Looks like ICOW is in Energy Auctions......
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Icoworks Inc. ("We" or "Icoworks") completed the acquisition of Premier
Auctions, a Texas and Oklahoma based auction business specializing in the oil
and gas industry on August 29, 2003. This acquisition was completed as an asset
and share purchase by Icoworks Holdings Inc. ("Icoworks Holdings"), a 56% owned
subsidiary of Icoworks. Icoworks Holdings now operates the Premier Auctions
business through Premier Auctioneers International, Inc. ("Premier
Auctioneers"), a Delaware corporation that is 100% owned by Icoworks Holdings.
The Acquisition of Premier Auctions
Icoworks Holdings acquired the assets of Premier Auctions and the shares of
Premier Auctioneers from Network International, Inc for an aggregate purchase
price of $1,500,000 effective August 29, 2003. Icoworks Holdings has operated
Premier Auctions as a wholly owned subsidiary of Premier Auctioneers since the
acquisition.
Icoworks Holdings entered into a letter agreement with Network International,
Inc. ("Network") on July 16, 2003 for the acquisition of Premier Auctions. The
letter agreement contemplated that Icoworks Holdings would acquire 100 percent
ownership of the shares or assets of Premier by paying $1,500,000. In addition,
the letter agreement contemplated that Icoworks would issue 2,100,000 shares of
Icoworks' common stock to James B. Richie, Scott Felker and David Long, the
original founders of Premier Auctions, to be vested over a three year period,
with 25% vesting up-front. Icoworks Holdings advanced a $100,000 deposit on
execution of the letter agreement.
On July 25, 2003, Network announced its intent to cancel the letter agreement.
Network further advised that they had entered into an alternate, and similar,
agreement with a third party. In response to this action, we commenced an action
in Harris County Court in Texas against Network and Premier Auctions for
specific performance of the agreement, or, in the alternative, damages in the
amount of $30 million for breach of contract.
We entered into a release and settlement agreement with Network, Premier
Auctioneers, Mr. Richie, Mr. Felker and Mr. Long dated effective August 29, 2003
whereby Network agreed to convey to Icoworks Holdings the Premier Auctions
business for the amount of $1,500,000, as originally contemplated in the letter
agreement. In addition to the conveyance, the parties executed mutual releases
in respect of the litigation that we had commenced.
The Premier Auctions Business
Premier Auctions is a dominant auction company in the energy auction sector
conducting more oilfield auctions than all of its competitors. Premier Auctions
will continue to be managed by James B. Richie, Scott Felker and David Long, the
original founders of Premier Auctions. Premier's management and staff have over
300 years of auction experience and their expertise includes talented
appraisers, set-up supervisors, ringmen, marketing experts and the industries
top cashiers and financial staff.
Premier Auctions will be headquartered in Tulsa, Oklahoma and will continue
operations of yards located in Odessa, Houston, San Antonio and Oklahoma City.
Premier Auctions operates exclusively as a commission agent for the consignors
to their auctions. Commissions normally range from 8% to 12% on a "plus plus"
basis. "Plus plus" means that the consignor pays all costs associated with the
auctions. Premier Auctions has three fixed date auctions annually; Bakersfield,
CA in late May, early June, and Oklahoma City, OK and Odessa, TX in October.
Between these fixed date auctions, Premier conducts 9 to 12 additional sales for
individual consignors. All sales are held off site and equipment inspections are
completed remotely and then the auction held by slide show (now digital) in a
hotel ballroom or equivalent. Approximately 65% of sales take place between
September to December of each year.
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Premier Auction's customers, whether they be buyers or sellers, represent every
major oil company, service company, exploration company and related companies,
together with the hundreds of independents in the oil and gas industry. Many
times a customer may be a buyer and a seller at the same sale.
Premier Auctions has completed the following auctions and liquidations since the
acquisition by Icoworks Holdings:
1. Premier Auctions completed the 17th annual fall consignment sale
of oilfield equipment and rolling stock on October 14 and 15,
2003 in Oklahoma City;
2. Premier Auctions completed the liquidation of C. Smith Drilling's
and Wayne City Drilling's drill rigs and related equipment on
September 25, 2003 in Grayville, Illinois; and
3. Premier Auctions completed the liquidation of Rock and Soil
Drilling Corporation's water and environmental drilling and
construction equipment on September 25, 2003 in St. Charles,
Illinois.
Icoworks Holdings has continued to operate the Premier Auctions business under
the Premier Auctions name since the completion of the acquisition.
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