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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
FEBRUARY 20, 2003
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Date of Report (Date of earliest event reported)
PARAGON POLARIS STRATEGIES.COM INC.
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(Exact name of registrant as specified in its charter)
NEVADA 333-32634 76-0609444
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Suite 1700, 1111 West Georgia Street
Vancouver, British Columbia, Canada V6E 4M3
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(Address of principal executive offices) (Zip Code)
604-681-1754
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Registrant's telephone number, including area code
FORMER ADDRESS:
3215 Mathers Avenue
West Vancouver, British Columbia, Canada V7V 2K6
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(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
CHANGE OF CONTROL
The Company has completed the acquisition of an approximate 56% interest in
Icoworks Inc., a Nevada corporation ("Icoworks"), pursuant to share purchase
agreements with individual non-United States shareholders of Icoworks. The
Company issued an aggregate of 7,186,398 shares of its common stock in
consideration of an aggregate of 3,593,199 shares of Icoworks from the former
Icoworks shareholders. The shares were issued pursuant to Regulation S of the
Securities Act of 1933. The interest of Icoworks acquired represents an
approximate 56% interest of the total outstanding shares of Icoworks. The
shares were issued to the former Icoworks shareholders on the basis of two
shares of the Company's common stock in consideration for each one share of
Icowork's common stock.
The Company issued shares to the following shareholders of Icoworks on
completion of the acquisition of the majority interest on February 20, 2003:
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Number of Shares Percentage of Company
Name of Beneficial Owner of Common Stock Common Stock Currently Held (1)
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Ian Brodie 3,584,398 (2) 27.8%
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Bill Wigley 1,200,000 (3) 9.3%
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Hollywood Holdings Ltd. 800,000 6.3%
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Solara Ventures Inc. 2,084,398 16.9%
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J. Graham Douglas 1,602,000 (4) 12.4%
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TOTAL 7,186,398 55.8%
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(1) Based on 12,886,398 shares of the Company's common stock issued and
outstanding as of February 28, 2003.
(2) Mr. Brodie is a director and officer of Solara Ventures and a minority
shareholder of Solara Ventures. Accordingly, Mr. Brodie is deemed to
beneficially own shares held by Solara Ventures for the purposes of Rule
13d-3. Mr. Brodie was individually issued 1,500,000 shares of the Company's
common stock. The balance of the shares deemed to be beneficially held by
Mr. Brodie are held by Solara Ventures.
(3) Includes shares held by the spouse of Mr. Wigley.
(4) The shares held by Mr. Douglas are held by a private corporation controlled
by Mr. Douglas.
The shares of the Company's common stock that were issued to the former
shareholders of Icoworks listed above were issued in consideration of the
transfer of the shares of Icoworks held by the former shareholders. The shares
were issued to the former Icoworks shareholders on the basis of two shares of
the Company's common stock in consideration for each one share of Icowork's
common stock. These Icoworks shares were acquired by the former shareholders
using their own funds.
As a consequence of the acquisition of the majority interest in Icoworks, the
former shareholders of Icoworks listed above own and control approximately 55.8%
of the Company's common stock. As a consequence, a change of control of the
Company has occurred.
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The following table sets forth certain information concerning the number of
shares of the Company's common stock owned beneficially as of February 28, 2003
by: (i) each person (including any group) known to the Company to own more than
five percent (5%) of the Company's common stock, (ii) each of the Company's
directors and executive officers, and (iii) the Company's officers and directors
as a group. Unless otherwise indicated, the shareholders listed possess sole
voting and investment power with respect to the shares shown.
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Name and Address Number of Shares Percentage of
Title of Class of Beneficial Owner of Common Stock Common Stock(1)
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DIRECTORS AND OFFICERS
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Common Stock ROBERT FOO 500,000 3.9%
President and Director
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Common Stock SAMUEL LAU
Secretary, Treasurer and Director 500,000 3.9%
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Common Stock IAN BRODIE
Director 3,584,398 (2) 27.8%
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Common Stock All Officers and Directors as
a Group (3 persons) 4,534,398 35.6%
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5% SHAREHOLDERS
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Common Stock BILL WIGLEY 1,200,000 (3) 9.3%
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Common Stock HOLLYWOOD HOLDINGS LTD. 800,000 6.28%
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Common Stock SOLARA VENTURES 2,084,398 16.9%
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Common Stock J. GRAHAM DOUGLAS 1,602,000 (4) 12.4%
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(1) Under Rule 13d-3, a beneficial owner of a security includes any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes the
power to vote, or to direct the voting of shares; and (ii) investment power,
which includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise of an
option) within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a
result, the percentage of outstanding shares of any person as shown in this
table does not necessarily reflect the person's actual ownership or voting power
with respect to the number of shares of common stock actually outstanding on
February 28, 2003. As of February 28, 2003, there were 12,886,398 shares of our
common stock issued and outstanding.
(2) Mr. Brodie is a director and officer of Solara Ventures and a minority
shareholder of Solara Ventures. Accordingly, Mr. Brodie is deemed to
beneficially own shares held by Solara Ventures for the purposes of Rule 13d-3.
(3) Includes shares held by the spouse of Mr. Wigley.
(4) The shares held by Mr. Douglas are held by a private corporation
controlled by Mr. Douglas.
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The Company is not aware of any arrangement that might result in a change in
control in the future, other than the completion of the merger with Icoworks, as
discussed below under Item 2 of this Current Report on Form 8-K.
APPOINTMENT OF NEW DIRECTOR
Mr. Brodie was appointed as one of our directors on February 12, 2003. Mr.
Brodie is currently the chief financial officer and secretary and a member of
the board of directors of Icoworks. Mr. Brodie has held these positions with
Icoworks since April 30, 2001. From 1988 to the present, Mr. Brodie has been
active as an independent consultant assisting companies prepare for the public
offering of their securities. His experience includes business restructuring,
mergers, acquisitions, and divestitures. Mr. Brodie began his career as a
registered representative with a Canadian brokerage firm before becoming
involved in corporate finance.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Company has completed the acquisition of an approximate 56% interest in
Icoworks Inc., a Nevada corporation, pursuant to share purchase agreements with
individual shareholders of Icoworks, as discussed above under Item 1 of this
Current Report on Form 8-K. The Company issued an aggregate of 7,186,398 shares
of its common stock in consideration of an aggregate of 3,593,199 shares of
Icoworks from the non-US shareholders. The interest of Icoworks acquired
represents an approximate 56% interest of the total outstanding shares of
Icoworks.
The shares were issued to the non-United States shareholders of Icoworks
disclosed under Item 1 of this Current Report on Form 8-K pursuant to Regulation
S of the Securities Act of 1933. Mr. Ian Brodie, who is a director of the
Company and was issued shares on completion of the merger, is a director and is
the chief financial officer and secretary of Icoworks. Mr. Graham Douglas, who
was issued 1,602,000 shares on completion of the acquisition, is a director and
the president of Icoworks. Mr. Bill Wigley, who was issued 1,200,000 shares on
completion of the acquisition, is the vice-president of Icoworks.
ICOWORKS MERGER
The Company plans to continue with the merger of the Company and Icoworks on the
terms of the previously announced merger agreement between the Company and
Icoworks dated November 20, 2002. Under the terms of this merger agreement, the
Company has agreed to issue shares of its common stock to the shareholders of
Icoworks on a two for one basis. Accounting for the recent acquisition of the
majority interest of Icoworks, the Company anticipates issuing approximately
5,528,522 shares of its common stock to acquire the remaining 2,764,261 shares
of Icoworks that it does not currently own. The completion of the merger will
be subject to approval by both the shareholders of the Company and Icoworks.
The Company plans on proceeding with a filing of a registration statement with
the United States Securities and Exchange Commission in connection with the
obtaining of shareholder approval of the merger.
CHANGE OF YEAR END
The Company plans to adopt the fiscal year end of Icoworks, namely June 30,
concurrent with the filing of the financial statements of Icoworks required to
be filed pursuant to Item 7 of this Current Report on Form 8-K.
BUSINESS OF ICOWORKS
Overview
Icoworks is engaged in the asset realization business and is a provider of a
full and comprehensive range of auction, liquidation and appraisal services to
the industrial, oilfield, commercial and office markets.
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Icoworks' business operations have historically been based in Calgary, Alberta,
Canada and have recently been expanded to include a subsidiary operation in
Oakville, Ontario, Canada. Icoworks plans to expand its business, both through
the expansion of its traditional auction, liquidation and appraisal services and
through the acquisition of other businesses engaged in the asset realization
business that complement Icoworks' growth strategy. Icoworks also plans to
enhance its traditional services by the use of technology, including the use of
live internet auctions, online internet auctions and technology-assisted
auctions, in order to expand the scope of potential purchasers for its asset
realization business and to facilitate auction transactions.
Icoworks provides asset realization services to its customers. These services
primarily involve auction liquidation and appraisal services. The Company's
plan is to increase the scope of its services to include bought deals and other
arrangements where Icoworks would acquire a business interest in the assets
being sold in addition to facilitating the sale of assets.
Corporate Background of Icoworks
Icoworks was incorporated as a Nevada corporation on February 27, 1998 under the
name "Miracle Living Centers, Inc." The corporate name was changed to
"TradeZap, Inc." on December 8, 2000. The corporate name was subsequently
changed to "Icoworks, Inc." on May 6, 2002 to reflect its current business
operations.
Icoworks acquired all the issued and outstanding common shares of Bill Wigley
Auction Services Ltd. effective December 1, 2001 from Bill Wigley and his
spouse. Bill Wigley Auction Services Ltd. was subsequently renamed Icoworks
Services Ltd. ("Icoworks Services"). Icoworks Services is an Alberta
corporation incorporated on January 30, 1987. Icoworks Services has been in the
business of providing auction liquidation appraisal services to the industrial,
oilfield, commercial and office markets in Calgary, Alberta, Canada since 1987.
Icoworks Services is the primary operating subsidiary of Icoworks in Canada.
Icoworks Services entered into a three year employment agreement with Mr. Bill
Wigley on the closing of the acquisition.
Auction Services
Icoworks is primarily involved in the auction business. Icoworks conducts
auctions on behalf of its customers who desire or are required to sell assets.
The range of asset disposition services that Icoworks offers in connection with
its auction services includes the following:
(a) Sales of industrial and commercial assets in commercial and industrial
bankruptcies on behalf of receiver managers and trustees;
(b) Sales of assets seized by sheriffs;
(c) Sales of assets repossessed by creditors under security agreements;
(d) Managed asset removal and settlement transactions;
(e) Private treaty sales for companies;
(f) Sales of assets for consignors.
Valuations And Appraisals
Icoworks provides valuations and appraisals in connection with its auction and
liquidation services. The appraisal and evaluation process is an important step
in attracting equipment for an auction or liquidation. Most appraisals commence
when Icoworks personnel visit the location of the prospective customer's
equipment. Appraisals tend to be directed towards entire plants and equipment
spreads available because of a bankruptcy, foreclosure, divestiture, abandonment
or relocation process. Appraisals of individual or smaller groupings of
equipment are usually performed for inclusion in a larger auction. In
completing the appraisal process, Icoworks describes each item to be appraised
in a standard format.
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The equipment description includes information such as year of manufacture,
manufacturer, model, serial number, attachments and condition, including
references to refurbishing work required to make each item ready for sale.
Photographs are taken of as many of the items as practical. Icoworks appraisers
then assign values to each item of equipment. Once this initial process is
completed, Icoworks appraisers and management consult to arrive at a final
valuation for the prospective customer.
In addition to valuations and appraisals in connection with auctions, Icoworks
consults with financial institutions, public and privately held corporations,
and creditor groups to provide valuations on both a fee for services basis and
as a basis for custom proposals for prospective customers. Members of Icoworks
have consulted as expert witnesses in judicial proceedings relating to the
valuation of assets.
Liquidations
Icoworks conducts retail-style liquidations for various clients on either a fee
for service or commission basis. Customers are typically receiver managers,
trustees in bankruptcy or private customers in the process of liquidating
assets.
Icoworks' Specific Industry Experience
Icoworks' focus is on asset realization of industrial and commercial equipment.
Icoworks has developed specific industry experience in the industrial, oilfield,
commercial, mining, forestry, construction and liquidation areas
Icoworks' Operations
Icoworks typically conducts auctions from its own facilities. Icoworks has a
24,000 square foot facility in Calgary, Alberta, which has historically been the
center of the Company's business operations. Icoworks recently opened a 12,000
square foot office, warehouse and auction arena in Oakville, Ontario to handle
increased demand perceived by Icoworks for Ontario based auctions.
Icoworks will also carry out auctions on-site. On-site auctions are typically
carried out for liquidation of operating plant and facilities auctions where the
assets to be auctioned off are not mobile.
Icoworks' services are designed to provide for the maximum net recovery on
assets sold to its customers. Icoworks provides full services from an initial
review and evaluation through to the final disposal of assets. In completing
auctions, Icoworks prepares asset listings which provide detailed appraisals
based on the in-depth market knowledge of Icoworks staff.
Icoworks Business Strategy and Plan of Operations
The Company's business strategy is to continue to expand the asset realization
business of Icoworks with the objective of increasing revenues and
profitability. Icoworks' strategies to achieve this business plan are as
follows:
1. Icoworks intends to target and acquire regional auction businesses that are
currently engaged in traditional industrial and commercial auction and
liquidation services. The objective of this strategy is to expand the
geographic scope of Icoworks' business, to expand its customer base and to
expand the scope of the prospective bidders for items sold by Icoworks. By
pursuing this strategy, Icoworks plans to be able to market to a broader
base of customers on the basis that Icoworks' geographic influence and its
database of prospective bidders will result in customers achieving higher
prices for items to be sold.
2. Icoworks plans to continue to integrate technology into its traditional
auction business. Icoworks will focus its efforts on using technology to
supplement its existing traditional auction business services, rather than
attempting to shift traditional auctions into an online format. Icoworks
plans to continue the use of live internet auctions using the BidSpotter or
competing technology. Icoworks also plans to pursue online auctions through
its e-Bay store. Icoworks will also
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consider conducting live online auctions that are accessible to users
through its corporate website.
3. Icoworks plans to pursue creative financing strategies for financing and
selling bought deals. Bought deals involve purchase of a group of assets
from the seller at a discount to the anticipated selling price. The
advantage of this arrangement to a seller is that the seller would be able
to achieve immediate proceeds from the sale at a guaranteed amount rather
than waiting for the completion of the auction process and being at risk to
lower than anticipated sales price at the auction. The risk to Icoworks as
a purchaser is that it would not be able to sell the assets at the price
paid to the seller. In order to be able to participate in such ventures at
a lower risk, Icoworks plans to evaluate the financing transactions,
including limited partnerships whereby Icoworks and other venture partners
would fund the purchase price for a block of assets and share the risk
associated with the sale of the assets on the market. This business
strategy would offer greater potential returns for Icoworks, but at
potentially greater risks than in its traditional auction and liquidation
business where assets are sold on a fixed commission basis.
The implementation of this business plan will require additional financial
resources that are in excess of the current financial resources of either the
Company or Icoworks. The Company plans to pursue equity financings involving
sales of its common stock or convertible preferred stock in order to raise
financing to fund the business plan of Icoworks and to funds its ongoing capital
requirements. It is contemplated that funds would be advanced by the Company as
a loan pending the completion of the merger with Icoworks. There is no
assurance that the Company will be successful in raising the necessary financing
to pursue the stated plan of operations.
The business of the Company and Icoworks are subject to substantial risks.
These risks include the risks described in Exhibit 99.1 to this Current Report
on Form 8-K. Investors are encouraged to read these risk factors prior to
investing in the Company's common stock.
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
None.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
None.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
The Company will file financial statements of Icoworks, Inc., a Nevada
corporation, by an amendment to this Current Report on Form 8-K to be filed
within the time period required by Form 8-K.
(b) Pro forma Financial Information.
The Registrant will file pro-forma information showing the effect of the
acquisition of the majority interest of Icoworks, Inc. by an amendment to this
Current Report on Form 8-K to be filed within the time period required by Form
8-K.
(c) Exhibits.
Exhibit Description
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10.2
Form of share purchase agreement entered into between the registrant
and the individual non-US shareholders of Icoworks, Inc. to acquire
the majority interest.
99.1 Risk Factors
ITEM 8. CHANGE IN FISCAL YEAR
None.
ITEM 9. REGULATION FD DISCLOSURE
None.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARAGON POLARIS STRATEGIES.COM INC.
Date: March 4 2003
By: /s/ ROBERT FOO
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ROBERT FOO
President And Chief Executive Officer