ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
ZiaSun Technologies, Inc.
A Nevada Corporation
ACQUISITION OF SHARES OF
Momentum Asia, Inc.
A Corporation organized under the laws of
the Republic of the Philippines
Dated: October 5, 1998
Table of Contents Page
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1 EXCHANGE OF SECURITIES .................................... 1
1.1 Exchange of Shares ............................... 1
1.2 Exemption from Registration ...................... 1
1.3 Non-taxable Transaction .......................... 2
2. REPRESENTATION AND WARRANTIES OF THE SHAREHOLDERS ......... 2
2.1 Organization ..................................... 2
2.2 Capital Stock .................................... 2
2.3 Options, Warrants, Rights, etc. .................. 2
2.4 Subsidiaries ..................................... 2
2.5 Directors and Officers............................ 2
2.6 Financial Statements.............................. 2
2.7 Absence of Changes................................ 2
2.8 Absence of Undisclosed Liabilities................ 3
2.9 Tax Returns....................................... 3
2.10 Patents, Trade Names and Rights................... 3
2.11 Compliance with Laws.............................. 3
2.12 Litigation........................................ 3
2.13 Authority......................................... 3
2.14 Ability to Carry Out Obligations.................. 3
2.15 Full Disclosure................................... 3
2.16 Assets............................................ 4
2.17 Material Contracts................................ 4
3. REPRESENTATIONS AND WARRANTIES OF ZIASUN .................. 4
3.1 Organization...................................... 4
3.2 Capital Stock..................................... 4
3.3 Options, Warrants, Rights, etc. .................. 4
3.4 Non-Reporting Publicly Traded Status ............. 4
3.5 Subsidiaries ..................................... 4
3.6 Directors and Officers ........................... 5
3.7 Patents, Trade Names and Rights................... 5
3.8 Compliance with Laws.............................. 5
3.9 Litigation........................................ 5
3.10 Authority......................................... 5
3.11 Ability to Carry Out Obligations.................. 5
3.12 Full Disclosure................................... 5
3.13 Assets............................................ 6
4. COVENANTS.................................................. 6
4.1 Investigative Rights.............................. 6
4.2 Conduct of Business............................... 6
5. CLOSING .................................................. 6
5.1 Closing........................................... 6
5.2 Shareholders' Deliveries at Closing............... 6
5.3 ZiaSun's Deliveries at Closing.................... 7
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Table of Contents (continued) Page
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6 CONDITIONS TO OBLIGATIONS TO CLOSE.......................... 7
6.1 Conditions to Obligations of Momentum Asia and
Shareholders to Close............................ 7
6.2 Conditions to Obligations of ZiaSun ............... 7
7. INDEMNIFICATION............................................. 7
7.1 Indemnification by Shareholders.................... 7
7.2 Indemnification by ZiaSun ......................... 7
7.3 Notice and Opportunity to Defend................... 8
8. MISCELLANEOUS............................................... 8
8.1 Costs.............................................. 8
8.2 Additional Documentation........................... 9
8.3 Captions and Headings.............................. 9
8.4 No Oral Change..................................... 9
8.5 Non-Waiver.......................................... 9
8.6 Time of Essence..................................... 9
8.7 Choice of Law....................................... 9
8.8 Counterparts and/or Facsimile Signature............. 9
8.9 Notices............................................. 9
8.10 Binding Effect...................................... 10
8.11 Mutual Cooperation.................................. 10
8.12 Brokers............................................. 10
8.13 Survival of Representations and Warranties.......... 10
Signature Pages .................................... 10
SCHEDULES A ...... List of Momentum Asia Shareholders
EXHIBIT 1.2....... Investment Letter
EXHIBIT 2.4....... Subsidiaries of Momentum Asia
EXHIBIT 2.5....... Present Officers and Directors of Momentum Asia
EXHIBIT 2.6....... Audited Financial Statements of Momentum Asia
EXHIBIT 2.8....... Liabilities of Momentum Asia
EXHIBIT 2.12...... Momentum Asia Legal Proceedings and Litigation
EXHIBIT 2.16...... Exceptions to Good Title to Assets of Momentum Asia
EXHIBIT 2.17...... Material Contracts of Momentum Asia
EXHIBIT 3.5....... Subsidiaries of ZiaSun
EXHIBIT 3.6....... Present Officers and Directors of ZiaSun
EXHIBIT 3.13...... Exceptions to Good Title to Assets of ZiaSun
EXHIBIT 5.2.3..... Post Closing Officers and Directors of
Momentum Asia
EXHIBIT 8.12...... Brokers
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AGREEMENT
This Acquisition Agreement and Plan of Reorganization (the "Agreement" or
"Acquisition Agreement") made this 5th day of October, 1998, is by and among
ZiaSun Technologies, Inc., a Nevada Corporation ("ZiaSun") and the undersigned
shareholders (the "Shareholders") who are the owners of 100% of the capital
stock of Momentum Asia, Inc., a corporation organized and existing under the
laws of the Republic of the Philippines ("Momentum Asia").
A. Whereas, Shareholders hold all of the issued and outstanding common
stock of Momentum Asia; and
B. Whereas, ZiaSun, a non-reporting public company, desires to exchange
shares of its Common Stock, $0.001 par value (the "Common Stock") for all of the
issued and outstanding capital stock of Momentum Asia held by the Shareholders,
thereby making Momentum Asia a wholly owned subsidiary of ZiaSun; and
C. Whereas, Shareholders desire to exchange all of the issued and
outstanding capital stock of Momentum Asia for 2,000,000 shares of the Common
stock of ZiaSun, all as more fully set forth herein below; and
D. Whereas, the Board of Directors of ZiaSun has authorized its proper
corporate officers to effect the transactions contemplated herein.
AGREEMENT
---------
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree to the following terms
and conditions:
1. EXCHANGE OF SECURITIES.
1.1. Exchange of Shares. Subject to all the terms and conditions of this
Agreement, ZiaSun will deliver to the Shareholders of Momentum Asia 2,000,000
shares of previously authorized but unissued unregistered and restricted shares
of the Common Stock, $0.001 par value per shares of ZiaSun (the "ZiaSun
Shares"), in exchange for all of the issued and outstanding capital stock of
Momentum Asia owned by the Momentum Asia Shareholders.
1.2. Exemption from Registration. The parties hereto intend that the ZiaSun
Shares to be exchanged shall be exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Act"), pursuant to Section 4(2) of the
Act and the rules and regulations promulgated thereunder and exempt from the
registration requirements of the applicable states. In furtherance thereof,
Shareholders will execute and deliver to ZiaSun on the closing date, investment
letters suitable to legal counsel for ZiaSun, in form substantially as set forth
in Exhibit 1.2 attached hereto.
Page 1 of 13
1.3. Non-taxable Transaction. The parties intend to effect this transaction
as a non-taxable reorganization pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
2. REPRESENTATIONS AND WARRANTIES OF MOMENTUM ASIA
AND THE SHAREHOLDERS.
The Officers and Directors of Momentum Asia and certain Shareholders (the
"Warranting Shareholders") hereby represent and warrant to ZiaSun that:
2.1. Organization. Momentum Asia is a corporation duly organized, validly
existing and in good standing under the laws of the Republic of the Philippines,
and has all necessary corporate powers to own its properties and to carry on its
business as now owned and operated by it, and is duly qualified to do business
and is in good standing in each of the states where its business requires
qualification.
2.2. Capital Stock. The authorized capital stock of Momentum Asia consists
of 4,000,000 shares of capital stock, one Peso (P1.00) par value per share,
(Philippine Currency) (the "Momentum Asia Shares") of which 1,000,000 shares are
issued and outstanding. Immediately prior to closing there shall be 1,000,000
Momentum Asia Shares issued and outstanding all of which are owned by the
Shareholders. All of the issued and outstanding shares of capital stock of
Momentum Asia are duly and validly issued, fully paid and nonassessable. There
are no other authorized class of capital stock.
2.3. Options, Warrants, Rights, etc. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments, convertible
securities or other agreements or commitments obligating Momentum Asia to issue
or to transfer from treasury any additional shares of its capital stock of any
class.
2.4. Subsidiaries. Momentum Asia has no subsidiaries and owns no interest
in other enterprises except as set forth on Exhibit 2.4 attached hereto.
2.5. Directors and Officers. Exhibit 2.5 hereto contains the names and
titles of all present officers and directors Momentum Asia as of the date of
this Agreement.
2.6. Financial Statements. Exhibit 2.6 hereto consists of the audited
financial statements of Momentum Asia as of December 31, 1997 and 1996. The
financial statements have been prepared in accordance with generally accepted
accounting principles on an accrual basis and practices consistently followed by
Momentum Asia throughout the periods indicated, and fairly present the financial
position of Momentum Asia as of the dates of the balance sheets included in the
financial statements and the results of operations for the periods indicated.
2.7. Absence of Changes. Since the date of Momentum Asia's financial
statements included in Exhibit 2.6, there has not been any change in the
financial condition or operations of Momentum Asia, except for changes in the
ordinary course of business, which changes have not, in the aggregate, been
materially adverse.
Page 2 of 13
2.8. Absence of Undisclosed Liabilities. Except as set forth on Exhibit 2.8
attached hereto, Momentum Asia does not have any material debt, liability or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected in the balance sheet of
Momentum Asia included in Exhibit 2.6.
2.9. Tax Returns. Within the times and in the manner prescribed by law,
Momentum Asia has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable. The
provisions for taxes, if any reflected in the Exhibits are adequate for the
periods indicated. There are no present disputes as to taxes of any nature
payable by Momentum Asia.
2.10. Patents, Trade Names and Rights. To the best of its knowledge
Momentum Asia and its subsidiaries (if any) own and hold all necessary patents,
franchise rights, trademarks, service marks, trade names, inventions, processes,
know-how, trade secrets, copyrights, licenses and other rights necessary to its
business, and the business of its subsidiaries as now conducted or proposed to
be conducted. Momentum Asia and its subsidiaries are not infringing upon or
otherwise acting adversely to the right or claimed right of any person with
respect to any of the foregoing.
2.11. Compliance with Laws. Momentum Asia and each of its subsidiaries have
complied with, and is not in violation of, applicable federal, state or local
statutes, laws and regulations (including, without limitation, any applicable
building, zoning or other law, ordinance or regulation) affecting its properties
or the operation of its business.
2.12. Litigation. Except as set forth in Exhibit 2.12 attached hereto,
neither Momentum Asia or any of its subsidiaries is a defendant to any suit,
action, arbitration or legal, administrative or other proceeding, or
governmental investigation which is pending or, to the best knowledge of the
Shareholders, threatened against or affecting Momentum Asia or its subsidiaries
or their business, assets or financial condition. Momentum Asia and its
subsidiaries are not in default with respect to any order, writ, injunction or
decree of any federal, state, local or foreign court, department, agency or
instrumentality applicable to it. Momentum Asia and its subsidiaries are not
engaged in any material lawsuits to recover moneys due it.
2.13. Authority. The Board of Directors of Momentum Asia has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and Momentum Asia has full power and authority to execute,
deliver and perform this Agreement, and this Agreement is a legal, valid and
binding obligation of the Shareholders and is enforceable in accordance with its
terms and conditions.
2.14. Ability to Carry Out Obligations. The execution and delivery of this
Agreement by the Shareholders and the performance by the Shareholders of their
obligations hereunder in the time and manner contemplated will not cause,
constitute or conflict with or result in (a) any breach or violation of any of
the provisions of or constitute a default under any license, indenture,
mortgage, instrument, article of incorporation, bylaw, or other agreement or
instrument to which Momentum Asia is a party, or by which it may be bound, nor
will any consents or authorizations of any party to the Shareholders'
performance of their obligations hereunder be required; (b) an event that would
permit any party to any agreement or instrument to terminate it or to accelerate
the maturity of any indebtedness or other obligation of Momentum Asia; or (c) an
event that would result in the creation or imposition of any lien, charge or
encumbrance on any asset of Momentum Asia.
Page 3 of 13
2.15. Full Disclosure. None of the representations and warranties made by
Momentum Asia, its officers, directors of the Shareholder herein or in any
exhibit, certificate or memorandum furnished or to be furnished by the
Shareholders, or on their behalf, contain or will contain any untrue statement
of material fact or omit any material fact the omission of which would be
misleading.
2.16. Assets. Except as otherwise indicated in Exhibit 2.16 attached
hereto, Momentum Asia and each of its subsidiaries (if any) has good and
marketable title to all of its property, free and clear of all liens, claims and
encumbrances.
2.17. Material Contracts. Material contracts of Momentum Asia are set forth
in Exhibit 2.17, attached hereto an incorporated herein.
3. REPRESENTATIONS AND WARRANTIES OF ZIASUN.
ZiaSun represents and warrants to Momentum Asia and the Shareholders that:
3.1. Organization. ZiaSun is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, and is duly qualified to do business and is in good standing
in each of the states where its business requires qualification.
3.2. Capital Stock. The authorized capital stock of ZiaSun consists of
50,000,000 shares of common stock, $0.001 par value per share (the "Common
Stock") of which 7,900,009 shares are presently issued and outstanding.
Immediately prior to closing it is anticipated that there shall be 8,465,009
shares of Common Stock issued and outstanding which additional 565,000 issued
and outstanding shares will be the result of the closing of the acquisition of
Momentum Internet Incorporated. All of the issued and outstanding shares are
duly and validly issued, fully paid and nonassessable. There are no other
authorized class of capital stock.
3.3. Options, Warrants, Rights, etc. There are no outstanding
subscriptions, options, rights, debentures, instruments, convertible securities
or other agreements or commitments obligation ZiaSun to issue or to transfer
from treasury any additional shares of its Common Stock, or any other class of
securities.
3.4. Non-Reporting Publicly Traded Status. The Common Stock of ZiaSun is
currently listed on the OTC Bulletin Board under the symbol "ZTEC". ZiaSun is a
non-reporting public company. It is not subject to the filing and reporting
requirements of the Securities Exchange Act of 1934 and as such does not file
any period or annual reports with the Securities and Exchange Commission.
Page 4 of 13
3.5. Subsidiaries. Except as set forth in Exhibit 3.5 attached hereto
ZiaSun does not have any other subsidiaries or own any interest in any other
enterprise.
3.6. Directors and Officers. The names and titles of all present officers
and directors of ZiaSun are as set forth on Exhibit 3.6 attached hereto.
3.7. Patents, Trade Names and Rights. To the best of its knowledge ZiaSun
and its subsidiaries own and hold all necessary patents, franchise rights,
trademarks, service marks, trade names, inventions, processes, know-how, trade
secrets, copyrights, licenses and other rights necessary to its business as now
conducted or proposed to be conducted. ZiaSun is not infringing upon or
otherwise acting adversely to the right or claimed right of any person with
respect to any of the foregoing.
3.8. Compliance with Laws. ZiaSun has complied with, and is not in
violation of, applicable federal, state or local statutes, laws and regulations
(including, without limitation, any applicable building, zoning or other law,
ordinance or regulation and all federal and state securities laws (including,
without limitation, the Securities Act of 1933 and the Securities Exchange Act
of 1934) and all material respects NASDAQ rules) affecting its properties or the
operation of its business. To the best of its knowledge all stock of ZiaSun
issued to date has been issued in compliance with all Federal and State
securities laws.
3.9. Litigation. ZiaSun is not a party to any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation which
is pending or, to the best knowledge of ZiaSun threatened against or affecting
ZiaSun or its business, assets or financial condition except for suits as
described in its 1934 Act filings. ZiaSun is not in default with respect to any
order, writ, injunction or decree of any federal, state, local or foreign court,
department, agency or instrumentality applicable to it.
3.10. Authority. The Board of Directors of ZiaSun has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and ZiaSun has full power and authority to execute, deliver
and perform this Agreement, and this Agreement is a legal, valid and binding
obligation of ZiaSun enforceable in accordance with its terms.
3.11. Ability to Carry Out Obligations. The execution and delivery of this
Agreement by ZiaSun and the performance by the ZiaSun of the obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any breach or violation of any of the provisions
of or constitute a default under any license, indenture, mortgage, instrument,
article of incorporation, bylaw, or other agreement or instrument to which
ZiaSun is a party, or by which it may be bound, nor will any consents or
authorizations of any party to ZiaSun's performance of its obligation hereunder;
(b) an event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of ZiaSun; or (c) an event that would result in the creation or
imposition of any lien, charge or encumbrance on any asset of ZiaSun.
3.12. Full Disclosure. None of the representations and warranties made by
ZiaSun herein or in any exhibit, certificate or memorandum furnished or to be
furnished by ZiaSun or on its behalf, contains or will contain any untrue
statement of material fact or omit any material fact the omission of which would
be misleading.
Page 5 of 13
3.13. Assets. ZiaSun has good and marketable title to all of its property,
free and clear of all liens, claims and encumbrances, except as otherwise
indicated on Exhibit 3.13 attached hereto.
4. COVENANTS RELATING TO THE PERIOD PRIOR TO CLOSING.
4.1. Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsel, accountants, auditors and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request.
4.2. Conduct of Business. Prior to Closing, the Shareholders represent that
Momentum Asia shall conduct its business in the normal course. Momentum Asia
shall not amend its Articles of Incorporation or Bylaws (except as may be
described in this Agreement), declare dividends, redeem securities, incur
additional or newly-funded liabilities outside the ordinary course of business,
acquire or dispose of fixed assets, change employment terms, enter into any
material or long-term contract, guarantee obligations of any third party, settle
or discharge any balance sheet receivable for less than its stated amount, pay
more on any liability than its stated amount, or enter into any other
transaction without the prior approval of ZiaSun, not to be unreasonably
withheld.
5. CLOSING.
5.1. Closing. The closing of this transaction shall be held at the offices
of ZiaSun on or prior to October 15, 1998, or at such other place and time as is
mutually agreeable to the parties, or by FAX and Federal Express.
5.2. Shareholders' Deliveries at Closing. At the Closing, the Shareholders
shall deliver the following items:
5.2.1 Certificates representing all of the shares of capital stock
Momentum Asia held by the Shareholders, along with a stock power or stock
powers with signatures guaranteed, duly executed by the Shareholders in
blank or to ZiaSun Technologies, Inc.;
5.2.2 An investment letter in the form of Exhibit 1.2 hereof, duly
executed by the Shareholders;
5.2.3 Resignations of the officers and directors of Momentum Asia and
a resolution concurrently therewith appointing ZiaSun's designated Officers
and Directors as set forth on Exhibit 5.2.3 attached hereto
Page 6 of 13
5.3. ZiaSun's Deliveries at Closing. At the Closing, ZiaSun shall deliver
the following items:
5.3.1 Either (a) certificates representing the ZiaSun Shares, duly
issued with restrictive legend, to the Shareholders as listed on Schedule A
attached hereto, or (b) a copy of a letter from ZiaSun to its transfer
agent, Signature Stock Transfer, Inc., instructing such transfer agent to
issue the certificates representing the ZiaSun Shares to the Shareholders
as listed on Schedule A.
6. CONDITIONS TO OBLIGATIONS TO CLOSE AND MATERIAL TERMS OF AGREEMENT.
6.1. Conditions to Obligations of Momentum Asia and Shareholders to Close.
The obligations of the Shareholders to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of the conditions that
the representations and warranties of ZiaSun shall be true in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing date, that ZiaSun shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
6.2. Conditions to Obligations of ZiaSun. The obligations of ZiaSun to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction of the conditions that the representations and warranties of
Momentum Asia and the Shareholders shall be true in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date, that the Shareholders shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement and between ZiaSun, its shareholders and Momentum Asia and related
parties, be performed or complied with by it on or prior to the Closing Date.
7. INDEMNIFICATION.
7.1. Indemnification by Shareholders. The Warranting Shareholders agree to
indemnify, defend and hold the ZiaSun shareholders, ZiaSun, its officers and
directors, harmless against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees that it
shall incur or suffer, which arise out of, result or relate to any breach of, or
failure by Momentum Asia perform any of its material representations,
warranties, covenants or agreements in this Agreement or in any schedule,
certificate, exhibit or other instrument furnished or to be furnished by
Shareholders under this Agreement; provided however, that notice of any such
breach shall have been communicated with specificity within two (2) years of the
date hereof.
7.2. Indemnification by ZiaSun. ZiaSun agrees to indemnify, defend and hold
the Shareholders harmless against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney fees, that
it shall incur or suffer, which arise out of, result or relate to any breach of,
or failure by ZiaSun to perform any of its material representations, warranties,
covenants or agreements in this Agreement or in any schedule, certificate,
exhibit or other instrument furnished or to be furnished by ZiaSun under this
Agreement.
Page 7 of 13
7.3. Notice and Opportunity to Defend. If there occurs an event which any
Party asserts is an indemnifiable event, the Party seeking indemnification shall
notify the Party obligated to provide indemnification (the "Indemnifying Party")
promptly. If such event involves (i) any claim or (ii) the commencement of any
action or proceeding by a third person, the Party seeking indemnification will
give such Indemnifying Party written notice of such claim or the commencement of
such action or proceeding. Such notice shall be a condition precedent to any
liability of the Indemnifying Party hereunder. Such Indemnifying Party shall
have a period of thirty (30) days within which to respond thereto. If such
Indemnifying Party does not respond within such thirty (30) days period, such
Indemnifying Party shall be obligated to compromise or defend, at its own
expense and by counsel chosen by the Indemnifying Party shall provide reasonably
satisfactory to the Party seeking indemnity, such matter and the Indemnifying
Party shall provide the Party seeking indemnification with such assurances as
may be reasonably required by the latter to assure that the Indemnifying Party
will assume, and be responsible for, the entire liability issue. If such
Indemnifying Party does not respond within such thirty (30) day period and
rejects responsibility for such matter in whole or in part, the Party seeking
indemnification shall be free to pursue, without prejudice to any of its rights
hereunder, such remedies as may be available to such Party under applicable law.
The Party seeking indemnification agrees to cooperate fully with the
Indemnifying Party and its counsel in the defense against any such asserted
liability. In any event, the Party seeking indemnification shall have the right
to participate at its own expense in the defense of such asserted liability. Any
compromise of such asserted liability by the Indemnifying Party shall require
the prior written consent of the Party seeking indemnification. If, however, the
Party seeking indemnification refuses its consent to a bona fide offer of
settlement which the Indemnifying Party wishes to accept, the Party seeking
indemnification may continue to pursue such matter, free of any participation by
the Indemnifying Party, at the sole expense of the Party seeking
indemnification. In such event, the obligation of the Indemnifying Party to the
Party seeking indemnification shall be equal to the lesser of (i) the amount of
the offer of settlement which the Party seeking indemnification refused to
accept plus the costs and expenses of such Party prior to the date the
Indemnifying Party notifies the Party seeking indemnification of the offer of
settlement and (ii) the actual out-of-pocket amount the Party seeking
indemnification is obligated to pay as a result of such Party's continuing to
pursue such an offer. An Indemnifying Party shall be entitled to recover from
the Party seeking indemnification any additional expenses incurred by such
Indemnifying Party as a result of the decision of the Party seeking
indemnification to pursue such matter.
8. MISCELLANEOUS.
8.1. Costs. Each party shall bear its own costs associated with this
Agreement, the closing of this Agreement, and all ancillary or related measures,
including without limitation, costs of attorneys fees, accountants fees, filing
fees, or other costs or expenses, without right or recourse from the other.
Page 8 of 13
8.2. Additional Documentation. The parties acknowledge that further
agreements and documents, in addition to the Exhibits appended hereto, may be
required in order to effect the transactions contemplated hereunder. Each party
agrees to provide and execute such other and further agreements or documentation
as, in the opinions of respective counsel, are reasonably necessary to effect
the transactions contemplated hereunder and to maintain regulatory and legal
compliance.
8.3. Captions and Headings. The article and paragraph headings throughout
this Agreement are for convenience and reference only and shall not define,
limit or add to the meaning of any provision of this Agreement.
8.4. No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but only by an agreement in
writing signed by the party against whom enforcement of any such waiver, change,
modification or discharge is sought.
8.5. Non-Waiver. The failure of any party to insist in any one or more
cases upon the performance of any of the provisions, covenants or conditions of
this Agreement or to exercise any option herein contained shall not be construed
as a waiver or relinquishment for the future of any such provisions, covenants
or conditions. No waiver by any party of one breach by another party shall be
construed as a waiver with respect to any subsequent breach.
8.6. Time of Essence. Time is of the essence of this Agreement and of each
and every provision.
8.7. Choice of Law. This Agreement and its application shall be governed by
the laws of the State of Nevada.
8.8. Counterparts and/or Facsimile Signature. This Agreement may be
executed in any number of counterparts, including counterparts transmitted by
telecopier or FAX, any one of which shall constitute an original of this
Agreement. When counterparts of facsimile copies have been executed by all
parties, they shall have the same effect as if the signatures to each
counterpart or copy were upon the same document and copies of such documents
shall be deemed valid as originals. The parties agree that all such signatures
may be transferred to a single document upon the request of any party.
8.9. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
If to ZiaSun, addressed to it at:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ZiaSun Technologies, Inc.
▇▇▇ ▇. ▇▇▇▇▇, #▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Page 9 of 13
With copy to Counsel, addressed to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Wenthur & Chachas
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Momentum Asia and the Shareholders, to them at:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Freeport Zone, Philippines
With a copy to their Counsel, addressed to:
▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇
8.10. Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
8.11. Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement and shall execute such other and
further documents and take such other and further actions as may be necessary or
convenient to effect the transaction described herein.
8.12. Brokers. The parties hereto represent that no other broker has
brought about this Agreement, and no other finder's fee has been paid or is
payable by either party, except for the broker whose name is set forth on
Exhibit 8.12, and whose fee shall be paid by the Shareholders. Each party hereto
shall indemnify and hold the other harmless against any and all claims, losses,
liabilities or expenses which may be asserted against it as a result of its
dealings, arrangements or agreements with any other broker.
8.13. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this Agreement
or in any instrument, certificate, opinion or other writing provided for herein
shall survive the Closing.
Page 10 of 13
AGREED AND ACCEPTED as of the date first above written.
ZIASUN TECHNOLOGIES, INC.
A Nevada Corporation
Dated: October 5, 1998 /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: President
Dated: October 5, 1998 /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Secretary
MOMENTUM ASIA, INC.
Republic of the
Philippines Corporation
Dated: October 5, 1998 /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: President
Dated: October 26, 1998 /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Secretary
SHAREHOLDERS OF MOMENTUM ASIA, INC., WHO WILL WARRANT THE REPRESENTATIONS
HEREIN:
/S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /S/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------------- ----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
----------------------------------- ----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /S/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III Momentum Media Ltd.
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Its: Authorized Agent
Page 11 of 13
NON-WARRANTING MOMENTUM ASIA, INC. SHAREHOLDER SIGNATURE PAGE for Acquisition
Agreement and Plan of Reorganization between ZiaSun Technologies, Inc., and the
Shareholders of Momentum Asia, Inc.
The undersigned shareholders of Momentum Asia hereby execute this Agreement
solely for the purpose of affirming the following and for no other purpose.
Delivery of Momentum Asia Stock.
Each Momentum Asia Shareholder signing hereto hereby agrees to sell,
assign, transfer and deliver and does hereby sell, assign, transfer and deliver
to ZiaSun, and ZiaSun agrees to acquire and accept from each Momentum Asia
Shareholder, upon the terms and conditions set forth in this Agreement,
complete, absolute and unencumbered right, title and interest in and to the
Momentum Asia Shares held by each Momentum Asia Shareholder.
Consideration.
The entire consideration to be paid to Momentum Asia Shareholders in
exchange for the transfer, assignment and deliver of the Momentum Asia Shares is
the common shares of the authorized but unissued capital stock of ZiaSun as
allocated on Schedule A to each shareholder.
Exchange of Shares.
At the Closing Date as defined in this Agreement, ZiaSun shall deliver to
the Momentum Asia Shareholders, in accordance with Schedule A, 2,000,000 shares
of the authorized but unissued Common Stock of ZiaSun (the "ZiaSun Shares"). The
exchange of shares contemplated by this Agreement is intended to result in a
tax-free reorganization within the meaning of Section 368(a)(1)(B) of the Code.
The Momentum Asia Shareholders agree to assist ZiaSun in adopting and filing any
documentation necessary to comply with the Code in order to preserve the
tax-free treatment of the within exchange of shares.
Investment Representation.
The Shares being acquired by the Momentum Asia Shareholders hereunder are
being acquired for investment purposes only and not with a view towards resale
or redistribution and no person or entity has any beneficial interest in such
shares except the Momentum Asia Shareholders. The Shares being acquired have not
been registered under the Securities Act of 1933 as amended (the "Securities
Act"), are restricted securities and the Momentum Asia Shareholders acknowledge
and agree that they may not sell, offer, transfer, hypothecate or convey such
shares except pursuant to a registration statement pursuant to the Securities
Act or an exemption therefrom. Such shares shall be issued with the following
legend and shall be subject to a stock transfer order delivered by the Company
to the transfer agent, such legend to be as follows:
Page 12 of 13
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION FOR THESE SHARES UNDER SUCH ACT OR AN
OPINION OF THE COMPANY'S COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SAID ACT.
Dated: ________________________ ___________________________
Signature of Non-Warranting
Momentum Asia, Inc.
Shareholder
Page 13 of 13
SCHEDULE A
LIST OF MOMENTUM ASIA SHAREHOLDERS
Shareholder Number of Number of
Name and Address Momentum Asia Shares ZiaSun Shares
--------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 1 2
59-D Sword Fish, New West
Kalayaan, Subic Bay Freeport Zone
Philippines
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1 2
▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Sunset Valley Mansions, Angeles City
▇▇▇▇ ▇. ▇▇▇▇▇▇ 1 2
▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III 1 2
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1 2
35-B Scout, Fuentebella St.
Quezon, City
Momentum Media Ltd......... 999,995 1,999,990
Rm. ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
--------------------------------------------------------------------------------
Total 1,000,000 2,000,000
EXHIBIT 1.2
INVESTMENT LETTER
--------------------------------------------------------------------------------
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ZiaSun Technologies, Inc.
▇▇▇ ▇. ▇▇▇▇▇, #▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: INVESTMENT LETTER
Gentlemen:
The undersigned having acquired by a stock-for-stock exchange a certain
amount of the total 2,000,000 restricted and unregistered shares of Common
Stock, $0.001 par value per share (the "Securities") of ZiaSun Technologies,
Inc., a Nevada Corporation, (the "Company"), hereby represents to the Company
that:
1. The Securities which are being acquired by the undersigned are being
acquired for the undersigned's own account and for investment and not with a
view to the public resale or distribution thereof.
2. The undersigned will not sell, transfer or otherwise dispose of the
Securities unless, in the opinion of the Company's counsel, such disposition
conforms with applicable securities laws requirements.
3. The undersigned is aware that the Securities are "restricted securities"
as that term is defined in Rule 144 (the "Rule") promulgated under the
Securities Act of 1933, as amended (the "Act").
4. The undersigned acknowledges that the undersigned has had an opportunity
to ask questions of and receive answers from duly designated representatives of
the Company concerning the finances of the Company and the proposed business
plan of the Company.
5. The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
6. The undersigned further acknowledges that the undersigned is fully aware
of the applicable limitations on the resale of the Securities. These
restrictions for the most part are set forth in Rule 144 (the "Rule"). The Rule
permits sales of "restricted securities" upon compliance with the requirements
of such Rule. If and when the Rule is available to the undersigned, the
undersigned may make only sales of the Securities in accordance with the terms
and conditions of the rule (which may limit the amount of Securities that may be
sold).
Investment Letter
Page 2 of 2
--------------------------------------------------------------------------------
7. By reason of the undersigned's knowledge and experience in financial and
business matters in general, and investments in particular, the undersigned is
capable of evaluating the merits and risks of an investment by the undersigned
in the Securities.
8. The undersigned is capable of bearing the economic risks of an
investment in the Securities. The undersigned fully understands the speculative
nature of the Securities and the possibility of loss.
9. The undersigned's present financial condition is such that the
undersigned is under no present or contemplated future need to dispose of any
portion of the Securities to satisfy any existing or contemplated undertaking,
need, or indebtedness.
10. Any and all certificates representing the Securities, and any and all
securities issued in replacement thereof or in exchange therefor, shall bear the
following restrictive legend.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION FOR THESE SHARES UNDER SUCH ACT OR AN
OPINION OF THE COMPANY'S COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER SAID ACT.
11. The undersigned further agrees that the Company shall have the right to
issue stop-transfer instructions to its transfer agent until such time as sale
is permitted under Security Laws and acknowledges that the Company has informed
the undersigned of its intention to issue such instructions.
Very truly yours,
----------------------------------
Undersigned
Date: ____________________________
----------------------------------
Address
----------------------------------
Social Security Number
EXHIBIT 2.4
SUBSIDIARIES OF MOMENTUM ASIA
-------------------------------------------------------------------------------
NONE
EXHIBIT 2.5
PRESENT OFFICERS AND DIRECTORS MOMENTUM ASIA
-------------------------------------------------------------------------------
OFFICERS
--------
CEO and President .............................. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer ........................ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary ...................................... ▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary............................. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
DIRECTORS
---------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
EXHIBIT 2.6
AUDITED FINANCIAL STATEMENTS MOMENTUM ASIA
As of December 31, 1997 and 1996
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
FINANCIAL STATEMENTS
December 31, 1997 and 1996
C O N T E N T S
Independent Auditors' Report............................................ 3
Balance Sheet........................................................... 4
Statements of Operations................................................ 6
Statements of Stockholders' Equity...................................... 7
Statements of Cash Flows................................................ 8
Notes of the Financial Statements....................................... 9
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Momentum Asia, Inc.
(Formerly New Age Publications, Inc.)
Subic Bay, Phillippines
We have audited the accompanying balance sheet of Momentum Asia, Inc. (formerly
New Age Publications, Inc.) as of December 31, 1997 and the related statements
of operations, stockholders' equity, and cash flows for the years ended December
31, 1997 and 1996. 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 audits 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 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 Momentum Asia, Inc. (formerly
New Age Publications, Inc.) as of December 31, 1997 and the results of its
operations and its cash flows for the years ended December 31, 1997 and 1996 in
conformity with generally accepted accounting principles.
▇▇▇▇▇, ▇▇▇▇▇▇ & Company
Salt Lake City, Utah
August 19, 1998
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Balance Sheet
ASSETS
December 31,
-------------
1997
-------------
CURRENT ASSETS
Cash $ 22,011
Accounts receivable, net (Note 2) 28,831
Inventory (Note 2) 3,755
-------------
Total Current Assets 54,597
EQUIPMENT (Note 2)
Printing equipment 297,271
Machinery and equipment 17,890
Office equipment 54,324
Vehicles 22,005
Leasehold improvements 35,729
Less: accumulated depreciation (109,754)
-------------
Total Equipment 317,465
OTHER ASSETS
Other assets (Note 3) 546,123
-------------
Total Other Assets 546,123
TOTAL ASSETS $ 918,185
=============
The accompanying notes are an integral part of these financial statements.
4
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Balance Sheet (Continued)
LIABILITIES
ASSETS
December 31,
-------------
1998
-------------
CURRENT LIABILITIES
Accounts payable $ 69,198
Accrued expenses 41,031
-------------
Total Current Liabilities 110,229
TOTAL LIABILITIES 110,229
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY
Common stock, par value $0.038; 1,000,000
shares authorized; 25,000 shares issued
and outstanding 953
Additional paid-in capital 785,912
Currency translation adjustment 41,761
Accumulated deficit (20,670)
-------------
Total Stockholders' Equity 807,956
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 918,185
=============
The accompanying notes are an integral part of these financial statements.
5
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Statements of Operations
For the Years Ended
December 31,
---------------------------------
1997 1996
------------- -------------
SALES, NET $ 884,764 $ 565,097
COST OF GOODS SOLD 552,210 311,588
------------- -------------
Gross Profit 332,554 253,509
------------- -------------
OPERATING EXPENSES
Depreciation expense 49,200 40,518
General and administrative 202,035 331,278
------------- -------------
Total Operating Expenses 251,235 371,796
------------- -------------
Income (Loss) from Operations 81,319 (118,287)
------------- -------------
OTHER INCOME (EXPENSE)
Unrealized gain on trading securities 18,297 -
Rental income 70,688 -
Interest income 350 803
Bad debt expense (27,796) (14,466)
Loss on sale of assets (707) -
------------- -------------
Total Other Income (Expense) 60,832 (13,663)
------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES 142,151 (131,950)
INCOME TAXES (Note 5) 605 -
------------- -------------
NET INCOME (LOSS) $ 141,546 $ (131,950)
============= =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 25,000 25,000
============= =============
PRIMARY INCOME (LOSS) PER SHARE $ 5.66 $ (5.28)
============= =============
FULLY DILUTED INCOME (LOSS) PER SHARE $ 5.66 $ (5.28)
============= =============
The accompanying notes are an integral part of these financial statements.
6
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Statements of Stockholders' Equity
Common Stock Additional Currency
-------------------------------- Paid-In Transaction Accumulated
Shares Amount Capital adjustment Deficit
---------------------------------------------------------------------------------------
Balance, December 31, 1995 25,000 $ 953 $ 298,388 $ 11 $ (30,266)
Contribution of capital by shareholder - - 402,425 - -
Currency translation adjustment - - - 34,017 -
Net loss for the year ended
December 31, 1996 - - - - (131,950)
----------------------------------------------------------------------------------------
Balance, December 31, 1996 25,000 953 700,813 34,028 (162,216)
Contribution of capital by shareholder - - 85,099 - -
Currency translation adjustment - - - 7,733 -
Net income for the year ended
December 31, 1997 - - - - 141,546
----------------------------------------------------------------------------------------
Balance, December 31, 1997 25,000 $ 953 $ 785,912 $ 41,761 $ (20,670)
========================================================================================
The accompanying notes are an integral part of these financial statements.
7
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Statements of Cash Flows
For the Years Ended
December 31,
---------------------------------
1997 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (income) loss $ 141,546 $ (131,950)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation 49,200 40,518
Allowance for bad debts 27,796 14,466
Gain on securities held for sale (18,297) -
Loss on sale of assets 707 -
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 5,970 (58,748)
(Increase) decrease in inventory - 2,315
(Increase) decrease in other assets (332,694) -
Increase (decrease) in accounts payable 46,875 11,901
Increase (decrease) in accrued expenses 41,031 -
------------- -------------
Net Cash Used in Operating Activities (37,866) (121,498)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (47,943) (22,771)
------------- -------------
Net Cash Used in Investing Activities (47,943) (22,771)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution of capital by shareholder - 200,000
------------- -------------
Net Cash Provided by Financing Activities - 200,000
------------- -------------
NET INCREASE (DECREASE) IN CASH (85,809) 55,731
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 107,820 52,089
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 22,011 $ 107,820
============= =============
Cash Paid For:
Interest $ - $ -
Income taxes $ 605 $ -
Schedule of Non-Cash Financing Activities:
Contribution of capital $ 85,099 $ 202,425
The accompanying notes are an integral part of these financial statements.
8
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Notes to the Financial Statements
December 31, 1997 and 1996
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
The financial statements presented are those of Momentum Asia, Inc.
(formerly New Age Publications, Inc.) (the Company). The Company was
incorporated in Manila, Phillippines on September 6, 1994 to carry on any
lawful activity under the laws of the Phillippines. On June 17, 1998, New
Age Publications, Inc. changed its name to Momentum Asia, Inc.
The Company is in the business of providing design printing and marketing
support services.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents.
c. Inventory
Inventories of raw materials are stated at the lower of cost or market. The
cost of the inventory includes the purchase price and direct costs such as
freight-in.
d. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful accounts.
The allowance was $24,141 and $8,697 at December 31, 1997 and 1996,
respectively.
e. 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
disclosure of contingent assets and liabilities at the date of the
financials statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The accompanying notes are an integral part of these consolidated financial
statements.
9
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Notes to the Financial Statements
December 31, 1997 and 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTANT POLICIES (Continued)
f. Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful life or lease term of
the related asset. Estimated useful lives are as follows:
Printing equipment 7 years
Machinery and equipment 5 years
Office equipment 5 years
Vehicles 10 years
Leasehold improvements 5 years
g. Marketable Securities
The Company has classified its marketable equity securities as "trading"
securities. Trading securities are stated at fair value. Realized and
unrealized gains and losses are included in other income.
Trading securities at December 31, 1997 and 1996 were $33,260 and -0-
respectively, and have been included in other assets.
h. Foreign Operations
The Company currently conducts printing and telemarketing activities in the
Philippines, a country with a developing economy. The Philippines have
experienced recently, or are experiencing currently, economic or political
instability. Hyperinflation, volatile exchange rates and rapid political
and legal change, often accompanied by military insurrection, have been
common in this and certain other emerging markets in which the Company may
conduct operations. The Company may be materially adversely affected by
possible political or economic instability in any one or more of those
countries. The risks include, but are not limited to terrorism, military
repression, expropriation, changing fiscal regimes, extreme fluctuations in
currency exchange rates, high rates of inflation and the absence of
industrial and economic infrastructure. Changes in investment policies or
shifts in the prevailing political climate in any of the countries in which
the Company conducts exploration and development activities could adversely
affect the Company's business. Operations may be affected in varying
degrees by government regulations with respect to production restrictions,
price controls, export controls, income and other taxes, expropriation of
property, maintenance of claims, environmental legislation, labor, welfare
benefit policies, land use, land claims of local residents, water use and
mine safety. The effect of these factors cannot be accurately predicted.
10
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Notes to the Financial Statements
December 31, 1997 and 1996
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTANT POLICIES (Continued)
i. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at the period and exchange rate.
Non-monetary assets are translated at the historical exchange rate and all
income and expenses are translated at the exchange rates prevailing during
the period. Foreign exchange currency translation adjustments are included
in the stockholders' equity section.
j. Fair Value of Financial Instruments
As at December 31, 1997, the fair value of cash, accounts receivable and
accounts and advances payable including amounts due to and from related
parties, approximate carrying values because of the short-term maturity of
these instruments.
k. Advertising
Advertising costs are expensed as incurred.
NOTE 3 - OTHER ASSETS
Other assets consisted of the following at December 31, 1997:
Membership in the Subic Bay Yacht Club $ 43,956
Prepaid rental deposits 24,978
Land held for resale 250,000
Membership in the Mimosa Golf Club 98,901
Motorcycles held for sale 95,028
Common stock held for sale 33,260
-------------
$ 546,123
NOTE 4 - COMMITMENTS AND CONTINGENCIES
The Company currently leases its office space on a month-to-month basis.
Rent expense for the years ended December 31, 1997 and 1996 was $58,338 and
$39,319, respectively.
11
MOMENTUM ASIA, INC.
(Formerly New Age Publications, Inc.)
Notes to the Financial Statements
December 31, 1997 and 1996
NOTE 5 - INCOME TAXES
For the years ended December 31, 1997 and 1996, income taxes were as
follows:
For the Years Ended
December 31,
---------------------------------
1997 1996
------------- -------------
Net income earned in the Phillippines -
subject to tax $ 12,100 $ 39,491
Net income (loss) not subject to taxation
jurisdictions 129,446 (171,441)
------------- -------------
Total Net Income (Loss) $ 141,546 $ (131,950)
============= =============
Income tax due $ 605 $ 1,975
Income tax paid at 5% (605) -
Carryforward credits applied - (1,975)
------------- -------------
Net Tax Due $ - $ -
============= =============
12
EXHIBIT 2.8
LIABILITIES OF MOMENTUM ASIA
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See Financial Statements set forth in Exhibit 2.6
EXHIBIT 2.12
MOMENTUM ASIA LITIGATION AND LEGAL PROCEEDINGS
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NONE
EXHIBIT 2.16
EXCEPTIONS TO GOOD TITLE TO ASSETS OF MOMENTUM ASIA
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NONE
EXHIBIT 2.17
MATERIAL CONTRACTS OF MOMENTUM ASIA
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(1) See copy of Loan Agreement between Momentum Asia, Inc., (formerly
New Age Publications, Inc.) and Touchstone Transport Services, Inc.,
attached hereto.
(2) See copy of Real Estate Mortgage between Momentum Asia, Inc.,
(formerly New Age Publications, Inc.) and Touchstone Transport
Services, Inc., attached hereto.
(3) See copy of the Appraisal of Property for Property of Momentum Asia
located at various locations in the Philippines.
(4) See copy of Appraisal of Property relating to Property of Touchstone
Transport Services, Inc.
(5) Loan Agreement evidencing $100,000 loan by Momentum Asia, Inc. to
Vulcan Consultants Limited (Not attached).
EXHIBIT 3.5
SUBSIDIARIES OF ZIASUN
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1. Best Way Beverages, Inc., a Nevada Corporation is a wholly
owned subsidiary of ZiaSun Technologies, Inc. Best Way
Beverages, Inc., holds a license from Fountain Fresh
International, Inc., under which Best Way will market , sell
and distribute the Beverage Center Equipment developed by
Fountain Fresh which is used to dispense Fountain Fresh
Beverages and purified water. The Beverage Center Equipment is
a patented in-store, self service, pressure fill, mini
bottling plant/beverage center.
2. Upon the completion of the pending acquisition of Momentum
Internet Incorporation, a Corporation formed under the laws of
the Bristish Virgin Islands, Momentum Internet Incorporation
will become a wholly owned subsidiary of ZiaSun Technologies,
Inc. Momentum Internet Incorporated is, among other things, in
the Financial Internet Website publication business wherein
subscribers can received financial news, stock quotes and
market information about various companies.
EXHIBIT 3.6
PRESENT OFFICES AND DIRECTORS OF ZIASUN
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OFFICERS
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CEO and President .................................. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President .................................... ▇▇▇▇ ▇▇▇▇▇▇
Vice President of Operations ...................... ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Financial Officer ........................... ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary ......................................... ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DIRECTORS
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT 3.13
EXCEPTIONS TO GOOD TITLE TO ASSETS OF ZIASUN
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NONE
EXHIBIT 5.2.3
POST CLOSING OFFICERS AND DIRECTORS
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OFFICERS
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CEO and President .................................. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer ............................ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Secretary .......................................... ▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary................................. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
DIRECTORS
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III
EXHIBIT 8.12
BROKERS
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With the exception of the shares issued to the Shareholders of Momentum Internet
as set forth herein, no brokerage of finders fees in the form of cash or
securities were paid to any party or person in connection with the acquisition.
