead to operate the banking facility. IFG would finance this
expansion through profits it has earned from its operations at the time of the
expansion or it would proceed with the raising of funds through traditional
means such as a further public offering.
There is no guarantee that we, or our subsidiaries will be approved for any Bank
License.
IFG Insurance
-------------
We intend to establish during 2002, IFG Insurance, Inc., subsidiaries in both
Bermuda and the Cayman Islands with the intent of offering insurance services
via traditional offshore service delivery channels including in-person
consultation, telephone and facsimile. In 2002, we also intend to commence
online insurance services activities from our websites located at www.ifg.com
-----------
and www.ifginsurance.com. Specifically, life insurance and life insurance
--------------------
products including annuities will be offered to our customers as part of our
comprehensive offshore financial service plan.
We intend to provide full service offshore insurance services via traditional
delivery channels including in-person consultation, telephone and facsimile.
Through contacting IFG Insurance, clients will be able to find information about
and purchase life insurance policies and annuities in an offshore environment.
IFG Insurance offices are intended to provide in-person consultations when
customers prefer to conduct their insurance business face-to-face. The website
is intended to provide convenient, cost-effective and secure discount insurance
services to the growing number of consumers using the Internet for commercial
and financial services. It is intended that customers will be able to access the
IFG Insurance web-site on a 24 hours a day, 7 days a week basis from any PC,
wherever located, by means of a secure Web browser.
Our objective is to offer a limited range of life insurance products. We do not
intend to incur the cost of supporting an extensive physical branch system or a
network of sales representatives, which management believes will benefit
customers through our ability to offer attractive rates. The interactive
Internet website, when completed, is intended to effectively reduce the number
of personnel traditionally required to establish an insurance contract or
policy. It is anticipated that clients will be able to select a life insurance
product, and then fill out all necessary information on-line to receive the
product. Overall, it is expected that the efficiencies created through this
system will allow us to offer very competitive rates. The insurance products and
services that we intend to offer include, but are not limited to, term
insurance, permanent insurance, Whole Life and Universal Life, and variable
other life insurance products.
We intend to establish subsidiaries in both Bermuda and the Cayman Islands,
which are globally recognized jurisdictions for offshore insurance products that
also have very strong professional and telecommunications infrastructures.
Outside London and New York, Hamilton, Bermuda offers the third largest
insurance and reinsurance market in the world. Bermuda and the Cayman Islands
also have a wide selection of insurance management companies that can assist us
in the delivery of our insurance products and services.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 32
[LOGO - IFG]
We have retained the services of Marsh Management Services (Bermuda) Ltd., a
large and internationally recognized insurance management company, to assist it
in establishing and managing our insurance business. This is intended to
minimize start up costs associated with our insurance subsidiary, while allowing
us time to assess the insurance market and establish our own insurance
infrastructure. Reliance on the insurance management company is expected to
slowly recede over the first few years of business.
We initially intend to rely heavily on reinsurance. This will assist us in
honoring all of our outstanding policy claims and provide timely service to our
clients while simultaneously allowing us to allocate capital to other areas.
Again, Bermuda and the Cayman Islands offer some of the strongest and most
competitive reinsurance markets in the world, so obtaining reasonable
reinsurance is not anticipated to be a problem, but is not guaranteed.
The launching of these subsidiaries will be contingent upon the success of this
offering to fund the necessary research and development to finance the
development of the systems to operate a full and online insurance service. Upon
the research and development being completed, IFG estimates that it will require
approximately $400,000 to $500,000 to operate one insurance subsidiary. This
will include costs to staff the insurance subsidiary., hardware to operate the
insurance system and overhead to operate the insurance subsidiary, if it is
determined not to use Marsh Management Services (Bermuda) Ltd. as discussed
above. IFG would finance this expansion through profits it has earned from its
operations at the time of the expansion or it would proceed with the raising of
funds through traditional means such as a further public offering .
There is no guarantee that we, or our subsidiary will be approved for any
insurance license in Bermuda or the Cayman Islands.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 33
[LOGO - IFG]
CORPORATE CHART
International Financial Group, Inc. Corporate Structure Flowchart
[ Mr. Kevin Mellor is the sole
beneficial owner of [IFG WORLD HOLDINGS
International Financial (arrow to) TRUST
Group , Inc.] (BARBADOS)]
(arrow to)
100%
To be Formed (TBF) [IFG WORLD HOLDINGS INC. (BARBADOS)]
100%
(arrow to)
[International Financial Group, Inc.
(CAYMAN CORP.)]
(arrows to 1. through 6. and 10.)
[1.IFG Bank, Inc. TBF] [2.IFG Investment [3.IFG Insurance, Inc.
Services, Inc. (Bermuda) TBF]
(Caymens)]
(arrow to 7.)
[4.IFG Trust Services, [5.IFG Administration [6.IFG Systems, Inc.
Inc. (Nevis) Inc. (Cayman Islands)]
IFG Trust Services IFG Corporate
(IOM)] Services, Inc.
(Cayman Islands)]
(arrow to 8. and 9.
and 10) (arrow to 11.)
[7.ifgsecurities.com [8.IFG Investments [10.IFG Trust Services
(Bahamas), Inc.] Services Inc.] (St. Lucia) Inc. and
[9.IFG Corporate Inc. and IFG Trust Services
IFG management Inc.] (Anguilla) Inc.
TBF]
[11.ifgcorporate.com,
ifgmanagement.com, and/or
ifgholdings.com to be
formed in up to 40
jurisdictions]
(arrow to 12.)
[12. Incorporations completed to-date:
ifgcorporate.com (Antigua) Inc.
ifgcorporate.com (Seychelles) Inc.
ifgmanagement.com (Turks & Caicos) Limited
ifgmanagement.com (Samoa) Inc.
ifgmanagement.com (BVI) Inc.
ifgmarketing.com (Mauritius) Inc.
ifgmanagement.com (Labaun) Inc.
ifgmanagement.com (Barbados) Inc.
ifgmanagement.com (St. Vincent) Inc.
ifgmanagement.com (Jersey) Inc.
ifgcorporate.com (Cook Islands) Inc.
ifgmanagement.com (Aldemey) Limited
ifgcorporate.com (Marshall Islands) Inc.
ifgcorporate.com (Niue) Inc.
ifgcorporate.com (BVI) Inc.
ifgmanagement.com (Anguilla) Inc.
ifgmanagment.com (Guemsey) Limited
iommanagement.com (Isle of Man) Limited
ifgmanagement.com (Seychelles) Inc.
ifgmanagement.com (St. Lucia) Inc.
ifgmanagement.com (Gibraltar) Inc.
ifgmanagement.com (Liberia) Inc.
ifgcorporate.com (Hong Kong) Limited
ifgmanagement.com (Ireland)
ifgcorporate.com (Labaun) Inc.
ifgcorporate.com (Panama) Inc.
ifgcorporate.com (Belize) Inc.
ifgmanagement.com (Niue) Inc.
ifgmanagement.com (Belize) Inc.
ifgmarketing.com (Singapore) Pte Ltd.
ifgmanagement.com (Antigua)
ifgmanagement.com (Grenada) Inc.
ifgmanagement.com (Dom) Limited
ifgholdings.com (Bahamas) Inc.
ifgcorporate.com (Vanuatu) Inc.
ifgcorporate (Isle of Man) Limited]
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 34
[LOGO - IFG]
IFG World Holdings Trust
------------------------
IFG World Holdings Trust is a trust established under the laws of Barbados. The
trustee is Mr. Harold Carter. The trust is for the sole benefit of Mr. Kevin
Mellor, the Director and President of International Financial Group, Inc. IFG
World Holdings Trust is the sole shareholder of IFG World Holdings Inc.
IFG World Holdings Inc.
-----------------------
IFG World Holdings Inc. is a Barbados corporation that is the controlling
shareholder of International Financial Group Inc.
Industry Background
-------------------
The "offshore industry" is comprised of those jurisdictions and institutions
outside a person's home jurisdiction that can be used to create an advantage,
financial or otherwise, for an individual or a business. Some of the more
popular offshore jurisdictions are the British Virgin Islands, Barbados,
Bermuda, Cayman Islands, the Federation of St. Kitts and Nevis, Isle of Man,
Channel Islands, and Switzerland. The differing legislative environment of
different jurisdictions can yield numerous advantages to any person that has the
flexibility to relocate themselves or a portion of their assets. Thus, "going
offshore" means nothing more than utilizing a jurisdiction other than ones own
to hold ones assets and/or conduct business and financial affairs to some
financial or legal advantage.
There are a number of reasons people and companies elect to engage an offshore
financial strategy. For the most part, they go offshore to protect assets,
increase flexibility in corporate management, minimize taxation, get access to
global investments, and gain testamentary freedom.
While the costs associated with creating and managing an offshore investment
plan has decreased significantly, telecommunications and particularly the
Internet have made access to these services faster, easier and more reliable.
Thus, while reduced costs make going offshore justifiable to a growing portion
of the market, an increasing portion of that market also has access to
everything they need to find out about and use these services via the Internet.
Growth of the Internet and Online Commerce
------------------------------------------
Internet usage and online commerce continue to grow worldwide. Offshore
Financial USA estimates that there will be 510 million people estimated to be
online by the summer of 2001 and they also predict on-line revenue collected by
Canadian and American companies by the end of 1999 to be $36.6 billion. The
Internet financial magazine, The Standard, quoting Jupiter Research, estimates
"By 2005, more than half of US households online - 44 million homes - will bank
on the Internet, and 34 million households will trade stocks... As a result
online financial institutions will have at their disposal more than $5 trillion
in investable assets in 2005..." In addition, The Standard states, "neither
traditional banks nor brokerages will claim the largest share of those assets.
The bulk of the business will go to firms that provide multiple offerings. In
fact, online financial institutions that provide only a single service may soon
go the way of the Susan B. Anthony coin. Consumers already favour financial
institutions that provide more than one service." Offshore Finance Yearbook
states European private banking assets at $5 trillion with worldwide private
assets estimated to be at $16.6 trillion USD. It is our believe that this growth
can be attributed to many factors, including: a large and growing installed base
of personal computers and other Internet-connected devices in the workplace and
home; advances in performance and speed of personal computers and modems;
improvements in network security, infrastructure and bandwidth; easier and
cheaper access to the Internet; and the rapidly expanding availability of online
content and commerce sites.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 35
[LOGO - IFG]
Market Opportunity
------------------
Arnold Goldstein, author of Offshore Havens, states, non-resident bank deposits
in the Caribbean are currently in excess of one trillion dollars USD, up from
just two billion in 1980. The value of offshore trust accounts established by
Americans in the Caribbean is in excess of $450 billion according to Offshore
Finance Canada.
This tremendous growth comes from an increasing number of individuals and
corporations that look to the international offshore marketplace for asset
protection, testamentary freedom, greater investment returns, tax and succession
planning and increased confidentiality in business dealings. For example, it is
estimated by Offshore Financial USA that the number of lawsuits filed in the USA
in 1999 were 18 million and the estimated cost of litigation was $300 billion.
Worldwide Internet users demand for online services is growing according to IDC.
According to Global Research in March 2001, there were estimated to be 453.4
million Internet users worldwide. The Standard, quoting American Express,
states, one-quarter of online consumers around the world are banking and trading
online - or plan to start soon. That number could jump sharply if financial
institutions can ease the fears of the nearly 80 percent of online consumers who
worry about privacy and security on the net. The Standard also quoted that
western Europe will supply the most new customers to Net banks and brokerages,
and by 2004 it will lead both sectors. The U.S. is also expecting strong growth
in online banking and trading. By 2004, The Standard estimates that online
brokerage customers worldwide will reach 63.6 million people. Data provided by
Salomon Smith Barney shows online trading accounted for 30.5% of all trades on
the NYSE and NASDAQ in the third quarter of 2000. We believe that the offshore
and online financial services industries will continue to grow. This belief is
supported by six recent trends.
First, global demographic statistics suggest that individuals will be investing,
holding and acquiring unprecedented wealth during the next decade. Large numbers
of "baby boomers" are beginning to invest for their children's education and for
their own retirement. Additionally, it is estimated that these individuals, many
of whom have greater education, technical capabilities and investment choices
than their parents, as well as greater access to information, will inherit
significant wealth from the previous generation during the next decade. This
represents the largest transfer of wealth in history, a fact that we believe
will result in - new consideration being given to the development of effective
estate plans and asset protection strategies, including the utilization of
offshore financial strategies.
Second, we believe there is an increased need by individuals and corporations to
protect themselves and their assets in today's increasingly litigious
environment. Higher levels of asset protection can be achieved through the
utilization of financial structures and institutions in confidentiality and
secrecy bound offshore jurisdictions. Through the use of offshore financial
structures, individuals and corporations are better able to protect themselves
from claims that may arise from frivolous lawsuits, creditors and disputes
arising from marital difficulties.
Third, investors are becoming more self-reliant in the pursuit of their
financial goals in general. They are increasingly willing to acquire information
about, and an understanding of, investments, trusts, corporations and other
offshore products and services and have become increasingly sophisticated and
knowledgeable about these products and services. Access to a broad range of
financial information and advice has decreased the necessity for hands-on
banking advice, brokerage advice, trust expertise, insurance expertise and other
professional financial assistance.
Fourth, consumers have expanded their access to powerful, yet inexpensive,
computer technology and are becoming more comfortable with and proficient in the
use of this technology. The Internet delivers information that facilitates
inexpensive communication of data and, therefore, independent "E-commerce"
transactions have been growing at an accelerating rate. In short, we believe the
Internet is producing thousands of new cyber-investors every day. Investors are
increasingly making their own decisions about their financial future and tend to
seek flexibility and efficiency in execution of these independent transactions.
Fifth, the Internet and advanced telecommunication systems have allowed banking,
brokerage, insurance and offshore corporate and trust products and services to
be offered from any place in the world to customers located any place in the
world. Thus, in most cases, dealing with an offshore financial account has
become as convenient as dealing with the bank down the street. Customers may
access their financial empire merely by dialing up a local telephone number and
logging on by computer through a user name and password. From the access screen,
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 36
[LOGO - IFG]
they can ascertain information regarding their deposits, stock quotes, view
their positions, execute orders, change orders, purchase products and deposit
and withdraw funds. Orders are routed electronically either to members of a
particular market or off-market facilities that match orders submitted directly
from brokerages.
Finally, we believe that the technology for on-line transactions has developed
to a stage where customers can be virtually assured complete security and
confidentiality. New and sophisticated cryptographic systems have been developed
that assures all information transmitted between a given client and offshore
service is completely protected. Further, we hope this new technology will give
new consumers confidence that their deposits will be protected from
technological espionage.
Management believes these trends will assure continued growth in the use of
offshore financial strategies, and particularly offshore financial strategies
that are accessible via the Internet.
Marketing Strategy
------------------
Our marketing strategy focuses on creating value for their clients through the
utilization of offshore asset protection and investment strategies. We market
our full-service division primarily through the use of a
telemarketing/fax/email-based Professional Referral Program, and we intend to
place advertisements in offshore trade publications. We market our discount
Internet-based services primarily through the registration of our websites in
popular Internet search engines and directories. We have focused our marketing
campaign on asset protection opportunities for potential clients, cost-effective
full line of offshore financial services, available in both bundled and separate
formats. IFG Trust and APIIP are registered with the following search engines:
o AOL Search
o Alta Vista
o DirectHit
o Google
o HotBot
o Lycos
o MSN
o Netscape
o Open Directory
We market our full service offshore financial products and services primarily
through a telemarketing/fax/email-based Professional Referral Program directed
at lawyers, accountants and investment advisors. The Professional Referral
Program has been developed to introduce IFG and our products and services to
those professional advisors who may have clients that would benefit through the
utilization of offshore strategies. We then work with the client and the
professional advisor to develop and implement an individualized offshore
financial strategy. We also intend to promote our full service divisions through
the placement of advertisements, aimed at professional advisors, in popular
offshore industry trade publications.
We market our discount Internet-based offshore financial products and services
exclusively through the Internet. We maintain numerous websites from which we
provide a wide variety of offshore financial products and services. We have
registered these websites with Internet search engines and directories.
Forrester Research estimates that over 50% of consumers who use e-commerce
websites find these sites through the utilization of Internet search engines and
directories.
We market our offshore financial products and services to the following target
markets:
o Professionals and entrepreneurs who are subject to a high degree of
potential legal liability in the course of their profession such as
lawyers, doctors and business owners;
o Individuals looking for asset protection and additional freedom in
estate and succession planning;
o Businesses that market and sell products internationally; and
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 37
[LOGO - IFG]
o High and middle-income market individuals and business entities with
liquid assets in excess of $100,000.00 or assets that lend themselves
to offshore strategies.
Our marketing campaign focuses on the asset protection opportunities for
potential clients to utilize the cost effective full line of offshore financial
services that are available in both bundled and separate formats. The campaign
addresses new opportunities for potential clients to protect their assets in
multiple offshore jurisdictions. Through the utilization of advanced proprietary
technology, we have been able to substantially reduce the costs associated with
establishing and managing an offshore financial plan, and as such, we highlight
this cost saving opportunity. Our marketing campaign also focuses on our ability
to deliver a full range of both bundled and separate offshore financial products
and services including investments, trust and corporate services.
It is our objective to gain a leading position as a provider of offshore and
Internet-based financial products and services by combining confidentiality,
technology, innovation, convenience, service and value. Our marketing strategies
to accomplish this goal will include:
o Continuing to broaden our products and services line of financial
services to include offshore banking and insurance;
o Continuing to increase the number of offshore jurisdictions from which
we offers services;
o Continuing to apply advanced and Internet-based technologies in the
delivery of cost-effective offshore financial products and services;
and,
o Continuing to employ offshore financial professionals with expertise
in law, banking, insurance and investments.
Revenues
--------
We currently are able to generate revenues from the following sources:
o Investment management, security transactions and related fees;
o Establishment of trust, trustee services and related fees;
o Consulting fees relating to capital acquisition activities for
clients; and,
o Incorporation, administration, management and related fees.
We intend to generate fees from the following sources, once our bank and
insurance subsidiaries are established:
o Banking and associated fees; and
o Insurance premiums and related fees.
Business Strategy
-----------------
Main Objectives
---------------
Our business strategy has been developed by management to achieve the following
corporate objectives:
o To create shareholder value by being a leading provider of
comprehensive offshore financial services;
o To attain the highest market share penetration possible, by delivering
both bundled and separate offshore financial services through
full-service traditional delivery channels and discount Internet-based
channels;
o To provide a confidential and secure environment for our clients to
conduct their offshore financial affairs with a focus on asset
protection;
o To utilize the latest Internet-based technologies to ensure cost
effective and convenient provision of our offshore financial products
and services on a global basis;
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 38
[LOGO - IFG]
o To provide prompt, reliable, efficient and professional service;
o To provide reliability in offshore financial planning by establishing
redundancy; and,
o To maintain an exceptional reputation in the international offshore
financial industry by satisfying all local anti-money laundering
regulatory requirements.
Full and Discount Products and Services
---------------------------------------
We currently provide full service offshore investment, trust, corporate and
management services, and in the future will incorporate banking and insurance
services, through traditional delivery channels including in-person
consultation, telephone, facsimile, courier and mail. Through contacting IFG and
its subsidiaries, clients are able to interact with our offshore experts on a
one-to-one basis in a confidential environment. Our office in St. Kitts and
Nevis provide facilities to conduct in-person consultations when customers
prefer to conduct their business face-to-face. Clients may also contact us via
telephone, facsimile, mail and courier, provided the customer pre-approves this
type of order communication and provides an account number and password. All of
these service channels are currently available during North American market
hours.
In May 2001, we intend to use proprietary technologies, to commence providing
online discount offshore financial services from our websites located at
www.ifg.com and www.apiip.com. The services currently provided via the Internet
----------- -------------
include: investments, trust, corporate and management services activities,
available in separate and bundled formats. Through our websites, clients are
able to establish and manage offshore trust and corporate structures. We also
intend to offer discount offshore banking and insurance services via the
Internet, once corporate and technical infrastructure are in place. These
Internet-based services are provided in a confidential and secure offshore
environment 24 hours a day, seven days a week, 365 days a year. Further, it is
intended that these services will be offered from up to 30 offshore
jurisdictions worldwide, allowing clients the ability to chose whatever
jurisdiction best suits their own particular offshore financial needs and
preferences. Today's investor demands confidentiality, asset protection,
investment alternatives and ease of access to assets.
We offer our offshore financial products and services both separately and in
bundled formats. By offering clients the convenience of a "one-stop"
comprehensive offshore financial service option, we create a number of internal
efficiencies in the delivery of our products and services.
Confidential and Secure Environment
-----------------------------------
There is no denying that confidentiality is a principal motivation behind many
decisions to initiate an offshore financial plan. Thus, we have developed an
infrastructure which is intended to allow clients autonomy in establishing,
modifying and managing their offshore financial plan, while hopefully minimizing
the number of individuals required to receive and process client requests. We
have developed a comprehensive internal confidentiality policy, which guides
each employee in respect of confidentiality. Moreover, each Company employee is
specifically trained and informed in their respective jurisdiction's privacy
legislation, and any violations are intended to be prosecuted to the fullest
extent of the law. Most offshore jurisdictions make it an offense, and in some
jurisdictions a criminal offense, for any offshore provider or employee to
divulge any information regarding a client to anyone unless ordered to by a
court of competent jurisdiction.
The global corporate infrastructure of IFG allows clients to establish and
manage their offshore financial plan to include the use of multiple offshore
jurisdictions in an efficient and timely manner. This allows for multiple layers
of confidentiality protection in each individual financial plan, while also
providing portfolio diversification, and a maximization of international
regulatory benefits. For example, a client is able to establish an offshore
trust in the Isle of Man, which owns an offshore company in Barbados, which in
turn has funds invested in the Cayman Islands or on deposit in St. Vincent and
The Grenadines.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 39
[LOGO - IFG]
Our Internet-based systems have been designed to maximize client ease of use,
while at the same time clients allowing the opportunity to contact our
representatives directly should they choose to do so. It is our intention for
clients to establish corporations and trusts, and manage their investment
portfolio in a secure and confidential on-line offshore environment. In the near
future, we intend to incorporate on-line offshore banking and insurance services
into our existing secure Internet-based technology infrastructure, and thereby
making it possible to establish and manage bank accounts, and purchase insurance
from any computer terminal in the world connected to the Internet. Provided
transactions do not violate anti-money laundering legislation, it is anticipated
that they can be performed through automation.
It is our intention to utilize Internet-based technologies that use the latest
in security measures, including, but not limited to, those described below:
o Our systems will employ a password entry system to attempt to assure
that no unauthorized users are allowed access to our system. Clients
select a "user name" and "password," which must be correctly entered
each time they attempt to access our systems.
o To support strong encryption, users of our system are required to
utilize a SSL capable browser, which allows the user to select and
approve their own certifying authority and to use strong encryption.
o Stand-alone web server located at a secured site and backed up with
redundant servers located in other offshore jurisdictions. The web
server hosting our system utilizes a closed operating system.
o We intend to employ a firewall and IP filter to prevent "active
attacks".
Cost Effective and Convenient Service
-------------------------------------
Through the use of the latest advanced and Internet-based technologies we are
attempting to provide cost effective and convenient services of our offshore
financial products on a global basis. Through our unique advanced and
Internet-based technologies and by the cost efficiencies gained through
providing a comprehensive bundled package of offshore financial products and
services, we are able to offer our clients a more cost-effective method for
moving their affairs offshore. We believe the use of the Internet by clients
makes access to offshore strategies more affordable, efficient and accessible
than ever before. On-line operating efficiencies such as a minimal physical
branch system and automatic record keeping and transaction processing reduce our
day-to-day operating costs. These savings, in turn, allow us to offer more cost
competitive offshore products and services.
We offer clients the convenience of managing their offshore financial affairs in
either a full-service or discount Internet-based environment. Our full-service
offerings enable clients the convenience of dealing with their professional
advisors on an individual basis. Our discount Internet-based offerings allow
clients the convenience of managing their offshore financial plan, via the
Internet, 24 hours of each day from virtually any Internet-enabled computer
system in the world
Prompt, Reliable, Efficient and Professional Service
----------------------------------------------------
We intend to continue to attract and retain leading offshore financial services
professionals. Our management team and staff are comprised of individuals with
extensive education and experience in law, taxation, banking, investments,
insurance, trusts, and corporate services. Due to the highly complex and
demanding nature of our business activities, and the sophisticated needs of our
clients, it will be essential for us to continue to maintain this high level of
professionalism.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 40
[LOGO - IFG]
Reliability Through Redundancy
------------------------------
We have established redundancy in two areas. First, we have, or are applying
for, licenses authorizing us to conduct bank, investment, insurance, trust, and
CSP activities in more than one jurisdiction. This redundancy hopefully allows
us to react to changing international and domestic legislation, and provide our
clients with an alternative offshore jurisdiction where required.
Second, our discount Internet-based offshore services intend to use a primary
and secondary network system. Thus, if the primary server experiences technical
problems with our telecommunications infrastructure, the secondary server will
automatically assume responsibility for maintaining our websites and databases.
We feel this is an essential element in the provision of offshore financial
services, since it is absolutely critical that each customer have 100% reliable
access to all their offshore financial affairs.
Reputation
----------
We are committed to upholding anti-money laundering laws in the jurisdictions in
which we operates and, therefore, has initiated stringent due diligence
standards to ensure relevant legislation is not offended and that client due
diligence requirements are satisfied. We recognize the importance of such
legislation in the prevention of crime and joins with all other offshore
providers in sharing this responsibility.
Competition
-----------
We compete with numerous established offshore service providers in the offshore
financial industry. These competitors currently include banks, offshore
investment firms, trust companies, and corporate and management service
providers. As we expand our products and services offered it is assumed we will
also compete with offshore banks, insurance companies, and other business
entities that provide offshore financial products and services. We expect such
competition to continue and intensify in the future. We expect many of our
competitors will have significantly greater financial, technical, marketing and
other resources than IFG.
There exists a number of well established, and in some cases much better
capitalized, competitors in both traditional and online securities and
investment services in the offshore venue. These include many companies and
financial services endeavors with single offices. We will be entering an arena
with well practiced, and in many instances well financed, competitors. While we
believe that we will eventually establish a position within this market, there
is no guarantee that our efforts will be successful.
Current competitors of our offshore investment services subsidiaries include,
but are not limited to, Merrill Lynch, Morgan Stanley, First Nevisian, Cayman
National Securities, Smith Barney, SEGOES, www.offshoretrading.com, Freedom
Trade, E-Trade, www.schwab.com, Insinger Trust, Trident Trust, Royal Bank of
Scotland, Atlas Private Trust and Fiduciary Trust, www.globaltrusts.com,
www.guardiantrustees.com, www.henley-partner.com, pishon-trust-management.com,
www.corporate-premier.com, HWR Services and Caribbean Management, Codan
Management, Morningstar, Insad, Sovereign Group, OCRA, Worldwide, Offshore
Corporate Services, www.corporate.com, www.123ezcorp.com, Barclays Bank, UBS,
Royal Bank of Canada, ING Bank and Cayman National Bank, www.fsharpbank.com,
www.bayshorebank.com, www.providentbelize.com, www.paritatebank.com and
www.hsbc.com Prudential Insurance, London Life, Lloyds of London, The Guardian
and Northern Life Insurance, I-Quote, www.budgetlife.com, www.quotesmith.com,
www.cheap-life-insurance.com and www.interlinx.com.
All these current and potential competitors may be able to respond more quickly
to new or changing opportunities, technologies and customer requirements than we
and may be able to undertake more extensive promotional activities, offer more
attractive terms to customers and adopt more aggressive pricing policies than
IFG. Moreover, current and potential competitors have established or may
establish cooperative relationships among themselves or with third parties to
enhance their services and products. We cannot guarantee that new competitors or
alliances among competitors will not emerge, and these competitors may acquire a
significant market share of the offshore financial industry. There can be no
assurance that we will be able to compete effectively with current or future
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 41
[LOGO - IFG]
competitors or that the competitive pressures faced by us will not have a
material adverse affect on our business, financial condition and operating
results.
GOVERNMENT REGULATION
The Company
-----------
In conducting various aspects of our business, we will be subject to various
laws and regulations within each jurisdiction in which we operate.
We will be engaged in marketing financial products and services from up to 30
jurisdictions. As a result, we are bound to uphold all local laws including
those laws related to the business of selling financial products and services
and all local money laundering laws. Failure to comply with any of these laws,
rules or regulations could result in censure, fine, incarceration, revocation of
work permits, the issuance of cease-and-desist orders or the suspension or
expulsion of the our officers or employees from certain countries, any of which
could have a material adverse affect on our ability to carry on business, which
would, in turn, have a material adverse affect on our financial condition and
operating results and, therefore, the prospect of an investor's return of
capital invested in IFG.
It is our intent to expand our business to a number of offshore financial
centers. In order to expand our services globally, we must comply with
regulatory rules and regulation of each specific country in which we conducts
business, which may include finding qualified professionals and business people
capable of providing correspondent services. The varying compliance requirements
of these different regulatory jurisdictions may also limit our ability to expand
internationally.
We eventually intend to conduct a significant portion of our business through
the Internet and other electronic media and intend to expand our use of such
media. To date, the use of the Internet to conduct financial transactions has
been relatively free from regulatory restraints. However, a number of
governments, including the United States, are beginning to address the
regulatory issues that may arise in connection with use of the Internet.
Accordingly, there can be no assurance that these authorities will not adopt new
regulations (or interpret their existing regulations) in a manner that
constrains our ability to transact business through the Internet or other
electronic media. Any additional regulation of our use of electronic media could
render our business or operations more costly, less efficient or even
impossible, any of which could have a material adverse affect our business,
financial condition and operating results.
In addition to the above risks, we cannot assess the effect that the
Organization for Economic Cooperation and Development, the United Nations and
the G7 countries initiatives will have upon the offshore financial industry and,
in particular, the jurisdictions that we will carry on business in and our
proposed clients.
IFG Bank
--------
With respect to obtaining bank licenses to carry on the business of offshore
banking, a typical requirement of offshore jurisdictions is to demand from the
applicant that they capitalize the bank with a statutory amount of capital as
stipulated by that jurisdictions government. These capital requirements can take
the form of unencumbered and encumbered capital. The latter would need to be
placed by the applicant into a deposit account with the government. The bank
would not be permitted to use such funds while in operation.
We have applied for a Class I bank license from the Government of St. Vincent
and will be subject to the following net capital requirements:
o Maintain a fully paid-up capital of not less than $500,000 USD, or its
equivalent in another currency, or such greater sum as the local
authority may reasonably determine appropriate; and,
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 42
[LOGO - IFG]
o Deposit or invest the sum of $100,000 USD or its equivalent in another
currency, in such a manner as the local authority may reasonable
prescribe.
We have applied for a Class A bank license from the Government of Belize and
will be subject to the following net capital requirement:
o Maintains a fully paid-up capital of not less than $500,000 USD, or
its equivalent in another currency, or such greater sum as the local
authority may reasonably determine appropriate.
Each of these jurisdictions will allow the bank to carry on banking activities
with non-residents only. Carrying on banking activities with residents of the
jurisdiction is strictly prohibited.
The proposed banks will also be subject to various other regulatory requirements
including but note limited to: competency of Directors and Officers; obtaining
errors and omission insurance; obtaining Directors and Officers insurance; and,
Know Your Client Rules. Know Your Client Rules are defined by us to mean rules
that are designed to identify the client and their source of funds to satisfy
anti-money laundering legislation enacted by the countries we operate within.
Generally, these rules are satisfied by obtaining the following from the client:
certified copy of his/her passport; professional references; bank reference;
utility statement; and, written representation as to the source of the funds
transferred by the client.
IFG Investment Services
-----------------------
The IFG Investment services subsidiaries will be subject to various regulatory
requirements including, competency of Directors and Officers, net capital
requirements, obtaining Errors and Omissions insurance, obtaining Directors and
Officers Liability insurance and Know Your Client Rules.
IFG Insurance
-------------
Our proposed insurance subsidiary, IFG Insurance, Inc., will be subject to
capital requirements to ensure that we can sustain a certain degree of losses
and that we are properly capitalized. We intend to provide life insurance
products that typically demand (at the ultimate discretion of the responsible
authority) that we have $250,000 USD in minimum capital and surplus
requirements. In addition, some jurisdictions will demand that we maintain
adequate levels of Error and Omission and Directors and Officers Liability
insurance as well as adhere to Know Your Client Rules.
IFG Trust Services
------------------
In each jurisdiction where management determines it is practicable to obtain a
trust license, our trust subsidiaries may be subject to various capital
requirements from each respective jurisdiction to ensure that it is properly
capitalized. We estimate that the typical paid in capital requirement will not
exceed $250,000 USD per jurisdiction. In addition, some jurisdictions will
demand that we maintain adequate levels of Error and Omission and Directors and
Officers Liability insurance and adhere to Know Your Client Rules.
IFG Corporate Services
----------------------
In each jurisdiction where management determines it is practicable to obtain a
CSP license, our CSP subsidiaries may be subject to various capital requirements
from each respective jurisdiction to ensure that it is properly capitalized. We
estimate that the typical paid in capital requirement for CSP jurisdictions will
not exceed $250,000 USD per jurisdiction. In many cases, local regulations only
require such capitalization to be demonstrated through corporate bank
statements, and such funds can be encumbered by more than one jurisdiction's
capitalization requirement and can be used in the operation of the business. In
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 43
[LOGO - IFG]
addition a particular jurisdiction will demand that we maintain adequate levels
of Error and Omission and Directors and Officers Liability insurance and Know
Your Client Rules.
Facilities, Equipment and Systems
---------------------------------
Offices
-------
We operate our head office in The Federation of St Kitts & Nevis, West Indies.
This space is utilized as IFG Trust Services, IFG Investments Services (Nevis),
IFG Corporate and IFG Management headquarters in Nevis, West Indies. We have
doubled our lease space in St. Kitts & Nevis to centralize our operation and to
accommodate the infrastructure required to facilitate our businesses.
The head office for IFG Bank, Inc. is anticipated to be located in St. Vincent.
We intend to lease office space in St. Vincent or Belize for the two proposed
operating subsidiaries of IFG Bank, Inc. Our estimates are that the leased space
in either jurisdiction will not exceed $48,000 per year.
Computer Hardware
-----------------
We have installed all necessary computer hardware and systems required to
operate our Internet based offshore financial services system with third-party
organizations that offer web-hosting services. We may eventually acquire and
maintain all the additional premises necessary for hosting our servers
internally. To ensure sufficient capacity and uninterrupted service, we intend
to provide redundant facilities that are located at our different operating
sites.
Computer Software
-----------------
We have either developed or licensed all the necessary proprietary computer
software required to operate our Internet-based offshore financial services
systems. For purposes of future computer software development, we intend to
evaluate software from third-party providers that can be customized and
integrated into our system. Where necessary to meet the diverse needs for
integrated data of the different Company's operating units, customer database
and web page software will be contracted to software developers hired by IFG.
The latest hardware and software environments and development tools will be
utilized.
Security
--------
We have placed a heavy emphasis on security for our main physical branches of
operations and our Internet-based online systems. We believe all of our existing
offices are of extremely solid construction. It is anticipated that we will make
it a priority that all future offices will be the same. Further, as our initial
client base expands, it is anticipated that the services of a "bonded" and
well-known local security company will be employed to monitor each head office
during regular business hours. In the case of the proposed bank subsidiaries,
such security will be employed to monitor the bank's physical office during both
business and non-business hours.
To ensure the integrity and privacy of client data and correspondence over the
Internet of our on-line service, we will utilize the latest technologies for
user authentication and data encryption. We have incorporated Secure Socket
Layer technology into our websites, which includes the use of digital
certificates and public key encryption techniques. We intend to monitor new
developments to ensure that we continue to offer the highest level of data
integrity and privacy. Beyond using the best security technologies, we monitor
our systems for any possible weaknesses in our security policies and practices
and for any external threats to our security system.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 44
[LOGO - IFG]
MANAGEMENT
The daily affairs of IFG are under the direction of its senior management: Mr.
Kevin Mellor, President, Mr. Daniel MacMullin, Sr. Vice President of Trust
Services, and Mr. Anthony Chan, Sr. Vice President Technology.
The directors, officers and senior management of International Financial Group
Inc. are as follows:
Name Age Position Residency Term as Director
---- --- -------- --------- ----------------
Mr. Kevin Mellor 40 President and Chair of the Board* Director* Cayman Islands 1 yr, 2 months
Mr. Harold Carter 55 Director* St. George, Barbados 11 months
Mr. Roman Kostiw 43 Director* Toronto, Canada 4 months
Mr. Drew Parker 42 Director* Vancouver, Canada 4 months
Mr. John Rayner 57 Director* Hamilton, Bermuda 7 monthss
Mr. Vernon Veira 45 Director* Basseterre, St. Kitts 11 months
Mr. Anthony Chan 26 Sr. Vice President, Technology Vancouver, Canada
Mr. Daniel MacMullin 40 Sr. Vice President, Trust Services Nevis, BWI
Ms Catherine Rublack 39 Vice President, Administration Director Cayman Islands 6 months
*Directors of International Financial Group, Inc.
Key Personnel Qualifications
----------------------------
Mr. Kevin Mellor received his Bachelor of Administration from the University of
Regina, Canada in 1983 and his Bachelor of Laws from the University of
Saskatchewan, Canada in 1990. Mr. Mellor received his Chartered Accountant
(Canada) designation in 1986 and became a Barrister & Solicitor (Canada) in
1991. Mr. Mellor has extensive litigation experience in the Tax Court of Canada
and the Federal Court of Appeal (Canada). Mr. Mellor practiced as a
corporate/commercial lawyer with his preferred area of practice in taxation. Mr.
Mellor's professional experience includes being an auditor for the Government of
Saskatchewan and a member of the National Hockey League Players Association in
his capacity as a players' agent. Mr. Mellor has for the past five (5) years
been a partner in the law firm Mellor & Anderson. Mr. Mellor has not previously
been a director of a reporting company.
Mr. Harold Carter received his Bachelor of Arts (Hons) degree, Certified General
Accountant (CGA) designation and Associate of the Chartered Institute of Bankers
(ACIB) from the University of West Indies. Between 1968 and 1988, Mr. Carter
managed a number of retail branches of Barclay's Bank, eventually going on to
act as Manager and Secretary for the Barclay's Financial Corporation of Barbados
Ltd. in 1988 and 1989. Mr. Carter acted as the Managing Director of the
Barclay's Financial Corporation of Barbados Ltd. from 1989 to 1998. Mr. Carter
has also acted as a member of the Barbados Police Services Commission. Mr.
Carter has not previously been a director of a reporting company.
Mr. Roman Kostiw received his Bachelor of Arts in Economics & Criminal Behavior
from York University in 1979. Mr. Kostiw has passed his Registered
Representatives Examinations (1980); Licensed for Options, Commodities,
Financial Futures and Mutual Funds (1980-1981); Canadian Securities Course
(1980); Canadian Investment Management Parts I and II leading to C.I.M.
(Certified Investment Managers Designation 1992-1993); Designated Registered
Options Principals Exam (D.R.O.P.) (1993); Branch Managers Qualifying Exam
(1993); Partners Directors Officers Exam (1993). Mr. Kostiw worked with Midland
Doherty Limited; Toronto Dominion Bank (Green Line Investor Service); The Canada
Trust Company; The Investment Dealers Association of Canada; securities
consultant to Credit Suisse Canada, Toronto Stock Exchange, Nesbitt Thomson
Inc., CIBC Securities and Midland Walwyn Inc; Altramira Management Ltd.
(Director of Compliance); The Corporate Group; C.M. Oliver Financial Corporation
(Ethics, Practices & Compliance). Mr. Kostiw has not previously been a director
of a reporting company.
Dr. Drew Parker is an Associate Professor of Information Technology in the
Faculty of Business Administration at Simon Fraser University in British
Columbia. He has taught, delivered presentations and consulted extensively in
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 45
[LOGO - IFG]
the Information Systems and Telecommunications area. He has worked with Internet
business issues for over a decade. Dr. Parker received his Bachelor of Commerce
and Masters in Business Administration from the University of Calgary in Alberta
and his Ph.D. from the Ivey School of Business Administration at the University
of Western Ontario. Mr. Parker was appointed to the position of Director in
March 2001. Dr. Parker was a director of a reporting company, Denmans.com. Dr.
Parker resigned as Director January 2001 from Denmans.com.
Mr. John Rayner worked at a number of insurance companies and institutions
including Prudential Assurance Company (UK), American International Group
(Bermuda), and Argus Conning (Bermuda) between 1966 and 1984. Mr. Rayner's past
insurance industry experience includes feasibility studies, profit testing,
reinsurance, statutory and CAAP valuations, underwriting and many other aspects
of life and health insurance. In 1984, he established an actuarial consulting
firm, Abbott Associates, where Mr. Rayner is currently the sole proprietor. Mr.
Rayner is a member of the American Academy of Actuaries and of the International
Actuarial Association and is an associate of the Society of Actuaries (USA). Mr.
Rayner has also attained the designation of Fellow with the Institute of
Actuaries (UK). Mr. Rayner has not been a public director of a reporting company
in North America or Europe. However, Mr. Rayner has been a director of public
Caribbean companies.
Mr. Vernon Veira received his Bachelor of Laws from La Salle Extension
University (Canada) in 1980 and received his LEC from Norman Manley Law School
in Kingston, Jamaica. During 1983 Mr. Veira established his own law firm and
acted as Crown Counsel for the Government of St Kitts-Nevis. Mr. Veira, has
maintained his law practice and now practices, as the senior partner in the law
firm of Veira, Grant & Associates as a corporate/commercial lawyer with his
preferred area of practice in offshore corporate/commercial law. Mr. Veira is a
member of the St. Kitts-Nevis Bar Association and the International Bar
Association and is a former Member of Parliament in St. Kitts. Mr. Veira is a
director of a public company named DotCom 2000.
Mr. Anthony Chan received his Bachelor of Business Administration and Master of
Business Administration from Simon Fraser University, Canada in 1997 and 1999.
His professional experience includes providing technical expertise in launching
a post-graduate online education program at Simon Fraser University. Mr. Chan
has been teaching in the faculty of business administration and school of
computing science at Simon Fraser University since 1999. Mr. Chan has not
previously been a director of a reporting company.
Mr. Daniel MacMullin received his Bachelor of Arts degree from the University of
Saskatchewan, Canada in 1989 and his Bachelor of Laws Degree from the University
of Saskatchewan, Canada in 1992. Mr. MacMullin became a Barrister & Solicitor
(Canada) in 1993 with his preferred area of practice being criminal law. Mr.
MacMullin has also served with the Canadian Armed Forces as a commissioned
officer from 1978 to 1981 and in the Royal Canadian Mounted Police (RCMP) from
1982 to 1988. Mr. MacMullin is also a member of the Saskatchewan Criminal
Defense Bar. For the past five years, Mr. MacMullin has been a partner in the
law firm Hawkins & MacMullin. Mr. MacMullin has not previously been a director
of a reporting company.
Ms. Catherine Rublack was employed with the Canadian Venture Exchange (formerly
Vancouver Stock Exchange) for over twelve years prior to joining IFG. Ms.
Rublack held several management and administrative positions within the Exchange
with the two most recent positions being Manager, President's Action Line and
Manager, Administration. Ms. Rublack has completed and passed her Canadian
Securities Course and the Conduct and Practices Handbook examination for
Registered Representatives. Ms. Rublack has also successfully completed other
Canadian securities related courses and University-level classes. Ms. Rublack
has not previously been a director of a reporting company.
We have also retained the services of Mr. Lisle Webster and Ms. Andrea Young to
perform future directors roles of the proposed banks that we have applied for
licenses under. Mr. Webster has agreed to be a director for IFG Bank, Inc. in
St. Vincent and Belize and Ms. Young has agreed to be a director in St. Vincent.
Mr. Lisle Webster's career with Barclays Bank extended over 35 years. He retired
as Senior Offshore Manager, Barbados Offshore Banking Centre. Since retiring in
1999, Mr. Webster founded Financial Solutions Group and is the majority
shareholder. Mr. Webster has held several professional associations with the
Institute of Bankers, London; Canada Barbados Business Association as a Member,
Fund-Raising Chairman and President in 1998-99.
Ms. Andrea J.P. Young attended the University of West Indies where she attained
her law degree in 1995. Ms. Young continued her education and obtained her Legal
Education Certificate from Hugh Wooding Law School in 1997. Ms. Young was an
Associate Attorney with the law firm Dougan & Delves, Kingstown, St. Vincent
from 1997 - 2000. She is currently an Associate Attorney with the law firm
Webster Dyrud Mitchell, Kingstown, St. Vincent.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 46
[LOGO - IFG]
IFG Bank, Inc. has retained Mr. Andre Lizee of Regina, Canada to consult with us
in his capacity as an "advisory committee member" to the Board of Directors.
Mr. Andre Lizee attended the University of Saskatchewan, Canada trained in Bank
management with the Institute of Canadian Bankers, and has received trade and
finance training from Trade Bank, Wells Fargo, and the Hong Kong Shanghai Bank.
Since 1990 Mr. Lizee has gained experience as a bank manager for the Bank of
Montreal, Montreal Trust and the Hong Kong Bank of Canada, as an associate
Vice-President for Credit Union Central of Saskatchewan, and as President of the
2020 Business advisory Corporation, a title he currently maintains. Since 1996,
Mr. Lizee has also acted as sole proprietor for A.L. Management Group, a
consulting practice specializing in asset liability and management for small
business. Mr. Lizee is a licensed securities representative and a Fellow of the
Institute of Canadian Bankers (University of Toronto).
Independent Development and Support Contracts
---------------------------------------------
Relationships have been established with International Internet Systems Inc. of
Vancouver, British Columbia, Canada (Mr. Tenny Sembokuya, President) and Express
Marketing Inc, Nevis, West Indies ( Mr. Winston Barta, President) for assistance
in web page design, content and marketing. We have also established
relationships with Efusion ATP of Toronto, Canada (Mr. Bruce Turner, President)
and Todd Long of Vancouver, Canada for assistance with search engine
registration. We have not executed a contract with these third-party providers.
We anticipate that additional contracts will be necessary as our development
continues.
Director and Officers Compensation
----------------------------------
The following table sets forth the salaries, directors' fees and living
allowances we expect to pay to our executives on an annual basis.
Living
Person Position Salary (1) Directors' Fees Allowance
--------- -------- ---------- --------------- ---------
Mr. Kevin Mellor President & Director $180,000 $10,000 $33,600
Mr. Harold Carter Director nil $10,000 nil
Mr. Roman Kostiw Director nil $10,000 nil
Dr. Drew Parker Director nil $10,000 nil
Mr. John Rayner Director nil $10,000 nil
Mr. VernonVeira Director nil $10,000 nil
Mr. Lisle Webster(1) Director nil $10,000 nil
Ms. Andrea Young(2) Director nil $ 1,000 nil
Mr. Anthony Chan Sr. Vice President $ 81,000 nil nil
Mr. Dan MacMullin Sr. Vice President $ 50,000 nil $38,800
Ms. Catherine Rublack Vice President $ 50,000 nil $33,600
(1) Mr. Webster has agreed to be a director of IFG Bank Inc., once formed.
(2) Ms. Young has agreed to be a director of IFG Bank Inc., once formed.
We intend to do one, or a combination of the following, to compensate our
employees, officers and directors so that they are retained and so that we can
attract qualified personnel.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 47
[LOGO - IFG]
o Enter into a stock option plan with our employees, officers and
directors; and/or
o Issue shares to our employers, officers and directors;
The option plan and/or issuance of ordinary shares to the employees will be at
an exercise price of $0.10 to $1.00 USD.
Selected Restrictions on Directors' Powers and Activites in the Articles of
---------------------------------------------------------------------------
Association
-----------
Our Articles of Association, as Amended and restated as at 15th March 2001,
provide:
o Article 75, that the remuneration of the Directors shall from time to
time be determined by the Company by Ordinary Resolution.
o Article 76 provides that the shareholding qualification for Directors
may be fixed by the Company by Ordinary Resolution and unless and
until so fixed no share qualification shall be required (and none is
presently required).
o Article 89 provides that the Directors may exercise all the powers of
the Company to borrow money and to mortgage or charge its undertaking,
property and uncalled capital or any part thereof, to issue
debentures, debenture stock and other securities whenever money is
borrowed or as security for any debt, liability or obligation of the
Company or of any third party.
o Article 97 of our Memorandum of Association provides that a Director
who is in any way, whether directly or indirectly, interested in a
contract or proposed contract with the Company shall declare the
nature of his interest at a meeting of the Directors, and that a
general notice given to the Directors by any Director to the effect
that he is a member of any specified company or firm and is to be
regarded as interested in any contract which may thereafter be made
with that company or firm shall be deemed a sufficient declaration of
interest in regard to any contract so made. A Director may vote in
respect of any contract or proposed contract or arrangement
notwithstanding that he may be interested therein and if he does so
his vote shall be counted and he may be counted in the quorum at any
meeting of the Directors at which any such contract or proposed
contract or arrangement shall come before the meeting for
consideration.
o Article 98 of our Memorandum of Association provides that a Director
may hold any other office or place of profit under the Company (other
than the office of auditor) in conjunction with his office of Director
for such period and on such terms (as to remuneration and otherwise)
as the Directors may determine and no Director or intending Director
shall be disqualified by his office from contracting with the company
either with regard to his tenure of any such other office or place of
profit or as vendor, purchaser or otherwise, nor shall any such
contract or arrangement entered into by or on behalf of the Company in
which any Director is in any way interested, be liable to be avoided,
nor shall any Director so contracting or being so interested be liable
to account to the Company for any profit realized by any such contract
or arrangement by reason of such Director holding that office or of
the fiduciary relation thereby established. A Director,
notwithstanding his interest, may be counted in the quorum present at
any meeting whereat he or any other Director is appointed to hold any
such office or place of profit under the Company or whereat the terms
of any such appointment are arranged and he may vote on any such
appointment or arrangement.
o Article 99 of our Memorandum of Association provides that any Director
may act by himself or his firm in a professional capacity for the
Company, and he or his firm shall be entitled to remuneration for
professional services as if he were not a Director; provided that
nothing herein contained shall authorize a Director or his firm to act
as auditor to the Company.
Employment and Consulting Contracts
-----------------------------------
Mr. MacMullin has entered into an employment agreement with International
Financial Group, Inc. to serve as Senior Vice President trust services. The
employment agreement is effective as of June 15, 2000, and can be terminated by
IFG upon 30 days prior written notice. Under the agreement, he is entitled to a
salary of $50,000 USD per year as an employee and a $38,800 USD per year living
and car allowance and as allowed by IFG.
Ms. Rublack has entered into an employment agreement with IFG to serve as Vice
President of Administration. The employment agreement is effective as of
September 1, 2000, and can be terminated by IFG upon 30 days prior written
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 48
[LOGO - IFG]
notice. Under the agreement and as allowed by IFG, she is entitled to a salary
of $50,000 USD per year as an employee and a $33,600 USD per year living
allowance.
Mr. Anthony Chan has entered into an employment agreement with IFG to serve as
Senior Vice President of Technology. The employment agreement is effective April
1, 2001, and can be terminated by IFG upon 30 days prior written notice. Under
the agreement, he is entitled to a salary of $120,000 CDN per year or
approximately $81,000 USD.
PRINCIPAL SHAREHOLDERS
The following table sets forth information about the beneficial ownership of our
outstanding common shares on July 18, 2001, by:
o each person or entity who is known by us to own beneficially more than
five percent of our common shares;
o each of the named executive officers;
o each of our directors; and
o all of our directors and executive officers as a group.
In accordance with rules promulgated by the Securities and Exchange Commission,
beneficial ownership includes any shares as to which a person or entity has sole
or shared voting power or investment power and any shares as to which the person
or entity has the right to acquire beneficial ownership within 60 days after
July 18, 2001 through the exercise of options, conversion of securities or
otherwise. Except as noted below, we believe that the persons named in the table
have sole voting and investment power with respect to the shares of ordinary
shares set forth opposite their names. Percentage of beneficial ownership before
the offering is based on 20,250,000 ordinary shares issued and outstanding as of
July 18, 2001, and 4,000,000 ordinary shares issuable upon exercise of
outstanding warrant agreements issued in connection with the completion of the
private offering dated June 13, 2000, for a total of 24,250,000. Percentage of
beneficial ownership after the offering is based on 20,250,000 ordinary shares
issued and outstanding as of July 18, 2001, 4,000,000 ordinary shares issuable
upon exercise of outstanding warrant agreements issued in connection with the
completion of the private offering dated June 13, 2000, 5,000,000 ordinary
shares issued and outstanding immediately after this offering, assuming
completion of this offering, and 5,000,000 ordinary shares issuable upon
exercise of outstanding warrant agreements issued in connection with the
completion of this offering for a total of 34,250,000. All shares included below
under "Outstanding Shares" represents issued and outstanding shares. All shares
included below under "Right to Acquire" represent shares subject to outstanding
warrant agreements. The address of our executive officers and directors is in
care of International Financial Group Inc., P.O. Box 10098APO, Grand Cayman,
Cayman Islands, British West Indies and/or Suite 4, Temple Building, Main and
Prince William Street, Charlestown, Nevis, WI.
Number of shares Percentage of shares
Beneficially owned Beneficially owned
Shareholder Outstanding Shares Right to Acquire Total Number Before Offering After Offering(2)
----------- ------------------ ---------------- ------------ --------------- -----------------
IFG World Holdings Inc.(1) 20,000,000 4,000,000 24,000,000 98.76 79.000
Sound Refuge Trust(3) 250,000 nil 250,000 1.24 0.009
(1) IFG World Holdings Inc. is owned by IFG World Holdings Trust of which Mr.
Kevin Mellor, President and Director of International Financial Group Inc.,
is the sole beneficiary.
(2) These percentages do not include the 4,000,000 ordinary shares that can be
issued to IFG World Holdings Inc. pursuant to the outstanding warrants it
owns. These percentages are calculated by dividing the present issued and
outstanding shares owned by the parties by 25,250,000.
(3) The beneficial owners of Sound Refuge Trust are Dr. James Stephenson, his
wife and two sons.
RELATED PARTY TRANSACTIONS
IFG's loan payable of $20,200 is due to IFG World Holdings, Inc., IFG's parent,
and is unsecured, non-interest bearing and payable upon demand.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 49
[LOGO - IFG]
IFG has two loans receivable at January 31, 2001. One, for $65,500 due from
IFG's president granted as a personal loan, is unsecured, non-interest bearing
and payable upon demand.
The other loan receivable for $5,000 was paid to IFG World Holdings Inc. for the
benefit of Dr. James Stephenson, a former key employee and director, or an
investment vehicle of his choice, to purchase 500,000 shares of IFG owned by IFG
World Holdings Inc. at the purchase price of $.01 per share. This loan was not
utilized by the key employee and director as explained below.
In March and April 2000 IFG entered into negotiations with Dr. James Stephenson
to become an employee and director to purchase shares in IFG. IFG and its
parent, IFG World Holdings Inc. offered to Dr. Stephenson or the investment
vehicle of his choice the opportunity to purchase 500,000 shares in IFG for the
purchase price of $.01 per share. The said shares were to be sold to Dr.
Stephenson on the condition that he pays $5,000. Dr. Stephenson also agreed the
shares would vest in the person, or an investment vehicle of his choice, at the
rate of 20,833 shares per month. If Dr. Stephenson left IFG before 24 months had
expired, the parent or IFG could repurchase the shares at $.01 per share at the
rate of 20,833 shares per month for each month that Dr. Stephenson did not
remain with IFG. Therefore, if Dr. Stephenson remained with IFG for one year he
would be entitled to retain 250,000 shares and IFG would be entitled to
repurchase the remaining 250,000 shares at the purchase price that Dr.
Stephenson paid to receive the shares. Dr. Stephenson accepted this offer from
the parent and IFG with the understanding that he needed to talk to his advisors
for the best method to purchase the shares and each party agreed that they would
accommodate Dr. Stephenson for whatever was decided. Dr. Stephenson prior to
receiving conclusive advice stated he would likely purchase from the parent,
therefore IFG transferred $5,000 to IFG World Holdings Inc. as a loan to Dr.
Stephenson to purchase the shares. Upon review with Dr. Stephenson's advisors it
was determined that his family should pay for the shares by issuing checks to
IFG World Holdings Inc. which was done. It was then determined by Dr.
Stephenson's advisors, prior to shares being issued and the share purchase being
completed, that he and his family should purchase the shares from IFG's treasury
instead of IFG World Holdings Inc. through a family trust. On March 7, 2001 due
to the length of time that had passed, IFG agreed to issue 250,000 shares in IFG
to Sound Refuge Trust for $2,500. The transaction is being accounted for as a
capital transaction and no part of the transaction is considered compensation to
Dr. Stephenson.
DESCRIPTION OF SHARE CAPITAL
The following description of our authorized share capital is subject to the
detailed provisions of our Memorandum and Articles of Association, copies of
which are available upon request by contacting us at ir@ifg.com; telephone
----------
345-946-4170; mailing address PO Box 10098 APO, Grand Cayman, Cayman Islands or
telephone 869-469-7040; Suite 4, Temple Building, Main & Prince William Street,
Charlestown, Nevis, Federation of St. Kitts and Nevis, West Indies.
General
-------
We are authorized to issue 50,000,000 ordinary shares, each with a par value of
$0.001. We have only one class of shares. As of July 18, 2001, there were
20,250,000 ordinary shares issued and outstanding and 4,000,000 warrants to
purchase ordinary shares at an exercise price of $2.00 USD, and expiring on
December 31, 2002. After giving effect to this offering but assuming no exercise
of outstanding warrant agreements there will be 25,250,000 ordinary shares
issued and outstanding.
Voting Rights
-------------
The holders of shares have one vote per share with respect to all matters
submitted to a vote of shareholders.
Dividend Rights
---------------
Subject to any rights and restrictions for the time being attached to any class
or classes of shares, the Directors may from time to time declare dividends
(including interim dividends) and other distributions on issued shares and
authorize payment of the same out of the funds to IFG lawfully available
therefor.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 50
[LOGO - IFG]
Subject to any rights and restrictions for the time being attached to any class
or classes of shares, we, by Ordinary Resolution, may declare dividends, but no
dividend shall exceed the amount recommended by the Directors.
The Directors, when paying dividends to the shareholders in accordance with the
foregoing provisions, may make such payment either in cash or in specie.
No dividend shall be paid otherwise than out of profits or, subject to the
restrictions of the Companies Law, the share premium account.
Redemption
----------
Subject to the provisions of the Companies Law, we may:
o issue shares on terms allowing for redemption at the option of IFG or
the member shareholder on such terms and in such manner as the
Directors may, before the issue of such shares, determine;
o purchase our own shares (including any redeemable shares) on such
terms and in such manner as the Directors may determine and agree with
the member shareholder; and,
o make a payment in respect of the redemption or purchase of our own
shares otherwise than out of profits or the proceeds of a fresh issue
of shares.
The shares, which are the subject of this Offering, will be redeemable only at
the option of IFG.
Liquidation Rights
------------------
If IFG shall be wound up the liquidator may, with the sanction of an Ordinary
Resolution of IFG, divide amongst the shareholders in specie or kind the whole
or any part of the assets of IFG (whether he/she/it shall consist of property of
the same kind or not) and may, for such purpose, set such value as he/she/it
deems fair upon any property to be divided as aforesaid and may determine how
such division shall be carried out as between the shareholders or different
classes of shareholders. The liquidator may, with the like sanction, vest the
whole or any part of such assets in trustees upon such trusts for the benefit of
the contributories as the liquidator, with the like sanction shall think fit,
but so that no shareholder shall be compelled to accept any shares or other
securities whereon there is any liability.
SHARE PURCHASE WARRANTS
Pursuant to a private placement dated June 13, 2000, we sold 4,000,000 units
with each unit consisting of one ordinary share and one (1) share purchase
warrant that allows the holder of each warrant to purchase one (1) ordinary
share at an exercise price of $2.00 USD, to be exercised not later than December
31, 2002, after which date the warrant will become null and void. At the date of
this offering, IFG World Holdings Inc., was the owner of these share purchase
warrants. None of the share purchase warrants have been exercised to date.
CERTAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION
Our Articles of Association provide that every director, alternate director,
managing director, agent, secretary, assistant secretary, or other officer (not
including our auditor and the personal representatives of the same) shall be
indemnified and secured harmless out of the assets and funds of IFG from and
against all actions, proceedings, costs, charges, losses, damages, liabilities
and expenses incurred or sustained by him or her in or about the conduct of our
business or affairs or in the execution or discharge of his or her duties,
powers, authorities or discretions, including, without prejudice to the
generality of the foregoing, any costs, expenses, losses or liabilities incurred
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 51
[LOGO - IFG]
by him or her in defending (whether successfully or otherwise) any civil
proceedings concerning IFG or its affairs in any court whether in the Cayman
Islands or elsewhere.
No such director, alternate director, managing director, agent, secretary,
assistant secretary or other officer of IFG (but not including our auditor)
shall be liable:
o for the acts, receipts, neglects, defaults or omissions of any other
such director or officer or agent of IFG;
o by reason of this having joined in any receipt for money not received
by him or her personally;
o for any loss on account of defect of title to any property of IFG;
o on account of the insufficiency of any security in or upon which any
money of IFG shall be invested;
o for any loss incurred through any bank, broker or other agent;
o for any loss occasioned by an negligence, default, breach of duty,
breach of trust, error of judgment or oversight on his or her part; or
o for any loss, damage or misfortune whatsoever which may happen in or
arise from the execution or discharge of the duties, powers
authorities, or discretions of this office or in relation thereto,
unless the same shall happen through his or her own dishonesty.
LOCK UP AGREEMENT
On March 7, 2001, we executed a lock up agreement (Schedule "D") with IFG World
Holdings Inc. that upon the earlier of the following events:
o the date that the F-1 registration is fully subscribed;
o the date the Board of Directors pass a resolution closing the
prospectus;
o the date that any of our shares can be freely traded; or
o August 31, 2001;
The registered shares owned by IFG World Holdings Inc. will be freely traded
without restrictions.
PLACEMENT
We are offering up to 5,000,000 units with each unit consisting of one (1)
ordinary share, and one (1) ordinary share purchase warrant that allows the
holder of each warrant to purchase one (1) ordinary share at an exercise price
of $2.00 USD, to be exercised not later than December 31, 2002, after which date
the warrant will become null and void, (herein, collectively, referred to as
"Units"), at an offering price of $0.10 per Unit. The Units are being offered on
a best "efforts basis". We reserve the right to withdraw, cancel or reject an
offer to subscribe in whole or in part.
OWNERSHIP RESTRICTIONS
There is no law or governmental decree or regulation in the Cayman Islands that
restricts the export or import of capital, or affects the remittance of
dividends, interest or other payments to non-resident holders of ordinary
shares.
There is no limitation imposed by Cayman Islands law or by the Articles of
Incorporation or other charter documents of IFG on the right of a non-resident
to hold or vote ordinary shares.
TRANSFER AGENT AND REGISTRAR
The registrar and transfer agent for our ordinary shares is Corporate Stock
Transfer of the United States of America. Its address is 3200 Cherry Creek Drive
South, Suite 430, Denver Colorado, 80209 and its telephone number at this
location is (303) 282-4800.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 52
[LOGO - IFG]
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, a total of 25,250,000 of our ordinary shares
will be outstanding assuming no exercise of any outstanding warrant agreements
by any shareholder. The sale of substantial numbers of ordinary shares in the
public market, or the possibility of such a sale, could adversely affect
prevailing market prices for our ordinary shares.
All of the ordinary shares sold in the offering will be freely tradable without
restriction under the U.S. Securities Act, except by "affiliates" as defined in
Rule 144 under the U.S. Securities Act, or "control persons" as defined under
the U.S. Securities Act.
For the reasons set forth below, we believe that the following presently
outstanding ordinary shares will be eligible for resale in the public market in
the United States at the following times and by the following persons:
No. of Shares
-------------
At the date of this prospectus nil
180 days after the date of this prospectus 34,000,000
Later than 180 days after the date of this
prospectus becoming effective 250,000
We have entered into a lock-up agreement pursuant to which IFG World Holdings
Inc. will agree not to dispose of or hedge any of our ordinary shares until the
earlier of:
o the date that the F-1 registration is fully subscribed;
o the date Board of Directors pass a resolution closing the prospectus;
or,
o the date that any shares can be freely traded; or,
o August 31, 2001.
U.S. RESALE RESTRICTIONS
Upon completion of this offering, it is our estimation that some of the ordinary
shares will be held by U.S. residents or others. As a result of the lock-up
agreements and the provisions of Rule 144 under the U.S. Securities Act, such
shares will be available for sale in the public market in the United States as
set forth in the table above, subject in some cases to Rule 144 limitations.
In general, under Rule 144, as in effect on the date of this prospectus, any
person, including any of our affiliates, who has beneficially owned common
shares for at least one year will be entitled to sell, in any three-month
period, a number of shares that, together with sales of any ordinary shares with
which such person's sales must be aggregated, does not exceed the greater of:
o 1% of the then outstanding ordinary shares; and
o The average weekly trading volume of the common shares on the
Over-The-Counter Bulletin Board, governed by NASD, during the four
calendar weeks immediately preceding the date on which such sale is
made.
Sales of restricted securities pursuant to Rule 144 are subject to requirements
relating to manner of sale, notice and availability of current public
information about IFG. Persons who are our affiliates must also comply with the
restrictions and requirements of Rule 144, other than the one-year holding
period requirement, in order to sell ordinary shares in the public market, which
are not restricted securities.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 53
[LOGO - IFG]
AUDITORS
We have retained the accounting firm of Miller and McCollom, Lakewood, Colorado,
USA to be our auditors.
MATERIAL AGREEMENTS AND DOCUMENTS
Agreements, the Memorandum and Articles of Association and documents which are
material to this Offering and that are not confidential to IFG, all of which are
or will be in effect by the closing date, may be obtained and/or reviewed at our
offices by contacting Ms. Catherine Rublack at investorservices@ifg.com or
------------------------
345-946-4170 or 869-469-7040. We may require a prospective investor's prior
execution of confidentiality and nondisclosure agreements before accessing
certain of our documents.
ADDITIONAL INFORMATION
Our units are being offered exclusively through this prospectus. We have
prepared no offering documents other than this prospectus in connection with our
offering of the Units. Nevertheless, potential investors in the Units may obtain
a copy of all non-confidential corporate documents that IFG possesses by
contacting, Ms. Catherine Rublack directly at investorservices@ifg.com or
------------------------
345-946-4170 or 869-469-7040.
TAXATION IN THE CAYMAN ISLANDS
At the present time there are no taxes imposed in the Cayman Islands, the
jurisdiction in which IFG was formed and from which we currently conduct our
business, on income, profits, capital gains or appreciation of the holders of
the shares or warrants. There are also currently no taxes imposed by the Cayman
Islands on the holders of shares or warrants in the nature of estate, duty,
inheritance or capital transfer tax. Therefore, under the existing laws of the
Cayman Islands, no income tax or withholding tax will be applicable in the
Cayman Islands to holders of the shares or warrants offered hereby.
We are an exempted company under Cayman Islands law and we have made application
to the Governor-in-Council of the Cayman Islands for, and expects to receive, an
undertaking as to tax concessions pursuant to Section 6 of the Tax Concessions
Law (1999 Revision) which will provide that, for a period of 20 years from the
date of issue of the undertaking, no law hereafter enacted in the Cayman Islands
imposing any taxes or duty to be levied on profits, income gains or
appreciations or which is in the nature of estate duty or inheritance tax will
apply to IFG or in respect of shares, debentures or other obligations of IFG.
TAXATION IN THE UNITED STATES OF AMERICA
In this section we summarize the material anticipated United States income tax
considerations relevant to a purchase of ordinary shares in this offering by
individuals and corporations which:
o For purposes of the United States Internal Revenue Code are resident
in the United States, or are otherwise subject to United States
federal income taxation without regard to source;
o Hold the common shares as capital assets for purposes of the Internal
Revenue Code;
o Deal at arm's length with IFG;
o Do not use or hold the ordinary shares in carrying on a business in
the Cayman Islands, through a permanent establishment or in connection
with a fixed base in the Cayman Islands or otherwise, and are not an
insurer which carries on business in the Cayman Islands and elsewhere;
and
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 54
[LOGO - IFG]
o In the case of individual holders, are also U.S. citizens.
We will refer to persons who satisfy the above conditions as "Unconnected U.S.
Shareholders."
We will assume, for purposes of this discussion, that you are an Unconnected
U.S. Shareholder. The tax consequences of a purchase of ordinary shares (i.e.
common shares) by persons who are not Unconnected U.S. Shareholders may differ
substantially from the tax consequences discussed in this section.
This discussion is based upon:
o the current provisions of the Internal Revenue Code and regulations
under the Internal Revenue Code;
o the administrative policies published by the U.S. Internal Revenue
Service; and
o judicial decisions,
all of which are subject to change either prospectively or retroactively. We do
not discuss the potential effects of any recently proposed legislation in the
United States and do not take into account the tax laws of the various state and
local jurisdictions of the United States or foreign jurisdictions.
IFG INTENDS THIS DISCUSSION TO BE A GENERAL DESCRIPTION OF THE U.S. FEDERAL
INCOME TAX CONSIDERATIONS MATERIAL TO A PURCHASE OF ORDINARY (COMMON) SHARES.
THIS DISCUSSION DOES NOT DEAL WITH ALL POSSIBLE TAX CONSEQUENCES RELATING TO AN
INVESTMENT IN IFG'S ORDINARY SHARES. IFG HAS NOT TAKEN INTO ACCOUNT YOUR
PARTICULAR CIRCUMSTANCES AND DOES NOT ADDRESS CONSEQUENCES PECULIAR TO YOU UNDER
PROVISIONS OF U.S. TAX LAW OR ANY OTHER TAXING JURISDICTION. THEREFORE, YOU
SHOULD CONSULT YOUR OWN TAX ADVISOR REGARDING THE PARTICULAR CONSEQUENCES TO YOU
OF PURCHASING ORDINARY SHARES IN THIS OFFERING.
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
As an Unconnected U.S. Shareholder, you generally will include in income
dividend distributions paid by IFG to the extent of our current or accumulated
earnings and profits. You must include in income an amount equal to the U.S.
dollar value of such dividends on the date of receipt based on the exchange rate
on such date, without reduction for any withholding tax. To the extent dividend
distributions paid by IFG exceed our current or accumulated earnings and
profits, they will be treated first as a return of capital up to your adjusted
tax basis in the shares, and then as a gain from the sale or exchange of the
shares.
Dividends paid by IFG on the shares will not generally be eligible for the
"dividends received" deductions. An Unconnected U.S. Shareholder, which is a
corporation, may, under some circumstances, be entitled to a 70% deduction of
the U.S. source portion of dividends received from IFG if such Unconnected U.S.
Shareholder owns shares representing at least 10% of our voting power and value.
If you sell the shares, you generally will recognize gain or loss in an amount
equal to the difference, if any between the amount realized on the sale and your
adjusted tax basis in the shares. Any gain or loss you recognize upon the sale
of shares held as capital assets will be long-term or short-term capital gain or
loss, depending on whether the shares have been held by you for more than one
year.
Under current U.S. tax regulations, dividends paid by us on the shares generally
will not be subject to U.S. information reporting or the 31% backup withholding
tax unless they are paid in the United States through a U.S. or U.S. related
paying agent, including a broker. If you furnish the paying agent with a duly
completed and signed Form W8-BEN or W-9 or such other form as is appropriate to
the situation such dividends will not be subject to the backup withholding tax.
We recommend that you see a tax advisor to determine the appropriate form to
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 55
[LOGO - IFG]
complete and file with your agent so that you are not subject to withholding tax
unnecessarily. You will be allowed a refund or a credit equal to any amounts
withheld under the U.S. backup withholding tax rules against your U.S. federal
income tax liability, provided you furnish the required information to the
Internal Revenue Service.
PERSONAL HOLDING COMPANIES
We could be classified as a personal holding company for U.S. federal income tax
purposes if both of the following tests are satisfied:
o if at any time during the last half of our taxable year, five or fewer
individuals own or are deemed to own more than 50% of the total value
of our shares; and
o we receive 60% or more of our U.S. related gross income from specified
passive sources, such as royalty payments.
A personal holding company is taxed on a portion of its undistributed U.S.
source income, including specific types of foreign source income, which are
connected with the conduct of a U.S. trade or business, to the extent this
income is not distributed to shareholders. We do not believe it is a personal
holding company presently, and we do not expect to become one. However, we
cannot assure you that we will not qualify as a personal holding company in the
future.
FOREIGN PERSONAL HOLDING COMPANIES
We could be classified as a foreign personal holding company if in any taxable
year both of the following tests are satisfied:
o five or fewer individuals who are United States citizens or residents
own or are deemed to own more than 50% of the total voting power of
all classes of our shares entitled to vote or the total value of our
shares; and
o at least 60%, 50% in some cases, of our gross income consists of
"foreign personal holding company income," which generally includes
passive income such as dividends, interests, gains from the sale or
exchange of shares or securities, rent and royalties.
If we are classified as a foreign personal holding company and if you hold
shares on the last day of our taxable year, you must include in your gross
income as a dividend your pro rata portion of our undistributed foreign personal
holding company income. If you dispose of your shares prior to such date, you
will not be subject to tax under these rules. We do not believe we are a foreign
personal holding company presently, and we do not expect to become one. However,
we cannot assure you that we will not qualify as a foreign personal holding
company in the future.
PASSIVE FOREIGN INVESTMENT COMPANIES
The rules governing "passive foreign investment companies" can have significant
tax effects on Unconnected U.S. Shareholders. We could be classified as a
passive foreign investment company if, for any taxable year, either:
o 75% or more of its gross income is "passive income," which includes
interest, dividends and some types of rents and royalties, or
o the average percentage, by fair market value, or, in some cases, by
adjusted tax basis, of our assets that produce or are held for the
production of "passive income" is 50% or more.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 56
[LOGO - IFG]
Distributions which constitute "excess distributions," as defined in Section
1291 of the Internal Revenue Code, from a passive foreign investment company and
dispositions of shares of a passive foreign investment company are subject to
the highest rate of tax on ordinary income in effect and to an interest charge
based on the value of the tax deferred during the period during which the shares
are owned. However, if an Unconnected U.S. Shareholder makes a timely election
to treat IFG as a qualified electing fund under section 1295, the
above-described rules generally will not apply. Instead, the Unconnected U.S.
Shareholder would include annually in his gross income his pro rata share of our
ordinary earnings and net capital gain, regardless of whether such income or
gain was actually distributed. Tax on this income, however, may be deferred.
In addition, subject to specific limitations, Unconnected U.S. Shareholders
owning actually or constructively marketable shares in a passive foreign
investment company may make an election to mark that stock to market annually,
rather than being subject to the above-described rules. Amounts included in or
deducted from income under this mark to market election and actual gains and
losses realized upon disposition, subject to specific limitations, will be
treated as ordinary gains or losses.
In addition, special rules apply if we qualify as both a passive foreign
investment company and a "controlled foreign corporation," as defined below, and
an Unconnected U.S. Shareholder owns, actually or constructively, 10% or more of
the total combined voting power of all classes of our shares entitled to vote.
We believe that we will not be a passive foreign investment company for the
current fiscal year and we do not expect to become a passive foreign investment
company in future years. You should be aware, however, that if we are or become
a passive foreign investment company we may not be able to satisfy
record-keeping requirements that would permit you to make a qualified electing
fund election. You should consult your tax advisor with respect to how the
passive foreign investment company rules affect your tax situation, including
the advisability of making an election to treat us as a qualified electing fund
or making a mark to market election.
CONTROLLED FOREIGN CORPORATION
If more than 50% of the voting power of all classes of our shares or the total
value of our shares is owned, directly or indirectly, by citizens of the United
States, U.S. domestic partnerships and corporations or estates or trusts other
than foreign estates or trusts, each of which owns 10% or more of the total
combined voting power of all classes of our shares, we could be treated as a
"controlled foreign corporation" under Subpart F of the Internal Revenue Code.
This classification would effect many complex results, including requiring such
shareholders to include in income their pro rata shares of our "Subpart F
Income," as defined by the Internal Revenue Code. In addition, gain from the
sale or exchange of shares by an Unconnected U.S. Shareholder who is or was a
10% or greater shareholder at any time during the five-year period ending with
the sale or exchange will be ordinary dividend income to the extent of our
earnings and profits attributable to the shares sold or exchanged.
We do not believe that we are a controlled foreign corporation and we do not
anticipate that we will become a controlled foreign corporation as a result of
the offering. However, we cannot assure you that we will not qualify as a
controlled foreign corporation in the future.
LEGAL MATTERS
Stepp Law Group, Newport Beach, California, and Walkers Attorneys-At Law, Grand
Cayman, Cayman Islands, will pass upon the legality of the ordinary shares
offered by this prospectus. Stepp Law Group acts as our counsel on United States
legal matters related to this prospectus.
We are not aware of any material legal proceedings against IFG. We may be
involved, from time to time, in various legal proceedings and claims incident to
the normal conduct of our business.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 57
[LOGO - IFG]
EXPERTS
The consolidated financial statements of IFG from July 14, 1997 (date of
incorporation) through January 31, 2001 included in this prospectus have been
audited by Miller and McCollom, certified public accountants, as indicated in
their report with respect thereto, and are included in this prospectus in
reliance upon the authority of Miller and McCollom as experts in auditing and
accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC, 450 Fifth Street N.W., Washington, D.C. 20549, a
registration statement on Form F-1 covering the units being sold in this
offering. We have not included in this prospectus all the information contained
in the registration statement, and you should refer to the registration
statement and our exhibits for further information.
Any statement in this prospectus about any of our contracts or other documents
is not necessarily complete. If the contract or document is filed as an exhibit
to the registration statement, the contract or document is deemed to modify the
description contained in this prospectus. You must review the exhibits
themselves for a complete description of the contract or document.
You may review a copy of the registration statement, including exhibits and
schedules filed with it, at the SEC's public reference facilities in Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the SEC located at 7 World Trade Center, 13th Floor, New
York, New York 10048 and at the Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. You may also obtain copies of such
materials from the Public Reference Section of the SEC at prescribed rates. You
may call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. The SEC maintains a website (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, such as IFG, that file electronically with the SEC.
You may read and copy any reports, statements or other information that IFG
files with the SEC at the addresses indicated above, and you may also access
them electronically at the web site set forth above. These SEC filings are also
available to the public from commercial document retrieval services.
Prior to this offering, we have not been required to file reports with the SEC.
Following consummation of the offering, we will be required to file reports and
other information with the SEC under the U.S. Securities Exchange Act. As a
foreign private issuer, we are exempt from the rules under the U.S. Securities
Exchange Act prescribing the furnishing and content of proxy statements, and our
officers, directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the U.S.
Securities Exchange Act. Under the U.S. Securities Exchange Act, we are not
required to publish financial statements as frequently or as promptly as United
States companies.
THE COMPANY'S LOCATIONS
IFG and its Cayman-based subsidiaries IFG Investment Services Inc., IFG
Corporate Services, Inc., IFG Administration, Inc., IFG Services, Inc. and IFG
Systems Inc. mailing address is P.O. Box 10098 APO, George Town, Grand Cayman,
Cayman Islands, Telephone: (345)946-4170.
IFG's St. Kitts and Nevis-based financial services subsidiaries, IFG Trust
Services, Inc., IFG Investments Services, Inc., IFG Corporate Inc. and its IFG
Management Inc. subsidiaries are located at Suite #4 Temple Building, Main &
Prince William Street, Charlestown, Federation of St. Kitts and Nevis,
Telephone: (869)469-7040/7041 and Fax: (869)469-7042
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 58
[LOGO - IFG]
REPRESENTATIONS
No finder, dealer, sales person or other person has been authorized to give any
information or to make any representation in connection with this Offering other
than those contained in this prospectus and, if given or made, such information
or representation must not be relied upon as having been authorized by IFG. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any of the securities offered hereby by anyone in any jurisdiction in which
such offer or solicitation is not authorized or in which the person making such
offer or solicitation is not qualified to do so or to any person to whom it is
unlawful to make such offer or solicitation. Neither the delivery of this
prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date of this prospectus.
--------------------------------------------------------------------------------
October 22, 2001 Registration Statement Page 59
[LOGO - IFG]
SCHEDULE "A" - Financial Statements
-----------------------------------
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 60
Financial Statements
[LOGO - IFG]
INTERNATIONAL FINANCIAL GROUP, INC.
FINANCIAL STATEMENTS
January 31, 2001
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 61
Financial Statements
[LOGO - IFG]
INDEX TO FINANICAL STATEMENTS
INTERNATIONAL FINANCIAL GROUP, INC.
FINANICAL STATEMENTS
With
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Page
Audit Report of Independent Certified Public Accountants F-2
Financial Statements:
Balance Sheets F-3
Statements of Operations F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 to F11
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 62
Financial Statements
Independent Accountants' Report
-------------------------------
Board of Directors
International Financial Group, Inc.
We have audited the accompanying balance sheets of International
Financial Group, Inc. (a Development Stage Company) as of January 31, 2001, and
July 31, 2000, and the related statements of operations, stockholders' equity,
and cash flows for the six months ended January 31, 2001, and 2000 and for the
years ended July 31, 2000, 1999, and 1998 and for the period from July 14, 1997
(date of incorporation) through January 31, 2001. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentations. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of International
Financial Group, Inc. (a Development Stage Company) as of January 31, 2001, and
July 31, 2000, and the results of its operations, its stockholders' equity, and
its cash flows for the six months ended January 31, 2001, and 2000 and for the
period from July 14, 1997 (date of incorporation) to January 31, 2001, in
conformity with generally accepted accounting principles in the United States of
America.
S/Miller and McCollom
Miller and McCollom
7400 West Fourteenth Avenue, Suite 10
Lakewood, Colorado 80215
March 7, 2001 except for Note 4 and Note 6 which are as of August 24, 2001.
F-2
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 63
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Consolidated Balance Sheets
January 31, 2001 July 31, 2000
------------------------ -------------------
ASSETS
CURRENT ASSETS:
Cash $ 922,041 $ 714,035
Restricted cash (Note 10) 200,000 200,000
Accounts receivable 26,000 26,000
Subscription receivable - 500,000
Due from parent 5,000 -
Prepaid expenses 61,984 10,000
Loan receivable from related parties 70,500 5,000
------------------------ -------------------
1,285,525 1,455,035
PROPERTY AND EQUIPMENT:
Office furniture and equipment 38,020 -
Computer equipment 68,225 5,428
------------------------ -------------------
106,245 5,428
Less accumulated depreciation (8,297) -
------------------------ -------------------
97,948 5,428
OTHER ASSETS:
Intangible asset (Note 8) 20,000 20,000
------------------------ -------------------
Total assets $ 1,403,473 $ 1,480,463
======================== ===================
LIABILITIES AND SHARHOLDERS' EQUITY
CURRENT LIABILTIES:
Loans payable to related parties (Note 4) $ 20,200 $ 37,200
Accounts payable and accrued expenses 74,517 34,833
------------------------ -------------------
94,717 72,033
COMMITMENTS AND CONTIGENCIES (Notes 12 and 14)
SHAREHOLDERS' EQUITY:
Common stock 50,000,000 shares of $0.001
par value authorized; 20,000,000
issued and outstanding (Note 5) 20,000 20,000
Contributed surplus 2,140,000 2,140,000
Subscription receivable (Note 5) - (500,000)
Deficit accumulated during the development stage (851,244) (251,570)
------------------------ -------------------
1,308,756 1,408,430
------------------------ -------------------
Total liabilities and shareholders' equity $ 1,403,473 $ 1,480,463
======================== ===================
The accompanying notes to financial statements are
an integral part of this statement.
F-3
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 64
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Consolidated Statements of Operations
Six Months Ended Years Ended July 14, 1997 (Date
January 31, July 31, of Incorporation)
------------------------------ ------------------------------------------- through January 31,
2001 2000 2000 1999 1998 2001
--------------- ----------- ------------- ------------ ------------ ---------------
INCOME $ - $ - $ - $ - $ - $ -
--------------- ----------- ------------- ------------ ------------ ---------------
EXPENSES:
Legal and professional fees 120,845 - 149,712 - - 270,557
Salaries 243,357 - 78,468 - - 321,825
Depreciation 8,297 - - - - 8,297
Other administrative expenses 227,175 - 23,390 - - 250,565
--------------- ----------- ------------- ------------ ------------ ---------------
Total expenses 599,674 - 251,570 - - 851,244
--------------- ----------- ------------- ------------ ------------ ---------------
Net Loss $ (599,674) $ - $ (251,570) $ - $ - $ (851,244)
=============== =========== ============= ============ ============ ===============
Basic and diluted loss
per share $ (.03) $ - $ (.09) $ - $ - $ (.05)
=============== =========== ============= ============ ============ ===============
Weighted average
shares outstanding 20,000,000 - 2,918,650 - - 15,729,662
=============== =========== ============= ============ ============ ===============
The accompanying notes to financial statements are
an integral part of this statement.
F-4
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 65
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Consolidated Statement of Shareholders' Equity
Common Shares Common Stock Contributed Subscription Shareholders'
Surplus Receivable Deficit Equity
--------------- -------------- --------------- -------------- ------------- --------------
Balance July 31, 1997 - $ - $ - $ - $ - $ -
Balance July 31, 1999 - - - - - -
Stock issued June 2000
to IFG World Holdings,
Inc. (Notes 1 and 5) 16,000,000 16,000 144,000 - - 160,000
Stock issued under
private placement 4,000,000 4,000 1,996,000 (500,000) - 1,500,000
Net loss for the year
ended July 31, 2000 - - - - (251,570) (251,570)
--------------- -------------- --------------- -------------- ------------- --------------
Balance July 31, 2000 20,000,000 20,000 2,140,000 (500,000) (251,570) 1,408,430
Payment received for
private placement - - - 500,000 - 500,000
Net loss for the six
month period ended
January 31, 2001 - - - - (599,674) (599,674)
--------------- -------------- --------------- -------------- ------------- --------------
Balance January 31, 2001 20,000,000 $ 20,000 $ 2,140,000 $ - $ (851,244) $ 1,308,756
=============== ============== =============== ============== ============= ==============
The accompanying notes to financial statements are
an integral part of this statement.
F-5
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 66
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Consolidated Statement of Cash Flows
Six Month July 14, 1997
Ended Year Ended (Date of Incorporation)
January 31, July 31, through
2001 2000 January 31, 2001
----------------- ---------------- ------------------------
Cash Flows from Operating Activities:
Net loss $ (599,674) $ (251,570) $ (851,244)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation 8,297 - 8,297
Net change in operating assets and
liabilities -
Restricted cash - (200,000) (200,000)
Account receivable - (26,000) (26,000)
Prepaid expense (51,984) (10,000) (61,984)
Accounts payable and accrued expense 39,684 34,833 74,517
----------------- ---------------- ------------------------
Net cash provided (used) by operating
activities (603,677) (452,737) (1,056,414)
Cash flows from investing activities:
Loan receivable from related parties (70,500) (5,000) (75,500)
Purchase of intangible asset - (20,000) (20,000)
Purchase of property and equipment (100,817) (5,428) (106,245)
----------------- ---------------- ------------------------
Net cash provided (used) by investing
activities (171,317) (30,428) (201,745)
Cash flows from financing activities:
Proceeds from issuance of common stock 1,000,000 1,160,000 2,160,000
Loan payable to related party (17,000) 37,200 20,200
----------------- ---------------- ------------------------
Net cash provided by financing activities 983,000 1,197,200 2,180,200
Net increase (decrease) in cash 208,006 714,035 922,041
Cash, beginning of period 714,035 - -
----------------- ---------------- ------------------------
Cash, end of period $ 922,041 $ 714,035 $ 922,041
================= ================ ========================
The accompanying notes to financial statements are
an integral part of this statement.
F-6
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 67
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
July 14, 1997 (date of incorporation) through January 31, 2001
(1) Incorporation and Background Information
International Financial Group, Inc. (the "Company"), was registered as
an exempt company in the Cayman Islands on July 14, 1997, under the name The
Caledonian 500 Index Fund. On March 13, 2000, the Company changed its name to
INTERNET FINANCIAL GROUP, INC. On May 29, 2000, the Company changed its name to
ifg.com, Inc. On March 7, 2001, the Company changed its name to International
Financial Group, Inc. As of July 31, 2000, and January 31, 2001, the Company has
not yet commenced operations. The Company is wholly owned by IFG World Holdings
Inc., which is a wholly owned subsidiary of IFG World Holdings Trust. The
Company holds a trade and business license to conduct offshore business in the
Cayman Islands. The Company was established to act as a holding corporation for
its operating subsidiaries carrying on business in the Cayman Islands, Nevis and
other offshore jurisdictions.
The Company intends to carry on the business of supplying offshore
financial products and services via traditional delivery channels and the
Internet. It is the Company's intention to establish itself as a comprehensive
offshore provider of financial services by having registered subsidiaries in up
to 40 offshore jurisdictions. The Company intends to provide banking,
securities, insurance, trust, corporate and management offshore products and
services.
The company has established its securities, trust, corporate holding,
and management holding subsidiaries in the Cayman Islands and its trust services
subsidiary in Nevis. The Company intends to establish its banking and insurance
subsidiaries in St. Vincent, Belize and Bermuda respectively. The Company has
selected these offshore countries as they are respected in these specific fields
of the offshore financial industry. The Company has also established a number of
subsidiaries in various offshore jurisdictions including Cyprus, Singapore,
Guernsey and Hong Kong, for the purpose of offering financial products and
services to its clients in various offshore regions. As of January 31, 2001,
none of the subsidiaries, except for IFG Trust Services, Inc. has commenced
operations. IFG Trust Services, Inc. recently entered into a limited number of
trust arrangements.
The Company is in the development stage and is devoting substantially
all of its efforts toward product research and development and raising capital.
The Company is subject to risks common to development stage technology companies
and companies in new and rapidly evolving markets, including a limited operating
history, dependence on key personnel, the need to raise capital, rapid
technological change, political uncertainty, competition, and the need for
successful development and marketing of products and services.
(2) Significant Accounting Policies
These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America and are
stated in United States dollars. The financial reporting year-end is July 31 and
reflect the following significant accounting policies:
(a) Principles of Consolidation
The accompanying consolidated financial statements include
the financial statements of the Company and its wholly owned
subsidiaries. All intercompany accounts have been eliminated.
F-7
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 68
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
July 14, 1997 (date of incorporation) through January 31, 2001
(b) Use of Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of income and expenses during the
period. Actual results could differ from these estimates.
(c) Fixed Assets
Fixed assets are recorded at cost, net of accumulated
depreciation, and are depreciated on a straight-line basis over
their estimated useful lives. Management has estimated the useful
life of computer equipment to be three years and the life of
office furniture and equipment to be seven years.
(d) Intangibles
Intangibles are recorded at cost and will be amortized
on a straight-line basis over their estimated useful life.
(e) Common Stock
Common stock in the accompanying financial statements are
represented by Certificates often referred to as Ordinary Shares.
(f) Earnings per share
Basic earnings (loss) per share are computed using the
weighted average number of shares outstanding during the periods
shown. As described in Note 6, the Company has warrants
outstanding for the purchase of common stock. The warrants were
not included in the calculation for diluted earnings (loss) per
share since such inclusion would be antidilutive.
(3) Prepaid Expenses
The Company has paid fees in advance to law firms and other third
parties in jurisdictions around the world for the purpose of receiving legal
advice on securities matters and offshore finance. The prepaid fees are
recognized as expenses when the services are rendered.
(4) Related Party Transactions
The Company's loan payable of $20,200 is due to IFG World Holdings,
Inc., the Company's parent, and is unsecured, non-interest bearing and payable
upon demand.
The Company has two loans receivable at January 31, 2001. One, for
$65,500 due from the Company's president granted as a personal loan, is
unsecured, non-interest bearing and payable upon demand.
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 69
Financial Statements
The other loan receivable for $5,000 was paid to IFG World Holdings
Inc. for the benefit of a key employee and director, or an investment vehicle of
his choice, to purchase 500,000 shares of the Company owned by IFG World
Holdings Inc. at the purchase price of $.01 per share. This loan was not
utilized by the key employee and director as explained below.
In March and April 2000 the Company entered into negotiations with a
person to become a key employee and director. The Company and its parent, IFG
World Holdings Inc. offered to the person or the investment vehicle of his
choice the opportunity to purchase 500,000 shares in the Company for the
purchase price of $.01 per share. The said shares were to be sold to the person
on the condition that he pays $5,000.00. The key employee and director also
agreed the shares would vest in the person, or an investment vehicle of his
choice, at the rate of 20,833 shares per month. If the person left the Company
before 24 months had expired, the parent or the Company could repurchase the
shares at $.01 per share at the rate of 20,833 shares per month for each month
that the person did not remain with the Company. Therefore, if the person
remained with the company for one year he would be entitled to retain 250,000
shares and the Company would be entitled to repurchase the remaining 250,000
shares at the purchase price that the person paid to receive the shares. The
person accepted this offer from the parent and the Company with the
understanding that he needed to talk to his advisors for the best method to
purchase the shares and each party agreed that they would accommodate the person
for whatever was decided. The person prior to receiving conclusive advice stated
he would likely purchase from the parent, therefore the Company transferred
$5,000 to IFG World Holdings Inc. as a loan to the person to purchase the
shares. Upon review with the person's advisors it was determined that his family
should pay for the shares by issuing checks to IFG World Holdings Inc. which was
done. It was then determined by the person's advisors, prior to shares being
issued and the share purchase being completed, that he and his family should
purchase the shares from the Company's treasury instead of IFG World Holdings
Inc. through a family trust. On March 7, 2001 due to the length of time that had
passed, the Company agreed to issue 250,000 shares in the Company to the person
or an investment vehicle of his choice for $2,500. The transaction is being
accounted for as a capital transaction and no part of the transaction is
considered compensation to the person.
On March 14, 2001 the Company notified the key employee and director that his
contract would not be renewed and therefore the Company paid the key employee
and director $2,500 representing one-half of the $5,000 amount that he had paid
to IFG World Holdings Inc. and that he would not have the right to purchase any
additional shares after the passage of an additional year.
F-8
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 70
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
July 14, 1997 (date of incorporation) through January 31, 2001
(5) Common Stock Subscribed
As of January 31, 2001, the Company has issued 16,000,000 shares to IFG
World Holdings Inc. and 4,000,000 shares to minority shareholders. The Company
accepted a commitment from minority shareholders to purchase 2,000,000 shares at
$.50 per share pursuant to an offering memorandum dated June 13, 2000. As of
July 31, 2000, the Company had recorded $500,000 as a subscription receivable
representing unremitted subscription proceeds. The par value of said shares is
$0.001 per share. This amount was received prior to January 31, 2001.
(6) Private Placement of Common Stock
The Company raised $2,000,000 pursuant to an offering memorandum dated June 13,
2000, by offering 4,000,000 units that are comprised of one (1) share and one
(1) warrant having an exercise price of $5.00 per warrant that becomes null and
void on December 31, 2002. The warrant allows the purchaser to purchase one (1)
share of common stock. The units issued under this offering memorandum were
later acquired by IFG World Holdings Inc., the Company's sole owner. See Note
(15). On July 17, 2001 the Company lowered the exercise price to $2.00 from
$5.00 on the 4,000,000 warrants held by IFG World Holdings, Inc.
(7) Financial Instruments
The carrying value of cash, accounts receivable, amounts due from
related parties, deposits and loans payable to related parties, accounts
payable, and accrued expenses reflected in the financial statements approximate
fair value due to their short term nature.
(8) Intangibles
The Company purchased the Uniform Resource Locator (URL) www.ifg.com
for its sole use in May 2000. A URL specifies the location of a resource
residing on the Internet. No amortization has been recorded on the URL as it is
still under construction and has not been put into use. Once put into use, the
asset will be amortized over a period of 20 years.
(9) Fixed Assets
The Company has purchased computer and other ancillary equipment and
certain furniture and fixtures. Depreciation is recorded in accordance with the
policy described in Note 2.
(10) Restricted Cash
The Company has placed $200,000 in trust with its solicitors as a
condition for receiving its trust license in Nevis for its subsidiary IFG Trust
Services, Inc. These funds must remain in trust for a period of time and then
can be returned to the Company. The Company believes that the money should come
out of trust on or about September 1, 2001.
F-9
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 71
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
July 14, 1997 (date of incorporation) through January 31, 2001
(11) Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued a Statement of
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information." Because of the prospective nature of the
Company's business, the Company anticipates having more than one segment of
business operations. The FASB issued a Statement of Financial Standards No. 130,
"Reporting Comprehensive Income." Because of the prospective nature of the
Company's business, the Company expects to have Comprehensive Income other than
net income.
In June of 1998, the FASB issued Statement of Accounting Standards No.
133 ("SFAS 133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities on the balance sheet
at their value. This statement, as amended by SFAS 137, is effective for
financial statements for all fiscal quarters to all fiscal years beginning after
June 15, 2000. Because of the prospective nature of the Company's business, the
Company may engage in derivative or hedging activities.
In December 1999, The Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements." SAB 101 summarized certain of the SEC's views regarding the
application of generally accepted accounting principles to revenue recognition
in financial statements. In June 2000, the SEC amended SAB 101 to require
companies with fiscal years beginning after December 15, 1999, to implement the
provisions of SAB 101 no later than the fourth fiscal quarter. The Company will
adopt the provisions of SAB 101 in the first quarter that it has revenue.
(12) Risks and Uncertainties
Because of the nature of the Company's prospective businesses, these
are considerable risks and uncertainties inherent in the planned operations.
Further risks and uncertainties are dependent upon the Company's ability to
provide the necessary capital for its operations. The Company will be subject to
considerable government regulations and restrictions, which would be associated
with the multiple governmental organizations that it proposes to operate under.
(13) Income Taxes
At the present time, no income, profit, capital or capital gains taxes
are levied in the Cayman Islands. Accordingly, no provision for such taxes has
been recorded in the accompanying financial statements. In the event that such
taxes are levied, the Company has received an undertaking from the Cayman
Islands government exempting it from all such taxes until April, 2020. Except
under certain circumstances, the Company does not expect to be liable for United
States income taxes.
F-10
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 72
Financial Statements
INTERNATIONAL FINANCIAL GROUP, INC.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
July 14, 1997 (date of incorporation) through January 31, 2001
(14) Commitments
The Company currently leases office facilities under an operating
lease. Rental expense under the operating lease agreement for the period ended
July 31, 2000, was $6,893 and $13,785 for the six months ended January 31, 2001.
Minimum lease payments over the term of the lease are as follows:
2001 $ 27,570
2002 20,677
2003 -
and thereafter
---------
$ 48,247
=========
(15) Subsequent Event
On March 7, 2001, IFG World Holdings Inc. acquired, effective January
31, 2001, the outstanding shares and warrants described in Note 6. In addition,
on March 7, 2001, the Company authorized that 250,000 shares of the common stock
be issued in satisfaction of the Company's vesting obligation to one of its
directors.
F-11
--------------------------------------------------------------------------------
October 22, 2001 Schedule A Page 73
Financial Statements
[LOGO - IFG]
SCHEDULE "B" - SUBSCRIPTION DOCUMENTS
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Page 74
Subscription Documents
International Financial Group, Inc., a Cayman Islands Exempt Corporation
------------------------------------------------------------------------
SUBSCRIPTION DOCUMENTS
The attached Subscription Documents must be completed and delivered as follows:
MAIL TO:
--------
(a) International Financial Group, Inc., P.O. Box 10098 APO, Grand Cayman,
Cayman Islands or Suite 4, Temple Building, Main and Prince William Street,
Charlestown, Nevis, WI; or
(b) to your broker
MONEY INSTRUCTIONS:
-------------------
The attached subscription document must have attached a certified bank draft or
money order for the amount of Units subscribed or the subscription paid must be
wired to the Company as follows:
Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, New York
10081
USA
ABA No. 021-0000-21
Account No. 001-1-153103
Account Name: Royal Bank of Canada, Grand Cayman
For further Credit to:
International Financial Group, Inc.
Account No. 8200693
FUNDING INSTRUCTIONS
Subscriptions must be funded (at a price of $0.10 per Unit) by certified bank
draft, money order or bank wire transfer. MAKE BANK DRAFTS AND MONEY ORDERS
PAYABLE TO: International Financial Group, Inc.
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Page 75
Subscription Documents
SCHEDULE B
TABLE OF CONTENTS
Page
SECTION "A" How to Subscribe 77
SECTION "B" Subscription Agreement 79
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Page 76
Subscription Documents
SECTION A - HOW TO SUBSCRIBE
To subscribe for Units, you must fill out the Subscription Agreement.
Directions for the Subscription Agreement are as follows:
1. Be sure to provide your correct name, address and social security or
tax identification number, as this information will appear on the
official records of the Company.
2. Sign and be sure that you have checked the appropriate type of
ownership.
3. Signature and Supporting Material Requirements - The following
requirements have been established for the various ways in which Units
may be purchased and held other than by you as an individual:
JOINT TENANTS WITH RIGHT OF SURVIVORSHIP: The signatures of both joint
tenants are required.
COMMUNITY PROPERTY: The signatures of both husband and wife are
required, unless a separate document signed by both parties and
designating either as agent of the other for purposes of signing
accompanies the subscription Agreement.
TENANTS IN COMMON: The signatures of all parties are required.
TENANTS BY THE ENTIRETY: The signatures of all parties are required.
PARTNERSHIP: The Subscription Agreement must be accompanied by a copy
of the signed partnership agreement.
TRUST: The Subscription Agreement must be accompanied by a copy of the
trust agreement.
CORPORATION: The Subscription Agreement must be accompanied by a
certified copy of the resolution of the Board of Directors designating
the officer(s) of the corporation authorized to sign on behalf of the
corporation and of the board's resolution authorizing the investment.
4. Due diligence documentation:
If corporation:
(a) Register of Directors;
(b) Register of Shareholders
(c) Notarized copy of passport of Director(s) and Shareholder(s);
(d) Certified copy of Articles of Incorporation or Certified copy of
Articles and Memorandum of Association;
(e) Banker's reference addressed to International Financial Group,
Inc.
If partnership:
(a) Register of Partners;
(b) Partnership Agreement;
(c) Notarized copy of passport of partners;
(d) Banker's reference addressed to International Financial Group,
Inc.
If individual:
(a) Notarized copy of passport;
(b) Professional reference to International Financial Group Inc;
(c) Banker's reference to International Financial Group Inc;
(d) Utility bill from country of residence.
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Section A Page 77
How to Subscribe
5. Forward the following:
(a) Completed Subscription Agreement
(b) Supporting material required by paragraphs 3 and 4.
(c) A certified bank draft or money order in the amount of your
subscription or by wire transfer (see below).
Payment Instructions
--------------------
MAKE CERTIFIED BANK DRAFT OR MONEY ORDER PAYABLE TO:
----------------------------------------------------
International Financial Group, Inc.
-----------------------------------
MAIL TO:
--------
(a) International Financial Group, Inc., P.O. Box 10098 APO, Grand Cayman,
Cayman Islands or Suite 4, Temple Building, Main and Prince William Street,
Charlestown, Nevis, WI; or
(b) to your broker
WIRE TRANSFER INSTRUCTIONS:
---------------------------
Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, NY
10081 USA
ABA No. 021-000021
Account No. 001-1-153103
Account Name: Royal Bank of Canada, Grand Cayman
For further credit to:
Account Name: International Financial Group, Inc.
Account No. 8200693
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Section A Page 78
How to Subscribe
SECTION B - SUBSCRIPTION AGREEMENT
By signing this Subscription Agreement, without waiving any of your rights under
the jurisdiction you reside in including federal or state laws under the
Securities Act of 1933 or the Securities Exchange Act of 1934, you agree as
follows:
1. You or your representative have received the International Financial
Group Inc., prospectus (F-1 Registration Statement) dated July 18, 2001
("Prospectus") prior to the execution of this Subscription Agreement. You have
relied solely upon such documents and upon independent investigations made by
you or by your representatives, in making your decision to purchase Units, and
no oral or written representations, apart from those contained in the foregoing
documents, have been made to or relied upon by you;
2. You are aware that no federal or state agency has approved or made any
finding or determination as to the fairness of the investment or any
recommendation or endorsement of the Units;
3. You understand that an investment in Units involves certain risk factors
and conflicts of interest, many of which are referred to in the Prospectus;
4. You have the requisite knowledge and experience to assess the relative
business and tax matters and risks, or have relied upon the advice of
experienced advisors with regard to tax aspects, risks and other considerations
involved in this investment;
5. You and your counsel and/or advisor(s) (collectively, "representatives")
have made, or have had the opportunity to make, such inspections as you have
deemed necessary, whether to investigate any information given by the
Memorandum, to further your evaluation of the investment, or otherwise;
6. You and your representatives have had the opportunity to discuss all
material aspects of this transaction with management of the Company or with its
authorized agents, and any questions asked have been answered to the full
satisfaction of you and your representatives;
7. You are investing in the Units with a reasonable expectation of an
economic profit from such investment apart from tax benefits. You understand the
offer and sale of the Units have been registered under the Securities Act of
1933, as amended (the "Act").
8. You have adequate net worth and means of providing for your current
needs and contingencies to sustain a complete loss of your investment in the
Company at the time of investment, and have no need for liquidity in your
investment in the Units. You currently can afford a complete loss of your
investment;
9. You have attained the age of majority (as established in the
jurisdiction in which you reside), if an individual, and are under no legal
disability with respect to entering into a contractual relationship with the
Company and executing this Subscription Agreement;
10. If and when this Subscription Agreement is accepted, you will have
purchased the number of Units set forth above your signature on the signature
page of this Subscription Agreement. The Units which you offer to purchase
hereby shall not be deemed issued to, or owned by, you until (i) you have fully
paid the initial subscription price in cash, and (ii) the Company has accepted
your offer of purchase. The Company shall have until the closing date of the
Offering or any extension to accept or reject your offer, in its sole
discretion;
11. By your signature hereto and by checking the applicable box below,
you hereby specifically represent and warrant that you are the sole party in
interest with respect to the purchase of Units hereunder. In the case of sales
to fiduciary accounts, the fiduciary represents that such conditions are met by
the fiduciary, by the fiduciary account, or by the contributor who directly or
indirectly supplies the funds for the purchase of Units. You are aware that the
selling agent and/or the authorized dealer will rely upon your foregoing
representations;
12. You agree to indemnify and hold harmless the Company, and its
respective accountants, attorneys, officers, directors, affiliates, employees,
agents and other representatives from and against all damages, losses, costs and
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Section B Page 79
Subscription Agreement
expenses (including reasonable attorneys' fees) which they may incur by reason
of your failure to fulfill any of the terms or conditions of this Subscription
Agreement, or by reason of any breach of the representations and warranties made
by you herein or in connection with the purchase of the Units, or in any
document provided by you to the Company.
13. All information, which you have provided to the Company, is correct
and complete as of the date set forth at the end hereof, and if there should be
any material change in such information prior to acceptance of this Subscription
Agreement by the Company, you will immediately provide the Company with such
information.
14. You agree that within five days after receipt of a written request from
the Company, you will provide such information and execute and deliver such
documents as reasonably may be necessary to comply with any and all laws and
ordinances to which the Company is subject.
15. That the source of funds used to pay for the Units were not derived from
net proceeds of crime or other money laundering laws within the jurisdiction
that you reside.
16. That all due diligence information supplied by you is in accordance
with that required to be supplied and is true, accurate and authentic.
How to Subscribe
----------------
The undersigned is subscribing to a total of $__________(____ Units at $0.10
per Unit) by:
____ $_______________(____Units) paid by certified bank draft, and/or
____ $_______________(____Units) paid by certified money order, and/or
____ $_______________(____Units) paid by wiring funds.
MAKE CERTIFIED BANK DRAFT OR MONEY ORDER PAYABLE TO:
----------------------------------------------------
International Financial Group, Inc.
-----------------------------------
MAIL TO:
--------
(a) International Financial Group, Inc., P.O. Box 10098 APO, Grand Cayman,
Cayman Islands or Suite 4, Temple Building, Main and Prince William Street,
Charlestown, Nevis, WI; or
(b) to your broker.
WIRE TRANSFER INSTRUCTIONS:
---------------------------
Chase Manhattan Bank
1 Chase Manhattan Plaza
New York, NY
10081 USA
ABA No. 021-0000-21
Account No. 001-1-153103
Account Name: Royal Bank of Canada, Grand Cayman
For further credit to:
Account Name: International Financial Group, Inc.
Account No. 8200693
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Section B Page 80
Subscription Agreement
{For details, see How to Subscribe (these instructions are immediately preceding
this Subscription Agreement form)}
Print name(s) in which Units are to be registered
if individual:
NAME:(1)____________________________________________
Soc. Sec. or Tax I.D. No.: _________________________
NAME:(2)____________________________________________
Soc. Sec. or Tax I.D. No.:__________________________
Address:____________________________________________
____________________________________________________
____________________________________________________
Print name(s) in which Units are to be registered
if partnership:
NAME:_______________________________________________
Tax I.D. No.: ______________________________________
Address:____________________________________________
____________________________________________________
if corporation:
NAME:_______________________________________________
Authorized Officer: ________________________________
Tax I.D. No.:_______________________________________
Address:____________________________________________
The investment is to be held as follows (check one):
(a) ____ Husband & Wife, as community property (e) ____ Corporation
(b) ____ Joint Tenants (f) ____ Partnership
(c) ____ Tenants in Common (g) ____ Trust
(d) ____ Individual (h) ____ Other
NOTE: BY SIGNING THIS SUBSCRIPTION AGREEMENT AND UPON ACCEPTANCE THEREOF, YOU
-------------------------------------------------------------------------------
ARE ENTERING INTO AN AGREEMENT AND AGREEING TO INVEST MONEY.
------------------------------------------------------------
The undersigned hereby certifies that the undersigned has answered the foregoing
to the best of the undersigned's knowledge, that the undersigned's answers are
complete and accurate, and the undersigned declares under penalty of perjury
that the foregoing is true and correct.
This Subscription Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof.
DATED:______________________ 2001, at _______________________________________
if individual:
X______________________________________ X__________________________________
if partnership:
X______________________________________ X__________________________________
Authorized Partner
if corporation:
X______________________________________ X__________________________________
Authorized Officer
NOTE: If Units are to be registered in more than one name, all subscribers must
sign.
Acceptance of Subscription
--------------------------
Accepted by International Financial Group, Inc., as of __________________, 2001.
By:_____________________________________
Kevin Mellor - Director and President
--------------------------------------------------------------------------------
October 22, 2001 Schedule B Section B Page 81
Subscription Agreement
SCHEDULE "C" - WARRANT AGREEMENT
--------------------------------------------------------------------------------
October 22, 2001 Schedule C Page 82
Warrant Agreement
EXHIBIT B
WARRANT AGREEMENT
This Warrant Agreement certifies that ____________________________ (the
"Holder"), is the owner of _____________ warrants (subject to adjustment as
provided herein), each of which represents the right to subscribe for and
purchase from International Financial Group, Inc., a Cayman Islands exempt
Company (the "Company"), one share of the Ordinary Share(s), $0.001 par value
per share, of the Company (the "Ordinary Shares", including any stock into which
it may be changed, reclassified or converted, is herein referred to as the
"Ordinary Shares") (herein "Warrants") at the purchase price (herein "Exercise
Price") of $2.00 per share (subject to adjustment as provided herein).
The Warrants are subject to the following provisions, terms and conditions:
1. EXERCISE OF WARRANTS
A. Exercise of Warrants. Subject to the other provisions of this Warrant
Agreement, the Warrants may be exercised by the Holder, in whole or in part (but
not as to a fractional share of the Ordinary Shares), by surrender of this
Warrant Agreement at the principal office of the Company at Suite 4, Temple
Building, Main and Prince William Street, Charlestown, Nevis, WI (or such other
office or agency of the Company as may be designated by notice in writing to the
Holder at the address of such Holder appearing on the books of the Company),
along with a properly executed notice in writing specifying the desired number
of Warrants to be exercised, at any time within the period beginning on the date
of this Warrant Agreement, which is specified immediately below Section 11 of
this Warrant Agreement ("Effective Date") and 5:00 p.m. Eastern Standard Time,
on December 31, 2002 (the "Exercise Period") and by payment to the Company by
certified check, bank draft or wire transfer of the exercise price for such
shares of the Ordinary Shares. The Company agrees that the shares of Ordinary
Shares so purchased shall be and are deemed to be issued to the Holder as the
record owner of such shares of Ordinary Shares as of the close of business on
the date on which the Warrant Agreement shall have been surrendered and payment
made for such shares of Ordinary Shares. Certificates representing the shares of
Ordinary Shares so purchased, together with any cash for fractional shares of
Ordinary Shares, shall be delivered to the Holder promptly and in no event later
than thirty (30) days after the Warrants shall have been so exercised.
2. ADJUSTMENTS
A. Adjustments. The Exercise Price and the number of shares of Ordinary
Shares issuable upon exercise of each Warrant shall be subject to adjustment
from time to time as follows:
(1) Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications. In the event that the Company shall (a) pay
a dividend with respect to its capital stock in shares of
Ordinary Shares, (b) subdivide its outstanding shares of
Ordinary Shares, (c) combine its outstanding shares of
Ordinary Shares into a smaller number of shares of any class
of Ordinary Shares or (d) issue any shares of its capital
stock in a reclassification of the Ordinary Shares (including
any such reclassification in connection with a merger,
consolidation or other business combination in which the
Company is the continuing corporation) (any one of which
actions is herein referred to as an "Adjustment Event"), the
number of shares of Ordinary Shares purchasable upon exercise
of each Warrant immediately prior to the record date for such
Adjustment Event shall be adjusted so that the Holder shall
thereafter be entitled to receive the number of shares of
Ordinary Shares or other securities of the Company (such other
securities thereafter enjoying the rights of shares of
Ordinary Shares under this Warrant Agreement) that such Holder
would have owned or have been entitled to receive after the
happening of such Adjustment Event, had such Warrant been
exercised immediately prior to the happening of such
Adjustment Event or any record date with respect thereto. An
adjustment made pursuant to this Section 2A(1) shall become
effective immediately after the effective date of such
Adjustment Event retroactive to the record date, if any, for
such Adjustment Event.
--------------------------------------------------------------------------------
October 22, 2001 Schedule C Page 83
Warrant Agreement
(2) Adjustment of Exercise Price. Whenever the number of shares of
Ordinary Shares purchasable upon the exercise of each Warrant
is adjusted pursuant to Sections 2A(1), the Exercise Price for
each share of Ordinary Shares payable upon exercise of each
Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, the
numerator of which shall be the number of shares of Ordinary
Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and the denominator of
which shall be the number of shares of Ordinary Shares so
purchasable immediately thereafter.
(3) De Minimis Adjustments. Except as provided in Section 2A(2)
with reference to adjustments required by such Section 2A(2),
no adjustment in the number of shares of Ordinary Shares
purchasable hereunder shall be required unless such adjustment
would require an increase or decease of at least one percent
(1%) in the number of shares of Ordinary Shares purchasable
upon an exercise of each Warrant; provided, however, that any
adjustments which by reason of this Section 2A(3) are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations shall
be made to the nearest full share.
B. Notice of Adjustment. Whenever the number of shares of Ordinary
Shares purchasable upon the exercise of each Warrant or the Exercise Price is
adjusted, as herein provided, the Company shall promptly notify the Holder in
writing (such writing referred to as an "Adjustment Notice") of such adjustment
or adjustments and shall deliver to the Holder a certificate of a firm of
independent public accountants selected by the Board of Directors of the Company
(who may be the regular accountants employed by the Company) or of the
Independent Financial Expert, if any, which makes a determination of the current
market value with respect to any such adjustment setting forth the number of
shares of Ordinary Shares purchasable upon the exercise of each Warrant and the
Exercise Price after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made.
C. Amendment of Warrant Agreement. This Warrant Agreement need not be
changed because of any change in the Exercise Price or in the number of shares
of Ordinary Shares purchasable upon the exercise of a Warrant and any Warrant
Exercise Price and the same number of shares of Ordinary Shares as are specified
in this Warrant Agreement. The Company may at the time in its sole discretion
make any change in the form of a warrant agreement that it may deem appropriate
and that does not affect the substance thereof and any warrant agreement
thereafter issued, whether in exchange or substitution for any outstanding
warrant agreement or otherwise, may be in the form so changed.
D. Fractional Interest. The Company shall not be required to issue
fractional shares of Ordinary Shares on the exercise of the Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same holder, the number of full shares of Ordinary Shares which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of whole shares of Ordinary Shares purchasable on exercise of the
Warrants so presented. If any fraction of a share of Ordinary Shares would,
except for the provisions of this Section 2D be issuable on the exercise of the
Warrants (or specified proportion thereof), the Company shall pay an amount in
cash calculated by it to be equal to the then fair value of one share of
Ordinary Shares, as determined by the Board of Directors of the Company in good
faith, multiplied by such fraction computed to the nearest whole cent.
3. RESERVATION AND AUTHORIZATION OF ORDINARY SHARES
The Company covenants and agrees (a) that all shares of Ordinary Shares which
may be issued upon the exercise of the Warrants represented by this Warrant
Agreement will, upon issuance, be validly issued, fully paid and nonassessable
and free of all insurance or transfer taxes, liens and charges with respect to
the issue thereof, (b) that during the Exercise Period, the Company will at all
times have authorized, and reserved for the purpose of issue or transfer upon
exercise of the Warrant, sufficient shares of Ordinary Shares to provide for the
exercise of the Warrants and (c) that the Company will take all such action as
may be necessary to ensure that the shares of Ordinary Shares issuable upon the
exercise of the Warrants may be so issued without violation of any applicable
law or regulation, or any requirements of any domestic securities exchange upon
--------------------------------------------------------------------------------
October 22, 2001 Schedule C Page 84
Warrant Agreement
which any capital stock of the Company may be listed; provided, however, that
nothing contained herein shall impose upon the Company any obligation to
register the warrants of such Ordinary Shares under applicable securities laws.
4. NO VOTING RIGHTS
This Warrant Agreement shall not entitle the Holder to any voting rights or
other rights as a stockholder of the Company.
5. EXERCISE OR TRANSFER OF WARRANTS OR ORDINARY SHARES
The Holder agrees to be obligated by any and all provisions with respect to the
limitations, including limitations imposed for Securities Act compliance,
regarding the Warrants and the shares of Ordinary Shares or other securities
issuable upon exercise of the Warrants.
6. TRANSFER OF WARRANT
Transferability and Negotiability of Warrant. Neither this Warrant Agreement nor
any Warrant may be transferred or assigned in whole or in part.
Warrant Register. The Company will maintain a register (the "Warrant Register")
containing the name and address of the Holder. The Holder may change his or her
address as shown on the Warrant Register by written notice to the Company
requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to the
Holder as shown on the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register, the Company
may treat the Holder as shown on the Warrant Register as the absolute owner of
this Warrant for all purposes, notwithstanding any notice to the Company.
Warrant Agent. The Company may, by written notice to the Holder, appoint an
agent for the purpose of maintaining the Warrant Register, issuing the Ordinary
Shares or other securities then issuable upon the exercise of this Warrant,
exchanging this Warrant Agreement, replacing this Warrant Agreement, or any or
all of the foregoing. Thereafter, any such registration, issuance, exchange, or
replacement, as the case may be, shall be made at the office of such agent.
Compliance with Securities Laws
The Holder, by acceptance hereof, acknowledges that this Warrant Agreement and
the shares of Ordinary Shares or Ordinary Shares to be issued upon the exercise
hereof or conversion thereof are being acquired solely for the Holder's own
account and not as a nominee for any other party, and not with a view to any
distribution thereof by the Holder, and that the Holder will not offer, sell or
otherwise dispose of this Warrant Agreement or any other shares of Ordinary
Shares or Ordinary Shares to be issued upon exercise hereof or conversion
thereof except pursuant to an effective registration statement, or an exemption
therefrom, under the Securities Act and any applicable state securities laws.
Upon exercise of this Warrant Agreement, the Holder shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the
shares of Ordinary Shares or Ordinary Shares so purchased are being acquired
solely for the Holder's own account and not as a nominee for any other party and
not with a view toward distribution.
7. REGISTRATION RIGHTS
Holder shall have any registration rights with respect to the Warrants or their
constituent securities or any of the Company's securities.
--------------------------------------------------------------------------------
October 22, 2001 Schedule C Page 85
Warrant Agreement
8. CLOSING OF BOOKS
The Company will at no time close its transfer books against the transfer of any
Warrant or of any shares of Ordinary Shares or other securities issuable upon
the exercise of any Warrant in any manner, which interferes with the timely
exercise of the Warrants.
9. WARRANTS EXCHANGEABLE, LOSS, THEFT
This Warrant Agreement is exchangeable, upon the surrender hereof by the Holder
at the office or agency of the Company referred to in Section 1 of this Warrant
Agreement, for new Warrant Agreements in similar form representing in the
aggregate the right to subscribe for and purchase the number of shares of
Ordinary Shares which may be subscribed for and purchased hereunder, each such
new Warrant Agreement to represent the right to subscribe and purchase such
number of shares of Ordinary Shares as shall be designed by the Holder at the
time of such surrender. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction or mutilation, upon surrender or cancellation of
this Warrant Agreement, the Company will issue to the Holder a new Warrant
Agreement in similar form, in lieu of this Warrant Agreement, representing the
right to subscribe for and purchase the number of shares of Ordinary Shares
which may be subscribed for and purchased hereunder.
10. MERGERS, CONSOLIDATIONS, ETC.
A. Except as may otherwise be provided in Section 2A of this Warrant Agreement,
if the Company shall merge or consolidate with another corporation, the Holder
shall thereafter have the right, upon exercise hereof and payment of the
Exercise Price, to receive solely the kind and amount of shares of capital stock
(including, if applicable, Ordinary Shares), other securities, property or cash
or any combination thereof receivable by a holder of the number of shares of
Ordinary Shares for which this Warrant Agreement might have been exercised
immediately prior to such merger or consolidation (assuming, if applicable, that
the holder of such Ordinary Shares failed to exercise its rights of election, if
any, as to the kind or amount of shares of stock, other securities, property or
cash or combination thereof receivable upon such merger or consolidation).
B. In case of any reclassification or change of the shares of Ordinary Shares
issuable upon exercise of the Warrants (other than elimination of par value, a
change in par value, or from par value to no par value, or as the result of a
subdivision or combination of shares (which is provided for elsewhere herein),
but including any reclassification of the shares of Ordinary Shares into two or
more classes or series of shares) or in case of any merger or consolidation of
another corporation into the Company in which the Company is the surviving
corporation and in which there is a reclassification or change of the shares of
Ordinary Shares (other than a change in par value, or from par value to no par
value, or as a result of a subdivision or combination (which is provided for
elsewhere herein), but including any reclassification of the shares of Ordinary
Shares, the Holder shall thereafter have the right, upon exercise hereof and
payment of the Exercise Price, to receive solely the kind and amount of shares
of stock, other securities, property or cash or any combination thereof
receivable upon such reclassification, change, merger or consolidation by a
holder of the number of shares of Ordinary Shares for which this Warrant
Agreement might have been exercised immediately prior to such reclassification,
change, merger or consolidation (assuming, if applicable, that the holder of
such Ordinary Shares failed to exercise its rights of election, if any, as to
the kind or amount of shares of stock, other securities, property or cash or
combination thereof receivable upon such reclassification, change, merger or
consolidation).
--------------------------------------------------------------------------------
October 22, 2001 Schedule C Page 86
Warrant Agreement
11. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANTS
The rights and obligations of the Company, of the Holder, and of the holders of
shares of Ordinary Shares or other securities issued upon exercise of the
Warrants, contained in Section 5 of this Warrant Agreement shall survive the
exercise of the Warrants.
Dated: _______________, 200__.
International Financial Group, Inc.,
a Cayman Islands exempt company
By: _________________________
Its: President
By: _________________________
Its: Secretary
HOLDER
if individual:
X______________________________________ X__________________________________
if partnership:
X______________________________________ X__________________________________
Authorized Partner
if corporation:
X______________________________________ X__________________________________
Authorized Officer
--------------------------------------------------------------------------------
October 22, 2001 Schedule C Page 87
Warrant Agreement
SCHEDULE "D" - LOCK-UP AGREEMENT
--------------------------------------------------------------------------------
October 22, 2001 Schedule D Page 88
Lock Up Agreement
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT ("Agreement") dated as of March 7, 2001, is entered into
in duplicate by and among IFG World Holdings Inc. ("Stockholder"), and
International Financial Group Inc., a Cayman Islands exempt Company ("Company").
Recitals
A. As of the date hereof, the Stockholder owns 20,000,000 shares of the
issued and outstanding common stock and 4,000,000 share purchase
warrants that allows the stockholder to purchase 4,000,000 ordinary
shares (at an exercise price of $2.00 and an expiry date of December
31, 2002) of the Company ("Subject Shares").
B. The Company and Stockholder, and each of them, desire that the
Stockholder agree to a restriction on the sale and disposition of the
Subject Shares, on the terms and subject to the conditions specified in
this Agreement.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES, UNDERTAKINGS AND
COVENANTS SPECIFIED HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, WITH THE INTENT TO BE
OBLIGATED LEGALLY AND EQUITABLY, THE PARTIES AGREE WITH EACH OTHER AS FOLLOWS:
1. Restriction Regarding Disposition of Subject Shares. During the term of this
Agreement, the Stockholder shall not, directly or indirectly, (a) sell,
transfer, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of, any of the
Subject Shares; or (b) grant any proxies, deposit any Subject Shares into a
voting trust or enter into a voting agreement with respect to any of the Subject
Shares.
2. Representations and Warranties of the Stockholder. The Stockholder
represents and warrants to the Company as follows:
2.1 Ownership of Subject Shares. On the date of this Agreement, the
Subject Shares are beneficially owned by the Stockholder. The
Stockholder has valid and marketable title to the Subject Shares,
free and clear of all liens, encumbrances, restrictions, options,
warrants, rights to purchase and claims of every kind (other than
those restrictions created by this Agreement and those
restrictions regarding transfer specified by applicable
securities laws).
2.2 Power Regarding Agreement. The Stockholder has the full and
complete legal right, power and authority to enter into and
perform all of the Stockholder's obligations pursuant to this
Agreement. The execution and delivery of this Agreement by the
Stockholder will not violate any other agreement to which the
Stockholder is a party, including, without limitation, any voting
agreement, stockholder agreement, voting trust or proxy. This
Agreement has been duly executed and delivered by Stockholder and
constitutes a legal, valid and binding agreement of Stockholder,
enforceable in accordance with its terms. Neither the execution
or delivery of this Agreement will (a) require any consent or
approval of or filing with any governmental or other regulatory
--------------------------------------------------------------------------------
October 22, 2001 Schedule D Page 89
Lock Up Agreement
agency, or (b) constitute a violation of, conflict with or
constitute a default pursuant to, any contract, commitment,
agreement, understanding, arrangement or other restriction of any
kind to which the Stockholder is a party or by which the
Stockholder is or the Subject Shares are obligated.
3. Termination. This Agreement shall terminate on the date that is the
earliest of the following dates: (a) the date that the F-1 registration is fully
subscribed; (b) the date that the Board of Directors pass a resolution closing
the prospectus; (c) the date that any of the Company's shares can be freely
traded; or, (d) August 31, 2001.
4. Expenses. Each party hereto will pay all of its expenses in connection with
this Agreement, including, without limitation, the fees and expenses of its
counsel and other advisers.
5. Confidentiality. The Stockholder shall not disclose or discuss the matters
contemplated by this Agreement with any person (other than his or her legal
counsel and advisors, if any) not a party to this Agreement, without prior
written consent of the Company, except for those disclosures that the
Stockholder's legal counsel advises are necessary in order to fulfill the
Stockholder's obligations imposed by law, in which event the Stockholder shall
give prompt prior notice of such disclosure to the Company.
6. Additional Shares. During the term of this Agreement, any additional shares
of the Company's common stock acquired by the Stockholder shall, upon issuance,
be immediately subject to the provisions of this Agreement. Any such additional
shares shall be contemplated by, and included, in the definition of "Subject
Shares".
7. Notices. All notices or other communications required or permitted pursuant
to this Agreement shall be in writing and shall be deemed duly given when
received by delivery in person, by facsimile machine, telex or telegram or by
certified mail, postage prepaid, or by an overnight courier service, addressed
as follows:
If to the Stockholder: GDA International Trustees Inc.
Suite 205 - 207 Dowell House
Cr. Roebuck & Palmetto Sts.
Bridgetown, Barbados, WI
If to the Company: P.O. Box 10098APO
Grand Pavilion Commercial Centre
West Bay Road
Grand Cayman, Cayman Islands
8. Entire Agreement; Amendment. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter of this Agreement
and supersedes all prior agreements and understandings among the parties with
respect to such subject matter. This Agreement may not be modified, amended,
altered or supplemented, except by an agreement in writing executed by the party
against whom such modification, amendment, alteration or supplement is sought to
be enforced.
9. Assigns. This Agreement shall obligate and inure to the benefit of the
parties hereto and their respective successors and assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other party.
--------------------------------------------------------------------------------
October 22, 2001 Schedule D Page 90
Lock Up Agreement
10. Governing Law. This Agreement, and all matters relating hereto, shall be
governed by, and construed in accordance with, the laws of the Cayman Islands.
11. Injunctive Relief. In the event of a breach or attempted breach by the
Stockholder of any provision of this Agreement, the Company may be without an
adequate remedy at law. In the event of a breach or attempted breach by the
Stockholder of any provision of this Agreement, the Company may elect to
commence and prosecute proceedings in any court of competent jurisdiction to
enforce the Shareholder's obligations created by this Agreement by specific
performance or to enjoin the continuing breach of such provision, as well as to
obtain damages for breach of this Agreement, and the Company may take any such
actions without the necessity of posting a bond. By, seeking or obtaining such
relief the Company will not be precluded from seeking or obtaining any other
relief to which it may be entitled.
12. Attorney's Fees. In the event any party shall institute any action or
proceeding to enforce any provision of this Agreement or to seek relief from any
violation of this Agreement, or to otherwise obtain any judgment or order
relating to or resulting from the subject matter of this Agreement, the
prevailing party shall be entitled to receive from the losing party the
prevailing party's actual attorneys' fees and costs incurred to prosecute or
defend such action or proceeding.
13. Counterparts. This Agreement may be executed in any number of counterpart,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same document.
14. Severability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
determined by a court of competent jurisdiction to be unenforceable, such
provision shall be interpreted in such a manner as to be enforceable.
15. Further Assurances. Each party hereto shall execute and deliver such
additional documents and take any and all other action, which may be necessary
or appropriate to carry out and effectuate the intents and purposes of this
Agreement.
16. Third Party Beneficiaries. Nothing in this Agreement, expressed or implied,
shall be construed to give any person other than the parties hereto any legal or
equitable right, remedy or claim pursuant to, or by reason of, this Agreement or
any provision contained herein.
--------------------------------------------------------------------------------
October 22, 2001 Schedule D Page 91
Lock Up Agreement
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed in
duplicate on the date specified in the preamble of this Agreement.
(Seal) INTERNATIONAL FINANCIAL GROUP INC.
Per: (Signed by Kevin Mellor)
___________________________
Director
Per: ___________________________
Director
IFG WORLD HOLDINGS INC.
(Seal) Per : (Signed by GDA International Trustees Inc.)
___________________________
Director
Per: ___________________________
Director
--------------------------------------------------------------------------------
October 22, 2001 Schedule D Page 92
Lock Up Agreement
SCHEDULE "E" - MEMORANDUM AND ARTICLES OF ASSOCIATION
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 93
Memorandum and Articles of Association
THE COMPANIES LAW (2000 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM & ARTICLES
OF
ASSOCIATION
OF
INTERNATIONAL FINANCIAL GROUP INC.
(Amended and restated as at 15th March 2001)
TABLE OF CONTENTS
MEMORANDUM OF ASSOCIATION
The Name of the Company..................................................1
The Registered Office of the Company.....................................1
The Objects for which the Company is established.........................1
The Liability of the Members.............................................2
The Capital of the Company...............................................2
ARTICLES OF ASSOCIATION
Table A..................................................................3
Interpretation...........................................................3
Preliminary..............................................................5
Shares...................................................................5
Variation Of Rights Attaching To Shares..................................5
Certificates.............................................................6
Fractional Shares........................................................6
Lien.....................................................................6
Calls On Shares..........................................................7
Forfeiture Of Shares.....................................................8
Transfer Of Shares.......................................................9
Transmission Of Shares...................................................9
Alteration Of Capital...................................................10
Redemption And Purchase Of Own Shares...................................10
Closing Register Of Members Or Fixing Record Date.......................11
General Meetings........................................................11
Notice Of General Meetings..............................................12
Proceedings At General Meetings.........................................12
Votes Of Members........................................................14
Corporations Acting By Representatives At Meetings......................14
Directors...............................................................15
Alternate Director......................................................15
Powers And Duties Of Directors..........................................16
Borrowing Powers Of Directors...........................................17
The Seal................................................................17
Disqualification Of Directors...........................................18
Proceedings Of Directors................................................18
Dividends...............................................................21
Accounts And Audit......................................................22
Capitalisation Of Profits...............................................22
Share Premium Account...................................................23
Notices.................................................................23
Indemnity...............................................................24
i
Non-Recognition Of Trusts...............................................25
Winding Up..............................................................25
Amendment Of Articles Of Association....................................26
Registration By Way Of Continuation.....................................26
ii
THE COMPANIES LAW (2000 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES
-------------------------
MEMORANDUM OF ASSOCIATION
OF
INTERNATIONAL FINANCIAL GROUP INC.
(Amended and restated as at 15th March 2001)
1. The name of the Company is INTERNATIONAL FINANCIAL GROUP INC..
2. The Registered Office of the Company will be situate at GRAND PAVILION
COMMERCIAL CENTRE, P.O. BOX 10098 APO, 802 WEST BAY ROAD, GEORGE TOWN,
GRAND CAYMAN, CAYMAN ISLANDS or at such other location as the Directors
may from time to time determine.
3. The objects for which the Company is established are unrestricted and
the Company shall have full power and authority to carry out any object
not prohibited by any law as provided by Section 7(4) of The Companies
Law (2000 Revision).
4. The Company shall have and be capable of exercising all the functions
of a natural person of full capacity irrespective of any question of
corporate benefit as provided by Section 27(2) of The Companies Law
(2000 Revision).
5. Nothing in the preceding sections shall be deemed to permit the Company
to carry on the business of a Bank or Trust Company without being
licensed in that behalf under the provisions of the Banks and Trust
Companies Law (2000 Second Revision), or to carry on Insurance Business
from within the Cayman Islands or the business of an Insurance Manager,
Agent, Sub-agent or Broker without being licensed in that behalf under
the provisions of the Insurance Law (1999 Revision), or to carry on the
business of Company Management without being licensed in that behalf
under the provisions of the Companies Management Law (2000 Revision).
6. The Company will not trade in the Cayman Islands with any person, firm
or corporation except in furtherance of the business of the Company
carried on outside the Cayman Islands; Provided that nothing in this
section shall be construed as to prevent the Company effecting and
concluding contracts in the Cayman Islands, and exercising in the
Cayman Islands all of its powers necessary for the carrying on of its
business outside the Cayman Islands.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 1
Memorandum and Articles of Association
7. The liability of the members is limited to the amount, if any, unpaid
on the shares respectively held by them.
8. The capital of the Company is US$50,000.00 divided into 50,000,000
ordinary shares of a nominal or par value of US$0.001 each provided
always that subject to the provisions of The Companies Law (2000
Revision) and the Articles of Association the Company shall have power
to redeem or purchase any of its shares and to sub-divide or
consolidate the said shares or any of them and to issue all or any
part of its capital whether original, redeemed, increased or reduced
with or without any preference, priority or special privilege or
subject to any postponement of rights or to any conditions or
restrictions whatsoever and so that unless the conditions of issue
shall otherwise expressly provide every issue of shares whether stated
to be Ordinary, Preference or otherwise shall be subject to the powers
on the part of the Company hereinbefore provided.
9. The Company may exercise the power contained in Section 224 of The
Companies Law (2000 Revision) to deregister in the Cayman Islands and
be registered by way of continuation in some other jurisdiction.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 2
Memorandum and Articles of Association
THE COMPANIES LAW (2000 Revision)
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
OF
INTERNATIONAL FINANCIAL GROUP INC.
(Amended and restated as at 15th March 2001)
TABLE A
The Regulations contained or incorporated in Table 'A' in the First Schedule of
the Companies Law (2000 Revision) shall not apply to this Company and the
following Articles shall comprise the Articles of Association of the Company:
INTERPRETATION
1. In these Articles:
"COMPANIES LAW" means the Companies Law (2000 Revision) of the Cayman
Islands and any statutory amendment or re-enactment thereof. Where any
provision of the Companies Law is referred to, the reference is to that
provision as amended by any law for the time being in force;
"DIRECTORS" and "BOARD OF DIRECTORS" means the Directors of the Company
for the time being, or as the case may be, the Directors assembled as a
Board or as a committee thereof;
"MEMBER" means a person whose name is entered in the register of
members as the holder of a share or shares and includes each subscriber
of the Memorandum pending the issue to him of the subscriber share or
shares;
"MEMORANDUM OF ASSOCIATION" means the Memorandum of Association of the
Company, as amended and re-stated from time to time;
"ORDINARY RESOLUTION" means a resolution:
(a) passed by a simple majority of such Members as, being entitled to
do so, vote in person or, where proxies are allowed, by proxy at
a general meeting of the Company and where a poll is taken regard
shall be had in computing a majority to the number of votes to
which each Member is entitled; or
(b) approved in writing by all of the Members entitled to vote at a
general meeting of the Company in one or more instruments each
signed by one or more of the Members and the effective date of
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 3
Memorandum and Articles of Association
the resolution so adopted shall be the date on which the
instrument, or the last of such instruments if more than one, is
executed;
"PAID UP" means paid up as to the par value and any premium payable in
respect of the issue of any shares and includes credited as paid up;
"REGISTER OF MEMBERS" means the register to be kept by the Company in
accordance with Section 40 of the Companies Law;
"SEAL" means the Common Seal of the Company including any facsimile
thereof;
"SHARE" means any share in the capital of the Company, including a
fraction of any share;
"SIGNED" includes a signature or representation of a signature affixed
by mechanical means;
"SPECIAL RESOLUTION" means a resolution passed in accordance with
Section 60 of the Companies Law, being a resolution:
(a) passed by a majority of not less than two-thirds of such Members
as, being entitled to do so, vote in person or, where proxies
are allowed, by proxy at a general meeting of the Company of
which notice specifying the intention to propose the resolution
as a Special Resolution has been duly given and where a poll is
taken regard shall be had in computing a majority to the
number of votes to which each Member is entitled, or
(b) approved in writing by all of the Members entitled to vote at a
general meeting of the Company in one or more instruments each
signed by one or more of the Members and the effective date of
the Special Resolution so adopted shall be the date on which the
instrument or the last of such instruments if more than one, is
executed.
2. In these Articles, save where the context requires otherwise:
(a) words importing the singular number shall include the plural
number and vice versa;
(b) words importing the masculine gender only shall include the
feminine gender;
(c) words importing persons only shall include companies or
associations or bodies of persons, whether corporate or not;
(d) "may" shall be construed as permissive and "shall" shall be
construed as imperative;
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 4
Memorandum and Articles of Association
(e) a reference to a dollar or dollars (or $) is a reference to
dollars of the United States; and
(f) references to a statutory enactment shall include reference to
any amendment or re-enactment thereof for the time being in
force.
3. Subject to the last two preceding Articles, any words defined in the
Companies Law shall, if not inconsistent with the subject or context,
bear the same meaning in these Articles.
PRELIMINARY
4. The business of the Company may be commenced as soon after
incorporation as the Directors see fit, notwithstanding that part only
of the shares may have been allotted or issued.
5. The registered office of the Company shall be at such address in the
Cayman Islands as the Directors shall from time to time determine. The
Company may in addition establish and maintain such other offices and
places of business and agencies in such places as the Directors may
from time to time determine.
SHARES
6. Subject as otherwise provided in these Articles, all shares in the
capital of the Company for the time being and from time to time
unissued shall be under the control of the Directors, and may be
re-designated, allotted or disposed of in such manner, to such persons
and on such terms as the Directors in their absolute discretion may
think fit.
7. The Company may in so far as may be permitted by law, pay a commission
to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares. Such
commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the
other. The Company may also on any issue of shares pay such brokerage
as may be lawful.
VARIATION OF RIGHTS ATTACHING TO SHARES
8. If at any time the share capital is divided into different classes of
shares, the rights attaching to any class (unless otherwise provided
by the terms of issue of the shares of that class) may be varied or
abrogated with the consent in writing of the holders of two-thirds of
the issued shares of that class, or with the sanction of a resolution
passed by at least a two-thirds majority of the holders of shares of
the class present in person or by proxy at a separate general meeting
of the holders of the shares of the class. To every such separate
general meeting the provisions of these Articles relating to general
meetings of the Company shall mutatis mutandis apply, but so that the
necessary quorum shall be at least one person holding or representing
by proxy at least one-third of the issued shares of the class and that
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 5
Memorandum and Articles of Association
any holder of shares of the class present in person or by proxy may
demand a poll.
9. The rights conferred upon the holders of the shares of any class issued
with preferred or other rights shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed
to be varied or abrogated by the creation or issue of further shares
ranking pari passu therewith or the redemption or purchase of shares of
any class by the Company.
CERTIFICATES
10. Every person whose name is entered as a member in the Register of
Members shall, without payment, be entitled to a certificate in the
form determined by the Directors. Such certificate may be under the
Seal. All certificates shall specify the share or shares held by that
person and the amount paid up thereon, provided that in respect of a
share or shares held jointly by several persons the Company shall not
be bound to issue more than one certificate, and delivery of a
certificate for a share to one of several joint holders shall be
sufficient delivery to all.
11. If a share certificate is defaced, lost or destroyed it may be renewed
on such terms, if any, as to evidence and indemnity as the Directors
think fit.
FRACTIONAL SHARES
12. The Directors may issue fractions of a share of any class of shares,
and, if so issued, a fraction of a share (calculated to three decimal
points) shall be subject to and carry the corresponding fraction of
liabilities (whether with respect to any unpaid amount thereon,
contribution, calls or otherwise), limitations, preferences,
privileges, qualifications, restrictions, rights (including, without
limitation, voting and participation rights) and other attributes of a
whole share of the same class of shares. If more than one fraction of a
share of the same class is issued to or acquired by the same Member
such fractions shall be accumulated. For the avoidance of doubt, in
these Articles the expression "share" shall include a fraction of a
share.
LIEN
13. The Company shall have a first priority lien and charge on every share
(not being a fully paid up share) for all moneys (whether presently
payable or not) called or payable at a fixed time in respect of that
share, and the Company shall also have a first priority lien and charge
on all shares (other than fully paid up shares) standing registered in
the name of a single person for all moneys presently payable by him or
his estate to the Company, but the Directors may at any time declare
any share to be wholly or in part exempt from the provisions of this
Article. The Company's lien, if any, on a share shall extend to all
dividends payable thereon.
14. The Company may sell, in such manner as the Directors think fit, any
shares on which the Company has a lien, but no sale shall be made
unless some sum in respect of which the lien exists is presently
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 6
Memorandum and Articles of Association
payable nor until the expiration of 14 days after a notice in writing,
stating and demanding payment of such part of the amount in respect of
which the lien exists as is presently payable, has been given to the
registered holder for the time being of the share, or the persons
entitled thereto by reason of his death or bankruptcy.
15. For giving effect to any such sale the Directors may authorise some
person to transfer the shares sold to the purchaser thereof. The
purchaser shall be registered as the holder of the shares comprised in
any such transfer and he shall not be bound to see to the application
of the purchase money, nor shall his title to the shares be affected by
any irregularity or invalidity in the proceedings in reference to the
sale.
16. The proceeds of the sale shall be received by the Company and applied
in payment of such part of the amount in respect of which the lien
exists as is presently payable, and the residue shall (subject to a
like lien for sums not presently payable as existed upon the shares
prior to the sale) be paid to the person entitled to the shares at the
date of the sale.
CALLS ON SHARES
17. The Directors may from time to time make calls upon the Members in
respect of any moneys unpaid on their shares, and each Member shall
(subject to receiving at least 14 days notice specifying the time or
times of payment) pay to the Company at the time or times so specified
the amount called on his shares.
18. The joint holders of a share shall be jointly and severally liable to
pay calls in respect thereof.
19. If a sum called in respect of a share is not paid before or on the day
appointed for payment thereof, the person from whom the sum is due
shall pay interest upon the sum at the rate of eight per centum per
annum from the day appointed for the payment thereof to the time of the
actual payment, but the Directors shall be at liberty to waive payment
of that interest wholly or in part.
20. The provisions of these Articles as to the liability of joint holders
and as to payment of interest shall apply in the case of non-payment of
any sum which, by the terms of issue of a share, becomes payable at a
fixed time, whether on account of the amount of the share, or by way of
premium, as if the same had become payable by virtue of a call duly
made and notified.
21. The Directors may make arrangements on the issue of shares for a
difference between the Members, or the particular shares, in the amount
of calls to be paid and in the times of payment.
22. The Directors may, if they think fit, receive from any member willing
to advance the same all or any part of the moneys uncalled and unpaid
upon any shares held by him, and upon all or any of the moneys so
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 7
Memorandum and Articles of Association
advanced may (until the same would, but for such advance, become
presently payable) pay interest at such rate (not exceeding without the
sanction of an Ordinary Resolution, eight per cent. per annum) as may
be agreed upon between the Member paying the sum in advance and the
Directors.
FORFEITURE OF SHARES
23. If a Member fails to pay any call or instalment of a call on the day
appointed for payment thereof, the Directors may, at any time
thereafter during such time as any part of such call or instalment
remains unpaid, serve a notice on him requiring payment of so much of
the call or instalment as is unpaid, together with any interest which
may have accrued.
24. The notice shall name a further day (not earlier than the expiration of
14 days from the date of the notice) on or before which the payment
required by the notice is to be made, and shall state that in the event
of non-payment at or before the time appointed the shares in respect of
which the call was made will be liable to be forfeited.
25. If the requirements of any such notice as aforesaid are not complied
with, any share in respect of which the notice has been given may at
any time thereafter, before the payment required by notice has been
made, be forfeited by a resolution of the Directors to that effect.
26. A forfeited share may be sold or otherwise disposed of on such terms
and in such manner as the Directors think fit, and at any time before a
sale or disposition the forfeiture may be cancelled on such terms as
the Directors think fit.
27. A person whose shares have been forfeited shall cease to be a Member in
respect of the forfeited shares, but shall, notwithstanding, remain
liable to pay to the Company all moneys which at the date of forfeiture
were payable by him to the Company in respect of the shares, but his
liability shall cease if and when the Company receives payment in full
of the fully paid up amount of the shares.
28. A statutory declaration in writing that the declarant is a Director of
the Company, and that a share in the Company has been duly forfeited on
a date stated in the declaration, shall be conclusive evidence of the
facts therein stated as against all persons claiming to be entitled to
the share. The Company may receive the consideration, if any, given for
the share on any sale or disposition thereof and may execute a transfer
of the share in favour of the person to whom the share is sold or
disposed of and he shall thereupon be registered as the holder of the
share, and shall not be bound to see to the application of the purchase
money, if any, nor shall his title to the share be affected by any
irregularity or invalidity in the proceedings in reference to the
forfeiture, sale or disposal of the share.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 8
Memorandum and Articles of Association
29. The provisions of these Articles as to forfeiture shall apply in the
case of non-payment of any sum which by the terms of issue of a share
becomes due and payable, whether on account of the amount of the share,
or by way of premium, as if the same had been payable by virtue of a
call duly made and notified.
TRANSFER OF SHARES
30. The instrument of transfer of any share shall be in any usual or common
form or such other form as the Directors may approve and executed by or
on behalf of the transferor and if in respect of a nil or partly paid
up share or if so required by the Directors shall also be executed on
behalf of the transferee and shall be accompanied by the certificate of
the shares to which it relates and such other evidence as the Directors
may reasonably require to show the right of the transferor to make the
transfer. The transferor shall be deemed to remain a holder of the
share until the name of the transferee is entered in the Register of
Members in respect thereof.
31. The registration of transfers may be suspended at such times and for
such periods as the Directors may from time to time determine, provided
always that such registration shall not be suspended for more than 45
days in any year.
32. All instruments of transfer which shall be registered shall be retained
by the Company.
TRANSMISSION OF SHARES
33. The legal personal representative of a deceased sole holder of a share
shall be the only person recognised by the Company as having any title
to the share. In the case of a share registered in the name of two or
more holders, the survivors or survivor, or the legal personal
representatives of the deceased survivor, shall be the only person
recognised by the Company as having any title to the share.
34. Any person becoming entitled to a share in consequence of the death or
bankruptcy of a Member shall upon such evidence being produced as may
from time to time be properly required by the Directors, have the right
either to be registered as a member in respect of the share or, instead
of being registered himself, to make such transfer of the share as the
deceased or bankrupt person could have made.
35. A person becoming entitled to a share by reason of the death or
bankruptcy of the holder shall be entitled to the same dividends and
other advantages to which he would be entitled if he were the
registered holder of the share, except that he shall not, before being
registered as a Member in respect of the share, be entitled in respect
of it to exercise any right conferred by membership in relation to
meetings of the Company.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 9
Memorandum and Articles of Association
ALTERATION OF CAPITAL
36. The Company may from time to time by Ordinary Resolution increase the
share capital by such sum, to be divided into shares of such classes
and amount, as the resolution shall prescribe.
37. The Company may by Ordinary Resolution:
(a) consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares;
(b) convert all or any of its paid up shares into stock and reconvert
that stock into paid up shares of any denomination;
(c) subdivide its existing shares, or any of them into shares of a
smaller amount provided that in the subdivision the proportion
between the amount paid and the amount, if any, unpaid on each
reduced share shall be the same as it was in case of the share
from which the reduced share is derived;
(d) cancel any shares which, at the date of the passing of the
resolution, have not been taken or agreed to be taken by any
person and diminish the amount of its share capital by the amount
of the shares so cancelled.
38. The Company may by Special Resolution reduce its share capital and any
capital redemption reserve in any manner authorised by law.
REDEMPTION AND PURCHASE OF OWN SHARES
39. Subject to the provisions of the Companies Law, the Company may:
(a) issue shares on terms that they are to be redeemed or are liable
to be redeemed at the option of the Company or the Member on such
terms and in such manner as the Directors may, before the issue
of such shares, determine;
(b) purchase its own shares (including any redeemable shares) on such
terms and in such manner as the Directors may determine and agree
with the Member; and
(c) make a payment in respect of the redemption or purchase of its
own shares otherwise than out of profits or the proceeds of a
fresh issue of shares.
40. Any share in respect of which notice of redemption has been given shall
not be entitled to participate in the profits of the Company in respect
of the period after the date specified as the date of redemption in the
notice of redemption.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 10
Memorandum and Articles of Association
41. The redemption or purchase of any share shall not be deemed to give
rise to the redemption or purchase of any other share.
42. The Directors may when making payments in respect of redemption or
purchase of shares, if authorised by the terms of issue of the shares
being redeemed or purchased or with the agreement of the holder of such
shares, make such payment either in cash or in specie.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
43. For the purpose of determining those Members that are entitled to
receive notice of, attend or vote at any meeting of Members or any
adjournment thereof, or those Members that are entitled to receive
payment of any dividend, or in order to make a determination as to who
is a Member for any other purpose, the Directors may provide that the
Register of Members shall be closed for transfers for a stated period
but not to exceed in any case 40 days. If the Register of Members shall
be so closed for the purpose of determining those Members that are
entitled to receive notice of, attend or vote at a meeting of Members
such register shall be so closed for at least 10 days immediately
preceding such meeting and the record date for such determination shall
be the date of the closure of the Register of Members.
44. In lieu of or apart from closing the Register of Members, the Directors
may fix in advance a date as the record date for any such determination
of those Members that are entitled to receive notice of, attend or vote
at a meeting of the Members and for the purpose of determining those
Members that are entitled to receive payment of any dividend the
Directors may, at or within 90 days prior to the date of declaration of
such dividend fix a subsequent date as the record date for such
determination.
45. If the Register of Members is not so closed and no record date is fixed
for the determination of those Members entitled to receive notice of,
attend or vote at a meeting of Members or those Members that are
entitled to receive payment of a dividend, the date on which notice of
the meeting is posted or the date on which the resolution of the
Directors declaring such dividend is adopted, as the case may be, shall
be the record date for such determination of Members. When a
determination of those Members that are entitled to receive notice of,
attend or vote at a meeting of Members has been made as provided in
this section, such determination shall apply to any adjournment
thereof.
GENERAL MEETINGS
46. The Directors may, whenever they think fit, convene a general meeting
of the Company.
47. General meetings shall also be convened on the written requisition of
any Member or Members entitled to attend and vote at general meetings
of the Company who hold not less than 10 per cent of the paid up
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 11
Memorandum and Articles of Association
voting share capital of the Company deposited at the registered office
of the Company specifying the objects of the meeting for a date no
later than 21 days from the date of deposit of the requisition signed
by the requisitionists, and if the Directors do not convene such
meeting for a date not later than 45 days after the date of such
deposit, the requisitionists themselves may convene the general
meeting in the same manner, as nearly as possible, as that in which
meetings may be convened by the Directors, and all reasonable expenses
incurred by the requisitionists as a result of the failure of the
Directors shall be reimbursed to them by the Company.
48. If at any time there are no Directors of the Company, any two Members
(or if there is only one Member then that Member) entitled to vote at
general meetings of the Company may convene a general meeting in the
same manner as nearly as possible as that in which meetings may be
convened by the Directors.
NOTICE OF GENERAL MEETINGS
49. At least seven days notice counting from the date service is deemed to
take place as provided in these Articles specifying the place, the day
and the hour of the meeting and, in case of special business, the
general nature of that business, shall be given in manner hereinafter
provided or in such other manner (if any) as may be prescribed by the
Company by Ordinary Resolution to such persons as are, under these
Articles, entitled to receive such notices from the Company, but with
the consent of all the Members entitled to receive notice of some
particular meeting and attend and vote thereat, that meeting may be
convened by such shorter notice or without notice and in such manner as
those Members may think fit.
50. The accidental omission to give notice of a meeting to or the
non-receipt of a notice of a meeting by any Member shall not
invalidate the proceedings at any meeting.
PROCEEDINGS AT GENERAL MEETINGS
51. All business carried out at a general meeting shall be deemed special
with the exception of sanctioning a dividend, the consideration of the
accounts, balance sheets, and ordinary report of the Directors and the
Company's auditors, and the appointment and removal of Directors and
the fixing of the remuneration of the Company's auditors. No special
business shall be transacted at any general meeting without the consent
of all Members entitled to receive notice of that meeting unless notice
of such special business has been given in the notice convening that
meeting.
52. No business shall be transacted at any general meeting unless a quorum
of Members is present at the time when the meeting proceeds to
business. Save as otherwise provided by these Articles, one or more
Members holding at least a majority of the paid up voting share capital
of the Company present in person or by proxy shall be a quorum.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 12
Memorandum and Articles of Association
53. If within half an hour from the time appointed for the meeting a quorum
is not present, the meeting, if convened upon the requisition of
Members, shall be dissolved. In any other case it shall stand adjourned
to the same day in the next week, at the same time and place, and if at
the adjourned meeting a quorum is not present within half an hour from
the time appointed for the meeting the Member or Members present and
entitled to vote shall be a quorum.
54. The chairman, if any, of the Board of Directors shall preside as
chairman at every general meeting of the Company.
55. If there is no such chairman, or if at any meeting he is not present
within fifteen minutes after the time appointed for holding the meeting
or is unwilling to act as chairman, the Members present shall choose
one of their number to be chairman.
56. The chairman may with the consent of any meeting at which a quorum is
present (and shall if so directed by the meeting) adjourn a meeting
from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place. When a
meeting is adjourned for 10 days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. Save as
aforesaid it shall not be necessary to give any notice of an
adjournment or of the business to be transacted at an adjourned
meeting.
57. At any general meeting a resolution put to the vote of the meeting
shall be decided on a show of hands, unless a poll is (before or on the
declaration of the result of the show of hands) demanded by one or more
Members present in person or by proxy entitled to vote and who together
hold not less than 10 per cent of the paid up voting share capital of
the Company, and unless a poll is so demanded, a declaration by the
chairman that a resolution has, on a show of hands, been carried, or
carried unanimously, or by a particular majority, or lost, and an entry
to that effect in the book of the proceedings of the Company, shall be
conclusive evidence of the fact, without proof of the number or
proportion of the votes recorded in favour of, or against, that
resolution.
58. If a poll is duly demanded it shall be taken in such manner as the
chairman directs, and the result of the poll shall be deemed to be the
resolution of the meeting at which the poll was demanded.
59. In the case of an equality of votes, whether on a show of hands or on a
poll, the chairman of the meeting at which the show of hands takes
place or at which the poll is demanded, shall be entitled to a second
or casting vote.
60. A poll demanded on the election of a chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken at such time as the chairman of the meeting
directs.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 13
Memorandum and Articles of Association
VOTES OF MEMBERS
61. Subject to any rights and restrictions for the time being attached to
any class or classes of shares, on a show of hands every Member present
in person and every person representing a Member by proxy shall at a
general meeting of the Company have one vote and on a poll every Member
and every person representing a Member by proxy shall have one vote for
each share of which he or the person represented by proxy is the
holder.
62. In the case of joint holders the vote of the senior who tenders a vote
whether in person or by proxy shall be accepted to the exclusion of the
votes of the joint holders and for this purpose seniority shall be
determined by the order in which the names stand in the Register of
Members.
63. A Member of unsound mind, or in respect of whom an order has been made
by any court having jurisdiction in lunacy, may vote, whether on a show
of hands or on a poll, by his committee, or other person in the nature
of a committee appointed by that court, and any such committee or other
person, may on a poll, vote by proxy.
64. No Member shall be entitled to vote at any general meeting unless all
calls or other sums presently payable by him in respect of shares in
the Company have been paid.
65. On a poll votes may be given either personally or by proxy.
66. The instrument appointing a proxy shall be in writing under the hand of
the appointor or of his attorney duly authorised in writing or, if the
appointor is a corporation, either under seal or under the hand of an
officer or attorney duly authorised. A proxy need not be a Member of
the Company.
67. An instrument appointing a proxy may be in any usual or common form or
such other form as the Directors may approve.
68. The instrument appointing a proxy shall be deemed to confer authority
to demand or join in demanding a poll.
69. A resolution in writing signed by all the Members for the time being
entitled to receive notice of and to attend and vote at general
meetings (or being corporations by their duly authorised
representatives) shall be as valid and effective as if the same had
been passed at a general meeting of the Company duly convened and held.
CORPORATIONS ACTING BY REPRESENTATIVES AT MEETINGS
70. Any corporation which is a Member or a Director may by resolution of
its directors or other governing body authorise such person as it
thinks fit to act as its representative at any meeting of the Company
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 14
Memorandum and Articles of Association
or of any class of Members or of the Board of Directors or of a
committee of Directors, and the person so authorised shall be entitled
to exercise the same powers on behalf of the corporation which he
represents as that corporation could exercise if it were an individual
Member or Director.
DIRECTORS
71. The name of the first Director(s) shall either be determined in writing
by a majority (or in the case of a sole subscriber that subscriber) of,
or elected at a meeting of, the subscribers of the Memorandum of
Association.
72. The Company may by Ordinary Resolution appoint any person to be a
Director.
73. Subject to the provisions of these Articles, a Director shall hold
office until such time as he is removed from office by the Company by
Ordinary Resolution.
74. The Company may by Ordinary Resolution from time to time fix the
maximum and minimum number of Directors to be appointed but unless such
number is fixed as aforesaid the number of Directors shall be
unlimited.
75. The remuneration of the Directors shall from time to time be determined
by the Company by Ordinary Resolution.
76. The shareholding qualification for Directors may be fixed by the
Company by Ordinary Resolution and unless and until so
fixed no share qualification shall be required.
77. The Directors shall have power at any time and from time to time to
appoint a person as Director, either as a result of a casual vacancy or
as an additional Director, subject to the maximum number (if any)
imposed by the Company by Ordinary Resolution.
ALTERNATE DIRECTOR
78. Any Director may in writing appoint another person to be his alternate
to act in his place at any meeting of the Directors at which he is
unable to be present. Every such alternate shall be entitled to notice
of meetings of the Directors and to attend and vote thereat as a
Director when the person appointing him is not personally present and
where he is a Director to have a separate vote on behalf of the
Director he is representing in addition to his own vote. A Director may
at any time in writing revoke the appointment of an alternate appointed
by him. Such alternate shall not be an officer of the Company and shall
be deemed to be the agent of the Director appointing him. The
remuneration of such alternate shall be payable out of the remuneration
of the Director appointing him and the proportion thereof shall be
agreed between them.
79. Any Director may appoint any person, whether or not a Director, to be
the proxy of that Director to attend and vote on his behalf, in
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 15
Memorandum and Articles of Association
accordance with instructions given by that Director, or in the absence
of such instructions at the discretion of the proxy, at a meeting or
meetings of the Directors which that Director is unable to attend
personally. The instrument appointing the proxy shall be in writing
under the hand of the appointing Director and shall be in any usual or
common form or such other form as the Directors may approve, and must
be lodged with the chairman of the meeting of the Directors at which
such proxy is to be used, or first used, prior to the commencement of
the meeting.
POWERS AND DUTIES OF DIRECTORS
80. Subject to the provisions of the Companies Law, these Articles and to
any resolutions made in a general meeting, the business of the Company
shall be managed by the Directors, who may pay all expenses incurred in
setting up and registering the Company and may exercise all powers of
the Company. No resolution made by the Company in general meeting shall
invalidate any prior act of the Directors which would have been valid
if that resolution had not been made.
81. The Directors may from time to time appoint any person, whether or not
a director of the Company to hold such office in the Company as the
Directors may think necessary for the administration of the Company,
including without prejudice to the foregoing generality, the office of
President, one or more Vice-Presidents, Treasurer, Assistant
Treasurer, Manager or Controller, and for such term and at such
remuneration (whether by way of salary or commission or participation
in profits or partly in one way and partly in another), and with such
powers and duties as the Directors may think fit. The Directors may
also appoint one or more of their number to the office of Managing
Director upon like terms, but any such appointment shall ipso facto
determine if any Managing Director ceases from any cause to be a
Director, or if the Company by Ordinary Resolution resolves that his
tenure of office be terminated.
82. The Directors shall appoint the Company Secretary (and if need be an
Assistant Secretary or Assistant Secretaries) who shall hold office for
such term, at such remuneration and upon such conditions and with such
powers as they think fit. Any Secretary or Assistant Secretary so
appointed by the Directors may be removed by the Directors.
83. The Directors may delegate any of their powers to committees consisting
of such member or members of their body as they think fit; any
committee so formed shall in the exercise of the powers so delegated
conform to any regulations that may be imposed on it by the Directors.
84. The Directors may from time to time and at any time by power of
attorney appoint any company, firm or person or body of persons,
whether nominated directly or indirectly by the Directors, to be the
attorney or attorneys of the Company for such purposes and with such
powers, authorities and discretion (not exceeding those vested in or
exercisable by the Directors under these Articles) and for such period
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 16
Memorandum and Articles of Association
and subject to such conditions as they may think fit, and any such
power of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorney as the Directors
may think fit, and may also authorise any such attorney to delegate all
or any of the powers, authorities and discretion vested in him.
85. The Directors may from, time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the
provisions contained in the three next following paragraphs shall be
without prejudice to the general powers conferred by this paragraph.
86. The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of
the company and may appoint any persons to be members of such
committees or local boards and may appoint any managers or agents of
the Company and may fix the remuneration of any of the aforesaid.
87. The Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers,
authorities and discretions for the time being vested in the Directors
and may authorise the members for the time being of any such local
board, or any of them to fill up any vacancies therein and to act
notwithstanding vacancies and any such appointment or delegation may be
made on such terms and subject to such conditions as the Directors may
think fit and the Directors may at any time remove any person so
appointed and may annul or vary any such delegation, but no person
dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
88. Any such delegates as aforesaid may be authorised by the Directors to
subdelegate all or any of the powers, authorities, and discretion for
the time being vested to them.
BORROWING POWERS OF DIRECTORS
89. The Directors may exercise all the powers of the Company to borrow
money and to mortgage or charge its undertaking, property and uncalled
capital or any part thereof, to issue debentures, debenture stock and
other securities whenever money is borrowed or as security for any
debt, liability or obligation of the Company or of any third party.
THE SEAL
90. The Seal of the Company shall not be affixed to any instrument except
by the authority of a resolution of the Board of Directors provided
always that such authority may be given prior to or after the affixing
of the Seal and if given after may be in general form confirming a
number of affixings of the Seal. The Seal shall be affixed in the
presence of a Director or the Secretary (or an Assistant Secretary) of
the Company or in the presence of any one or more persons as the
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 17
Memorandum and Articles of Association
Directors may appoint for the purpose and every person as aforesaid
shall sign every instrument to which the Seal of the Company is so
affixed in their presence.
91. The Company may maintain a facsimile of its Seal in such countries or
places as the Directors may appoint and such facsimile Seal shall not
be affixed to any instrument except by the authority of a resolution
of the Board of Directors provided always that such authority may be
given prior to or after the affixing of such facsimile Seal and if
given after may be in general form confirming a number of affixings of
such facsimile Seal. The facsimile Seal shall be affixed in the
presence of such person or persons as the Directors shall for this
purpose appoint and such person or persons as aforesaid shall sign
every instrument to which the facsimile Seal of the Company is so
affixed in their presence and such affixing of the facsimile Seal and
signing as aforesaid shall have the same meaning and effect as if the
Company Seal had been affixed in the presence of and the instrument
signed by a Director or the Secretary (or an Assistant Secretary) of
the Company or in the presence of any one or more persons as the
Directors may appoint for the purpose.
92. Notwithstanding the foregoing, the Secretary or any Assistant Secretary
shall have the authority to affix the Seal, or the facsimile Seal, to
any instrument for the purposes of attesting authenticity of the matter
contained therein but which does not create any obligation binding on
the Company.
DISQUALIFICATION OF DIRECTORS
93. The office of Director shall be vacated, if the Director:
(a) becomes bankrupt or makes any arrangement or composition with
his creditors;
(b) is found to be or becomes of unsound mind; or
(c) resigns his office by notice in writing to the Company.
PROCEEDINGS OF DIRECTORS
94. The Directors may meet together (either within or without the Cayman
Islands) for the despatch of business, adjourn, and otherwise regulate
their meetings and proceedings as they think fit. Questions arising at
any meeting shall be decided by a majority of votes. In case of an
equality of votes the chairman shall have a second or casting vote. A
Director may, and the Secretary or Assistant Secretary on the
requisition of a Director shall, at any time summon a meeting of the
Directors.
95. A Director or Directors may participate in any meeting of the Board of
Directors, or of any committee appointed by the Board of Directors of
which such Director or Directors are members, by means of telephone or
similar communication equipment by way of which all persons
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 18
Memorandum and Articles of Association
participating in such meeting can hear each other and such
participation shall be deemed to constitute presence in person at the
meeting.
96. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors, and unless so fixed, if there
be more than two Directors shall be two, and if there be two or less
Directors shall be one. A Director represented by proxy or by an
Alternate Director at any meeting shall be deemed to be present for the
purposes of determining whether or not a quorum is present.
97. A Director who is in any way, whether directly or indirectly,
interested in a contract or proposed contract with the Company shall
declare the nature of his interest at a meeting of the Directors. A
general notice given to the Directors by any Director to the effect
that he is a member of any specified company or firm and is to be
regarded as interested in any contract which may thereafter be made
with that company or firm shall be deemed a sufficient declaration of
interest in regard to any contract so made. A Director may vote in
respect of any contract or proposed contract or arrangement
notwithstanding that he may be interested therein and if he does so
his vote shall be counted and he may be counted in the quorum at any
meeting of the Directors at which any such contract or proposed
contract or arrangement shall come before the meeting for
consideration.
98. A Director may hold any other office or place of profit under the
Company (other than the office of auditor) in conjunction with his
office of Director for such period and on such terms (as to
remuneration and otherwise) as the Directors may determine and no
Director or intending Director shall be disqualified by his office
from contracting with the Company either with regard to his tenure of
any such other office or place of profit or as vendor, purchaser or
otherwise, nor shall any such contract or arrangement entered into by
or on behalf of the Company in which any Director is in any way
interested, be liable to be avoided, nor shall any Director so
contracting or being so interested be liable to account to the Company
for any profit realised by any such contract or arrangement by reason
of such Director holding that office or of the fiduciary relation
thereby established. A Director, notwithstanding his interest, may be
counted in the quorum present at any meeting whereat he or any other
Director is appointed to hold any such office or place of profit under
the Company or whereat the terms of any such appointment are arranged
and he may vote on any such appointment or arrangement.
99. Any Director may act by himself or his firm in a professional capacity
for the Company, and he or his firm shall be entitled to remuneration
for professional services as if he were not a Director; provided that
nothing herein contained shall authorise a Director or his firm to act
as auditor to the Company.
100. The Directors shall cause minutes to be made in books or loose-leaf
folders provided for the purpose of recording:
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 19
Memorandum and Articles of Association
(a) all appointments of officers made by the Directors;
(b) the names of the Directors present at each meeting of the
Directors and of any committee of the Directors;
(c) all resolutions and proceedings at all meetings of the Company,
and of the Directors and of committees of Directors.
101. When the chairman of a meeting of the Directors signs the minutes of
such meeting the same shall be deemed to have been duly held
notwithstanding that all the Directors have not actually come together
or that there may have been a technical defect in the proceedings.
102. A resolution signed by all the Directors shall be as valid and
effectual as if it had been passed at a meeting of the Directors duly
called and constituted. When signed a resolution may consist of several
documents each signed by one or more of the Directors.
103. The continuing Directors may act notwithstanding any vacancy in their
body but if and so long as their number is reduced below the number
fixed by or pursuant to the Articles of the Company as the necessary
quorum of Directors, the continuing Directors may act for the purpose
of increasing the number, or of summoning a general meeting of the
Company, but for no other purpose.
104. The Directors may elect a chairman of their meetings and determine the
period for which he is to hold office but if no such chairman is
elected, or if at any meeting the chairman is not present within
fifteen minutes after the time appointed for holding the same, the
Directors present may choose one of their number to be chairman of the
meeting.
105. A committee appointed by the Directors may elect a chairman of its
meetings. If no such chairman is elected, or if at any meeting the
chairman is not present within five minutes after the time appointed
for holding the same, the members present may choose one of their
number to be chairman of the meeting.
106. A committee appointed by the Directors may meet and adjourn as it
thinks proper. Questions arising at any meeting shall be determined by
a majority of votes of the committee members present and in case of an
equality of votes the chairman shall have a second or casting vote.
107. All acts done by any meeting of the Directors or of a committee of
Directors, or by any person acting as a Director, shall notwithstanding
that it be afterwards discovered that there was some defect in the
appointment of any such Director or person acting as aforesaid, or that
they or any of them were disqualified, be as valid as if every such
person had been duly appointed and was qualified to be a Director.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 20
Memorandum and Articles of Association
DIVIDENDS
108. Subject to any rights and restrictions for the time being attached to
any class or classes of shares, the Directors may from time to time
declare dividends (including interim dividends) and other distributions
on shares in issue and authorise payment of the same out of the funds
of the Company lawfully available therefor.
109. Subject to any rights and restrictions for the time being attached to
any class or classes of shares, the Company by Ordinary Resolution may
declare dividends, but no dividend shall exceed the amount recommended
by the Directors.
110. The Directors may, before recommending or declaring any dividend, set
aside out of the funds legally available for distribution such sums as
they think proper as a reserve or reserves which shall, at the
discretion of the Directors be applicable for meeting contingencies, or
for equalising dividends or for any other purpose to which those funds
be properly applied and pending such application may, at the like
discretion, either be employed in the business of the Company or be
invested in such investments (other than shares of the Company) as the
Directors may from time to time think fit.
111. Any dividend may be paid by cheque or warrant sent through the post to
the registered address of the Member or person entitled thereto, or in
the case of joint holders, to any one of such joint holders at his
registered address or to such person and such address as the Member or
person entitled, or such joint holders as the case may be, may direct.
Every such cheque or warrant shall be made payable to the order of the
person to whom it is sent or to the order of such other person as the
Member or person entitled, or such joint holders as the case may be,
may direct.
112. The Directors when paying dividends to the Members in accordance with
the foregoing provisions may make such payment either in cash or in
specie.
113. No dividend shall be paid otherwise than out of profits or, subject
to the restrictions of the Companies Law, the share premium account.
114. Subject to the rights of persons, if any, entitled to shares with
special rights as to dividends, all dividends shall be declared and
paid according to the amounts paid on the shares, but if and so long as
nothing is paid up on any of the shares in the Company dividends may be
declared and paid according to the amounts of the shares. No amount
paid on a share in advance of calls shall, while carrying interest, be
treated for the purposes of this Article as paid on the share.
115. If several persons are registered as joint holders of any share, any of
them may give effectual receipts for any dividend or other moneys
payable on or in respect of the share.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 21
Memorandum and Articles of Association
116. No dividend shall bear interest against the Company.
ACCOUNTS AND AUDIT
117. The books of account relating to the Company's affairs shall be kept
in such manner as may be determined from time to time by the Directors.
118. The books of account shall be kept at the registered office of the
Company, or at such other place or places as the Directors think fit,
and shall always be open to the inspection of the Directors.
119. The Directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or
regulations the accounts and books of the Company or any of them shall
be open to the inspection of Members not being Directors, and no Member
(not being a Director) shall have any right of inspecting any account
or book or document of the Company except as conferred by law or
authorised by the Directors or by the Company by Ordinary Resolution.
120. The accounts relating to the Company's affairs shall be audited in such
manner and with such financial year end as may be determined from time
to time by the Company by Ordinary Resolution or failing any such
determination by the Directors or failing any determination as
aforesaid shall not be audited.
CAPITALISATION OF PROFITS
121. Subject to the Companies Law, the Board may, with the authority of an
Ordinary Resolution:
(a) resolve to capitalise an amount standing to the credit of
reserves (including a share premium account, capital redemption
reserve and profit and loss account), whether or not available
for distribution;
(b) appropriate the sum resolved to be capitalised to the Members in
proportion to the nominal amount of shares (whether or not fully
paid) held by them respectively and apply that sum on their
behalf in or towards:
(i) paying up the amounts (if any) for the time being unpaid
on shares held by them respectively, or
(ii) paying up in full unissued shares or debentures of a
nominal amount equal to that sum,
and allot the shares or debentures, credited as fully paid, to
the Members (or as they may direct) in those proportions, or
partly in one way and partly in the other, but the share premium
account, the capital redemption reserve and profits which are
not available for distribution may, for the purposes of this
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 22
Memorandum and Articles of Association
Article, only be applied in paying up unissued shares to be
allotted to members credited as fully paid;
(c) make any arrangements it thinks fit to resolve a difficulty
arising in the distribution of a capitalised reserve and in
particular, without limitation, where shares or debentures
become distributable in fractions the Board may deal with the
fractions as it thinks fit;
(d) authorise a person to enter (on behalf of all the Members
concerned) an agreement with the Company providing for either:
(i) the allotment to the members respectively, credited as
fully paid, of shares or debentures to which they may be
entitled on the capitalisation, or
(ii) the payment by the Company on behalf of the Members (by
the application of their respective proportions of the
reserves resolved to be capitalised) of the amounts or
part of the amounts remaining unpaid on their existing
shares,
an agreement made under the authority being effective and
binding on all those Members; and
(e) generally do all acts and things required to give effect to the
resolution.
SHARE PREMIUM ACCOUNT
122. The Board of Directors shall in accordance with Section 34 of the
Companies Law establish a share premium account and shall carry to the
credit of such account from time to time a sum equal to the amount or
value of the premium paid on the issue of any share.
123. There shall be debited to any share premium account on the redemption
or purchase of a share the difference between the nominal value of such
share and the redemption or purchase price provided always that at the
discretion of the Board of Directors such sum may be paid out of the
profits of the Company or, if permitted by Section 37 of the Companies
Law, out of capital.
NOTICES
124. Any notice or document may be served by the Company or by the person
entitled to give notice to any Member either personally, by facsimile
or by sending it through the post in a prepaid letter or via a
recognised courier service, fees prepaid, addressed to the Member at
his address as appearing in the Register of Members. In the case of
joint holders of a share, all notices shall be given to that one of the
joint holders whose name stands first in the Register of Members in
respect of the joint holding, and notice so given shall be sufficient
notice to all the joint holders.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 23
Memorandum and Articles of Association
125. Notices posted to addresses outside the Cayman Islands shall be
forwarded by prepaid airmail.
126. Any Member present, either personally or by proxy, at any meeting of
the Company shall for all purposes be deemed to have received due
notice of such meeting and, where requisite, of the purposes for which
such meeting was convened.
127. Any notice or other document, if served by (a) post, shall be deemed
to have been served five days after the time when the letter
containing the same is posted and if served by courier, shall be
deemed to have been served five days after the time when the letter
containing the same is delivered to the courier (in proving such
service it shall be sufficient to prove that the letter containing the
notice or document was properly addressed and duly posted or delivered
to the courier), or, (b) facsimile, shall be deemed to have been
served upon confirmation of receipt or (c) recognised delivery
service, shall be deemed to have been served 48 hours after the time
when the letter containing the same is delivered to the courier
service and in proving such service it shall be sufficient to prove
that the letter containing the notice or documents was properly
addressed and duly posted or delivered to the courier.
128. Any notice or document delivered or sent by post to or left at the
registered address of any Member in accordance with the terms of these
Articles shall notwithstanding that such Member be then dead or
bankrupt, and whether or not the Company has notice of his death or
bankruptcy, be deemed to have been duly served in respect of any share
registered in the name of such Member as sole or joint holder, unless
his name shall at the time of the service of the notice or document,
have been removed from the Register of Members as the holder of the
share, and such service shall for all purposes be deemed a sufficient
service of such notice or document on all persons interested (whether
jointly with or as claiming through or under him) in the share.
129. Notice of every general meeting shall be given to:
(a) all Members who have supplied to the Company an address for the
giving of notices to them; and
(b) every person entitled to a share in consequence of the death or
bankruptcy of a Member, who but for his death or bankruptcy would
be entitled to receive notice of the meeting.
No other person shall be entitled to receive notices of general
meetings.
INDEMNITY
130. Every Director (including for the purposes of this Article any
Alternate Director appointed pursuant to the provisions of these
Articles), Managing Director, agent, Secretary, Assistant Secretary,
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 24
Memorandum and Articles of Association
or other officer for the time being and from time to time of the
Company (but not including the Company's auditor) and the personal
representatives of the same shall be indemnified and secured harmless
out of the assets and funds of the Company against all actions,
proceedings, costs, charges, expenses, losses, damages or liabilities
incurred or sustained by him in or about the conduct of the Company's
business or affairs or in the execution or discharge of his duties,
powers, authorities or discretions, including without prejudice to the
generality of the foregoing, any costs, expenses, losses or
liabilities incurred by him in defending (whether successfully or
otherwise) any civil proceedings concerning the Company or its affairs
in any court whether in the Cayman Islands or elsewhere.
131. No such Director, Alternate Director, Managing Director, agent,
Secretary, Assistant Secretary or other officer of the Company (but
not including the Company's auditor) shall be liable (i) for the acts,
receipts, neglects, defaults or omissions of any other such director
or officer or agent of the Company or (ii) by reason of his having
joined in any receipt for money not received by him personally or
(iii) for any loss on account of defect of title to any property of
the Company or (iv) on account of the insufficiency of any security in
or upon which any money of the Company shall be invested or (v) for
any loss incurred through any bank, broker or other agent or (vi) for
any loss occasioned by any negligence, default, breach of duty, breach
of trust, error of judgement or oversight on his part or (vii) for any
loss, damage or misfortune whatsoever which may happen in or arise
from the execution or discharge of the duties, powers authorities, or
discretions of his office or in relation thereto, unless the same
shall happen through his own dishonesty.
NON-RECOGNITION OF TRUSTS
132. No person shall be recognised by the Company as holding any share upon
any trust and the Company shall not, unless required by law, be bound
by or be compelled in any way to recognise (even when having notice
thereof) any equitable, contingent or future interest in any of its
shares or any other rights in respect thereof except an absolute right
to the entirety thereof in each Member registered in the Register of
Members.
WINDING UP
133. If the Company shall be wound up the liquidator may, with the sanction
of an Ordinary Resolution of the Company divide amongst the Members in
specie or kind the whole or any part of the assets of the Company
(whether they shall consist of property of the same kind or not) and
may, for such purpose set such value as he deems fair upon any property
to be divided as aforesaid and may determine how such division shall be
carried out as between the Members or different classes of Members. The
liquidator may, with the like sanction, vest the whole or any part of
such assets in trustees upon such trusts for the benefit of the
contributories as the liquidator, with the like sanction shall think
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 25
Memorandum and Articles of Association
fit, but so that no Member shall be compelled to accept any shares or
other securities whereon there is any liability.
AMENDMENT OF ARTICLES OF ASSOCIATION
134. Subject to the Companies Law and the rights attaching to the various
classes of shares, the Company may at any time and from time to time by
Special Resolution alter or amend these Articles in whole or in part.
REGISTRATION BY WAY OF CONTINUATION
135. The Company may by Special Resolution resolve to be registered by way
of continuation in a jurisdiction outside the Cayman Islands or such
other jurisdiction in which it is for the time being incorporated,
registered or existing. In furtherance of a resolution adopted pursuant
to this Article, the Directors may cause an application to be made to
the Registrar of Companies to deregister the Company in the Cayman
Islands or such other jurisdiction in which it is for the time being
incorporated, registered or existing and may cause all such further
steps as they consider appropriate to be taken to effect the transfer
by way of continuation of the Company.
--------------------------------------------------------------------------------
October 22, 2001 Schedule E Page 26
Memorandum and Articles of Association
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
In accordance with the Companies law (2000 Revision), sections 130 and 131 of
our Articles of Association provides that the Registrant shall indemnify certain
persons as follows:
Section 130. Every Director (including for the purposes of this Article any
Alternate Director appointed pursuant to the provisions of these Articles),
Managing Director, agent, Secretary, Assistant Secretary, or other officer for
the time being and from time to time of the Company (but not including the
Company's auditor) and the personal representatives of the same shall be
indemnified and secured harmless out of the assets and funds of the Company
against all actions, proceedings, costs, charges, expenses, losses, damages or
liabilities incurred or sustained by him in or about the conduct of the
Company's business or affairs or in the execution or discharge of his duties,
powers, authorities or discretions, including without prejudice to the
generality of the foregoing, any costs, expenses, losses or liabilities incurred
by him in defending (whether successfully or otherwise) any civil proceedings
concerning the Company or its affairs in any court whether in the Cayman Islands
or elsewhere.
Section 131. No such Director, Alternate Director, Managing Director, agent,
Secretary, Assistant Secretary or other officer of the Company (but not
including the Company's auditor) shall be liable (i) for the acts, receipts,
neglects, defaults or omissions of any other such director or officer or agent
of the Company or (ii) by reason of his having joined in any receipt for money
not received by him personally or (iii) for any loss on account of defect of
title to any property of the Company or (iv) on account of the insufficiency of
any security in or upon which any money of the Company shall be invested or (v)
for any loss incurred through any bank, broker or other agent or (vi) for any
loss occasioned by any negligence, default, breach of duty, breach of trust,
error of judgement or oversight on his part or (vii) for any loss, damage or
misfortune whatsoever which may happen in or arise from the execution or
discharge of the duties, powers authorities, or discretions of his office or in
relation thereto, unless the same shall happen through his own dishonesty.
A policy of directors' and officers' liability insurance has been applied for by
the Registrant which insures directors and officers of the Registrant and its
subsidiaries against liability incurred by, arising from or against them for
certain of their acts, errors or omissions.
Reference is made to Item 17 for the undertakings of the Registrant with respect
to indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act").
RECENT SALES OF UNREGISTERED SECURITIES
(a) Securities issued and sold:
1. On March 13, 2000, the Registrant issued one ordinary share to Peter
Lawson of Walkers Law Firm for the aggregate and per share
consideration of $1.00 USD as the subscribing incorporator of the
Company, in reliance on the exemption from registration specified by
the provisions of Regulation S, promulgated pursuant to the Securities
Act of 1933.
2. On March 13, 2000, the incorporator transferred the one ordinary share
to IFG World Holdings Inc. for the aggregate and per share
consideration of $1.00 USD, pursuant to Regulation S of the Securities
Act of 1933.
3. On April 14, 2000, the share capital was subdivided from $50,000 USD
divided into 50,000 ordinary shares of a nominal or par value of $1.00
USD to $50,000 USD divided into 50,000,000 ordinary shares of a
nominal or par value of $0.001 USD. That the existing shares issued
were subdivided as indicated above. Therefore the original ordinary
share was subdivided to total 1,000 ordinary shares.
4. On June 14, 2000, the registrant issued 15,999,000 ordinary shares to
IFG World Holdings Inc. for the aggregate consideration of $160,000
USD and per share consideration of $0.010000625, pursuant to
Regulation S of the Securities Act of 1933.
5. On July 14, 2000, the Registrant accepted and executed subscription
agreements that sold 500,000 units to Solinvest Group Ltd. with each
unit consisting of one share, having $0.001 par value per share, and
one (1) share purchase warrant that allows the holder of each warrant
to purchase one (1) share at an exercise price of $5.00 U.S., to be
exercised not later than December 31, 2002 after which date the
warrant would become null and void, at an offering price of $0.50 per
Unit for gross offering proceeds of $250,000 USD, pursuant to
Regulation S of the Securities Act of 1933.
6. On July 14, 2000, the Registrant accepted and executed subscription
agreements that sold 500,000 units to MultiAsian Venture Ltd. with
each unit consisting of one share, having $0.001 par value per share,
and one (1) share purchase warrant that allows the holder of each
warrant to purchase one (1) share at an exercise price of $5.00 U.S.,
to be exercised not later than December 31, 2002 after which date the
warrant would become null and void, at an offering price of $0.50 per
Unit for gross offering proceeds of $250,000 USD, pursuant to
Regulation S of the Securities Act of 1933.
7. On July 14, 2000, the Registrant accepted and executed subscription
agreements that sold 1,000,000 units to Shangai Ltd. with each unit
consisting of one share, having $0.001 par value per share, and one
(1) share purchase warrant that allows the holder of each warrant to
purchase one (1) share at an exercise price of $5.00 U.S., to be
exercised not later than December 31, 2002 after which date the
warrant would become null and void, at an offering price of $0.50 per
Unit for gross offering proceeds of $500,000 USD, pursuant to
Regulation S of the Securities Act of 1933.
8. On August 17, 2000, the Registrant accepted and executed subscription
agreements that sold 1,000,000 units to Advance Marketing Ltd. with
each unit consisting of one share, having $0.001 par value per share,
and one (1) share purchase warrant that allows the holder of each
warrant to purchase one (1) share at an exercise price of $5.00 U.S.,
to be exercised not later than December 31, 2002 after which date the
warrant would become null and void, at an offering price of $0.50 per
Unit for gross offering proceeds of $500,000 USD, pursuant to
Regulation S of the Securities Act of 1933.
9. On August 17, 2000, the Registrant accepted and executed subscription
agreements that sold 1,000,000 units to Tequesta Financial Ltd. with
each unit consisting of one share, having $0.001 par value per share,
and one (1) share purchase warrant that allows the holder of each
warrant to purchase one (1) share at an exercise price of $5.00 U.S.,
to be exercised not later than December 31, 2002 after which date the
warrant would become null and void, at an offering price of $0.50 per
Unit for gross offering proceeds of $500,000 USD, pursuant to
Regulation S of the Securities Act of 1933.
10. Effective January 31, 2001 IFG World Holdings Inc. purchased all the
units owned by MultiAsian Venture Ltd., Solinvest Group Ltd., Shangai
Ltd., Advance Marketing Ltd., and Tequesta Financial Ltd. pursuant to
a purchase sale agreement between the parties at an aggregate offering
price of $2,000,000 USD and a per unit consideratino of $.50 USD per
unit pursuant to Regulation S of the Securities Act of 1933. These
sales were approved by the Board of Directors on January 31, 2001.
11. On March 7, 2001 the Registrant issued 250,000 ordinary shares to
Sound Refuge Trust at an aggregate offering price of $2,500 USD and a
per unit share price of $0.01 USD in satisfaction of its vesting
obligations to Dr. James Stephenson, pursuant to Regulation S of the
Securities Act of 1933.
(b) Underwriters and Other Purchasers.
Not applicable
(c) Consideration.
See (a) above.
(d) Exemption from Registration Claimed.
See (a) above.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. EXHIBITS
The following exhibits are attached hereto:
Exhibit
Number Title
3.1 Our Articles and Memorandum of Association dated March 15, 2001.
3.2 Our Articles of Amendment and Certificate of Incorporation on change of
name.
4.1 Specimen ordinary share certificate
5.1 Opinion of Stepp Law Group as to the legality of the securities offered
hereby
10.1 Employment Agreements of the Officers and Directors
10.2 Tax Exemption Certificate
21.1 Our subsidiaries
23.1 Consent of Miller and McCollom, Certified Public Accountants (included
in 8.1)
24.1 Power of Attorney (Contained on the signature pages of this
Registration Statement)
B. FINANCIAL STATEMENT SCHEDULES
All schedules are omitted because they are not applicable or the required
information is shown in our consolidated financial statements and related notes
attached to the prospectus.
UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii)to include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the Securities Act
of 1933, may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(5) To remove from registratino by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(6) The undersigned registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of the
subscription offer, the transactions by the underwriters, if any, during the
subscription period, the amount of unsubscribed securities to be purchased by
the underwriters, if any, and the terms of any subsequent reoffering thereof. If
any public offering by the underwriters, if any, is to be made on terms
differing from those set forth on the cover page of the prospectus, a
post-effective amendment will be filed to set forth the terms of such offering.
(7) The undersigned registrant hereby undertakes to provide to the underwriter,
if any, at the closing specified in the underwriting agreements, if any,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this Amendment Number 1
to the Registration Letter to be signed on its behalf by the undersigned,
thereunto duly authorized, this 24th day of May 2001.
(Seal) International Financial Group Inc.
a Cayman Islands, exempt company
Per: (Signed by Kevin Mellor)
------------------------------------------
Kevin Mellor
President, Chief Executive Officer and Director
POWERS OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each officer or director of
International Financial Group Inc. whose signature appears below constitutes and
appoints Kevin Mellor, his true and lawful attorney-in-fact and agents, with
full and several power of substitution, for him and in his name, place and
stead, in any and all capacities, to execute any or all amendments, including
post-effective amendments, and supplements to this Registration Statement and
any subsequent Registration Statement for the same offering which may be filed
under Rule 462(b) increasing the number of securities for which registration is
sought, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agents or his or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by or on behalf of the following persons in the
capacities indicated on March 28, 2001:
(Signed by Kevin Mellor)
-----------------------------------------------------
Mr. Kevin Mellor - President, Chief Executive Officer, Director
(Signed by Harold Carter)
-----------------------------------------------------
Mr. Harold Carter - Director
(Signed by Roman Kostiw)
-----------------------------------------------------
Mr. Roman Kostiw - Director
(Signed by Drew Parker)
-----------------------------------------------------
Dr. Drew Parker - Director
(Signed by John Rayner)
-----------------------------------------------------
Mr. John Rayner - Director
(Signed by Vernon Veira)
-----------------------------------------------------
Mr. Vernon Veira - Director