Interim Agreement dated for reference June 29, 2009 between the Company and Smartlinx VOIP Networks Private Limited
CIGNUS VENTURES INC. |
Suite 410 103 East Holly Street, National Bank Building |
Bellingham, WA 98225 |
June 29, 2009
TO: | SMARTLINX VOIP NETWORKS PRIVATE LIMITED, | |
Attention: | Dr. Manohar Loka Reddy and | |
Chandra Sekhar Pogula | ||
(collectively, the Principal Shareholders) |
Dear Sirs:
Re: | Acquisition by Cignus Ventures Inc. (Cignus) of |
The interim agreement confirms that Cignus wishes to acquire Smartlinx. The purpose of this interim agreement is to set forth basic terms and conditions of such a transaction, not to cover all of the issues related to the transaction. Completion of Cignus acquisition of Smartlinx is subject to Cignus completing due diligence of Smartlinx to its satisfaction.
1. | Representations of Smartlinx and the Principal Shareholders. Smartlinx and the Principal Shareholders have represented to Cignus as follows: | |
(a) | Smartlinx is a company incorporated under the laws of India and is in good standing under the laws of its jurisdiction of incorporation; | |
(b) | Smartlinxs authorized capital consists of 1,500,000 equity shares, with a par value of Rs 10, of which 10,000 equity shares are issued and outstanding. There are no other classes of shares or other securities of Smartlinx outstanding and no person has any option or right to acquire any unissued shares of Smartlinx; | |
(c) | The Principal Shareholders hold 10,000 equity shares representing 100% of the issued and outstanding equity shares of Smartlinx; | |
(d) | All shares of Smartlinx issued and outstanding have been duly and properly issued in compliance with all applicable corporate and securities laws; | |
(e) | Smartlinxs financial statements for the years ended December 31, 2008 and 2007 and the period from January 1, 2009 to May 31, 2009, as set out under Schedule A, present fairly the assets, liabilities (whether accrued, absolute, contingent or otherwise) and the financial condition of Smartlinx |
Cignus Ventures Inc. |
June 29, 2009 |
as at the date thereof and there has been no material change in the assets and liabilities since that date; | ||
(f) | Smartlinx is engaged in the business of providing Voice-Over Internet Protocol (VoIP) services and live, on-line tutoring services through its Live Tutor website (the Business); and | |
(g) | Smartlinx owns the technology required for the conduct of the Business, including the Smartlinx and Live Tutor websites and all trademarks associated with the Live Tutor brand names as set out in Schedule B. |
2. | Representations of Cignus. Cignus represents as follows: | |
(a) | Cignus is a company incorporated under the laws of Nevada and is in good standing under the laws of its jurisdiction of incorporation; | |
(b) | Cignus is a reporting company under the United States Securities Exchange Act of 1934 (the Act) and is in good standing with respect to its filings under the Act; | |
(c) | Cignus authorized capital consists of 100,000,000 shares of common stock, with a par value of $0.001 per share, of which 16,000,000 shares of common stock are issued and outstanding, and 100,000,000 shares of preferred stock, with a par value of $0.001 per share, of which none are issued and outstanding; | |
(d) | The shares of common stock of Cignus are quoted on the FINRA OTC Bulletin Board; and | |
(e) | There has been no material change in the affairs of Cignus since its most recent filings in Form 10-K and Form 10-Q under the Act, except as may be disclosed in any Form 8-K filed under the Act. | |
3. | Stock Split. Cignus agrees to complete a 2.7-for-1 forward split of its common stock (the Stock Split). Upon completion of the Stock Split, it is anticipated Cignus authorized capital of common stock will be increased from 100,000,000 shares, with a par value of $0.001 per share, to 270,000,000 shares of common stock, with a par value of $0.001 per share, and the issued and outstanding shares of common stock will be correspondingly increased from 16,000,000 shares to 43,200,000 shares of common stock. | |
4. | Purchase of Smartlinx. We have agreed that Cignus will acquire all of the issued and outstanding shares of Smartlinx (the Acquisition). In consideration of Cignus acquisition of Smartlinx, the principal stockholder of Cignus, David K. |
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Cignus Ventures Inc. |
June 29, 2009 |
Ryan, will transfer all of his shares, being 27,000,000 post-split shares (10,000,000 pre-split shares) of Cignus common stock, to the Principal Shareholders. | ||
5. | Loan. Cignus agrees to advance $200,000 to Smartlinx upon closing of the acquisition (the Loan). Smartlinx agrees that the Loan will be due on demand. If the formal agreement is not entered into as contemplated under paragraph 7 of this Interim Agreement, Smartlinx agrees that the Loan will bear interest at a rate of 6% per annum. | |
6. | Conditions. The obligations of the parties to complete the Acquisition shall be subject to customary conditions including: | |
(a) | All the representatives of the parties shall be true and accurate at closing as if they were made immediately prior to closing; | |
(b) | Smartlinx shall have provided to Cignus prior to or on closing such financial statements as are required by Article 8.01 of Regulation S-X of the United States Securities and Exchange Commission in order to permit Cignus to make the United States Securities and Exchange Commission filings required in respect of the Acquisition; and | |
(c) | Smartlinx shall have provided to Cignus such information as is necessary to satisfy Cignus and its counsel that the Acquisition may be completed in reliance of exemptions from applicable federal and state or foreign securities laws. | |
7. | Formal Agreement. The parties shall take such steps as may be necessary and use their best efforts to prepare and execute a formal agreement as soon as possible, but in any event not later than August 15, 2009. During this period, the parties will cooperate with each other and provide such documentation or information as may be necessary to permit the parties to complete reasonable due diligence with respect to the proposed Acquisition. | |
8. | Full Disclosure. Smartlinx shall disclose to Cignus any and all material adverse conditions or potential adverse conditions currently known about that could affect the business in a negative matter. | |
9. | Exclusivity. In consideration of the undertaking by Cignus of the costs and expenses in conducting due diligence and continuing negotiations, Smartlinx agrees that, during the term of this interim agreement, it will not seek or solicit, or engage anyone to seek or solicit, other suitors for a merger or purchase of Smartlinx, will not make available to other potential suitors information concerning itself, and will maintain confidentiality about the transaction |
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Cignus Ventures Inc. |
June 29, 2009 |
contemplated by this interim agreement, except to the extent the disclosure is required by applicable law or is made to advisors on a need to know basis. | |
10. | Counterparts. This interim agreement may be executed in one or more counter- parts, each of which so executed shall constitute an original and all of which together shall constitute one and the same interim agreement. |
If the foregoing is in accordance with your understanding of the Acquisition, please sign where indicated below and this will serve as an interim agreement to govern our relationship pending completion of a formal agreement.
Yours truly,
CIGNUS VENTURES INC.
Per: /s/ David K. Ryan
David K. Ryan,
President
Agreed and accepted as of the 10th day of July, 2009.
Smartlinx VOIP Networks Private Limited
Per: | /s/ Dr. Manohar Loka Reddy | /s/ Chandra Sekhar Pogula |
Dr. Manohar Loka Reddy, | Chandra Sekhar Pogula, | |
Director | Director |
\4416\12-Acq of Live Tutor\Interim Agreement.v4.doc
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SCHEDULE A
Financial Statements for the years ended December 31, 2008 and 2007
and for the period from January 1, 2009 to May 31, 2009
of
Smartlinx VOIP Networks Private Limited
1
SMARTLINX VOIPNETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
BALANCE SHEET (FROM JANUARY 2008 TO DEC-2008) - US GAAP
2008 | 2007 | |||||||||
SCHEDULE | Jan08 to Dec08 | Jan07 to Dec07 | ||||||||
Rupees | Rupees | |||||||||
A | SOURCE OF FUNDS | |||||||||
Shareholder's Funds | ||||||||||
a) Share Capital | 1 | 100000 | 100000 | |||||||
a) Share Application Money Account | 6087000 | 0 | ||||||||
2 | Loan Funds | |||||||||
a) Secured Loans | 2 | 0 | 0 | |||||||
b) Unsecured Loans | 3 | 0 | 0 | |||||||
TOTAL | 6187000 | 100000 | ||||||||
B | APPLICATION OF FUNDS | |||||||||
1 | Fixed Assets | |||||||||
a) Gross Block | 4 | 512575 | 512575 | |||||||
b) Less: Depreciation | 105999 | 27457 | ||||||||
c) Net Block | 406576 | 485118 | ||||||||
2 | Current Asset, Loans and Advances | |||||||||
Cash and Bank Balance | 5 | 283818 | 267431 | |||||||
Loans & Advances | 6 | 378729 | 204289 | |||||||
662547 | 471720 | |||||||||
Less: Current Liabilities & Provisions | ||||||||||
Current Liabilities | 7 | 5902 | 4509894 | |||||||
Provisions | 8 | 14378 | 55723 | |||||||
20280 | 4565617 | |||||||||
Net Current Assets | 642267 | (4093896 | ) | |||||||
3 | a) Miscellaneous Expenditure | 9 | 844420 | 16920 | ||||||
(to the extent not written off or adjusted) | ||||||||||
Profit & Loss Account | 4293737 | 3691858 | ||||||||
TOTAL | 6187000 | 100000 | ||||||||
SMARTLINX VOIPNETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM JAN-2008 TO DEC-2008 (US GAAP)
2008 Jan08 to Dec08 Rupees | 2007 Jan07 to Dec07 Rupees | |||
Sales Accounts | ||||
Sales & Services | 713930 | 537504 | ||
Indirect Expenses | ||||
Advertisement & Publicity Exp | 0 | 207085 | ||
Audit Fee | 11236 | 0 | ||
Bank Charges | 1520 | 1105 | ||
Business Promotions Exp. | 0 | 10000 | ||
Bandwidth Expenses | 0 | 124189 | ||
Commission on Voip Resellers | 0 | 83138 | ||
Computer Maintenance Exp-A/c | 2450 | 7336 | ||
Deferred Revenue Exp.Written Off | 39940 | 0 | ||
Depreciation | 78542 | 27457 | ||
Discount - Voip | 200 | 99933 | ||
Electrical Maintenance Exp | 0 | 11536 | ||
FBT Account | 11701 | 1452 | ||
General Expencess A/c | 110 | 100 | ||
Inaguration Expenses | 0 | 58117 | ||
Insurance A/c | 3503 | 0 | ||
Internet Expenses A/c | 10038 | 14665 | ||
Legal & Professional Charges | 15000 | 44854 | ||
Local Conveyance Exp | 61436 | 99537 | ||
Marketing Expenses | 1800 | 1120 | ||
Miscellaneous Exp.Written Off | 4230 | 4230 | ||
Networking Maintenance Expenses | 11869 | 28459 | ||
P.F.Adminstrative Exp. | 5565 | 8640 | ||
Postage & Courier A/c | 1645 | 391 | ||
Professional Tax | 2500 | 5000 | ||
Printing & Stationery | 0 | 62663 | ||
Provident Fund | 43996 | 73060 | ||
Rates & Taxes Fee | 12475 | 14168 | ||
Salaries | 929597 | 2987741 | ||
Staff Recruitment & Training Exp A/c | 0 | 17500 | ||
Staffwelfare Expenses | 0 | 4526 | ||
Telehpone Expenses | 3100.00 | 22166.00 | ||
Telephone Expenses (Cell Phone) | 59153.00 | 71813.00 | ||
Travelling Expenses | 4203 | 42521 | ||
Voip Talktime Expense | 0 | |||
1315809 | 4134501 | |||
Profit & (Loss) A/c | -601879 | -3596997 |
SMARTLINX VOIP NETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
SCHEDULES TO THE BALANCE SHEET
As at | As at | |||||
2008 | 2007 | |||||
Rs | Rs | |||||
SCHEDULE - 1 | ||||||
AUTHORIZED CAPITAL: | ||||||
(15,00,000 Equity shares of Rs. 10/- each) | 100000 | 100000 | ||||
SHARE CAPITAL: | ||||||
Issued, subscribed and paid-up Capital | ||||||
(10,000 Equity Shares of Rs. 10/- each) | 100000 | 100000 | ||||
SHARE APPLICATION MONEY : | ||||||
Nettlinx Limited | 0 | 0 | ||||
SCHEDULE - 2 | ||||||
SECURED LOANS | ||||||
0 | 0 | |||||
SCHEDULE - 3 | ||||||
UNSECURED LOANS | 0 | 0 | ||||
0 | 0 | |||||
SCHEDULE - 5 | ||||||
CASH AND BANK BALANCES | ||||||
Cash in Hand | 125332 | 100525 | ||||
Bank balance | 158486 | 166906 | ||||
2,83,818 | 2,67,431 | |||||
SCHEDULE - 6 | ||||||
LOANS AND ADVANCES | ||||||
Loans & Advances | 132230 | 124897 | ||||
Sundry Debtors | 243995.52 | 79392 | ||||
Prepaid Insurance | 2503 | 0 | ||||
378729 | 204289 | |||||
SCHEDULE - 7 | ||||||
CURRENT LIABILITIES | ||||||
Sundry Creditors & Other payables | 57669 | 1312686 | ||||
Nettlinx Limited | 4247928 | 3197208 | ||||
4305597 | 4509894 | |||||
SCHEDULE - 8 | ||||||
PROVISIONS | 14378 | 55723 | ||||
0 | 0 | |||||
SCHEDULE - 9 | ||||||
MISC. EXPENSES | ||||||
Deferred Revenue Expenditure | ||||||
831730 | ||||||
Preliminary Expenses | ||||||
12690 | 16920 | |||||
844420 | 16920 |
For SMARTLINX VOIP NETWORKS PRIVATE LIMITED | |
(MANOHAR LOKA REDDY) | (POGULA CHANDRA SEKHAR) |
Director | |
Place: Hyderabad | |
Date : |
SMARTLINX VOIPNETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
BALANCE SHEET (FROM JANUARY 2009 TO MAY 2009) - US GAAP
2009 | 2008 | |||||||||
SCHEDULE | Jan09 to May 09 | Jan08 to Dec08 | ||||||||
Rupees | Rupees | |||||||||
A | SOURCE OF FUNDS | |||||||||
1 | Shareholder's Funds | |||||||||
a) Share Capital | 1 | 100000 | 100000 | |||||||
a) Share Application Money Account | 7179000 | 6087000 | ||||||||
2 | Loan Funds | |||||||||
a) Secured Loans | 2 | 0 | 0 | |||||||
b) Unsecured Loans | 3 | 0 | 0 | |||||||
TOTAL | 7279000 | 6187000 | ||||||||
B | APPLICATION OF FUNDS | |||||||||
1 | Fixed Assets | |||||||||
a) Gross Block | 4 | 687511 | 512575 | |||||||
b) Less: Depreciation | 146680 | 105999 | ||||||||
c) Net Block | 540831 | 406576 | ||||||||
2 | Current Asset, Loans and Advances | |||||||||
Cash and Bank Balance | 5 | 220535 | 283818 | |||||||
Loans & Advances | 6 | 1863374 | 378729 | |||||||
2083908 | 662547 | |||||||||
Less: Current Liabilities & Provisions | ||||||||||
Current Liabilities | 7 | 721586 | 5902 | |||||||
Provisions | 8 | 16196 | 14378 | |||||||
737782 | 20280 | |||||||||
Net Current Assets | 1346126 | 642267 | ||||||||
3 | a) Miscellaneous Expenditure | 9 | 1248045 | 844420 | ||||||
(to the extent not written off or adjusted) | ||||||||||
Profit & Loss Account | 4143998 | 4293737 | ||||||||
TOTAL | 7279000 | 6187000 | ||||||||
0 | 0 |
SMARTLINX VOIPNETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM JAN-2009 TO MAY-2009 (US GAAP) SEGMENT WISE
VOIP SERVICES | LIVE TUTOR SERVICES | ||||
2009 Jan09 to May 09 Rupees | 2009 Jan09 to May 09 Rupees | ||||
Sales Accounts | |||||
Sales & Services | 1185684 | 0 | |||
Indirect Expenses | |||||
Advertisement & Publicity Exp | 0.00 | 3062 | |||
Bank Charges | 33388.17 | ||||
Business Promotions Exp. | 0.00 | 19000 | |||
Computer Maintenance Exp-A/c | 0.00 | 170 | |||
Deferred Revenue Exp.Written Off | 93335.00 | ||||
Depreciation | 40681.00 | ||||
General Expencess A/c | 850.00 | 22834 | |||
Internet Expenses A/c | 1923.00 | ||||
Legal & Professional Charges | 5000.00 | 35946 | |||
Local Conveyance Exp | 57727.00 | 1000 | |||
Miscellaneous Exp.Written Off | 2115.00 | ||||
Office Maintenance | 0.00 | 10203 | |||
P.F.Adminstrative Exp. | 2359.00 | ||||
Pooja Expenses | 0.00 | 501 | |||
Postage & Courier A/c | 255.00 | ||||
Printing & Stationery | 0.00 | 197109 | |||
Provident Fund | 11709.35 | 5879 | |||
Rates & Taxes Fee | 644.00 | 9900 | |||
Salaries | 646263.81 | 194093 | |||
Staffwelfare Expenses | 7001.00 | 592 | |||
Telehpone Expenses | 3598.00 | 9985 | |||
Telephone Expenses (Cell Phone) | 9477.00 | 16216 | |||
Travelling Expenses | 19803.00 | 68620.00 | |||
Tutors Fess | 0.00 | 3780.00 | |||
936129 | |||||
Deferred Revenue Expenditure Total | 598890 | ||||
Deferred Revenue Exp.Written Off | 99815 | ||||
Profit & (Loss) A/c | 249555 | -99815 | 149740 |
SMARTLINX VOIPNETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM JAN-2009 TO MAY-2009 (US GAAP)
2009 Jan09 to May 09 Rupees | 2008 Jan08 to Dec08 Rupees | |||
Sales Accounts | ||||
Sales & Services | 1185684 | 713930 | ||
Indirect Expenses | ||||
Audit Fee | 0.00 | 11236 | ||
Bank Charges | 33388.17 | 1520 | ||
Computer Maintenance Exp-A/c | 0.00 | 2450 | ||
Deferred Revenue Exp.Written Off | 193150.00 | 39940 | ||
Depreciation | 40681.00 | 78542 | ||
Discount - Voip | 0.00 | 200 | ||
FBT Account | 0.00 | 11701 | ||
General Expencess A/c | 850.00 | 110 | ||
Insurance A/c | 0.00 | 3503 | ||
Internet Expenses A/c | 1923.00 | 10038 | ||
Legal & Professional Charges | 5000.00 | 15000 | ||
Local Conveyance Exp | 57727.00 | 61436 | ||
Marketing Expenses | 0.00 | 1800 | ||
Miscellaneous Exp.Written Off | 2115.00 | 4230 | ||
Networking Maintenance Expenses | 0.00 | 11869 | ||
P.F.Adminstrative Exp. | 2359.00 | 5565 | ||
Postage & Courier A/c | 255.00 | 1645 | ||
Professional Tax | 0.00 | 2500 | ||
Provident Fund | 11709.35 | 43996 | ||
Rates & Taxes Fee | 644.00 | 12475 | ||
Salaries | 646263.81 | 929597 | ||
Staffwelfare Expenses | 7001.00 | 0 | ||
Telehpone Expenses | 3598.00 | 3100.00 | ||
Telephone Expenses (Cell Phone) | 9477.00 | 59153.00 | ||
Travelling Expenses | 19803.00 | 1035944 | 4203 | 1315809 |
Profit & (Loss) A/c | 149740 | -601879 |
SMARTLINX VOIP NETWORKS PRIVATE LIMITED
5-9-22, 3rd Floor, My Home Sarovar Plaza, Secretariat Road, Saifabad
Hyderabad - 500 063
SCHEDULES TO THE BALANCE SHEET
As at | As at | ||||||||
31st March 2009 | 31st March 2008 | ||||||||
Rs | Rs | ||||||||
SCHEDULE - 1 | |||||||||
AUTHORIZED CAPITAL: | |||||||||
(15,00,000 Equity shares of Rs. 10/- each) | 15000000 | 100000 | |||||||
SHARE CAPITAL: | |||||||||
Issued, subscribed and paid-up Capital | |||||||||
(10,000 Equity Shares of Rs. 10/- each) | 100000 | 100000 | |||||||
SHARE APPLICATION MONEY : | |||||||||
Nettlinx Limited | 7179000 | 0 | |||||||
SCHEDULE - 2 | |||||||||
SECURED LOANS | |||||||||
0 | 0 | ||||||||
SCHEDULE - 3 | |||||||||
UNSECURED LOANS | 0 | 0 | |||||||
0 | 0 | ||||||||
SCHEDULE - 5 | |||||||||
CASH AND BANK BALANCES | |||||||||
Cash in Hand | 120730 | 125332 | |||||||
Bank balance | 99805 | 158486 | |||||||
2,20,535 | 2,83,818 | ||||||||
SCHEDULE - 6 | |||||||||
LOANS AND ADVANCES | |||||||||
Loans & Advances | 638564 | 132230 | |||||||
Sundry Debtors | 1222307 | 243995.52 | |||||||
Prepaid Insurance | 2503 | 2503 | |||||||
1863374 | 378729 | ||||||||
SCHEDULE - 7 | |||||||||
CURRENT LIABILITIES | |||||||||
Sundry Creditors & Other payables | 107153 | 57669 | |||||||
Sundry debtors Cr balances | 0 | 0 | |||||||
Nettlinx Limited | 614433 | 4247928 | |||||||
721586 | 4305597 | ||||||||
SCHEDULE - 8 | |||||||||
PROVISIONS | 16196 | 14378 | |||||||
0 | 0 | ||||||||
SCHEDULE - 9 | |||||||||
MISC. EXPENSES | |||||||||
Deferred Revenue Expenditure | 12690.00 | ||||||||
Less: Deferred Revenue Exp.Written Off | -2115.00 | 10575.00 | 831730 | ||||||
Preliminary Expenses | 1430620.00 | ||||||||
Less: Written off | -193150.00 | 1237470.00 | 12690 | ||||||
1248045 | 844420 |
For SMARTLINX VOIP NETWORKS PRIVATE LIMITED | |
(MANOHAR LOKA REDDY) | (POGULA CHANDRA SEKHAR) |
Director | |
Place: Hyderabad | |
Date : |
SCHEDULE B
Trademark Applications of Smartlinx
Trade Mark Application | Jurisdiction(s) | Application Number |
Live Tutor | India | 1745989 |
Websites of Smartlinx
Website Address |
http://smartlinx.co.in |
http://bsnl.livetutor.in |
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