Actually here is an excerpt from their 10k:
Since January 2001, through the date of this filing, the Company has been essentially non-operative. Its only significant business activity during this period has been raising capital through Itrex to fund the operations of its subsidiaries and to pay certain of the Company’s professionals, employees and other individuals and entities in connection with attempting to restructure the Company.
Background
ITREX INTERNATIONAL CORPORATION, A DELAWARE CORPORATION
Since the formation of Itrex International Corporation (“Itrex”) in 2002, the Company has utilized convertible promissory notes to finance all of the development stage activities of the other Orbit subsidiaries, and from time to time Itrex has up-streamed funds to the Company in order to facilitate the Company’s own business operations. The primary asset of Itrex is its intellectual property, including the “Media Exchange,” which is described below.
The Media Exchange plans to enter the multi-billion dollar global music, media and entertainment industry with a revolutionary technology (the “MX”) that could redefine the financing tools of the industry. The MX is an integrated multi-function exchange platform for the offering and trading of a novel formulation of securities, backed by the current and future revenue streams of the issuers (including artists, record labels, and entertainers). The MX can serve the interests of all segments of the music entertainment industry, including artists, labels, studios, producers, fans, and investors, by diversifying the risks and rewards of financing industry growth, and insuring a transparent public market.
The MX provides a financing vehicle which will raise growth capital for artists and other segments of the music, media and entertainment industry through the issuance of asset-based securities. These securities will be backed by rights to a percentage of the underlying intellectual property (e.g., music) and associated revenues generated through(a) publishing and licensing of music, (b) royalties, (c) merchandising, (d) album sales, and (e) bookings and promotional appearances.
The MX is a seamless financial product. Its methodology can be readily expanded into other facets of the entertainment industry, such as television, film, publishing, and other media, and as it gains broad acceptance in the public markets, we anticipate extending its scope to other segments of related industries, and beyond.
For the major entertainment industry participants, particularly the larger record labels, the MX offers the ability to hedge risk and diversify exposure, while retaining revenues from the sale of record albums (cd’s, ipod and other current media). At the same time, the record labels can securitize their existing royalty streams in order to raise new capital, by shifting a portion of their royalty streams into the public market. This will allow the record labels to reduce their risk without a corresponding reduction in profits, and will provide new operating capital while generating broad exposure for their stable of new and existing artists.
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In many if not all aspects of the entertainment industry, artists at all stages of their careers can be viewed as growth businesses. Achieving commercial success requires being properly capitalized to produce albums, conduct marketing campaigns, and underwrite touring expenses, among other requirements. Artists have intellectual property with intrinsic value, multiple revenue streams, and a potentially high growth curve when they are properly funded and even moderately successful. Using the MX platform, the issuers can market themselves to intrinsic and other potential investors. Between the ubiquitous “garage band” and the major recording star, there is a wide range of artists who have loyal followings, generate revenues, and are “on track” to becoming even more successful.
The MX will offer intrinsic investors the unique opportunity of investing in their favorite artists, satisfying the desire not only to share in, but to benefit from, their artistic and commercial success.
SMARTVoice Telecommunications, Inc.
SMARTVoice will seek to develop and market telecommunication technology for IP telephony and applications. IP Telephony is the technology of using the Internet to transport voice conversations.
SMARTVoice intends to be an IP Telephony service provider with two product lines: (1) internet protocol telephone devices and communication services, and (2) hosted services which implement the functionality of a private branch exchange, or PBX, over data networks. Its first product line will include analog telephone adaptors and communication software and services that work over broadband networks. SMARTVoice expects to sell internet protocol telephony software and services that will enable its customers to provision and use voice communication services with IP telephones and other end-point devices. SMARTVoice has established its website at “ www.smartvoice-ip.com ”. Effective January 1, 2004, the Company through a subsidiary SMARTVoice Telecommunications, Inc, a Delaware corporation (“SMARTVoice”) agreed to acquire the intellectual property of SMARTVoice Telecommunications, Inc, a Georgia corporation (“Georgia”) formed on May 6, 2003. The net liabilities of Georgia were initially acquired by the Company for no consideration. In addition, the Company entered into an employment contract with an individual to serve as the Chief Executive Officer of SMARTVoice (see below). On October 19, 2004, the agreement was amended to adjust the purchase price to include an additional amount of $570,000 in the form notes payable and amend certain terms of the employment agreement.
The acquisition was accounted for as a purchase and the results of operations have been included in the consolidated financial statements since the date of acquisition. SMARTVoice will seek to develop and market telecommunication technology for IP telephony and applications. IP telephony is the technology of using the internet to transport voice conversations.
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The summarized balance sheet at the acquisition date as adjusted for the notes is as follows:
Current assets $ 4,754
Due to affiliates 11,284 )
Notes payable (570,000 )
Other current liabilities (216,215 )
$ (792,745 )
The net cost of the acquisition of $792,745 was recorded as goodwill and subsequently impaired.
Prior to this, Georgia was an affiliate of the Company, and between December 16, 2003 and May 31, 2004, the Company caused certain of its convertible debenture holders to invest approximately $405,905 of the amounts discussed below into Georgia for use as working capital for both Georgia ($250,905) and the Company ($155,000). On January 1, 2004 SMARTVoice executed employment agreements with Charles P. Shuster, as Chairman and CEO of SMARTVoice and Frederick Alger as Chief Financial Officer of SMARTVoice. The terms of the employment contracts for Fredrick Alger are for 90 day renewal periods at compensation rates yet to be determined. The employment contract between Fredrick Alger was not renewed after the initial 90 day period. The term of the employment contract with Charles Shuster is for a period of seven years at a base salary of $275,000 per annum and a signing bonus of $150,000. In addition he is entitled to options to purchase 5,000,000 shares of common stock of the Company at fair market value exercisable for 5 years. The contract also contains certain anti-dilution provisions, incentive compensation and severance pay in the amount of $900,000 in the event of default or termination for certain reasons. The contract was amended on October 19, 2004, to remove the anti-dilution provisions effective at the inception of the contract and remove the right to the 5,000,000 options. The compensation has been deferred for all executive employment agreements of SMARTVoice. The Company has formed a compensation committee to review the terms of the Executive Employment Agreements.
Malibu Beach Beverage Group, LLC
On November 26, 2003, Malibu Beach Beverage Group, LLC (“Malibu” and/or “MBBG”) purchased certain intellectual property rights from Amy L. Goldman, the duly appointed, qualified and acting Chapter 7 Trustee of the bankruptcy estate of MBB, Inc. in that certain Chapter 7 bankruptcy case pending in the United States Bankruptcy Court for the Central District of California, San Fernando Valley Division, In re: Malibu Beach Beverage Co., Inc., Debtor, Case No.: SV 01- 17743-AG, including the right to use the trade name of “Malibu Beach Beverage Company,” among other assets (the “Rights”), for a purchase price of $20,000. MBB Group is a Delaware limited liability company in which Joseph R.
Cellura, the Company’s Chairman, Chief Executive Officer and majority shareholder, owns a 25% interest.
Effective June 30, 2004, Malibu Beach Beverage Group, LLC, a Delaware LLC (“Malibu”) was acquired by the Company. MBBG sold all of its rights, title and interests in all intellectual property of the low carb beverages including but not limited to any and all formulas, copyrights and applications, patents and applications, trademarks and applications, licensing, contracts, proprietary information, any other claimed proprietary information, and any other tangible and intangible intellectual property of the low carb beverage business of the MBBG. The net liabilities of MBBG were acquired by the Company for no consideration. The Company’s Chairman and CEO, Joseph Cellura, holds a 25% membership interest in MBBG.
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The acquisition was accounted for as a purchase and the results of operations have been included in the consolidated financial statements since the date of acquisition.
The summarized balance sheet at the acquisition date is as follows:
Current assets $ 242,542
Property and equipment 6,300
Due to related parties (1,239,056 )
Current liabilities (142,891 )
$ (1,133,105 )
The net cost of the acquisition of $1,133,105 was recorded as goodwill and subsequently impaired.
The following summarized unaudited pro forma information assumes the acquisition had occurred on January 1:
2004 2003
Net sales $ 12,222 $ -
Net (loss) $ (8,645,286 ) $ (1,256,839 )
Net (loss) per share
Basic and diluted $ (0.00 ) (0.00 )
Malibu Entertainment Group, Inc., a Delaware corporation
In May 2004, Malibu Entertainment Group (“MEG”) was formed as a media and entertainment company for the purpose of developing and financing television, film and media projects for distribution and exploitation worldwide. MEG seeks to finance or co-finance various media projects, at such time as it secures the appropriate financing and/or distribution advances.
Over the past two years, MEG has entered into non-exclusive consulting agreements with several experienced film and television executives in order to create media opportunities for the company. These executives include Jim Townsend, Dean Hamilton, Bert Bedrosian and Frederico LaPenda.
Floating Bed International, Inc., f/k/a BBKO Corporation, f/k/a Malibu Mixers Company, a Nevada corporation
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Floating Bed International, Inc. (“FB Int’l.”) develops, markets and sells high quality rest and relaxation devices in the form of beds and hammocks. Its patent-pending technology utilizes gentle motion to provide many health benefits to end users. The benefits of this type of motion have been established in independent scientific studies over a number of years. The company currently has one core product which can be customized and accessorized at the end of its manufacturing process. This feature allows purchasers to use the product in many ways in different settings, in order to serve a number of diverse purposes. The company’s products are sold to individuals and also to commercial users, such as hotels and health spas.
The Hammock Industry Overview
The hammock is an established piece of furniture with which most people are familiar. However, no significant improvements have been made to the hammock in recorded history. Thus, the company’s product represents a giant step forward for this unique item.
A major trend has emerged as people are turning to outdoor areas (yards, decks, rooftops -- basically, whatever is available) to expand their practical living space. Outdoor furniture sales are booming. Traditional indoor products are being adapted and new products are being developed for outdoor use. Thirty years ago, the general public could not have been sold on the idea of a bathtub in the yard. However, in today’s vernacular, anyone with the space and the money has to have a hot tub. Attitudes change, and people are thinking of their yards and open spaces in new ways. Given the increasing cost of housing construction and the scarcity of indoor space, this trend will likely continue into the foreseeable future.
The Company intends currently to focus its efforts and business strategy on seeking financing for its core business, internet-based technologies, as well as product development and the distribution of related consumer products throughout North America. The Company intends to raise additional capital in the form of equity and/or debt to fund the acquisition and growth of its subsidiaries and recent acquisitions, as described above, which could significantly change the capital structure and cause a change of control in the Company.
During the current year, the Company’s affiliate, Itrex International Corporation, raised an aggregate of approximately $1.2 million in the form of convertible notes. The terms of the notes are that they pay 12 percent interest per annum for the period outstanding and are convertible into the Companies common stock at a rate between $.0005 and $.015 per share. A portion of these funds were utilized for the payment of certain professionals required to assist in the preparation of the Company’s corporate legal work and securities filings. (See discussion, supra.) In addition, Itrex restructured Company debt and paid for business expenses attributable to 2002 and 2003 operations and for the business acquisition activities associated with Malibu Beach Beverage Company, Inc., and SMARTVoice Telecommunications, Inc.
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The Company intends currently to focus its efforts and business strategy on seeking financing for its core business, internet-based technologies, as well as product development and the distribution of related consumer products throughout North America in 2005 and 2006. The Company intends to raise additional capital in the form of equity and/or debt to fund the acquisition and growth of its various subsidiaries, which could significantly change the capital structure and cause a change of control in the Company.
Since January 2001, through the date of this Form 10-KSB, the Company has been essentially non-operative. Its only significant business activity during this period has been raising capital through Itrex to fund the operations of its subsidiaries, and to pay certain of the Company’s professionals, employees and other individuals and entities in connection with attempting to restructure the Company, which includes, but is not limited to, the preparation of this Form 10-KSB.
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