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| ATWO.OB > SEC Filings for ATWO.OB > Form 10KSB/A on 20-Apr-2004 | All Recent SEC Filings |
20-Apr-2004
Annual Report
The following should be read in conjunction with our Consolidated Financial Statements and the notes thereto included in "Item 7. Financial Statements."
PLAN OF OPERATION
Currently, the Company believes it has sufficient cash for operations for the next twelve (12) months. The Company is planning to raise additional capital from time to time to reduce its debt, provide working capital for operations, and additional acquisitions. The Company expects to raise capital in the form of equity, debt and through asset sales. In this regard, in April 2004, the Company contracted with an institutional buyer to sell SuperStock, Inc.'s 73,000 square foot facility in Jacksonville, Florida for $7,500,000. Upon the closing of the transaction, which is expected in June 2004, the Company will enter into a long term lease of the premises with the buyer. With the proceeds, the Company intends to repay its current mortgage note of $4,047,504, reduce other liabilities and add to working capital for operations and acquisitions. The Company intends to sublet any unused space. The Company may add additional employees from time to time over the next twelve (12) months on an as needed basis as determined by management. There is no guarantee management will be successful in achieving the above. If the Company is unable to raise additional capital, then the Company may not be able to fully execute its business plan.
Prior to the acquisition of SuperStock, Inc., without additional capital, our capital resources were insufficient to support the existing and anticipated levels of business unless the Company was able to continue to accrue certain of its expenses and finance its expenses through accounts payable as it had in the past. The Company had been funding its operations through an increase in accounts payable in addition to capital that it had raised from various equity and debt financings. The Company had experienced cash shortages and inability to pay its obligations from time to time in 2002 and 2003. A significant portion of its current liabilities was past due. These conditions raised doubt about the Company's ability to continue as a going concern.
Reverse Acquisition With Saratoga Holdings, Inc.
a21, Inc. was incorporated in the State of Texas in October 1998, under the name Saratoga Holdings I, Inc. On April 18, 2002, Agence 21, Inc. entered into an exchange agreement with the registrant, then named Saratoga, and a21 Acquisition LLC, a wholly owned subsidiary of Saratoga.
On April 30, 2002, pursuant to the exchange agreement, the shareholders of Agence exchanged 26,236,000 shares (84.3%) of the common stock of Agence and 1,500,000 shares (100%) of preferred stock of Agence on a basis of three shares of Agence for each share of common stock of Saratoga held by a21 Acquisition. The aggregate of 9,245,000 shares of the Company's common stock issued to Agence's shareholders represented 83.3% of the outstanding common stock of Saratoga. The remaining 3,680,000 shares of common stock of Saratoga are held by a21 Acquisition will be retired April 30, 2004. The minority shareholders of Agence hold 4,887,000 shares of common stock in Agence representing a 15.7% minority interest in the subsidiary, which the holders could have exchanged into 1,629,000 common shares of the Company prior to the expiration of the exchange agreement. 4,062,000 of the Nonexchanged Shares were issued to a founder upon formation of Agence. 825,000 of the Nonexchanged Shares were issued as consideration for services. Effective with the closing of the exchange, Saratoga changed its name to a21, Inc.
The exchange was accounted for as a reverse acquisition, since the former shareholders of Agence acquired a majority of the outstanding common stock of Saratoga. Accordingly, the combination of Agence and Saratoga was recorded as a recapitalization of Agence pursuant to which Agence will be treated as the continuing entity for accounting purposes, and the historical financial statements are those of Agence. a21 Acquisition and Agence continue to operate as wholly and majority owned subsidiaries of the registrant.
Acquisition of Superstock, Inc.
As of February 29, 2004, a21 completed the acquisition all of the voting common stock, representing 83% of the outstanding equity, of SuperStock, Inc. SuperStock's primary assets include approximately 900,000 images that it either owns or licenses from third parties, an approximately 73,000 square foot facility in Jacksonville Florida, receivables from its customers and cash.
In consideration for the sale and purchase of all of the voting common stock of SuperStock, the sellers received:
o 1,666,717 shares of non-voting participating preferred stock of
SuperStock which is exchangeable into 5,000,151 shares of a21 common
stock;
o $2,600,625 in cash; and
o a fourteen (14) month secured note in the amount of $1,576,250 that
initially pays an interest rate of Libor plus 1.9% per annum.
In addition, the Company granted warrants to the sellers to purchase 160,000 shares of a21 common stock at $0.56 per share and issued the sellers and one of their advisors 573,589 shares of its common stock for $149,539 in cash. Final adjustments will be made to the purchase price after finalization of SuperStock's closing balance sheet. The sellers may also receive up to $1,500,000 should SuperStock's revenue exceed certain projections for the four year period after closing.
OFF BALANCE SHEET ARRANGEMENTS
Not applicable.
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