SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
October 2, 2001
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Date of Report
(Date of Earliest Event Reported)
EXPRESSO EXPRESS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Texas 00-32691 76-0676168
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
618 Cardiff, Irvine, CA 92606
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(Address of principal executive offices)
949-862-5842
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Registrant's telephone number
ILN PELHAM CORPORATION
15007 Grove Gardens, Houston, TX 77082
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(Former name and address of Registrant)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Reorganization dated October
2, 2001 the ("Plan"), between the Registrant ("the Company"); the sole
shareholder of the Registrant; and Jennifer Baker, the sole owner of
The Expresso Express ("Expresso Express"), as listed in the Plan
(see exhibit 2.1), the sole owner of Expresso Express became the
controlling stockholder of the Registrant in a transaction
viewed as an asset purchase. The Plan will be treated as an acquisition
of Expresso Express for accounting purposes, and the effective date of
the Plan was October 2, 2001.
The Plan was adopted, ratified and approved by the sole shareholder,
officer and director of the Registrant, and by the sole owner of
Expresso Express.
The source of the consideration used by the sole owner of Expresso Express
to acquire her respective interest in the Registrant was the exchange of
100% of the assets and liabilities of Expresso Express for 20 million
"unregistered" and "restricted" shares of $0.0001 par value common stock
of the Registrant, pursuant to the Plan.
The basis of the "control" by the sole owner of Expresso Express is stock
ownership. See the table below under Paragraph (b) of this Item.
The sole stockholder of the Registrant and the percentage of ownership of
such outstanding voting securities of the Registrant prior to the
completion of the Plan was ILN Industries, LLC, who owned 5,000,000
shares or 100%, as reported in the Registrant's 10-SB/12g, which has
been filed with the Securities and Exchange Commission.
Pursuant to the Plan, the Registrant was required:
1. To issue 20 Million "unregistered" and "restricted" shares of
$0.0001 par value common stock as the sole consideration for
the assets of Expresso Express;
2. Following resignations, in seriatim, of the director and
executive officers of the Registrant, to designate and elect,
in seriatim, Jennifer Baker as President and Director; and
Simon Gaunt as Secretary/Treasurer and director of the
Registrant, to serve until the next annual meeting of stockholders
and until their respective successors are elected and qualified or
until their prior resignations or terminations.
Taking into account the shares issued for the assets of The Expresso
Express, there will be 25 Million issued and outstanding shares of
common stock of the Registrant as a result of the foregoing.
5 Million shares of $.0001 par value common stock has been transferred
from Jennifer Baker to Simon Gaunt in regards to a previously negotiated
contract prior to the business combination.
A copy of the Plan of Reorganization is filed as an exhibit to this
Form 8-K and is incorporated in its entirety herein. The foregoing
description is modified by such reference.
(b) The following table contains information regarding the shareholdings
of the Registrant's current directors and executive officers and those
persons or entities who beneficially own more than 5% of its common stock
(giving effect to the exercise of the warrants held by each such person
or entity):
Number of shares of Percent of
Common Stock Common Stock
Name Beneficially Owned Beneficially Owned
- -------------------- -------------------- ---------------------
Jennifer Baker 15 MILLION 60%
618 Cardiff
Irvine, CA 92606
Simon Gaunt 5 Million 20%
999 Armidale Rd.
Nemingha, NSW 2340
Australia
ILN Industries, LLC 5 MILLION 20%
15007 Grove Gardens
Houston, TX 77082
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 2, 2001 the Company fully consummated the acquisition of
Expresso Express in accordance with the "Plan" described in Item 1
above. The consideration given for the assets of Expresso Express
was the issuance of 20 Million "unregistered" and "restricted" shares
of the Company's Stock. The transaction was consummated October 2,
2001. See Item 1 above for additional information regarding the
transaction.
(a) See Item 1 of this Report. The consideration exchanged under the
Plan was negotiated at "arms length" between the directors and
executive officers of the Registrant and the sole owner of Expresso
Express. Stockholders and Board of Directors of the Registrant used
criteria used in similar proposals involving the Registrant in the
past, including the relative value of the assets of the Registrant;
its present and past business operations; the future potential of
Expresso Express; its management; and the potential benefit to the
stockholders of the Registrant. The Board of Directors determined
in his good faith that the consideration for the exchange was
reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be an
affiliate of the Registrant had any direct or indirect interest in
Expresso Express prior to the completion of the Plan.
(b) The Registrant, intends to continue the business operations
formerly conducted by Expresso Express which are described below
under the caption Business.
BUSINESS
The Registrant, having purchased the assets of The Expresso
Express, will be engaged in the business of selling espresso
based coffee drinks and other similar products at the retail
level throughout the United States by means of drive-thru
stands.
The overall business goal of the Registrant is to become a
market leader in the retail espresso business by addressing
a niche of the market that is not adequately being addressed
through today's existing espresso shops: the demand for top
quality espresso based products for consumers on the go.
The Registrant's mission is to provide customers with the finest
quality espresso in a friendly and efficient manner. This will
be accomplished through the company's business model, superior
employee training and experience in the drive-thru espresso
stand industry.
PLAN OF OPERATIONS
The Company's current plan is to concentrate initially on
establishing espresso drive-thru facilities throughout California,
and then expand across the United States into other strategic
locations. The development and expansion of these drive-thru
facilities will receive the majority of the company's management
and financial resources, if and when the financial resources
become available.
The Company's major marketing strategy will focus on espresso and
tea drinkers on-the-go by offering top quality espresso based
products at an affordable price with superior customer service.
Exhausting all resources, our promotional efforts will include
internet, radio, print and television advertising. Periodically,
the Company will hold contests and promotions to increase customer
loyalty and to introduce our products to new customers.
To date, the Company's current business activities have consisted
of developing a business plan, research, assembling a management
team and pursuing financing.
DESCRIPTION OF PROPERTY
The Company owns only intellectual property and it's assets are
based on the value of that property. The Company's executive offices
are located in Irvine, CA. The Company acknowledges that the
office space is sufficient for the near future. The intent of the
Registrant is to move into a larger office space if and when
operational financing is secured.
MANAGEMENT
Names Title or Position Ages
Jennifer Baker President/CEO and director 26
Simon Gaunt Treasurer/Secretary/COO and director 25
R. Michael Mendieta CFO **
RESUME
JENNIFER BAKER, President/Chief Executive Officer and director.
Jennifer Baker has over 4 years of management experience in
the retail espresso industry. Her experience includes working with
retail espresso companies throughout the Seattle and California
area. This experience includes working with Espresso Connection,
Shoreline Community College Espresso, and Starbucks Coffee Company.
Ms. Baker's marketing concepts, managerial experience, and Barista
knowledge of making gourmet espresso beverages helped maintain
standards and quality at a drive-thru espresso stand, kiosk, and a
cafe.
SIMON GAUNT, Treasurer/Secretary/Chief Operating Officer and Director.
Simon Gaunt was a fibre optic components manufacturing team leader
at JDS Uniphase. He has over 5 years management experience
stemming from his time in the Australian Army. Mr. Gaunt graduated
with his Bachelors degree in Electrical Engineering from the
University of Western Sydney, Australia.
R. MICHAEL MENDIETA, Chief Financial Officer.
R. Michael Mendieta was the Director of Finance / Accounting,
International Television Distribution for Sony Pictures Entertainment.
Some of Mendieta's primary responsibilities were overseeing the annual
budget, quarterly forecasts, and four-year plans for Sony Pictures
Entertainment international revenues. He analyzes the financial impact
of new agreements and business opportunities, oversees quarterly
marketing reports for international marketing and oversees financial
reporting for thirteen territories. Prior to working at Sony, Mr.
Mendieta was the Director of Home Video & Television Reporting,
International / Domestic for DreamWorks S.K.G. He prepared monthly
internal and external financials in accordance with FAS 53, interfaced
between operations, production, and corporate finance / accounting
regarding contract administration and home video and television
matters. Prior to DreamWorks S.K.G., Mr. Mendieta was Manager of
Financial Reporting for A&M Records.
R. Michael Mendieta graduated from Bowling Green State University.
with a Bachelors of Science degree in Business Administration majoring
in Accounting with a minor in Computer Science. He graduated from the
University of Southern California with a MBA in Entertainment Finance.
HENRY N. EHRLICH, Consultant, Marketing/Promotions.
Mr. Ehrlich formerly served for over 20 years as Paramount Studios'
Senior Publicist, and has been serving as Executive Consultant for
Paramount Studios' Motion Pictures Division for the past 16 years.
Prior to that, Mr. Ehrlich was the formal President of The Publicist
Guild of America and currently lectures for the University of
Southern California and the University of California, Los Angeles.
JONATHAN COOPER, Consultant, Corporate Development.
Mr. Cooper, who is currently with Point of No Return Entertainment,
was with the Global Corporate Strategy and Development Team for
Level 3 Communications, Inc. For Level 3 Communications, Inc.,
his responsibilities included strategic support for M&A deals, market
intelligence, and design of a market strategy for both the
infrastructure (collocation and power) and session technology
products (VoIP, Managed Modem, interactive gaming and presence),
and creation and implementation of Level 3's channel strategy for
the media and entertainment industry. Mr. Cooper was also a process
consultant with Andersen Consulting (Accenture). At Andersen
Consulting, he designed, built, and implemented Health Care
applications for both PPO and HMO solutions.
MICHAEL ABBOTT, Consultant, Corporate Development.
Mr. Abbott worked as a financial analyst at Savoy Pictures, a mid-
size motion-picture production and distribution company in Los
Angeles, calculating the P&A budgets for such feature films as
"Circle of Friends," "The Show," and "Tales from the Hood." He
spearheaded the development of "The Fireflies", a $35M actioner for
MGM and "Mai: The Psychic Girl", a $30M feature for Sony. Mr.
Abbott is the Co-Producer for the $55M motion picture "Battlestar
Gallactica."
MANAGEMENT RESPONSIBILITIES
As Chief Executive Officer (CEO), Jennifer Baker's duties will
be to perform and oversee the management and expansion of
the Registrant. She will be responsible for establishing and
maintaining a strong market competitor for the Company in the
coffee industry. Ms. Baker will also be responsible for
building strong investment relationships and corporate development.
As Chief Operating Officer (COO), Simon Gaunt's duties will
include helping the company remain versatile and competitive
by maintaining the company's fresh approach in the coffee
industry. Mr. Gaunt will oversee and ensure the implementation
of the company operational and marketing strategies.
As Chief Financial Officer (CFO), R. Michael Mendieta will
institute accounting and finance policies and procedures for the
Company. He will solely responsible for creating and implementing
business processes and integrated accounting software. Mr. Mendieta
will oversee annual budget preparation and monthly budget variance
analysis as well as manage accounting.
During the development stage, the Registrant will enter into
consulting agreements in which each Executive will receive the
following registered and unrestricted stock grants pursuant to
the 2001 stock incentive plan and stock grant agreement to be filed
with the SEC registration Form S-8.
Executive Shares to be
issued
Jennifer Baker, CEO 250,000 Shares
Simon Gaunt, COO 250,000 Shares
Michael Mendieta, CFO 187,500 Shares
RISK FACTORS
The Company has only a limited operating history in the coffee
industry upon which an evaluation of the Company and its prospects
can be based. There are established competitors and environmental
factors such as snow, storms that can affect a drive thru location.
Its prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early
stage of development, particularly companies in the new and rapidly
evolving markets. To address these risks, it must, in addition to
other demands, respond to competitive developments. There can be
no assurance that the Company will be successful in addressing such
risks that are involved.
FUTURE CAPITAL REQUIREMENTS
Uncertainty of Future Funding.
The Company presently has extremely limited operating capital. It
will require substantial funding in order to meet the goals and
mission of the Company. Depending on the growth of the company and
the acceptance of its products and services, the Company may need to
raise additional funds for expansion throughout the USA. Such funding
may be difficult to obtain due to a limited operating history. There
can be no assurance that such additional funding will be made available
to the Company, or if made available, that the terms will be
satisfactory to the Company. Additionally, any equity funding will
cause a substantial decrease in the proportional ownership interests of
existing stockholders.
GOVERNMENT REGULATION
The Company is not currently subject to direct regulation by any
government agency, other than regulations applicable to businesses
generally.
LIMITED MARKET FOR COMMON STOCK
Any Market price that may develop for shares of common stock of the
Company is likely to be very volatile, and factors such as success of
lack thereof in developing and marketing the Company's products and
services, competition, governmental regulation and fluctuations in
operating results may all have a significant effect. In addition,
the stock markets generally have experienced, and continue to experience,
extreme price of many small capital companies and which have often been
unrelated to the operating performance of these companies. These broad
market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the Company's common
stock in any market that may develop.
DILUTION
Dilution usually results from the substantially lower prices paid by
insiders for their securities in a company when compared with the price
being paid by other investors. Financial Statements of the Company and
the Pro Forma Combined Balance Sheets and Statements of Operations of
the Registrant and The Expresso Express taking into account the completion
of the Plan, and as described under Item 7 have not been completed to date.
The issuance of the securities to The Expresso Express stockholders will
substantially dilute the interest of other stockholders in the Registrant.
FUTURE SALES OF COMMON STOCK
There is presently no market for the shares of common stock of the
Registrant. See the Risk Factor "Limited Market for Common Stock;
Limited Market for Shares," above. Future sales of securities by the
Board of Directors pursuant to Rule 144 of the Securities and Exchange
Commission may have an adverse impact on any market, which may
develop in the Registrant's securities. Presently, Rule 144 requires a
one year holding period prior to public sale of "restricted
securities" in accordance with this rule; the Directors could each
sell (i) an amount equal to 1% of the total outstanding securities of
the Registrant in any three month period or (ii) the average weekly
reported volume of trading in such securities on all national
securities and exchanges or reported through the automated quotation
system of a registered securities association during the four calendar
weeks preceding the filing of notice under Rule 144 (this computation
is not available to OTC Bulletin Board companies), with the one year
holding period to have commenced on October 2, 2001.
VOTING CONTROL
By virtue of their collective ownership of approximately 80% of the
Registrant's outstanding voting securities, the current Directors have
the ability to elect all of the Registrant's directors, who in turn
elect all executive officers, without regard to the votes of other
stockholders. Collectively, these persons may be deemed to have
absolute control over the management and affairs of the Registrant.
DEPENDENCE ON KEY PERSONAL
The Registrant's performance is substantially dependent on the
performance of its executive officers and key employees. Given the
Registrant's early stage of development, the Registrant is dependent on
its ability to retain and motivate high quality personnel, especially
its current management. The Registrant does not have a "key person"
life insurance policy on any of its employees. The loss of the
services of any of its executive officers or other key employees could
have a material adverse effect on the business, operating results or
financial condition of the Registrant.
DIVIDENDS
The Registrant does not anticipate paying dividends on its common
stock in the foreseeable future. Future dividends, if any, will depend
upon the Registrant's earnings, if any, and subscribers who anticipate
the need of cash dividends from their investment should refrain from
the purchase of the Shares being offered hereby.
PENNY STOCK
The Registrant's securities are deemed to be "penny stock" as defined
in Rule 3a51-1 of the Securities and Exchange Commission; This
designation may have an adverse effect on the development of any
public market for the Registrant's shares of common stock or, if
such a market develops, its continuation, as broker-dealers are
required to personally determine whether an investment in the securities
is suitable for customers prior to any solicitation of any offer to
purchase these securities.
Penny stocks are securities (i) with a price of less than five dollars
per share; (ii) that are not traded on a "recognized" national exchange;
(iii) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ-listed stocks must still meet requirement (i) above);
or (iv) of an issuer with net tangible assets less than $2,000,000
(if issuer has been in continuous operation for at least three years)
or $5,000.000 (if in continuous operation for less than three years),
or with average annual revenues of less than $6,000,000 for the last
three years.
Section 15 (g) of the Securities Exchange Act of 1934, as amended, and
Rule 15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors
with a document disclosing the risks of penny stocks and to obtain a
manually signed and dated written receipt of the document before effecting
any transaction in a penny stock for the investor's account. Potential
investors in the Registrant's common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed
to be "penny stock".
Further, Rule 15g-9 of the Securities and Exchange Commission requires
broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that
investor. This procedure requires the broker-dealer to (i) obtain from
the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable
for the investor and that the investor has sufficient knowledge and
experience as to be reasonably capable of evaluating the risks of penny
stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination
in (ii) above; and (iv) receive a signed and dated copy of such statement
from the investor, confirming that it accurately reflects the investor's
financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for
purchasers of the Registrant's common stock to resell their shares to
third parties or to otherwise dispose of them.
IMDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
The Bylaws of the Registrant provide for indemnification to the fullest
extent allowed under the Texas Business Corporations Act. Generally,
under this Act, a corporation has the power to indemnify any person who
is made a party to any civil, criminal, administrative or investigative
proceeding, other than action by or any right of the corporation, by
reason of the fact that such person was a director, officer, employee
or agent of the corporation, against expenses, including reasonable
attorney's fees, judgments, fines and amounts paid in settlement of
any such actions; provided, however, in any criminal proceeding, the
indemnified person shall have had no reason to believe the conduct
committed was unlawful. It is the position of the Securities and
Exchange Commission that indemnification against liabilities for
violations of the federal securities laws, rules and regulations is
against public policy.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
See Item 1.
On October 3, 2001, the Board of Directors of the Company approved
the formation of a special committee (the Committee) to implement,
oversee and manage the Expresso Express, Inc. 2001 Stock Incentive
Plan (the Plan) and Stock Grant Agreements. The following persons
were nominated by the Board of Directors of the company as the
Directors of the Committee, to serve until the next annual meeting of
the Board and until their successors are elected and qualify, or until
their earlier resignation or termination: Jennifer Baker and Simon
Gaunt.
In addition the Board of Directors of the Company also approved the
execution and the filing of SEC form S-8 in order to register all
shares of common stock granted under the 2001 Stock Incentive Plan
incorporated by reference in this document as exhibit 3.3.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The sole officer and director of ILN Pelham Corporation resigned
as an officer and director of ILN Pelham Corporation effective upon
completion of the Acquisition.
ITEM 7. FINANCIAL STATEMENTS
(a) Financial Statements of Businesses Acquired.
Financial Statements are being prepared and will be filed as an
amendment to this Form 8-k within 60 days of the date October 16, 2001.
(b) Pro Forma Financial Information.
Combined Balance Sheets, Combined Statements of Operations of
ILN Pelham Corporation and Expresso Express are being prepared and will
be filed within 60 days of the date October 16, 2001.
ITEM 8. CHANGE IN FISCAL YEAR
Not Applicable
EXHIBITS
2.1. Agreement and Plan of Reorganization between The Expresso Express
and ILN Pelham Corporation.
3.1. Certificate of Amendment to Articles of Incorporation of ILN Pelham
Corporation.
3.2. Minute of Special Meeting of ILN Pelham Corporation, 10-02-01
3.3. Minute of Special Meeting of Expresso Express, Inc., 10-03-01
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Current Report on Form
8-K/a to be signed on its behalf by the undersigned hereunto duly
authorized.
EXPRESSO EXPRESS, INC.
November 20, 2001 By /s/ Jennifer Baker
--------------------------------
Jennifer Baker, President
Exhibit 2.1
Date: October 2, 2001
AGREEMENT AND PLAN OF REORGANIZATION among ILN Pelham Corporation,
a Texas Corporation ("Pelham" or "Registrant"); ILN Industries, LLC, a
Texas Limited Liability Company hereof (the "Pelham Shareholder"), being
the owner of record of all of the issued and outstanding stock of Pelham;
and Jennifer Baker [dba "The Expresso Express" ("Expresso Express")], a
Sole Proprietorship.
WHEREAS, the Board of Directors of Pelham and the sole proprietor
dba Expresso Express have adopted resolutions pursuant to which Pelham
shall acquire and Expresso Express shall exchange all the assets
described in Exhibit B hereof (hereinafter, respectively, the
"Assets") which is incorporated herein by reference;
WHEREAS, the sole consideration for the Assets shall be the
issuance of 20,000,000 shares of "unregistered" and "restricted" $0.0001
par value common stock of Pelham;
WHEREAS, ILN Industries, LLC, after the effectuation of this plan,
will transfer its 5,000,000 shares of $0.0001 par value common stock of
Pelham (issued originally on April 2, 2001) to the Registrant for
cancellation. The Registrant will then reissue to ILN Industries, LLC
5,000,000 "unregistered" and "restricted" shares of $0.0001 par value
common stock of the Registrant;
WHEREAS, all common stock issued regarding this plan be
deemed validly issued, fully paid and non-assessable; and
WHEREAS, Expresso Express shall acquire in exchange such
shares of the Company in a reorganization within the meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, Pelham, Expresso Express, and the Shareholders
of Pelham shall adopt this plan of reorganization and agree as
follows:
1. PURCHASE AND SALE OF ASSETS
1.1. PURCHASE AND SALE. Pelham hereby agrees to acquire and
Expresso Express hereby agrees to exchange all of the Assets owned by
Expresso Express as of September 30, 2001.
1.2. CONSIDERATION FOR THE ASSETS. The consideration paid for
the Assets shall consist solely of 20,000,000 "unregistered" and
"restricted" shares of $0.0001 par value common stock of Pelham to be
issued in exchange therefore.
1.3. DELIVERY OF SHARES. Upon the execution and delivery by
Expresso Express of an assignment or assignments and other instruments
required or necessary to transfer the Assets to Pelham, the Pelham
shareholder shall deliver one stock certificate to Expresso Express in
the amount set opposite of her respective names as listed on Exhibit A
hereto representing 20,000,000 "restricted" and "unregistered" shares
of common stock of Pelham in the aggregate.
1.4. FURTHER ASSURANCES. At the Closing and from time to time
thereafter, Expresso Express shall execute such additional instruments
and take such other action as Pelham may request in order to exchange
and transfer clear title and ownership in the Assets to Pelham.
1.5. RESIGNATION OF PRESENT DIRECTORS AND EXECUTIVE OFFICERS AND
DESIGNATION OF NEW DIRECTORS AND EXECUTIVE OFFICERS. On Closing,
Henry Jan shall resign as director and officers of Pelham and designate
the directors and executive officers nominated by Jennifer Baker to
serve in their place and stead, until the next respective annual
meetings of the stockholders and Board of Directors of Pelham,
and until their respective successors shall be elected and qualified
or until their respective prior resignations or terminations, who
shall be: Jennifer Baker, President and Director; and Simon Gaunt,
Treasurer, Secretary and Director.
1.6. CHANGE OF NAME. The signatures of the sole Pelham shareholder
and Director in this Plan shall represent an unanimous written consent to
change the Company name "Pelham" to "Expresso Express, Inc." or, if
unavailable in the State of Texas, any name similar to, by amending the
Articles of Incorporation.
1.7. CLOSING. The Plan will be deemed to be closed on receipt of
the Signature of Jennifer Baker, the sole proprietor dba Expresso
Express.
2.0. CLOSING.
2.1. PLACE. The Closing contemplated herein shall be held at the
offices of ILN Industries, LLC 15007 Grove Gardens, Houston, TX 77082,
unless another place or time is agreed upon in writing by the parties
without requiring the meeting of the parties hereof. All proceedings
to be taken and all documents to be executed at the Closing shall be
deemed to have been taken, delivered and executed simultaneously, and
no proceeding shall be deemed taken nor documents deemed executed or
delivered until all have been taken, delivered and executed. The date
of Closing may be accelerated or extended by agreement of the parties.
2.2. EXECUTION OF DOCUMENTS. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or
transmission required by this Agreement or any signature required
thereon may be used in lieu of an original writing or transmission
or signature for any and all purposes for which the original could
be used, provided that such copy, facsimile telecommunication or
other reproduction shall be a complete reproduction of the entire
original writing or transmission or original signature.
3.0. REPRESENTATIONS AND WARRANTIES OF PELHAM
Pelham represents and warrants as follows:
3.1. CORPORATE ORGANIZATION AND GOOD STANDING. Pelham is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Texas, and is qualified to do business
as a foreign corporation in each jurisdiction, if any, in which its
property or business requires such qualification.
3.2. REPORTING COMPANY STATUS. Pelham has filed with the
Securities and Exchange Commission a registration statement on Form
10-SB which became effective pursuant to the Securities Exchange Act
of 1934 and is a reporting company pursuant to Section 12(g)
thereunder.
3.3. REPORTING COMPANY FILINGS. Pelham has timely filed and is
current on all reports required to be filed by it pursuant to Section
13 of the Securities Exchange Act of 1934.
3.4. CAPITALIZATION. Pelham's authorized capital stock
consists of 100,000,000 shares of Common Stock, $.0001 par value,
of which 5,000,000 shares are issued and outstanding, and 20,000,000
shares of non-designated preferred stock of which no shares are
designated or issued.
3.5. ISSUED STOCK. All the outstanding shares of its Common
Stock are duly authorized and validly issued and non-assessable.
3.6. STOCK RIGHTS. Except as set out by attached schedule,
there are no stock grants, options, rights, warrants or other rights
to purchase or obtain Pelham Common or Preferred Stock issued or
committed to be issued.
3.7. CORPORATE AUTHORITY. Pelham has all requisite corporate
power and authority to own, operate and lease its properties, to
carry on its business as it is now being conducted and to execute,
deliver, perform and conclude the transactions contemplated by this
agreement and all other agreements and instruments related to this
agreement.
3.8. AUTHORIZATION. Execution of this agreement has been duly
authorized and approved by Pelham's board of directors.
3.9. SUBSIDIARIES. Except as set out by attached schedule,
Pelham has no subsidiaries.
3.10. FINANCIAL STATEMENTS. Pelham's financial statements dated
April 30, 2001(the "Pelham Financial Statements"), fairly present the
financial condition of Pelham as of the date therein and the results of
its operations for the periods then ended in conformity with generally
accepted accounting principles consistently applied.
3.11. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
reflected or reserved against in the Pelham Financial Statements, Pelham
did not have at that date any liabilities or obligations (secured,
unsecured, contingent, or otherwise) of a nature customarily reflected
in a corporate balance sheet prepared in accordance with generally
accepted accounting principles.
3.12. NO MATERIAL CHANGES. Except as set out by attached schedule,
there has been no material adverse change in the business, properties,
or financial condition of Pelham since the date of the Pelham Financial
Statements.
3.13. LITIGATION. Except as set out by attached schedule, there
is not, to the knowledge of Pelham, any pending, threatened, or
existing litigation, bankruptcy, criminal, civil, or regulatory
proceeding or investigation, threatened or contemplated against Pelham
or against any of its officers.
3.14. CONTRACTS. Except as set out by attached schedule, Pelham
is not a party to any material contract not in the ordinary course of
business that is to be performed in whole or in part after the date of
this agreement.
3.15. TITLE. Except as set out by attached schedule, Pelham has
good and marketable title to all the real property and good and valid
title to all other property included in the Pelham Financial
Statements. Except as set out in the balance sheet thereof, the
properties of Pelham are not subject to any mortgage, encumbrance, or
lien of any kind except minor encumbrances that do not materially
interfere with the use of the property in the conduct of the business
of Pelham.
3.16. TAX RETURNS. Except as set out by attached schedule, all
required tax returns for federal, state, county, municipal, local,
foreign and other taxes and assessments have been properly prepared
and filed by Pelham for all years for which such returns are due
unless an extension for filing any such return has been filed. Any
and all federal, state, county, municipal, local, foreign and other
taxes and assessments, including any and all interest, penalties and
additions imposed with respect to such amounts have been paid or
provided for. The provisions for federal and state taxes reflected
in the Pelham Financial Statements are adequate to cover any such
taxes that may be assessed against Pelham in respect of its business
and its operations during the periods covered by the Pelham Financial
Statements and all prior periods.
3.17. NO VIOLATION. Consummation of the Acquisition will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or
any order, judgment, decree, law, or regulation to which any property
of Pelham is subject or by which Pelham is bound.
4.0. REPRESENTATIONS AND WARRANTIES OF THE PELHAM SHAREHOLDERS
The Shareholders, individually and separately, represent and
warrant as follows:
4.1. TITLE TO SHARES. The Shareholders, and each of them, are
the owners, free and clear of any liens and encumbrances, of the
number of Pelham shares which are listed in the attached schedule
and which they have contracted to transfer.
4.2. LITIGATION. There is no litigation or proceeding pending,
or to each Shareholder's knowledge threatened, against or relating
shares of Pelham held by the Shareholders.
5.0. REPRESENTATIONS AND WARRANTIES OF EXPRESSO EXPRESS
Expresso Express represents and warrants as followed:
5.1. OWNERSHIP. Expresso Express owns the Assets, free and clear
of any liens or encumbrances of any type or nature whatsoever, except
the Liabilities, and Expresso Express has full right, power and
authority to convey these Assets without qualification.
5.2. CONDITION OF THE ASSETS. At the time of Closing, the Assets
shall be in good and marketable condition, suitable for the uses for
which they were intended and, reasonable wear and tear excepted, shall
be free of any material defect.
5.3. CORPORATE AUTHORITY. Expresso Express has all requisite
corporate power and authority to own, operate and lease its properties,
to carry on its business as it is now being conducted and to execute,
deliver, perform and conclude the transactions contemplated by this
Agreement and all other agreements and instruments related to this
agreement.
5.4. FINANCIAL STATEMENTS. Expresso Express's financial
statements dated as of September 30, 2001, copies of which will have
been delivered by Expresso Express to Pelham prior to the Acquisition
Date ("Expresso Express Financial Statements"), fairly present the
financial condition of Expresso Express as of the date therein and
the results of its operations for the periods then ended in
conformity with generally accepted accounting principles
consistently applied.
5.8. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
reflected or reserved against in the Expresso Express Financial
Statements, Expresso Express did not have at that date any liabilities
or obligations (secured, unsecured, contingent, or otherwise) of a
nature customarily reflected in a corporate balance sheet prepared
in accordance with generally accepted accounting principles.
5.9. NO MATERIAL CHANGES. Except as set out by attached schedule,
there has been no material adverse change in the business, properties,
or financial condition of Expresso Express since the date of the
Expresso Express Financial Statements.
5.10. LITIGATION. Except as set out by attached schedule, there
is not, to the knowledge of Expresso Express, any pending, threatened,
or existing litigation, bankruptcy, criminal, civil, or regulatory
proceeding or investigation, threatened or contemplated against
Expresso Express.
5.11. CONTRACTS. Except as set out by attached schedule,
Expresso Express is not a party to any material contract not in the
ordinary course of business that is to be performed in whole or in
part at or after the date of this agreement.
5.12. TITLE. Except as set out by attached schedule, Expresso
Express has good and marketable title to all the real property and
good and valid title to all other property included in the Expresso
Express Financial Statements. Except as set out in the balance
sheet thereof, the properties of Expresso Express are not subject
to any mortgage, encumbrance, or lien of any kind except minor
encumbrances that do not materially interfere with the use of the
property in the conduct of the business of Expresso Express.
5.13. TAX RETURNS. Except as set out by attached schedule,
all required tax returns for federal, state, county, municipal,
local, foreign and other taxes and assessments have been properly
prepared and filed by Expresso Express for all years for which such
returns are due unless an extension for filing any such return has
been filed. Any and all federal, state, county, municipal, local,
foreign and other taxes and assessments, including any and all
interest, penalties and additions imposed with respect to such
amounts have been paid or provided for. The provisions for federal
and state taxes reflected in the Expresso Express Financial
Statements are adequate to cover any such taxes that may be assessed
against Jennifer Baker in respect of its business and its operations
during the periods covered by the Expresso Express Financial
Statements and all prior periods
5.14. NO VIOLATION. Consummation of the Acquisition will not
constitute or result in a breach or default under any provision of
any charter, bylaw, indenture, mortgage, lease, or agreement, or
any order, judgment, decree, law, or regulation to which any
property of Expresso Express is subject or by which Expresso
Express is bound.
6.0. CONDITIONS PRECEDENT TO OBLIGATIONS OF EXPRESSO EXPRESS
All obligations of Expresso Express under this Plan are
subject, at their option, to the fulfillment, before or at the
Closing, of each of the following conditions:
6.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Pelham contained in this Plan
shall be deemed to have been made again at and as of the Closing
and shall then be true in all material respects and shall survive
the Closing.
6.2. DUE PERFORMANCE. Pelham shall have performed and complied
with all of the terms and conditions required by this Plan to be
performed or complied with by it before the Closing.
6.3. OFFICERS' CERTIFICATE. Expresso Express shall have been
furnished with a certificate signed by the President of Pelham, in
such capacity, attached hereto as Exhibit H and incorporated herein
by reference, dated as of the Closing, certifying (1) that all
representations and warranties of Pelham contained herein are true
and correct; and (2) that since the date of the financial statements
(Exhibits C), there has been no material adverse change in the
financial condition, business or properties of Pelham, taken as a
whole.
6.4. ASSETS AND LIABILITIES OF PELHAM. Unless otherwise
agreed, Pelham shall have no assets and no liabilities at Closing,
and all costs, expenses and fees incident to the Plan shall have
been paid.
6.5. RESIGNATION OF DIRECTORS AND EXECUTIVE OFFICERS AND
DESIGNATION OF NEW DIRECTORS AND EXECUTIVE OFFICERS. The present
directors and executive officers of Pelham shall resign, and shall
have designated nominees of Expresso Express as outlined in Section
1.5 hereof as directors and executive officers of Pelham to serve
in their place and stead, until the next respective annual meetings
of the stockholders and Board of Directors of Pelham, and until
their respective successors shall be elected and qualified or until
their respective prior resignations or terminations.
7.0. CONDITIONS PRECEDENT TO OBLIGATIONS OF PELHAM
All obligations of Pelham under this Plan are subject, at Pelham's
option, to the fulfillment, before or at the Closing, of each of the
following conditions:
7.1. REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Expresso Express contained in this
Plan shall be deemed to have been made again at and as of the Closing
and shall then be true in all material respects and shall survive the
Closing.
7.2. DUE PERFORMANCE. Expresso Express shall have performed and
complied with all of the terms and conditions required by this Plan to
be performed or complied with by them before the Closing.
7.3. OFFICERS' CERTIFICATE. Pelham shall have been furnished
with a certificate signed by the sole proprietor dba Expresso Express,
in such capacity, attached hereto as Exhibit I and incorporated herein
by reference, dated as of the Closing, certifying (1) that all
representations and warranties of Expresso Express are true and correct;
and (2) that since the date of the financial statements (Exhibit E),
there has been no material adverse change in the financial condition,
business or properties of Expresso Express, taken as a whole.
7.4. BOOKS AND RECORDS. Expresso Express shall have caused
Expresso Express to make available all books and records of Expresso
Express; provided, however, only to the extent requested in writing
by Pelham at Closing.
8.0. TERMINATION
8.1. TERMINATING THE PLAN. Prior to Closing, this Plan may be
terminated (1) by mutual consent in writing;(2) by either the sole
director of Pelham or the sole proprietor dba Expresso Express, if
there has been a material misrepresentation or material breach of
any warranty or covenant by the other party; or (3) by either the
sole director of Pelham or the sole proprietor dba Expresso
Express if the Closing shall not have taken place, unless
adjourned to a later date by mutual consent in writing, by the
date fixed in Section 2.
9.0. ARBITRATION
9.1. SCOPE. The parties hereby agree that any and all claims
(except only for requests for injunctive or other equitable relief)
whether existing now, in the past or in the future as to which the
parties or any affiliates may be adverse parties, and whether
arising out of this agreement or from any other cause, will be
resolved by arbitration before the American Arbitration Association
within the State of Texas.
9.2. CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The
parties hereby irrevocably consent to the jurisdiction of the
American Arbitration Association and the situs of the arbitration
(and any requests for injunctive or other equitable relief) within
the State of Texas. Any award in arbitration may be entered in
any domestic or foreign court having jurisdiction over the
enforcement of such awards.
9.3. APPLICABLE LAW. The law applicable to the arbitration
and this agreement shall be that of the State of Texas, determined
without regard to its provisions which would otherwise apply to a
question of conflict of laws.
9.4. DISCLOSURE AND DISCOVERY. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and
discovery in regard to any matters which are the subject of the
arbitration and to compel compliance with such disclosure and
discovery order. The arbitrator may order the parties to comply
with all or any of the disclosure and discovery provisions of the
Federal Rules of Civil Procedure, as they then exist, as may be
modified by the arbitrator consistent with the desire to simplify
the conduct and minimize the expense of the arbitration.
9.5. RULES OF LAW. Regardless of any practices of
arbitration to the contrary, the arbitrator will apply the rules
of contract and other law of the jurisdiction whose law applies
to the arbitration so that the decision of the arbitrator will
be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
9.6. FINALITY AND FEES. Any award or decision by the American
Arbitration Association shall be final, binding and non-appealable
except as to errors of law or the failure of the arbitrator to adhere
to the arbitration provisions contained in this agreement. Each party
to the arbitration shall pay its own costs and counsel fees except as
specifically provided otherwise in this agreement.
9.7. MEASURE OF DAMAGES. In any adverse action, the parties shall
restrict themselves to claims for compensatory damages and\or
securities issued or to be issued and no claims shall be made by any
party or affiliate for lost profits, punitive or multiple damages.
9.8. COVENANT NOT TO SUE. The parties covenant that under no
conditions will any party or any affiliate file any action against
the other (except only requests for injunctive or other equitable
relief) in any forum other than before the American Arbitration
Association, and the parties agree that any such action, if filed,
shall be dismissed upon application and shall be referred for
arbitration hereunder with costs and attorney's fees to the
prevailing party.
9.9. INTENTION. It is the intention of the parties and their
affiliates that all disputes of any nature between them, whenever
arising, whether in regard to this agreement or any other matter,
from whatever cause, based on whatever law, rule or regulation,
whether statutory or common law, and however characterized, be
decided by arbitration as provided herein and that no party or
affiliate be required to litigate in any other forum any disputes
or other matters except for requests for injunctive or equitable
relief. This agreement shall be interpreted in conformance with
this stated intent of the parties and their affiliates.
9.10. SURVIVAL. The provisions for arbitration contained herein
shall survive the termination of this agreement for any reason.
10.0. GENERAL PROVISIONS.
10.1. FURTHER ASSURANCES. From time to time, each party will
execute such additional instruments and take such actions as may be
reasonably required to carry out the intent and purposes of this
agreement.
10.2. WAIVER. Any failure on the part of either party hereto
to comply with any of its obligations, agreements, or conditions
hereunder may be waived in writing by the party to whom such
compliance is owed.
10.3. BROKERS. Each party agrees to indemnify and hold harmless
the other party against any fee, loss, or expense arising out of
claims by brokers or finders employed or alleged to have been employed
by the indemnifying party.
10.4. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if
delivered in person or sent by prepaid first-class certified mail,
return receipt requested, or recognized commercial courier service,
as follows:
If to Expresso Express, to:
Expresso Express
618 Cardiff
Irvine, CA 92606
If to Pelham, to:
ILN Pelham Corporation
C/O ILN Industries
P.O. Box 6162
Burbank, CA 91510
If to the Shareholders, to:
ILN Industries, LLC
P.O. Box 6162
Burbank, CA 91510
10.5. GOVERNING LAW. This agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas.
10.6. ASSIGNMENT. This agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their successors and
assigns; provided, however, that any assignment by either party of its
rights under this agreement without the written consent of the other
party shall be void.
10.7. COUNTERPARTS. This agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Signatures sent by facsimile transmission shall be deemed to be evidence
of the original execution thereof.
10.8. REVIEW OF AGREEMENT. Each party acknowledges that it has had
time to review this agreement and, as desired, consult with counsel. In
the interpretation of this agreement, no adverse presumption shall be
made against any party on the basis that it has prepared, or participated
in the preparation of, this agreement.
10.9. NO REVERSE SPLIT. All stockholders of Pelham, including those
to receive shares pursuant to Section 1.3 hereof, shall be protected
against any reverse split that occurs in the reorganized company for a
period of two years following Closing, and in the event of any such
reverse split, such stockholders shall be entitled to have the
reorganized company issue them additional shares to increase their
respective stock holdings as though such reverse split had never been
effected.
10.10. SCHEDULES. All schedules attached hereto, if any, shall be
acknowledged by each party by signature or initials thereon.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
ILN PELHAM CORPORATION
Date: 10-02-01 /s/ Henry Jan
Henry L. Jan, President
SHAREHOLDER OF ILN PELHAM CORPORATION
Date:10-02-01 /s/ Henry Jan
Henry L. Jan, Executive Director
ILN Industries, LLC
THE EXPRESSO EXPRESS
Date:10-02-01 /s/ Jennifer Baker
Jennifer Baker, Owner
EXHIBIT A
THE EXPRESSO EXPRESS OWNERSHIP
Name and Address Ownership of Number of Common
Expresso Express Shares of Pelham to be
Received in Exchange
Jennifer Baker 100% 20,000,000
618 Cardiff
Irvine, CA 92606
EXHIBIT B
EXPRESSO EXPRESS
618 CARDIFF
IRVINE, CA 92606
ASSETS OF EXPRESSO EXPRESS
AS OF SEPTEMBER 30, 2001
1) "The Expresso Express" business plan
2) "The Expresso Express" drink recipes
3) "The Expresso Express" employee handbook
4) Internet Domain Name "www.expressoexpress.com"
EXHIBIT C
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
AS OF APRIL 30, 2001
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
Page
----
INDEPENDENT AUDITOR'S REPORT F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statement of Loss and Accumulated Deficit During F-4
the Development Stage
Statement of Cash Flows F-5
Statement of Stockholder's Equity F-6
NOTES TO FINANCIAL STATEMENTS F-7 to F-9
F-1
Independent Auditor's Report
----------------------------
Stockholders and Board of Directors
ILN Pelham Corporation (A Development Stage Company)
Houston, Texas
We have audited the accompanying balance sheet of ILN Pelham
Corporation (A Development Stage Company), as of April 30, 2001, and
the related statements of loss and accumulated deficit during the
development stage, cash flows, and stockholder's equity for the period
from inception (April 2, 2001) to April 30, 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. 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 presentation. We believe
that our audit provides 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 ILN
Pelham Corporation (A Development Stage Company) at April 30,
2001, and the results of its operations and its cash flows for the
period from inception (April 2, 2001) to April 30, 2001, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 4 to
the financial statements, the Company has incurred a loss of $1,238 from
inception (April 2, 2001) to April 30, 2001, which raises substantial
doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 4. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Dohan and Company, CPA's
May 2, 2001
Miami, Florida
F-2
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
April 30, 2001
ASSETS
Deferred tax asset, less valuation allowance of $186 $ -
TOTAL ASSETS $ -
=========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES $ -
---------
TOTAL LIABILITIES -
---------
COMMITMENTS AND CONTINGENCIES (NOTE 4)
STOCKHOLDER'S EQUITY
Preferred Stock, $.0001 par value, 20,000,000 shares
authorized; none outstanding $ -
Common Stock, $.0001 par value, 100,000,000 shares
authorized; 5,000,000 shares issued and outstanding 500
Additional paid-in capital 1,738
Stock subscription receivable (1,000)
Deficit accumulated during the development stage (1,238)
---------
TOTAL STOCKHOLDER'S EQUITY -
---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ -
=========
See accompanying notes.
F-3
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT DURING THE DEVELOPMENT STAGE
For the period from inception (April 2, 2001) to April 30, 2001
EXPENSES
Organizational expenses $ 300
Professional fees 938
---------
NET LOSS BEFORE INCOME TAX $(1,238)
INCOME TAXES -
---------
NET LOSS AND ACCUMULATED DEFICIT DURING THE
DEVELOPMENT STAGE $(1,238)
=========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
(BASIC AND DILUTED) 5,000,000
=========
NET LOSS PER SHARE (BASIC AND DILUTED) $ (0.00)
=========
See accompanying notes.
F-4
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the period from inception (April 2, 2001) to April 30,2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,238)
---------
NET CASH USED BY OPERATING ACTIVITES (1,238)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Capital Contributed 1,238
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,238
---------
NET INCREASE IN CASH AND EQUIVALENTS FOR THE PERIOD
AND CUMULATIVE DURING THE DEVELOPMENT STAGE -
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -
---------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ -
=========
SUPPLEMENTAL DISCLOSURES
Interest paid $ -
Income taxes paid $ -
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES
Common stock issued for stock subscriptions receivable $ 1,000
---------
See accompanying notes.
F-5
ILN PELHAM CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDER'S EQUITY
Accumulated
Deficit
Common Stock Additional Stock During the Total
-------------------- Paid-In Subscription Development Stockholder's
Description Shares Amount Capital Receivable Stage Equity
- -----------------------------------------------------------------------------------------------
Common stock issued
for cash 5,000,000 $ 500 $ 500 $(1,000) -
Contributed capital - - 1,238 - - 1,238
Net loss and cumulative
loss during the
development stage - - - (1,238) (1,238)
- -----------------------------------------------------------------------------------------------
BALANCE,
April 30, 2001 5,000,000 $ 500 $ 1,738 $(1,000) $(1,238) $ -
===============================================================================================
See accompanying notes.
F-6
NOTE 1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
ILN Pelham Corporation (A Development Stage Company)(the
Company) was incorporated in Texas on April 2, 2001, to serve
as a vehicle to effect a merger, exchange of capital stock,
asset acquisition or other business combination with a domestic
or foreign private business. At April 30, 2001, the Company
had not yet commenced any formal business operations. The
Company's fiscal year end is December 31.
The Company's ability to commence operations is contingent upon
its ability to identify a prospective target business and raise
the capital it will require through the issuance of equity
securities, debt securities, bank borrowings or a combination
thereof.
USE OF ESTIMATES
The preparation of 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 disclosures of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those
estimates.
INCOME TAXES
The Company follows Statement of Financial Accounting Standards
No. 109 (FAS 109), "Accounting for Income Taxes". FAS 109 is
an asset and liability approach that requires the recognition
of deferred tax assets and liabilities for the expected future
tax consequences of the difference in events that have been
recognized in the Company's financial statements compared to
the tax returns.
ADVERTISING
Advertising costs will be expensed as incurred.
NET LOSS PER COMMON SHARE
Basic net loss per common share is computed by dividing net
loss applicable to common shareholders by the weighted-average
number of common shares outstanding during the period.
Diluted net loss per common share is determined using the
weighted-average number of common shares outstanding during the
period, adjusted for the dilutive effect of common stock
equivalents, consisting of shares that might be issued upon
exercise of common stock options. In periods where losses are
reported, the weighted-average number of common shares
outstanding excludes common stock equivalents, because their
inclusion would be anti-dilutive.
CASH AND CASH EQUIVALENTS
The company considers all highly liquid investments with
original maturities of three months or less to be cash
equivalents.
DEVELOPMENT STAGE COMPANY
The Company has been devoting its efforts to activities
such as raising capital, establishing sources of information,
and developing markets for its planned operations. The
Company has not yet generated any revenues and, as such,
it is considered a development stage company.
F-7
NOTE 2. RELATED PARTY TRANSACTIONS
The Company issued 5,000,000 shares of common stock to ILN
Industries, LLC, which is 100% owned by the President and
sole director of the Company in April 2001. These shares
were issued for a total value of $1,000.
ILN Industries, LLC, the Company's sole shareholder
contributed capital in the amount of $1,238, per a signed
agreement dated April 2, 2001. The agreement calls for
ILN Industries, LLC to provide the following services,
without reimbursement from the Company, until the Company
enters into a business combination as described in Note 1:
a. Location and review of potential target companies
b. Payment of all corporate, organizational, and other
costs incurred by the Company.
NOTE 3. INCOME TAXES
At April 30, 2001, the Company had a net operating loss of
approximately $1,238. This loss may be used offset federal
income taxes in future periods. However, if subsequently
there are ownership changes in the Company, as defined in
Section 382 of the Internal Revenue Code, the Company's
ability to utilize net operating losses available before
the ownership change may be restricted to a percentage of
the market value of the Company at the time of the ownership
change. Therefore, substantial net operating loss
carryforwards could, in all likelihood, be limited or
eliminated in future years due to a change in ownership as
defined in the Code. The utilization of the remaining
carryforwards is dependent on the Company's ability to
generate sufficient taxable income during the carryforward
periods and no further significant changes in ownership.
The Company computes deferred income taxes under the
provisions of FASB Statement No. 109 (SFAS 109), which
requires the use of an asset and liability method of
accounting for income taxes. SFAS No. 109 provides for the
recognition and measurement of deferred income tax benefits
based on the likelihood of their realization in future years.
A valuation allowance must be established to reduce deferred
income tax benefits if it is more likely than not that, a
portion of the deferred income tax benefits will not be
realized. It is Management's opinion that the entire
deferred tax benefit of $186 resulting from the net operating
loss may not be recognized in future periods. Therefore, a
valuation allowance equal to the deferred tax benefit of
$186 has been established, resulting in no deferred tax
benefits as of the balance sheet date.
NOTE 4. GOING CONCERN AND MANAGEMENT'S PLANS
As shown in the accompanying financial statements, the
Company incurred a net loss of $1,238 for the period from
inception (April 2, 2001) to April 30, 2001. The ability of
the Company to continue as a going concern is dependent upon its
ability to obtain financing and achieve profitable operations.
The Company anticipates meeting its cash requirements through
the financial support of its shareholders until such time as
it finds a merger partner. The financial statements do not
include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
F-8
NOTE 5. STOCKHOLDER'S EQUITY
SALE OF SHARES
In April 2001, the Company issued 5,000,000 shares of common
stock for a total of $1,000. A stock subscription receivable
was recorded in connection with this transaction.
CAPITAL CONTRIBUTED
In April 2001, the sole shareholder of the Company contributed
$1,238 to pay for the Company's organizational expenses and
audit fees.
PREFERRED STOCK
The Board of Directors is authorized to establish the rights
and preferences of preferred stock. To date, the Board of
Directors has not established those rights and preferences.
F-9
EXHIBIT D
None.
EXHIBIT E
EXPRESSO EXPRESS
618 CARDIFF
IRVINE, CA 92606
From Inception (September 14, 2001)
to September 30, 2001
BALANCE SHEET
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash $ -
FIXED ASSETS
Tangible Assets $ -
Intangible Assets
(drink recipes, business plan
employee handbook, internet
domain) $ 5,050
TOTAL ASSETS $ 5,050
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LIABILITIES $ -
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TOTAL LIABILITIES -
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EXHIBIT G
ACKNOWLEDGEMENT AND APPROVAL OF TERMS AND CONDITIONS
Pursuant to that certain Agreement and Plan of Reorganization
(the "Plan") between the undersigned, The Expresso Express ("Expresso
Express") and Pelham, I acknowledge that I have approved this exchange;
that I am aware of all of the terms and conditions of the Plan; that I
have received and personally reviewed a copy of the Plan and any and
all material documents regarding the Company. I represent and warrant
that I have sufficient knowledge and experience to understand the
nature of the exchange and am fully capable of bearing the economic
risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion
of the Plan, Pelham had no assets and no liabilities, of any measurable
value, and that in actuality, the completion of the Plan and the
exchange of my assets of Expresso Express for shares of Pelham results
in a decrease in the actual percentage of ownership of Expresso Express
prior to the completion of the Plan.
I understand that you have and will make books and records of
your Company available to me for my inspection in connection with the
contemplated exchange of my shares, options or warrants, and that I
have been encouraged to review the information and ask any questions
I may have concerning the information of any director or officer of
the Company or of accounting firms for the Company. I understand
that the accountant for the Company is Dohan and Company, 7700 North
Kendall Drive, #204, Miami, FL, 33156-7564, Telephone (305) 274-1366.
I further understand that, upon the completion of the Plan, no
accountant, attorney, employee or consultant will have any claim of
any kind against the Company for any event or occurrence on or prior
to the completion of the Plan.
I also understand that I must bear the economic risk of ownership
for any shares issued to me for a long period of time, the minimum of
which will be one (1) year, as these shares are "unregistered" and
"restricted" shares and may not be sold unless any subsequent offer or
sale is registered with the United States Securities and Exchange
Commission or otherwise exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act"), or other applicable laws,
rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to
Jennifer Baker for use by Pelham as they are made to induce you to issue
me the shares of Pelham under the Plan, and I further represent (of my
personal knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view Toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further
distribution";
3. That I understand the meaning of "restricted" and
"unregistered" shares and know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend
restricting the sale, assignment, hypothecation or other disposition
unless it can be made in accordance with applicable laws, rules and
regulations;
5. I agree that the stock transfer records of your Company shall
reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired
182unless I shall first have obtained an opinion of legal counsel to
the effect that the shares may be sold in accordance with applicable
laws, rules and regulations, and I understand that any opinion must be
from legal counsel satisfactory to the Company and, regardless of any
opinion, I understand that the exemption covered by any opinion must in
fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the
shares, options or warrants being acquired except as may be pursuant
to any applicable laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable
of bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Pelham, all shares of Pelham to be issued and delivered to me shall be
represented by one certificate only and which such certificate shall be
imprinted with the following legend or a reasonable facsimile thereof
on the front and reverse sides thereof:
The shares, options or warrants of stock represented by this
certificate have not been registered under the Securities Act
of 1933, as amended, and may not be sold or otherwise
transferred unless compliance with the registration provisions
of such Act has been made or unless availability of an
exemption from such registration provisions has been
established, or unless sold pursuant to Rule 144 under the
Act.
THE EXPRESSO EXPRESS
Date:10-02-01 /s/ Jennifer Baker
Jennifer Baker, Owner
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of ILN Pelham Corporation, a
Texas corporation ("Pelham"), represents and warrants the
following as required by the Agreement and Plan of Reorganization
(the "Plan") between Pelham; the Pelham Stockholders; and The
Expresso Express ("Expresso Express"), to-wit:
1. That the undersigned, Henry Jan, is the President
of Pelham and has been authorized and empowered by its
Board of Directors to execute and deliver this Certificate
to Expresso Express;
2. Based upon the personal knowledge, information and
belief of the undersigned and opinions of counsel for
Pelham regarding the Plan:
(i) All representations and warranties of Pelham
contained within the Plan are true and correct;
(ii) Pelham has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes
in the financial position of Pelham as set forth in its
financial statements for the period ending April 30, 2001,
except as set forth in Exhibit D to the Plan.
ILN PELHAM CORPORATION
/s/ Henry Jan
Henry L. Jan, President
EXHIBIT I
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the sole proprietor dba The Expresso Express
("Expresso Express"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan")
between Expresso Express; ILN Pelham Corporation, a Texas Corporation
("Pelham"); and the Pelham Stockholders to-wit:
1. That the undersigned, Jennifer Baker, is the sole proprietor
dba Expresso Express and is authorized to execute and deliver this
Certificate to Pelham and the Pelham Stockholders;
2. Based upon the personal knowledge, information and belief of
the undersigned and opinions of counsel for Expresso Express regarding
the Plan:
(i) All representations and warranties of Expresso Express
contained within the Plan are true and correct;
(ii) Expresso Express has complied with all terms and
provisions required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Expresso Express as set forth in its
financial statements for the financial statements dated as
of September 30, 2001, except as set forth in Exhibit F to the
Plan.
THE EXPRESSO EXPRESS
/s/Jennifer Baker
Jennifer Baker, Owner
Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
ILN Pelham Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Texas,
does hereby certify:
FIRST: That at a meeting of the Board of Directors of ILN Pelham
Corporation, resolutions were duly adopted on October 2, 2001,
setting forth a proposed amendment of the Articles of Incorporation
of said corporation, declaring said amendment to be advisable and
calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed
amendment was as followed:
RESOLVED, that the Articles of Incorporation of ILN Pelham
Corporation be amended by changing the name "ILN Pelham
Corporation" to "Expresso Express, Inc." in ARTICLE ONE so that,
as amended, said Articles shall be and read as followed:
ARTICLE ONE, The name of the Corporation is Expresso
Express, Inc.
SECOND: That there were 25,000,000 shares of common stock
outstanding and entitled to vote.
THIRD: That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the shareholders of said corporation
was duly called and held. The amendment of ARTICLE ONE was adopted
by unanimous written consent of all shareholders, in accordance
with article 9.10 of the Texas Business Corporations Act, and any
written notice required by such article had been given.
FOURTH: That said amendment was duly adopted in accordance with the
provisions of the Texas Business Corporations Act.
FIFTH: That the capital of said corporation shall not be reduced
under or by reason of said amendment.
IN WITNESS WHEREOF, the President of the Corporation has executed
this Certificate of Amendment on October 2, 2001.
/s/ Jennifer Baker
Jennifer Baker, President
Exhibit 3.2
MINUTES OF THE BOARD OF DIRECTORS MEETING
FOR ILN PELHAM CORPORATION
DATE: October 2, 2001
TIME: 10:30am
PLACE: 15007 Grove Gardens, Houston, TX 77082
BOARD MEMBERS PRESENT:
Henry L. Jan PRESIDENT, SECRETARY, & DIRECTOR
ALSO PRESENT WAS:
ILN Industries, LLC. SOLE SHAREHOLDER OF PELHAM
RESOLVED, that the Company exchange the assets of The Expresso
Express ("Expresso Express")described in Exhibit B in consideration
of 20,000,000 "restricted" and "unregistered" shares of the $0.0001
mill par value common stock of the Company and assume the
liabilities of Expresso Express described in Exhibit B of the
Agreement and Plan of Reorganization (the "Plan") between the
Company, and the sole owner of Expresso Express, presented to a
meeting of the Board of Directors;
FURTHER, RESOLVED, that in the good faith judgment of the
directors, the acquisition of the assets listed in Exhibit B
and the assumption of the liabilities listed in Exhibit B as
contemplated by the Plan is fair, just and equitable, and in
the best interest of the stockholders of the Company;
FURTHER, RESOLVED, that such shares, when issued, be deemed
validly issued, fully paid and non-assessable;
FURTHER, RESOLVED, that the delivery of such shares be subject
to the execution and delivery of the Plan by each such
stockholder who is party to the Plan and Expresso Express; and
compliance by Expresso Express with all of the terms and provisions
thereof prior to Closing;
FURTHER, RESOLVED, that the officers of the Company be and they
hereby are authorized and directed to execute and deliver the
Plan and all other documents required or deemed necessary to
complete the Plan for and on behalf of the Company pursuant to
which the Company shall acquire the assets and assume the
liabilities described in Exhibit B to the Plan in exchange for
shares of the Company in a reorganization within the meaning of
Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as
amended;
FURTHER, RESOLVED, that on Closing, the following persons
nominated by the sole proprietor dba Expresso Express will be
designated as the directors of the Company, to serve until the
next annual meeting of the stockholders and until their
successors are elected and qualify, or until his earlier
resignation or termination: Jennifer Baker and Simon Gaunt.
FURTHER, RESOLVED, that Jennifer Baker, be elected as President;
Simon Gaunt be elected as Treasurer and Secretary.
FURTHER, RESOLVED, if the Plan is completed as contemplated,
the Company accept the resignation of Henry L. Jan effective
on the Closing.
Date: 10-02-01 /s/ Henry Jan
Henry L. Jan
Exhibit 3.1
MINUTES OF SPECIAL MEETING
OF BOARD OF DIRECTORS
The special meeting of the Board of Directors of the
Corporation was held on the date and at the time and place set
forth in the written waiver of Notice signed by the Board of
Directors, fixing such time and place, and prefixed to the minutes
of this meeting.
There were present the following :
JENIFFER BAKER -PRESIDENT
SIMON GAUNT-SECRETARY & TREASURER
being all of the Directors of the Corporation.
The meeting was called to order by the President.
It was moved, seconded and unanimously carried that
JENNIFER BAKER acted as Chairman and
SIMON GAUNT acted as Secretary.
After discussion, upon motion duly made, seconded and
carried, it was:
RESOLVED that the Board of Directors of the Company be and
they hereby are authorized and directed to approve the formation
of a special committee (the Committee) to implement, oversee and
manage the EXPRESSO EXPRESS, INC 2001 Stock Incentive Plan (the
Plan) and Stock Grant Agreement.
FURTHER, RESOLVED, that the following persons nominated by the
Board of Directors of Expresso Express, Inc. be designated as the
Directors of the Committee, to serve until the next annual meeting
of the Board and until their successors are elected and qualify,
or until their earlier resignation or termination: Jennifer Baker
and Simon Gaunt.
FURTHER, RESOLVED, that the Committee shall have exclusive and
final authority in each determination, interpretation or other
action affecting the Plan and its Participants. The Committee
shall have the sole discretionary authority to interpret the Plan,
to establish and modify administrative rules for the Plan, to
impose such conditions and restrictions on Awards as it determines
appropriate, and to take such steps in connection with the Plan
and Awards granted hereunder as it may deem necessary or advisable.
The Committee may be, subject to compliance with applicable legal
requirements, with respect to Participants who are not subject to
Section 16(b) of the Exchange Act, delegate such of its powers and
authority under the Plan as it deems appropriate to designated
officers or employees of the Company. In addition, the Board may
exercise any of the authority conferred upon the Committee
hereunder. In the event of any such delegation of authority or
exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer to the delegate of the Committee
or the Board, as the case may be.
FURTHER, RESOLVED, that the Board of Directors of the Company be
and they hereby are authorized and directed to approve and execute
the filing of SEC form S-8 in order to register all shares of
common stock granted under the 2001 Stock Incentive Plan.
There being no further business to come before the meeting, upon
motion duly made, seconded and unanimously carried, it was adjourned.
/s/ Simon Gaunt
Simon Gaunt, Secretary
/s/ Jennifer Baker
Jennifer Baker, Director
/s/ Simon Gaunt
Simon Gaunt, Director
DATE: 10-03-01
TIME: 10:00 am
PLACE: 618 Cardiff, Irvine, CA 92606