-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AQtxX4g8AC3n1KTzUNaCvsdgowoSGYywqTYRFQQ6pBDnBguEnr3gPimtk1uzf7r9 aVLmnDbOe5Eae5eHodqpWg== 0000950123-01-508894.txt : 20020412 0000950123-01-508894.hdr.sgml : 20020412 ACCESSION NUMBER: 0000950123-01-508894 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20011114 ITEM INFORMATION: Bankruptcy or receivership ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNET ADVISORY CORP CENTRAL INDEX KEY: 0000831489 STANDARD INDUSTRIAL CLASSIFICATION: INVESTORS, NEC [6799] IRS NUMBER: 870426358 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16665 FILM NUMBER: 1802670 BUSINESS ADDRESS: STREET 1: 2455 EAST SUNRISE BLVD STREET 2: SUITE 401 CITY: FT LAUDERDALE STATE: FL ZIP: 33304 BUSINESS PHONE: 8885220958 MAIL ADDRESS: STREET 1: 2455 EAST SUNRISE BLVD STREET 2: SUITE 401 CITY: FT LAUDERDALE STATE: FL ZIP: 33304 FORMER COMPANY: FORMER CONFORMED NAME: OLYMPUS MTM CORP DATE OF NAME CHANGE: 19970215 8-K 1 y55341e8-k.txt FORM 8-K 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 Date of Report (Date of earliest event reported) NOVEMBER 14, 2001 - -------------------------------------------------------------------------------- THE INTERNET ADVISORY CORPORATION (Exact name of registrant as specified in its charter)
UTAH 0-16665 87-042635 - ---------------------------------- ----------------------------- -------------------------------- State or other jurisdiction (Commission File Number) (IRS Employer Identification No.) of incorporation or organization)
150 E. 58TH STREET, NEW YORK, NY 10022 (Address of principal executive offices)(Zip Code) - -------------------------------------------------------------------------------- (212) 421-8480 (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- N/A (Former Name or Former Address, If Changed since Last Report.) ITEM 3. BANKRUPTCY OR RECEIVERSHIP (a) Not Applicable. (b) (1) The United States Bankruptcy Court, Southern District of Florida, has entered an order (the "Order") confirming our Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated as of August 29, 2001. (2) The date the Order was entered is November 14, 2001. (3) The following is a summary of our Plan of Reorganization as confirmed by the Bankruptcy Court. Under the Plan of Reorganization (the "Plan"), we complied with Section 1129 of the Bankruptcy Code as a Debtor-in-Possession pursuant to Section 1107 and Section 1108 of the Bankruptcy Code. We also complied with Section 1129 of the Bankruptcy Code as a good faith debtor seeking to reorganize its financial affairs during the term of the Plan in order to pay off or substantially reduce the principal due and owing to all allowed creditors ("Creditors") from our continuing operations. BACKGROUND Subsequent to the date of filing of the Plan, we have continued to provide comprehensive Internet services to our customers emphasizing the small and medium- sized business market. We store our customers' website information on a "virtual" basis but also provide our customers with server lease facility resources, providing such customers with space to house equipment in our Tier 1 Data Center. We also offer a package of enhanced Internet tools, including website design services and electronic commerce solutions (e-Commerce). Our goal is to be a premier, full-service provider of Internet services to small and medium-sized businesses. To accomplish this goal, we will endeavor to expand our market presence, strengthen our Internet access and Web hosting core service platforms, and add additional enhanced value service capabilities through acquisitions and strategic relationships. CLASSIFICATION OF CLAIMS AND INTERESTS Pursuant to the Plan, the claims ("Claims") of Creditors and other interested parties were divided into the following six classes ("Classes"): 2 CLASS 1: Allowed Unsecured Lease Termination Damage Claim of Spring Lake Partners CLASS 2: Allowed Unsecured Rejected Bandwidth Contract Claims CLASS 3: Allowed Unsecured Convenience Class Claims CLASS 4: Allowed Unsecured Claims CLASS 5: Equity Security Interest Claims ("White Knight Class") CLASS 6: Equity Stock Option Holders DESIGNATION AND TREATMENT OF UNIMPAIRED CLAIMS ADMINISTRATIVE EXPENSE CLAIMS: These claims consisted primarily of the balance of unpaid post-petition rent obligations to Spring Lake Partners ("Leasor") for the use and occupancy of our Fort Lauderdale, FL premises, the balance of unpaid post-petition obligations to AT&T arising from the Internet bandwidth contract by and between us and AT&T, and the fees and expenses of professionals employed by us pursuant to the authorization of the Bankruptcy Court. PRIORITY TAX CLAIMS: The Allowed Priority Tax Claims of the Internal Revenue Service were determined in accordance with Section 507(a)(8) of the Bankruptcy Code. The total of such claims were approximately $11,680 which is exclusively comprised of a claim in that amount of the Internal Revenue Service. DESIGNATION AND TREATMENT OF IMPAIRED CLAIMS CLASS 1: The claim of Spring Lake Partners was treated as an Unsecured Claim. Spring Lake Partners shall receive deferred cash payments equal to ten percent (10%) of its claim in twelve equal monthly installments. CLASS 2: These claims represent Unsecured Rejected Bandwidth Contract Claims of Winstar, Genuity Solutions, Inc., Expanets, Quest, AT&T, Bellsouth, and MCI. These Creditors shall receive ten percent (10%) of their Allowed Unsecured Claims. The Company estimates the total of such Allowed Unsecured Claims to be $650,000. CLASS 3: This class is composed of all Allowed Unsecured Claims less than $2,500.00. Each claimant is to receive the lesser of the amount of the claim or $100. CLASS 4: Each claimant of an Allowed Unsecured Claim shall receive deferred cash payments equal to five percent (5%) of the Claim in equal monthly installments over one (1) year commencing ten days after the Plan Confirmation Date. 3 CLASS 5: The White Knight Class consists of Richard Goldring and all equity security holders that choose to make an additional equity contribution to us on or before November 30, 2001 ("White Knight Electors"). As of November 27, 2001 there are no White Knight Electors. Richard Goldring contributed $50,000 in exchange for retention of all of his equity interest in the Company. White Knight Electors are entitled to contribute $1.00 per share owned, subject to a minimum of $1,000, and are allowed to retain up to 100% of their corresponding equity interest in the Company. All holders of our common stock who choose not to make a cash contribution to us as a White Knight Elector will presently retain his, her or its respective number of common shares in the Company but such shares will be subject to a 1 for 50 reverse stock split ("Reverse Stock Split"). We intend to effect the Reverse Stock Split on or about December 12, 2001 with respect to all of our presently outstanding common shares other than those held by members of the White Knight Class. As of November 27, 2001 Richard Goldring is the sole member of the White Knight Class. CLASS 6: Any and all holders of any of our equity stock options had their options extinguished and will not receive any distribution under the Plan. MANAGEMENT, DIRECTORS AND OFFICERS We continue to be managed by Richard Goldring, President and Chief Executive Officer, and John Neilson, Vice President and Secretary. MEANS BY WHICH PLAN TO BE EFFECTUATED Richard Goldring, our President and Chief Executive Officer, funded the Plan. The funding was structured as a capital contribution in exchange for retention of stock. EXECUTORY CONTRACTS AND UNEXPIRED LEASES As of the date of filing of the Plan, we expressly rejected all executory contracts and unexpired leases set forth as Exhibit D of the Disclosure Statement and filed as Exhibit 99.2 of this Form 8-K. (4) The following table shows the number of issued and outstanding shares of the Company's Common Stock as of the date of the Order. It does not take into account the Reverse Stock Split, which has not yet been effected. Shares of The Internet Advisory Corporation's Issued and Outstanding Common Stock.....................................14,445,018 (5) Information about our assets and liabilities as of the date the Bankruptcy Court issued the Order confirming our Plan will be filed by amendment. 4 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 99.1 Plan of Reorganization, dated August 29, 2001. 99.2 Disclosure Statement, dated August 27, 2001. 99.3 Order confirming Plan of Reorganization, dated November 14, 2001. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly cause this Report to be signed on its behalf by the undersigned hereunto duly authorized. THE INTERNET ADVISORY CORPORATION Dated: November 29, 2001 By: /s/ Richard Goldring ------------------------------------- Richard Goldring President & Chief Executive Officer 5 EX-99.1 3 y55341ex99-1.txt PLAN OF REORGANIZATION Exhibit 99.1 Plan of Reorganization, dated August 29, 2001. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA Fort Lauderdale Division In re: Case No. 01-23925-BKC-RBR The Internet Advisory Corporation, Debtor. Chapter 11 - -----------------------------------/ PLAN OF REORGANIZATION ARTICLE I INTRODUCTION On May 25, 2001, the Debtor filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"), and continued to operate its business as a Debtor-In-Possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. By this Plan, the Debtor seeks to comply with Section 1129 of the Bankruptcy Code as a good faith Debtor seeking to reorganize its financial affairs during the term of this Plan in order to pay off or substantially reduce the principal due and owing to all allowed Creditors from the ongoing operations of the Debtor. For the reasons stated in the Disclosure Statement and this Plan, the Debtor believes that the Plan is in the best interests of Creditors and will result in a distribution to Creditors that will exceed what would otherwise be obtained by each Creditor through a forced liquidation of the Debtor's assets in a Chapter 7 liquidation. ARTICLE 11 DEFINITIONS When used herein, the words set forth below shall have the following meaning or meanings: 1. "Administrative Bar Date" means the deadline established by Court order to file fee applications. 2. "Administrative Expense Claim" means those expenses provided by Section 503 and Section 507 of the Bankruptcy Code including, without limitation, the fees of professionals approved by Bankruptcy Court Orders as allowed by the Bankruptcy Court. 3. "Allowed Claim" means a Claim (i) which the Debtor has not scheduled as disputed, contingent or unliquidated and in respect of which no proof of Claim has been filed; or (ii) for which a proof of Claim was timely filed and in respect of which no timely objection thereto has been interposed or, if interposed, such objection has been overruled by Final Order allowing a Claim. 4. "Allowed Priority Tax Claim" means an Allowed Claim of a kind specified in Section 507(a)(8) of the Bankruptcy Code. 5. "Allowed Secured Claim" means an Allowed Claim which has a perfected lien on assets of the Debtor to the extent of the value of the asset in accordance with Section 506 of the Bankruptcy Code. The balance of such a Claim is deemed an "Allowed Unsecured Claim" herein. 6. "Allowed Unsecured Claim" means any Allowed Claim which is not an Allowed Secured Claim, an Administrative Expense Claim, an Allowed Priority Tax Claim or an Equity Security Interest Claim. 7. "Bankruptcy Code" means Title 11 of the United States Code, as amended. 8. "Bankruptcy Court" means the United States Bankruptcy Court for the Southern District of Florida, or such other court as may hereinafter be granted primary jurisdiction for this case and related proceedings. 2 9. "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended. 10. "Bar Date" shall mean September 26, 2001, the date set by the Bankruptcy Court prior to which Creditors must file proofs of claim with the Court. 11. "Claim" means any right to payment from the Debtor whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmeasured, disputed, undisputed, legal, equitable, secured or unsecured; or any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from the Debtor, whether or not such right to an equitable remedy is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmeasured, disputed, undisputed, legal, equitable, secured or unsecured. 12. "Claim holder" means any holder of an Allowed Claim. 13. "Class" means a category of Claims with regard to confirmation and distribution pursuant to this Plan. A Claim is in a particular-Class only to the extent that any portion of the Claim qualifies within the description of that Class and is in a different Class to the extent that the remainder of the Claim qualifies within the description of the different Class. 14. "Confirmation Date" means the date of entry of an Order by the Bankruptcy Court confirming this Plan pursuant to Section 1129 of the Bankruptcy Code. 15. "Contested Claim" means any Claim or any portion of any Claim as to which the Debtor or any other party in interest has timely objected in accordance with the Bankruptcy Code and Bankruptcy Rules and which objection has not been withdrawn or determined by Final Order. 3 16. "Convenience Class" means all Allowed Unsecured Claims less than $2,500.00. 17. "Debtor or "TIAC" shall mean The Internet Advisory Corporation, a Utah corporation, the above-styled Chapter 11 Debtor-In-Possession. 18. "Disclosure Statement" means the Disclosure Statement prepared pursuant to Section 1125 of the Bankruptcy Code, and all subsequent amendments or amended version thereto. 19. "Effective Date" means the date ten (10) days after the Confirmation Date regardless of whether the order confirming the Plan is final and non-appealable provided that the order of confirmation has not been stayed by a court of competent jurisdiction and, if so, the date designated as such by the reorganized Debtor not fewer than five (5) days nor more than ten (10) after such stay has been dissolved. 20. "Filing Date" means May 25, 2001, the date on which the Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code. 21. "Final Order" means an order or judgment of the Bankruptcy Court which has not been reversed, stayed, modified or amended and as to which the time to appeal or to seek certiorari or review has expired and as to which no appeal or petition certiorari or review is pending or as to which any right to appeal or to seek certiorari has been waived. 22. "Impaired Claims" means those Claims which are impaired within the meaning of Section 1124 of the Bankruptcy Code. 23. "Local Rules" means the Local Rules of the United States Bankruptcy Court for the Southern District of Florida, as amended. 4 24. "Plan" means this proposed Chapter 11 Plan of Reorganization, and all subsequent amendments thereto. 25. "Priority Claim" means any pre-petition Claim entitled to priority in payment under Section 507(a)(3), (4) or (6). 26. "Pro Rata" means an amount to be distributed to each creditor in a particular Class in amount equal to the ratio (expressed as a percentage) that the amount of each Allowed Claim in such Class bears to the total amount of Allowed Claims in such Class at the time of such calculation. 27. "Schedules" means those certain bankruptcy Schedules of Assets and Liabilities and Statement of Financial Affairs, and any amendments thereto, filed by the Debtor pursuant to Bankruptcy Rule 1007. 28. "Secured Claim" means any Claim that is secured by a lien, mortgage, security or collateral interest, trust deed, encumbrance or other interest that has been properly perfected as required by law with respect to property of the estate, to the extent of the lesser of the value of the property of the estate securing the Claim or the Amount of the Claim, provided however that such Claim is not subject to avoidance under the Bankruptcy Code or applicable non-bankruptcy law. 29. "Secured Creditor" means any person who is the holder of a Secured Claim. 30. "Unimpaired Claims" means those Claims which are not impaired within the meaning of Section 1124 of the Bankruptcy Code. 31. "Unsecured Claim" means all Claims for unsecured debts, liabilities, demands, or Claims of any character whatsoever arising prior to the Petition Date, including any portion of a Claim which exceeds the value of the property of the estate 5 securing such Claim. 32. "Unsecured Creditor" means any person who is the holder of an Unsecured Claim. 33. "White Knight Class" shall consist of Richard Goldring and all equity security holders of the Debtor that choose to make an additional capital contribution to the Debtor ("White Knight Electors"), as more specifically set forth herein and in the Disclosure Statement attached hereto. 34. "White Knight Electors" means all equity security holders of the Debtor that choose to make an additional capital contribution to the Debtor, as more specifically set forth herein and in the Disclosure Statement attached hereto. 35. As used in the Plan, masculine, feminine and neutral pronouns shall be deemed to include each other, and all terms used in the singular shall be deemed to include the plural, where applicable, and vice-versa. 36. All references to statutory sections are to the Bankruptcy Code, Title 11 of the United States Code, unless otherwise specified. 37. All terms defined herein shall have the same meaning when used in the Disclosure Statement. 38. The words "herein", "hereof", and "hereunder" and other words of similar import refer to the Plan as a whole, including all Schedules, appendices, and exhibits annexed or attached thereto, as the same may from time to time be amended or supplemented and not to any particular article, section or subdivision contained in the Plan. 39. Accounting terms not otherwise defined in the Plan have the meanings 6 assigned to them in accordance with generally accepted principles currently in effect. ARTICLE III CLASSIFICATION OF CLAIMS AND INTERESTS The Claims of creditors and interests of the Debtor shall be divided into six Classes: Class 1: Allowed Unsecured Lease Termination Damage Claim of Spring Lake Partners Class 2: Allowed Unsecured Rejected Bandwidth Contract Claims Class 3: Allowed Unsecured Convenience Class Claims Class 4: Allowed Unsecured Claims Class 5: Equity Security Interest Claims (White Knight Class) Class 6: Equity Stock Option Holders
(Note, Administrative and Priority Claims are not deemed to be included in any Class.) ARTICLE IV DESIGNATION AND TREATMENT OF UNIMPAIRED CLAIMS ADMINISTRATIVE EXPENSE CLAIMS: These Claims shall consist primarily of the balance of unpaid post-petition rent obligations to Spring Lake Partners for the use and occupancy of the Debtor's premises, the balance of unpaid post-petition obligations to AT&T on account of the Internet bandwidth contract by and between the Debtor and AT&T (paid on a current basis in the ordinary course of business), and the fees and expenses of professionals employed pursuant to Court authorization. These fees and expenses shall be paid in full in cash on the Effective Date when allowed by Final Order of the Court or as otherwise agreed. Any remaining fees due to the office of the United States Trustee or the Bankruptcy Court shall be paid in full in cash on the 7 Effective Date. The Debtor estimates the aggregate of administrative expenses will be approximately $95,000.00 as of the Confirmation Date consisting of an approximate balance due of $30,000.00 to Spring Lake Partners for the Debtor's post-petition use and occupancy of the Debtor's premises, an approximate balance due of $5,000.00 to AT&T on account of the Internet bandwidth contract by and between the Debtor and AT&T, legal fees to the Debtor's bankruptcy counsel, Steven M. Stoll, P.A., a Florida professional association doing business as Stoll & Associates, in the approximate amount of $40,000.00 (net of pre-petition retainer), legal fees to the Debtor's Securities Exchange Commission counsel, Kaplan Gottbetter & Levenson, in the approximate amount of $10,000.00 (net of pre-petition retainer), and auditor/accounting fees to the Debtor's auditor/accountant, Radin Glass & Co., in the approximate amount of $10,000.00 (net of pre-petition retainer). The Debtor will remain current on all obligations to the United States Trustee's office and the Clerk of the Court throughout this Chapter 11 case and anticipates that no such fees will be due at confirmation. These fees and expenses shall be paid in full in cash on the Effective Date when allowed by Final Order of the Court or as otherwise agreed. Any remaining fees due to the office of the United States Trustee or the Bankruptcy Court shall be paid in full in cash on the Effective Date. Notwithstanding any other provisions of the Plan to the contrary, the Debtor shall pay the United States Trustee the appropriate sum required pursuant to 28 U.S.C. Section 1930(a)(6), within 10 days of the entry of the order confirming this Plan, for 8 pre-confirmation periods and simultaneously provide to the United States Trustee an appropriate affidavit indicating the cash disbursements for the relevant period. The Debtor, as a reorganized debtor, shall further pay the United States Trustee the appropriate sum required pursuant to 28 U.S.C. Section 1930(a)(6) for post-confirmation periods within the time period set forth in 28 U.S.C. Section 1930(a)(6), based upon all postconfirmation disbursements made by the reorganized Debtor, until the earlier of the closing of this case by the issuance of a Final Decree by the Bankruptcy Court, or upon the entry of an Order by the Bankruptcy Court dismissing this case or converting this case to another chapter under the Bankruptcy Code, and the reorganized Debtor shall provide to the United States Trustee upon the payment of each post-confirmation payment an appropriate affidavit indicating all cash disbursements for the relevant period. PRIORITY TAX CLAIMS: The Allowed Priority Tax Claims of the Internal Revenue Service shall be determined in accordance with the provisions of Section 507(a)(8) of the Bankruptcy Code. The Debtor estimates that the aggregate of all such claims is approximately $11,680.00, comprised of a claim in said amount of by the Internal Revenue Service. The Internal Revenue Service will receive on account of its claim deferred equal monthly cash payments over six years of a value, as of the Effective Date of the Plan, equal to the allowed amount of such claim commencing on the Effective Date plus interest at a rate of nine percent (9.0%). The Debtor's estimate does not include penalties, interest and costs associated with such claims which shall be treated as General Unsecured Claims. The Debtor estimates that penalties, interest and costs 9 associated with such claims total approximately $1,500.00. ARTICLE V DESIGNATION AND TREATMENT OF IMPAIRED CLAIMS CLASS 1: The Allowed Unsecured Lease Termination Damage Claim of Spring Lake Partners shall be treated as an Unsecured Claim. Spring Lake Partners shall receive on account of its Allowed Unsecured Claim deferred cash payments equal to ten percent (10%) of its Claim in twelve equal monthly installments commencing thirty (30) days after the Effective Date. The Debtor shall execute a substitute lease and other necessary documents and instruments in a form to be agreed upon by the parties. CLASS 2: The Allowed Unsecured Rejected Bandwidth Contract Claims of Winstar, Genuity Solutions, Inc., Expanets, Quest, AT&T, BellSouth, and MCI shall be treated as Unsecured Claims. Winstar, Genuity Solutions, Inc., Expanets, Quest, AT&T, BellSouth, and MCI shall receive on account of their claims deferred cash payments equal to ten percent (10%) of their Allowed Unsecured Claims in equal monthly installments over five (5) years commencing thirty (30) days after the Effective Date. The Debtor estimates that the aggregate of all Allowed Unsecured Rejected Bandwidth Contract Claims is approximately $650,000.00; however, the Debtor will be filing objections to various proofs of claim filed and, subject to Court approval, anticipates reducing this approximate aggregate amount accordingly. CLASS 3: The Convenience Class is comprised of all Allowed Unsecured Claims less than $2,500.00. Each claimant of the Convenience Class shall receive on account of his, her or its Allowed Unsecured Claim the lesser of the actual Allowed 10 Claim or $100.00. Such payment will be paid in full thirty (30) days after the Effective Date. CLASS 4: Each claimant of an Allowed Unsecured Claim shall receive on account of his, her or its Allowed Unsecured Claim deferred cash payments equal to five percent (5%) of the Claim in equal monthly installments over one (1) year , commencing thirty (30) days after the Effective Date. The Debtor estimates that the aggregate of all Allowed Unsecured Claims is approximately $309,606.74; however, the Debtor will be filing objections to various proofs of claim filed and, subject to Court approval, anticipates reducing this approximate aggregate amount accordingly. CLASS 5: The White Knight Class shall consist of Richard Goldring and all equity security holders that choose to make an additional capital contribution to the Debtor ("White Knight Electors"), as more specifically set forth herein. Richard Goldring shall contribute the sum of $50,000.00, at least 10 days prior to the hearing to consider confirmation of the Plan, in exchange for the retention of 100% of his equity interest in the Debtor. Each White Knight Elector shall contribute the sum of $1.00 per share, subject to a minimum capital contribution of $1,000.00, at least 10 days prior to the hearing to consider confirmation of the Plan, in exchange for the retention of 100% of his equity interest in the Debtor. Any equity security holder chooses to not make an aggregate cash contribution to the Debtor shall retain their respective equity security interests in the Debtor subsequent to a 50 to 1 reverse of all issued and outstanding stock of the Debtor. Notwithstanding the foregoing, all holders of equity security interest in the Debtor shall receive no distribution under the Plan, other than the retention of their 11 respective interests, as more specifically set forth above. CLASS 6: Any and all holders of any equity stock options in the Debtor shall have their options extinguished and shall receive no distribution under the Plan. ARTICLE VI GENERAL PROVISIONS Steven M. Stoll, Esq. of Steven M. Stoll, P.A., a Florida professional association doing business as Stoll & Associates, the Debtor's bankruptcy counsel, shall act as the Debtor's disbursing agent for the purpose of making the initial distributions required under the Plan and, except as otherwise provided herein, shall establish such accounts as he may in his sole discretion deem necessary. Thereafter, either the Debtor or a Disbursing Agent appointed by the Debtor may make all future distributions. The rights afforded in this Plan shall be in exchange for and in complete satisfaction, discharge and release of all existing Claims of any nature against the Debtor, or any of the Debtor's real or personal property. The Debtor's discharge shall be effective as to each Claim, regardless of whether (a) a Proof of Claim was filed; (b) whether the Claim is an Allowed Claim; or (c) whether the Claim holder votes to accept the plan. Subsequent to the Confirmation Date, all persons or entities shall be precluded from asserting Claims against the Debtor or the Debtor's assets or properties or any other future Claims based upon any act, transaction or activity of any kind that occurred prior to the Confirmation Date. At the Confirmation Date, the Debtor's estate property shall revest in the Debtor. Pursuant to Local Rule 3007-1(B) of the Local Rules, the Debtor's objections 12 to Claims must be filed no later than the deadline set in the "Order (I) Approving Disclosure Statement; (II) Setting Hearing on Confirmation of Plan; (III) Setting Various Deadlines; and (IV) Describing Plan Proponent's Obligations" or in the "Order Conditionally Approving Disclosure Statement, etc." for service of a plan, disclosure statement and ballots. Each Impaired Class of creditors with Claims against the Debtor's estate (as defined in Article II) shall be entitled to vote separately to accept or reject the Plan. Section 1126 of the Bankruptcy Code requires acceptance by creditors of a Class holding at least two-thirds in amount and more than one-half in number of Allowed Claims "that have accepted or rejected the plan." If sufficient acceptances are not received, the Debtor reserves the right to amend the Plan and/or proceed to "cramdown" pursuant to the provisions of Section 1129(b) of the Bankruptcy Code. The cramdown provisions of the Bankruptcy Code are discussed in detail in Article XIII infra. ARTICLE VII MANAGEMENT, DIRECTORS AND OFFICERS Debtor incurred losses since the inception of its Internet business due to the poor quality and inexperience of former management. In December 2000, a majority of Debtor's shareholders requested that the board of directors and the officers step down. As a result, a new board of directors was elected in December 2000 and replacement of the officers in December 2000 and January 2001. Immediately, the new management team of Richard Goldring and John Neilson reduced the Debtor's operating costs by 50%, and significantly reduced the work force and operating expenses, especially the bandwidth charges which previously accounted for as much 13 as 60% of the Debtor's monthly operating expenses. The Debtor will continue to be managed by Richard Goldring as President & Chief Executive Officer and John Neilson as Vice President & Secretary (collectively, the "Officers"). ARTICLE VIII RESTRUCTURING OF THE DEBTOR'S BUSINESS OPERATIONS Subsequent to the Filing Date, Debtor has continued to provide comprehensive Internet services to its customers with an emphasis on serving the small and medium sized business market. Typically, Debtor stores its customers' Web site information on a "virtual" basis; however, for its customers with the resources and desire to have their own dedicated servers, Debtor continues to offers specialized colocation server lease facility resources, providing its customers with space to house equipment in its Tier 1 Data Center. Additionally, Debtor continues to offer an expanding package of enhanced Internet tools, including website design services and electronic commerce solutions (i.e., e-Commerce), which enable its customers to undertake private communications and secure transactions with employees, consumers and vendors over the Internet. Debtor's newly implemented business strategy of combining national scale with local presence was specifically developed to serve the needs of the small and medium sized business market. In formulating its business strategy, Debtor concluded that the large, national Internet service providers lacked the local presence to provide customized hands-on support. On the other hand, the smaller, local Internet service providers did not have the requisite scale and resources to provide a full range of services at an acceptable quality and pricing levels. Debtor believes that it has a 14 competitive advantage in serving these business customers because it has combined technical expertise and hands-on support with its own local sales and engineering personnel while still offering the quality and economic efficiency of a national network provider. Debtor's goal is to be a premier, full-service provider of Internet services to small and medium sized businesses. To accomplish this goal, Debtor will expand its market presence, strengthen its Internet access and Web hosting core service platforms, and add additional enhanced value service capabilities through further acquisitions and strategic relationships. Given its large potential customer base, broad distribution channels and established core service strengths in Internet access and Web hosting, Debtor believes that it is an attractive potential acquirer and/or strategic partner. Furthermore, Debtor has integrated its operations into a national network with a highly reliable and scalable national infrastructure supported by Interliant, who is one of only three "Tier One" national network providers in the world. As a direct result thereof, Debtor believes that it will derive increasing revenues from its customers and facilitate its goal of attaining profitability by continuing to offer better performing Web sites, an expanding array of enhanced value Internet services, and additional high capacity Internet data transmission capability. Indeed, by integrating operations and leverage into a national infrastructure, Debtor has reduced its operating costs by 80% and improved its product quality. Debtor believes that its strong balanced position in both the Internet access and Web hosting service platforms gives it a competitive edge in offering high-margin, enhanced value Internet services and bundled packages to meet the evolving needs 15 of its customers. Examples of these Web-based enhanced value Internet services include: Electronic commerce; Web-based faxing and email; Unified messaging, (which is the aggregation of various messaging formats, such as fax, voice, email, into a single point of contact); Office and business process automation capabilities; Audio and video applications and Automated Web site development tools and templates; and redundant "hot" sites, (which are multiple presence Web sites hosted across multiple national and international data centers). Debtor anticipates enhancing the value of such platforms by developing, both internally and through strategic vendor relationships, a further array of higher margin products and services to continue to address changing customer demands. Through its new business strategy, Debtor connects its customers to the Internet via a national high capacity Internet data transmission network. Debtor believes this network is adequate to meet the current and anticipated service needs of its customers; however, by aggregating the capacity of data transmission over the Internet and capacity requirements of its operations onto one national network, Debtor continues to increase its operational control and efficiency, reduce costs, and provide redundancy and higher quality service. In this way, Debtor addresses some of the most significant challenges that an Internet service provider faces in supporting its customers. Debtor's infrastructure also incorporates several other elements critical to maintaining the highest quality Internet service, including a high capacity and reliable national network, peering relationships with other regional, national and international Internet service providers, sophisticated network management tools and engineering support services. The reliability of the national network is the result of many factors, 16 including redundant routers and other critical hardware, carrier class facilities at point of presence locations such as back-up power, fire suppression and climate control, and redundant telecommunications lines. In accordance with the Bankruptcy Code, applicable rules and the United States Trustee Guidelines, the Debtor has timely filed its Debtor-In-Possession Reports ("DIP Reports") with the Clerk of the Bankruptcy Court for each month it has operated its business subsequent to the Filing Date. These monthly reports contain detailed information reflecting the Debtor's financial operations. Taken as a whole, the DIP Reports summarize the profitable results of the Debtor's operations during the Chapter 11 proceeding. A copy of the summary page of each of the DIP Reports filed by the Debtor, together with Attachments 1, 2 and 3 of the most recent DIP Report is attached hereto as Exhibit A. Since the Filing Date, the Debtor has diligently prosecuted this case. Additionally, the Debtor has instituted an extensive turn-around program resulting in a positive cash flow for the business and has been paying their expenses as they become due. ARTICLE IX MEANS TO EFFECTUATE PLAN The White Knight Class and Richard Goldring, the Debtor's President and Chief Executive Officer, will fund the plan of re-organization. This funding will be structured as a capital contribution in exchange for retention of stock. Richard Goldring shall contribute the sum of $50,000.00, at least 10 days prior to the hearing to consider confirmation of the Plan, in exchange for the retention 17 of 100% of his equity interest in the Debtor. Each White Knight Elector shall contribute the sum of $1.00 per share, subject to a minimum capital contribution of $1,000.00, at least 10 days prior to the hearing to consider confirmation of the Plan, in exchange for the retention of 100% of his equity interest in the Debtor. ARTICLE X EXECUTORY CONTRACTS AND UNEXPIRED LEASES As of the date of filing the Plan, the Debtor has expressly rejected all executory contracts and unexpired leases set forth on Exhibit D attached to the Disclosure Statement, but for the unexpired contract entered into by and between the Debtor and AT&T. Notwithstanding the foregoing, any executory contract or unexpired lease not assumed by the Debtor under the Plan or pursuant to an order of the Bankruptcy Court entered at any time, shall be deemed rejected by the Debtor at the Confirmation Date. Any Claim which arises by virtue of a rejection at the Confirmation Date shall be filed by such claimant within thirty (30) days after the Confirmation Date or the holder thereof shall be forever barred from asserting a Claim against the Debtor and the Debtor's estate and seeking distribution therefrom. Any damage Claim asserted by a creditor arising out of the rejection of any executory contract or unexpired lease shall be a Class 4 General Unsecured Claim. ARTICLE XI ADVERSARY PROCEEDINGS After thorough review and analysis, the Debtor has determined that the legal fees and costs associated with bringing potential adversary proceedings would 18 exceed the possible recovery associated therewith. Notwithstanding the foregoing, the Debtor reserves in its name potential claims for and proceeds from recovery under any adversary proceedings under Sections 544, 545, 547, 548, 549, 550 and 553 of the Bankruptcy Code, and all claims and causes of action under other applicable law. ARTICLE XII MODIFICATION OF THE PLAN The Debtor may propose amendments or modifications of the Plan at any time prior to the Confirmation Date with leave of Court and upon such notice as the Court may require. After the Confirmation Date, the Debtor may, with the approval of the Bankruptcy Court, and so long as it does not materially or adversely affect the interests or creditors thereunder, remedy any defect or omission, or reconcile any inconsistencies in the Plan or in the Confirmation Order as may be necessary to carry out the purposes and effect of the Plan. ARTICLE XIII PROVISION TO INVOKE CRAM DOWN PROCEEDING IF NECESSARY The Bankruptcy Code provides for confirmation of a plan even if it is not accepted by all Impaired Classes of Claims if at least one Impaired Class has voted to accept the Plan. These so-called "cramdown" provisions for Confirmation are set forth in Section 1129(b) of the Bankruptcy Code. If any Impaired Class of Claims does not accept the Plan, the Bankruptcy Court may still confirm the Plan at the request of the Plan proponent if, as to each Impaired Class which has not accepted the Plan, the Plan does not "discriminate unfairly" and the Plan is "fair and equitable." The phrase "fair and equitable" has different meanings for Secured and Unsecured Claims and 19 Classes of Equity Interests. If all of the applicable requirements of Section 1129(a) of the Bankruptcy Code, other than paragraph 8, are found to have been met with respect to the Plan, the Debtor may then seek to confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code. For the purposes of seeking confirmation under the "cramdown" provisions of the Bankruptcy Code, the Debtor reserves the right to modify or vary the Classification of Allowed Claims and the treatment of Allowed Claims of all Classes, so as to comply with the requirements of Section 1129(b). The Debtor also reserves the right to amend the Plan at that time and in such a manner as to permit confirmation over the vote of the rejecting Impaired Class. ARTICLE XIV EFFECTS OF CONFIRMATION OF THE PLAN Revesting of Assets: Unless otherwise provided by this Plan, pursuant to Sections 1123(a)(5)(A) and 1141 of the Bankruptcy Code, on the Effective Date, title to all assets and property of the Debtor's estate not otherwise transferred pursuant to the Plan shall pass to, and vest in the Debtor, free and clear of all Claims, interests, liens, charges and other interests of Creditors arising prior to the Effective Date, except the liens of SunTrust, SBA, and the Judgment Creditors which will survive the Plan. The reorganized Debtor will be holding the assets for the benefit of the Creditors. The transfer of any property under the Plan shall not be subject to any transfer tax under Section 1146 of the Bankruptcy Code. Except as otherwise provided herein or in the Confirmation Order, on and after the Effective Date, the Debtor shall exclusively be in control of the operation of its business, and shall use, acquire and dispose of property 20 free and clear of any restrictions imposed under the Bankruptcy Code, the Federal Rules and the Bankruptcy Court. As of the Effective Date, all property of the Debtor shall be free and clear of all Claims and the interests of such Claim holders, except as otherwise provided. Rights of action: Any rights or causes of action owned by or accruing in favor of the Debtor shall remain assets of the Debtor after the Effective Date. The Debtor may pursue, abandon, settle or release all rights of action, as appropriate, in accordance with what is in the best interests, and for the benefit of the Debtor. ARTICLE XV RETENTION OF JURISDICTION Notwithstanding confirmation of the Plan, with the Effective Date having occurred, the Bankruptcy Court shall retain jurisdiction for the following purposes: (a) Determination of the allowability of Claims in interest upon objection to such Claims by the Debtor or any other party in interest; (b) Determination of request for payment of Claims entitled to priority under Section 503 or Section 507(a) of the Bankruptcy Code, including the compensation of professionals. (c) Resolution of controversies and disputes regarding the interpretation of this Plan, regarding title to the assets of the estates and to determine all causes of action, controversies, disputes and conflicts pending as of the Confirmation Date between the Debtor and any other party; (d) Correction of any defect, the curing of any omission, or the reconciliation of any inconsistencies in the Plan or the confirmation as may be necessary to carry out the purposes and intent of the Plan. 21 (e) Implementation of the provisions of this Plan and the confirmation of this Plan, including appropriate orders to protect the Debtor from creditor actions; (f) Modification of the Plan pursuant to Section 1127 of the Bankruptcy Code; and (g) Interpretation of the terms and conditions of this Plan and to enter orders concluding and terminating this case, including the entry of a final decree and discharge. ARTICLE XVI MISCELLANEOUS PROVISIONS GOVERNING LAW: Except to the extent the Bankruptcy Code or Federal Rules of Bankruptcy Procedure are applicable, the rights and obligations arising under this Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida. HEADINGS: The headings of the articles, paragraphs and subparagraphs of this Plan are inserted for convenience only and shall not affect the interpretation of the Plan. SUCCESSORS AND ASSIGNS: This Plan and all the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. TIME: In computing any time period prescribed or allowed by this Plan, the day or the act or event from which the designated period begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday, Sunday, or a legal holiday, in which event the period runs until the end of the next succeeding business day which is not a legal holiday. 22 SEVERABILITY: Should any provision in the Plan be determined to be unenforceable following the Effective Date, such determination shall in no way limit or affect the enforceability and operative effect of any and all other provisions of this Plan. [Signature page to follow] 23 THE INTERNET ADVISORY CORPORATION By: /s/ Richard Goldring 08/27/01 --------------------------------- ---------------- Richard Goldring, its President Date I hereby certify that I am admitted to the Bar of the United States District Court for the Southern District of Florida and I am in compliance with the additional qualifications to practice in this court set forth in Local Rule 2090-1(A). STOLL & ASSOCIATES Attorneys for the Debtor 3696 North Federal Highway, Suite 300 Fort Lauderdale, FL 33308 (954) 745-3550 (954) 745-3551 Fax /s/ Steven M. Stoll ---------------------------------------- Steven M. Stoll Florida Bar Number 946230 Christopher J. Gertz Florida Bar Number 1069511 EXHIBIT A MONTHLY FINANCIAL REPORT FOR BUSINESS FOR THE PERIOD BEGINNING MAY 26th, 2001 AND ENDING MAY 31st, 2001 Name of Debtor: THE INTERNET ADVISORY CORPORATION Case Number: 01-23925.RBR Date of Petition: MAY 25th, 2001
CURRENT CUMULATIVE MONTH: PETITION TO DATE: 1. CASH AT BEGINNING OF PERIOD $4,331.87 $4,331.87 2. RECEIPTS A. Cash Sales $ -- $ -- Less: Cash Refunds $ -- $ -- Net Cash Sales $ -- $ -- B. Collection on Postpetition A/R $ -- $ -- C. Collection on Prepetition A/R $ 246.54 $ 246.54 D. Other Receipts (Attach List) $ -- $ -- 3. TOTAL RECEIPTS $ 246.54 $ 246.54 4. TOTAL CASH AVAILABLE FOR OPERATIONS (Line 1 + Line 3) $4,578.41 $4,578.41 5. DISBURSEMENTS A. U.S. Trustee Quarterly Fees $ -- $ -- B. Net Payroll $ -- $ -- C. Payroll Taxes Paid $ -- $ -- D. Sales & Use Taxes $ -- $ -- E. Other Taxes $ -- $ -- F. Rent $ -- $ -- G. Other Leases (Attachment 3) $ -- $ -- H. Telephones $ -- $ -- I. Utilities $ -- $ -- J. Travel & Entertainment $ -- $ -- K. Vehicle Expenses $ -- $ -- L. Office Supplies $ -- $ -- M. Advertising $ -- $ -- N. Insurance (Attachment 7) $ -- $ -- 0. Purchases Of Fixed Assets $ -- $ -- P. Purchases Of Inventory $ -- $ -- Q. Manufacturing Supplies $ -- $ -- R. Repairs & Maintainance $ -- $ -- S. Payments to Secured Creditors $ -- $ -- T. Other Operating Expenses (List Attached) $ -- $ -- 6. TOTAL CASH DISBURSEMENTS $ -- $ -- 7. ENDING CASH BALANCE (Line 4 - Line 6) $4,578.41 $4,578.41
I declare under penalty of perjury that this statement and the accompanying documents and reports are true and correct to the best of my knowledge and belief. Signed: /s/ John Neilson ---------------------------------------------- By: John Neilson As Vice President & Secretary This 20th day of June, 2001 MONTHLY FINANCIAL REPORT FOR BUSINESS FOR THE PERIOD BEGINNING July 1st, 2001 AND ENDING July 31st, 2001 Name of Debtor: THE INTERNET ADVISORY CORPORATION Case Number: 01-23925 RBR Date of Petition: MAY 25th, 2001
CURRENT CUMULATIVE MONTH: PETITION TO DATE: 1. CASH AT BEGINNING OF PERIOD $22,563.39 $ 20,159.85 2. RECEIPTS A. Cash Sales $22,000.00 $ 47,350.00 Less: Cash Refunds $ -- $ -- Net Cash Sales $ 22,000.00 $ 47,350.00 B. Collection on Postpetition A/R $ -- $ -- C. Collection on Prepetition A/R $ -- $ -- D. Other Receipts (Attach List) $ -- $ -- 3. TOTAL RECEIPTS $22,000.00 $47,350.00 4. TOTAL CASH AVAILABLE FOR OPERATIONS (Line 1 + Line 3) $44,563.39 $47,350.00 5. DISBURSEMENTS A. U.S. Trustee Quarterly Fees $ -- $ -- B. Net Payroll $ 6,000.00 $ 6,000.00 C. Payroll Taxes Paid $ 747.00 $ 747.00 D. Sales & Use Taxes $ -- $ -- E. Other Taxes $ -- $ -- F. Rent $ -- $- G. Other Leases (Attachment 3) $ -- $- H. Telephones $ -- $ 605.20 I. Utilities/Internet Bandwidth $ 459.58 $ 459.58 J. Travel & Entertainment $ -- $ -- K. Transfer Agent Fees $ 140.00 $ 170.00 L. Office Supplies $ -- $ -- M. Advertising/EDGAR Filing Fees $ 173.20 $ 352.00 N. Insurance (Attachment 7) $ 2,591.38 $ 2,591.38 0. Purchases Of Fixed Assets $ -- $ -- P. Purchases Of Inventory $ -- $ -- Q. Manufacturing Supplies $ -- $ -- R. Repairs & Maintainance $ -- $ -- S. Payments to Secured Creditors $ -- $ -- T. Other Operating Expenses (List Attached) $ -- $ -- 6. TOTAL CASH DISBURSEMENTS $10,111.16 $10,925.16 7. ENDING CASH BALANCE (Line 4 - Line 6) $34,452.23 $36,424.84
I declare under penalty of perjury that this statement and the accompanying documents a reports are true and correct to the best of my knowledge and belief. Signed: /s/ John Neilson ---------------------------------------------- By: John Neilson As Vice President & Secretary This 14th day of July, 2001 ATTACHMENT 1 MONTHLY ACCOUNTS RECEIVABLE AGING AND RECONCILIATION Name of Debtor: THE INTERNET ADVISORY CORPORATION Case Number: 01-23925 RBR Reporting Period beginning July 1st, 2001 and ending June 31st, 2001 ACCOUNTS RECEIVABLE AT PETITION DATE $ - ACCOUNTS RECEIVABLE RECONCILIATION (Include all accounts receivable, pre-petition and post petition, including charge card sales which have not been received): Beginning of Month Balance $ 4,691.52 PLUS: Current Month New Billings $ 22,000.00 LESS: Collection During the Month $ 22,000.00 End of Month Balance $ 4,691.52
AGING: (Show the total amount for each age group of accounts incurred since fling the petition)
0-30 Days 31-60 Days 61-90 Days Over 90 Days Total: - --------- ---------- ---------- ------------ ------ $ -- $4,691.52 $ -- $ -- $4,691.52
ATTACHMENT 2 MONTHLY ACCOUNTS PAYABLE AND SECURED PAYMENTS REPORT Name of Debtor. THE INTERNET ADVISORY CORPORATION Case Number: 01-23925 RBR Report Period Beginning July 1st, 2001 and ending July 31st, 2001 In the space below list all invoices or bills incurred and not paid since the filing of the petition. Do not include amounts owed prior to filing the petition.
Date Days Incurred Outstanding Vendor Description Amount: -------- ----------- ------ ----------- ------- July 20th Thru 9 Employees Payroll $3,000.00 July 29th, 2001 July 20th Thru 9 Taxes Payroll Taxes $ 373.50 July 29th, 2001
ACCOUNTS PAYABLE RECONCILIATION (Post Petition Only): Opening Balance (total from prior report) $3,300.00 PLUS: New Indebtedness Incurred This Month $10,111.16 LESS: Amount Paid on Accounts Payable $10,111.16 Ending Month Balance $ 3,300.00
SECURED; List the status of Payments to Secured Creditors and Lessors (Post Petition Only)
Secured Creditor Date Payment Payment Number of Post Total Amount Lessor Due: Amount: Petition of Post Petition Payment Late: Payments Late: None
ATTACHMENT 3 AND FIXED ASSETS REPORT Name of Debtor: THE INTERNET ADVISORY CORPORATION Case Number: 01-23925 RBR Reporting Period beginning July 1st, 2001 and ending July 31st, 2001 INVENTORY REPORT INVENTORY BALANCE AT PETITION DATE: None INVENTORY RECONCILIATION: Inventory Balance at Beginning of the Month None Inventory Purchased During the Month None Inventory Used or Sold None Inventory on Hand at the End of the Month None METHOD OF COSTING INVENTORY: None
(It should be noted that the debtor does not carry inventories) FIXED ASSET REPORT FIXED ASSETS FAIR MARKET VALUE AT PETITION DATE: $50,000 to $75,000 (Includes Property, Plant & Equipment) FIXED ASSETS RECONCILIATION: Fixed Asset Book Value at Beginning of the Month $ 455,704.00 LESS: Depreciation Expense $ 5,723.00 PLUS: New Purchases $ -- Ending Monthly Balance $ 449,981.00
BRIEF DESCRIPTION OF FIXED ASSETS PURCHASED OR DISPOSED OF DURING THE REPORTING PERIOD: None EX-99.2 4 y55341ex99-2.txt DISCLOSURE STATEMENT 99.2 Disclosure Statement, dated August 27, 2001. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA Fort Lauderdale Division In re: Case No. 01-23925-BKC-RBR, The Internet Advisory Corporation, Debtor: Chapter 11 DISCLOSURE STATEMENT This Disclosure Statement and attached Plan of Reorganization (the "Plan") have been prepared pursuant to Section 1125 of Title 11 of the United States Code (the "Bankruptcy Code") on behalf of the Debtor, The Internet Advisory Corporation (the "Debtor" or "Debtor-in Possession"). This Disclosure Statement describes the terms and provisions of the Plan. The information contained herein has been prepared by the Debtor in good faith based upon information available to it. The information herein has not been subject to an audit. The Debtor believes that this Disclosure Statement complies with the requirements of the Bankruptcy Code and contains adequate information to enable all claim holders to make an informed judgment about the merits of approving or disapproving the Plan. A discussion of the history of the Debtor, the events leading up to the Chapter 11 filing, the status of the Debtor's business operations subsequent to the Filing Date and the significant events during the Chapter 11 case is set forth in Articles VI, VII and VIII of this Disclosure Statement. The description of the Plan and certain exhibits attached thereto contained in this Disclosure Statement are intended as summaries only and are qualified in their entirety by references to the Plan and exhibits thereto. The Plan is a legally binding arrangement and should be read in its entirety, as opposed to relying on the summary in this Disclosure Statement. Accordingly, creditors may wish to consult with their own lawyer regarding this Disclosure Statement and the Plan in order to understand the Plan more fully. Any representations made to secure an acceptance to the Plan that are not contained in this Disclosure Statement should be reported to the Debtor, the Debtor's counsel, and the United States Trustee for appropriate action. Any capitalized terms used and not otherwise defined herein have the same definition as set forth in Article II of the Plan. Article II of the Plan is attached hereto as Exhibit A for your convenience. ARTICLE I INTRODUCTION A. PURPOSE OF THE DISCLOSURE STATEMENT Confirmation of the Plan depends, in part, upon the receipt of a sufficient number of votes in favor of the Plan from persons holding Allowed Claims entitled to vote under the Plan. Accordingly, if you hold an Allowed Claim entitled to vote, your vote is important. (See Article IV infra.) If the Plan, including any amendments or modifications thereto, is rejected by the Claim holders, this case may be dismissed or converted to a Chapter 7 liquidation case. In the event of a Chapter 7 liquidation, Unsecured Creditors will receive less, if any, distribution compared to this Plan due to increased administrative expenses compounded with diminished value for accounts receivable and the Debtor's real property since liquidation of the Debtor's personal and real property will be at 2 substantially less than the market price for an operating business. This Disclosure Statement describes the classification and treatment of Claims in Article II as well as in the exhibits attached hereto. You are urged to study the Plan and to consult your legal and tax counsel concerning the Plan and its impact upon your legal rights before voting on the Plan. B. BRIEF EXPLANATION OF CHAPTER 11 In Chapter 11, the debtor-in-possession retains its assets and operates its business unless, and until, a trustee is appointed: The formulation of a plan of reorganization is the principal purpose of a Chapter 11 case. The plan of reorganization is the vehicle for satisfying the claim holders' interests in the debtor and, when approved by the Court, establishes a reorganization "contract" between the debtor and its creditors under which the debtor pays its creditors. You are urged to consult a lawyer for further information regarding Chapter 11 bankruptcy cases. ARTICLE II CLASSIFICATION OF CLAIMS UNDER THE PLAN The Claims of creditors and interests of the Debtor shall be divided into five Classes. (Note, Administrative and Priority Claims are not deemed to be included in any Class.) CLASS 1: Allowed Unsecured Lease Termination Damage Claim of Spring Lake Partners CLASS 2: Allowed Unsecured Rejected Bandwidth Contract Claims CLASS 3: Allowed Unsecured Convenience Class Claims CLASS 4: Allowed Unsecured Claims 3 CLASS 5: Equity Security Interest Claims (White Knight Class) CLASS 6: Equity Stock Option Holders The Allowed Claims against the Debtor have been classified into separate Classes, each of which will be treated under the Plan. A Claim is in a particular Class only to the extent that any portion of the Claim qualifies within the description of that Class and is in a different Class to the extent that the remainder of the Claim qualifies within the description of the different Class. Specifically, the Classes provided for in the Plan are set forth as follows: A. ADMINISTRATIVE EXPENSE CLAIMS: These Claims shall consist primarily of the balance of unpaid post-petition rent obligations to Spring Lake Partners for the use and occupancy of the Debtor's premises, the balance of unpaid post-petition obligations to AT&T on account of the Internet bandwidth contract by and between the Debtor and AT&T (paid on a current basis in the ordinary course of business), and the fees and expenses of professionals employed pursuant to Court authorization. These fees and expenses shall be paid in full in cash on the Effective Date when allowed by Final Order of the Court or as otherwise agreed. Any remaining fees due to the office of the United States Trustee or the Bankruptcy Court shall be paid in full in cash on the Effective Date. The Debtor estimates the aggregate of administrative expenses will be approximately $95,000.00 as of the Confirmation Date consisting of an approximate balance due of $30,000.00 to Spring Lake Partners for the Debtor's post-petition use and occupancy of the Debtor's premises, an approximate balance due of $5,000.00 to AT&T on account of the Internet bandwidth contract by and between the Debtor and 4 AT&T, legal fees to the Debtor's bankruptcy counsel, Steven M. Stoll, P.A., a Florida professional association doing business as Stoll & Associates, in the approximate amount of $40,000.00 (net of pre-petition retainer), legal fees to the Debtor's Securities Exchange Commission counsel, Kaplan Gottbetter & Levenson, in the approximate amount of $10,000.00 (net of pre-petition retainer), and auditor/accounting fees to the Debtor's auditor/accountant, Radin Glass & Co., in the approximate amount of $10,000.00 (net of pre petition retainer). The Debtor will remain current on all obligations to the United States Trustee's office and the Clerk of the Court throughout this Chapter 11 case -and anticipates that no such fees will be due at confirmation. These fees and expenses shall be paid in full in cash on the Effective Date when allowed by Final Order of the Court or as otherwise agreed. Any remaining fees due to the office of the United States Trustee or the Bankruptcy Court shall be paid in full in cash on the Effective Date. Notwithstanding any other provisions of the Plan to the contrary, the Debtor shall pay the United States Trustee the appropriate sum required pursuant to 28 U.S.C. Section 1930(a)(6), within 10 days of the entry of the order confirming this Plan, for pre-confirmation periods and simultaneously provide to the United States Trustee an appropriate affidavit indicating the cash disbursements for the relevant period. The Debtor, as a reorganized Debtor, shall further pay the United States Trustee the appropriate sum required pursuant to 28 U.S.C. 1930(a)(6) for post-confirmation periods within the time period set forth in 28 U.S.C.1930(a)(6), based upon all post-confirmation disbursements made by the reorganized Debtor, until the earlier of the 5 closing of this case by the issuance of a Final Decree by the Bankruptcy Court, or upon the entry of an Order by the Bankruptcy Court dismissing this case or converting this case to another chapter under the Bankruptcy Code, and the reorganized Debtor shall provide to the United States Trustee upon the payment of each post-confirmation payment an appropriate affidavit indicating all cash disbursements for the relevant period. B. PRIORITY-TAX CLAIMS: The Allowed Priority Tax Claims of the Internal Revenue Service shall be determined in accordance with the provisions of Section 507(a)(8) of the Bankruptcy Code. The Debtor estimates that the aggregate of all such claims is approximately $11,680.00, comprised of a claim in said amount of by the Internal Revenue Service. The Internal Revenue Service will receive on account of its claim deferred equal monthly cash payments over six years of a value, as of the Effective Date of the Plan, equal to the allowed amount of such claim commencing on the Effective Date plus interest at a rate of nine percent (9.0%). The Debtor's estimate does not include penalties, interest and costs associated with such claims which shall be treated as General Unsecured Claims. The Debtor estimates that penalties, interest and costs associated with such claims total approximately $1,500.00. C. CLASS 1 - ALLOWED UNSECURED LEASE TERMINATION DAMAGE CLAIM OF SPRING LAKE PARTNERS: On or about February 6, 1998, Spring Lakes Partners, Ltd., ("SLP"), as landlord, and the Debtor, as tenant, entered into a lease, as amended thereafter, (the "Lease") regarding two suites in the premises located at 2455 East Sunrise Boulevard, Fort Lauderdale, Florida 33304 (the "Premises"). SLP 6 presently holds a $14,360.54 deposit (the "Deposit") of the Debtor to secure its obligations under the Lease. In furtherance of its reorganization efforts, the Debtor desires to assume portions of the Lease, and reject other portions thereof. SLP has certain pre- and post-petition claims against the Debtor. After good faith and arm's length negotiations, the Debtor and SLP have agreed on a resolution to the issues, subject to Court approval, as follows: 1. The Debtor owes SLP for pre-petition unpaid rent under the Lease in an amount to be agreed upon by the parties and the Debtor owes SLP with respect to its post-petition obligations under the Lease through and including August 31st, 2001 in amount to be agreed upon by the parties. 2. The Debtor consents to the Court granting SLP immediate relief from the automatic stay imposed by section 362 of the Bankruptcy Code to allow SLP to apply the entire Deposit to partially satisfy the pre- and/or post-petition amounts due under the Lease through August 31st, 2001. 3. The Debtor shall pay an amount to be agreed upon by the parties to SLP on account of the Debtor's remaining post-petition Lease obligations that are not satisfied by SLP's retention of the Deposit. Said funds shall constitute and be allowed as administrative expenses pursuant to Section 503(b) and Section 507(a)(1) of the Bankruptcy 7 Code and shall be paid within three (3) business days after Court approval of the stipulation between the parties and the confirmation of the Debtor's Plan of Reorganization. 4. The Debtor rejects that portion of the Lease that relates to the 4th Floor of the Premises, effective immediately. SLP, however, has agreed to allow the Debtor additional time to vacate the 4th Floor of the Premises, through and including September 10, 2001. The Debtor has agreed to use its best efforts to assist SLP in securing a new tenant for the 4th Floor of the Premises and, in furtherance thereof, the Debtor has agreed to allow SLP to market the 4th Floor of the Premises effective immediately. SLP has agreed to use its best efforts to mitigate any damages that it may incur as a result of the Debtor's rejection of the 4th Floor portion of the Lease. 5. The Debtor hereby assumes that portion of the Lease that relates to the 1st Floor of the Premises. SLP consents to the assumption and subject to Court approval, agrees to a modification of the Lease to reflect the Debtor's assumption of the 1st Floor of the Premises and rejection of the 4th Floor of the Premises. 6. Beginning September 1st, 2001, the Debtor shall make monthly post-petition administrative rent payments for the 1st Floor of the Premises in an amount as required by the Lease, plus an 8 additional $666.67 per month for nine (9) months, to replenish a portion of the Deposit over time. Following the nine months, SLP shall hold a Deposit of $6,000.00. 7. As a result of the Debtor's rejection of the portion of the lease relating to the 4th Floor of the Premises, SLP has suffered lease termination damages. The Debtor and SLP are presently calculating the amount of such damages (the "Lease Termination Damages"). The Lease Termination Damages shall be treated as an Unsecured Claim. Spring Lake Partners shall receive on account of its Allowed Unsecured Lease Termination Damage Claim deferred cash payments equal to ten percent (10%) of its Claim in twelve equal monthly installments commencing thirty (30) days after the Effective Date. The Debtor shall execute a substitute lease and other necessary documents and instruments in a form to be agreed upon by the parties. D. CLASS 2 - ALLOWED UNSECURED REJECTED BANDWIDTH CONTRACT CLAIMS: The Allowed Unsecured Rejected Bandwidth Contract Claims of Winstar, Genuity Solutions, Inc., Expanets, Quest, AT&T, BellSouth, and MCI shall be treated as Unsecured Claims. Winstar, Genuity Solutions, Inc., Expanets, Quest, AT&T, BellSouth, and MCI shall receive on account of their claims deferred cash payments equal to ten percent (10%) of their Allowed Unsecured Claims in equal monthly installments over five (5) years commencing thirty (30) days after the Effective Date. The Debtor estimates that the aggregate of all Allowed Unsecured Rejected 9 Bandwidth Contract Claims is approximately $650,000.00; however, the Debtor will be filing objections to various proofs of claim filed and, subject to Court approval, anticipates reducing this approximate aggregate amount accordingly. E. CLASS 3 - ALLOWED UNSECURED CONVENIENCE CLASS CLAIMS: The Convenience Class is comprised of all Allowed Unsecured Claims less than $2,500.00. Each claimant of the Convenience Class shall receive on account of his, her or its Allowed Unsecured Claim the lesser of the actual Allowed Claim or $100.00. Such payment will be paid in full thirty (30) days after the Effective Date. F. CLASS 4 - ALLOWED UNSECURED CLAIMS: Each claimant of an Allowed Unsecured Claim shall receive on account of his, her or its Allowed Unsecured Claim deferred cash payments equal to five percent (5%) of the Claim in equal monthly installments over one (1) year commencing thirty (30) days after the Effective Date. The Debtor estimates that the aggregate of all Allowed Unsecured Claims is approximately $309,606.74; however, the Debtor will be filing objections to various proofs of claim filed and, subject to Court approval, anticipates reducing this approximate aggregate amount accordingly. G. CLASS 5 - EQUITY SECURITY INTEREST CLAIMS (WHITE KNIGHT CLASS): The White Knight Class shall consist of Richard Goldring and all equity security holders that choose to make an additional capital contribution to the Debtor ("White Knight Electors"), as more specifically set forth herein. Richard Goldring shall contribute the sum of $50,000.00, at least 10 days prior to the hearing to consider confirmation of the Plan, in exchange for the retention of 100% of his equity interest in the Debtor. Each White Knight Elector shall contribute 10 the sum of $1.00 per share, subject to a minimum capital contribution of $1,000.00, at least 10 days prior to the hearing to consider confirmation of the Plan, in exchange for the retention of 100% of his equity interest in the Debtor. Any equity security holder chooses to not make an aggregate cash contribution to the Debtor shall retain their respective equity security interests in the Debtor subsequent to a 50 to 1 reverse of all issued and outstanding stock of the Debtor. Notwithstanding the foregoing, all holders of equity security interest in the Debtor shall receive no distribution under the Plan other than the retention of their respective interests, as more specifically set forth above. H. CLASS 6 - EQUITY STOCK OPTION HOLDERS: Any and all holders of any equity stock options in the Debtor shall have their options extinguished and shall receive no distribution under the Plan. ARTICLE III LIQUIDATION ANALYSIS The Debtor's Chapter 7 Liquidation Analysis (the "Analysis") is attached hereto as Exhibit B. The Analysis reflects the Debtor's estimates of the proceeds they would realize if the Debtor were to be liquidated in accordance with Chapter 7 of the Bankruptcy Code. According to the Analysis, no distribution would be made to Unsecured Creditors in a Chapter 7 liquidation scenario, as the funds available for distribution would be insufficient to pay Administrative Claims and Priority Claims in full. ARTICLE IV VOTING PROCEDURES AND REQUIREMENTS 11 A. MANNER OF VOTING ON PLAN: Each Claim holder entitled to vote on the Plan may cast a vote by completing, dating, and signing the accompanying Ballot, and delivering it in person or by mail to: Clerk of Bankruptcy Court 299 E Broward BLVD Room 112 Fort Lauderdale, FL 33301 With a copy to: Stoll & Associates 3696 North Federal Highway, Suite 300 Fort Lauderdale, FL 33308 A sample Ballot is attached hereto as Exhibit C. B. CLAIM HOLDERS ENTITLED TO VOTE: Except as provided below, any Claim holder whose claim is an Impaired Claim (as hereinafter defined and discussed) under the Plan is entitled to vote. THE DEADLINE TO FILE A PROOF OF CLAIM IS SEPTEMBER 26, 2001. A Claim holder is entitled to vote if either (i) its Claim has been listed in the Debtor's Schedule of liabilities filed with the Bankruptcy Court and such Claim is not scheduled as disputed, contingent or unliquidated, or (ii) such Claim holder is disputed, but has filed a Proof of Claim on or before September 26, 2001, and the Bankruptcy Court, upon motion by the Creditors holding such Claim, temporarily allows the Claim in an estimated amount which it deems to be proper for the purpose of voting either to accept or reject the Plan. Any such motion must be heard after appropriate notice, and determined by the Bankruptcy Court prior to the date established by the Bankruptcy Court as the final date to vote on the Plan. If a Claim of a Claim holder is disputed, contingent or unliquidated, and the Claim holder did not file a Proof of Claim, the Claim holder cannot vote. In addition, a vote may be 12 disregarded if the Bankruptcy Court determines that the acceptance or rejection of the Plan by the Creditor was not solicited or procured in good faith or in accordance with the applicable provisions of the Bankruptcy Code. C. DEFINITION OF IMPAIRMENT: Under Section 1124 of the Bankruptcy Code, a Class is considered an Impaired Class under a plan unless, with respect to each Claim or interest of such Class, the plan: (1) leaves unaltered the legal, equitable and contractual rights of the holder of such Claim or interest; or (2) notwithstanding any contractual provision or applicable law that entitles the holder of the Claim or interest to receive accelerated payment of such Claim or interest after the occurrence of a default: (a) cures any such default that occurred before or after the commencement of the case under the Bankruptcy Code, other than a default of a kind specified in Section 365(b)(2) of the Bankruptcy Code; (b) reinstates the maturity of such Claim or interest as it existed before the default; (c) compensates the holder of such Claim or interest for damages incurred as a result of reasonable reliance on such contractual provision or such applicable law; and (d) does not otherwise alter the legal, equitable or contractual rights to which such Claim or interest entitles the holder of such Claim or interest. 13 D. CLASSES IMPAIRED UNDER THE PLAN: Claim holders in Classes 1 through 6 are impaired under the Plan and are eligible to vote to accept or reject the Plan, subject to the limitations set forth above. Any controversy as to whether any Claim holder or Class of Claim holders is impaired under the Plan shall, after notice and hearing, be determined by the Bankruptcy Court. E. VOTE REQUIRED FOR CLASS ACCEPTANCE: Section 1126(c) of the Bankruptcy Code defines acceptance of a plan of reorganization by a Class of Claims as the acceptance by holders of at least two-thirds in amount and more than one-half in number of the Allowed Claims of the Class actually voting to accept or reject the proposed plan of reorganization. F. INFORMATION ON VOTING BALLOTS: Ballots are being forwarded to Claim holders in Classes 1-6. G. DISTRIBUTIONS UNDER THE PLAN: Distributions of cash to be made by the Debtor pursuant to this Plan shall be made within thirty (30) days of the Effective Date or as soon as practicable thereafter or in accordance with the terms and provisions of the Plan. Steven M. Stoll, Esq. of Steven M. Stoll, P.A., a Florida professional association doing business as Stoll & Associates, the Debtor's bankruptcy counsel, shall act as the Debtor's disbursing agent for the purpose of making the initial distributions required under the Plan and, except as otherwise provided herein, shall establish such accounts as he may in his sole discretion deem necessary. Thereafter, either the Debtor or a Disbursing Agent appointed by the Debtor may make all future distributions. 14 H. MISCELLANEOUS PROVISIONS The rights afforded in this Plan shall be in exchange for and in complete satisfaction, discharge and release of all existing Claims of any nature against the Debtor or any of the Debtor's real or personal property. The Debtor's discharge shall be effective as to each Claim, regardless of whether (a) a Proof of Claim was filed; (b) whether the Claim is an Allowed Claim; or (c) whether the holder votes to accept the Plan. Subsequent to confirmation, all persons or entities shall be precluded from asserting Claims against the Debtor or the Debtor's assets or properties or any other future Claims based upon any act, transaction or activity of any kind that occurred prior to the Confirmation Date. Upon the confirmation of the Plan, the Debtor's estate property shall revest in the Debtor. Pursuant to Local Rule 3007-1(B), the Debtor's objections to Claims must be filed no later than the deadline set in the "Order(I) Approving Disclosure Statement; (II) Setting Hearing on Confirmation of Plan; (III) Setting Various Deadlines; and (IV) Describing Plan Proponent's Obligations" or in the "Order Conditionally Approving Disclosure Statement, etc." for service of a plan, disclosure statement and ballots. Each impaired Class of creditors with Claims against the Debtor's estate shall be entitled to vote separately to accept or reject the Plan. Section 1126 of the Bankruptcy Code requires acceptance by creditors of a Class holding at least two-thirds in amount and more than one-half in number of Allowed Claims "that have accepted or rejected the Plan." If sufficient acceptances are not received, the Debtor reserves the right to amend the Plan and/or proceed to "cramdown" pursuant to the provisions of Section 1129(b) of the Bankruptcy Code. The cramdown provisions of the Bankruptcy Code are discussed in detail in Article V, paragraph C infra. 15 ARTICLE V CONFIRMATION OF THE PLAN The Bankruptcy Code establishes certain procedural and substantive requirements for confirmation of a plan of reorganization. In addition, the Bankruptcy Code provides a mechanism which enables the proponents of a plan of reorganization to confirm such a plan, notwithstanding rejection thereof by a Class of Creditors. A. CONFIRMATION HEARING: Section 1128(a) of the Bankruptcy Code requires that the Bankruptcy Court, after notice, hold a hearing on confirmation of the Plan (the "Confirmation Hearing). Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to confirmation of the Plan. Any objection to confirmation must be made in writing and filed with the Bankruptcy Court with proof of service and served upon the following persons prior to the date to be set forth by the Bankruptcy Court: United States Trustee Stoll & Associates 51 SW 1st AVE Attn: Steven M. Stoll, Esq. 12" Floor 3696 North Federal Highway, Suite 300 Miami, FL 33130 Fort Lauderdale, FL 33308 B. REQUIREMENTS FOR CONFIRMATION OF THE PLAN: Section 1129 of the Bankruptcy Code sets forth the substantive requirements for confirmation of a plan of reorganization. At the Confirmation Hearing, the Bankruptcy Court will determine whether the Disclosure Statement contains "adequate information" as that term is defined in Section 1125(a)(1) of the Bankruptcy Code. Approval of the Disclosure Statement by the Court, however, is not tantamount to a decision by the Court on the merits of the Plan. C. CRAMDOWN: The Bankruptcy Code provides for confirmation of a 16 plan even if it is not accepted by all Impaired Classes of Claims, if at least one Impaired Class has voted to accept the plan. These so-called "cramdown" provisions for Confirmation are set forth in Section 1129(b) of the Bankruptcy Code. If any Impaired Class of Claims does not accept the plan, the Bankruptcy Court may still confirm the plan at the request of the plan proponent if, as to each impaired Class which has not accepted the plan, the plan does not "discriminate unfairly" and the plan is "fair and equitable." The phrase "fair and equitable" has different meanings for Secured and Unsecured Claims and Classes of Equity Interests. If one or more Classes of Impaired Claims under the Plan rejects the Plan, the Debtor reserves the right to request the Bankruptcy Court to determine at the Confirmation Hearing whether the Plan is fair and equitable and does not discriminate unfairly against any rejecting Impaired Class, of Claims so as to allow confirmation despite the vote to reject the Plan. The Debtor also reserves the right to amend the Plan at that time and in such a manner as to permit confirmation over the vote of the rejecting impaired Class. ARTICLE VI HISTORY OF THE DEBTOR AND EVENTS LEADING UP TO CHAPTER 11 FILING Debtor incorporated in Utah on September 21, 1981, under the name Adonis Energy, Inc. ("Adonis"). Adonis was formed for the primary purpose of acquiring and investing in energy resources. On March 10, 1983, Adonis' name was changed to Olympus M.T.M. Corporation ("Olympus"). Olympus failed to achieve success in its business endeavors and consequently ceased operations on or before April, 1990. Thereafter, Olympus remained dormant until June 22,1998, when it succeeded to the 17 business of The Internet Advisory Corporation ("TIAC-FL"), a Florida corporation engaged in the business of providing Internet access and web design. Subsequent to reorganization, Debtor changed its name to The Internet Advisory Corporation. Pursuant to the terms and conditions of the reorganization, Debtor issued 6,000,000 shares of its common stock to TIAC-FL's shareholders and assumed the liabilities of TIAC-FL in exchange for TIAC-FL's assets. At the time of this issuance, Debtor had 1,202,017 shares outstanding. Immediately after this issuance, the former shareholders of TIAC-FL owned 6,000,000 of Debtor's total of 7,202,017 outstanding shares, or 83% of Debtor. Upon closing the transaction, the Olympus officers and directors resigned and the designees of TIAC-FL were appointed to serve in their place. On December 30, 1999, Debtor entered into a Reorganization Agreement with Richard K. Goldring (the "Reorganization Agreement"), the sole stockholder of Sunrise Web Development, Inc., a Florida corporation ("Sunrise"), whereby Debtor issued 4,000,000 shares of its common stock to Mr. Goldring and his designees in exchange for 100% of the outstanding voting securities of Sunrise. Pursuant to the Reorganization Agreement, Sunrise became a wholly owned subsidiary of the Debtor. Mr. Goldring owned approximately 10.7% of Debtor's outstanding common stock prior to the completion of the Reorganization Agreement and approximately 37.5% of Debtor's outstanding common stock following completion. There were 9,345,018 shares of Debtor's common stock issued and outstanding prior to the completion of the Reorganization Agreement and 13,345,018 shares of Debtor's common stock issued and outstanding after completion. 18 Presently, Debtor is a full service Internet company that provides web hosting, web design co-location, and e-commerce services which enable Debtor's customers to capitalize on the latest Web-based technologies quickly and cost effectively without the burden and expense of building, managing and maintaining the infrastructure required to support their desired applications. Additionally, Debtor provides its customers with access to electronic main services, public bulletin boards, the buddy list feature, instant message services, public or private "meeting rooms/chat rooms" for interactive conversations and live "auditorium" events. Debtor also offers enhanced value Internet security capabilities and professional consulting services to support a variety of methods or processes designed to resolve its customers' Internet problems. To maximize customer satisfaction, Debtor owns and operates a national network that provides high capacity, reliable Internet data transmission via multiple T-3 fiber optic lines with high-speed servers for the fastest possible Internet access. Debtor's present network is well suited to meet the current and anticipated service needs of its customers. By aggregating the capacity of data transmission over the Internet and capacity requirements of Debtor's operations onto one national network, Debtor continues to reduce costs, increase its operational control and efficiency, and provide redundancy and higher quality service. In this way, Debtor is able to address some of the most significant challenges that an Internet service provider faces in supporting its customers. Unfortunately, Debtor's previous management entered into several onerous Internet based service contracts which obligated Debtor to make monthly payments in excess of $42,000.00. Debtor disputed the amounts owed under such service 19 contracts since certain of the services were never provided and others were not provided in a timely fashion and Debtor attempted to terminate the burdensome contracts; however there could be no assurance that the payables due under such contracts would be negotiated in a manner satisfactory to Debtor. Although none of these contract disputes have resulted in litigation, Debtor's auditors included an accrued liability of $500,000.00 in its December 31, 2000, financial statements. As a direct result of the tremendous ongoing monthly financial burden, Debtor quickly became unable to offer competitively priced products which, in turn, ultimately drove Debtor to file for relief under Chapter 11 of the Bankruptcy Code. ARTICLE VII STATUS OF THE DEBTOR'S BUSINESS OPERATIONS SUBSEQUENT TO THE FILING DATE Subsequent to the Filing Date, Debtor has continued to provide comprehensive Internet services to its customers with an emphasis on serving the small and medium sized business market. Typically, Debtor stores its customers' Web site information on a "virtual" basis; however, for its customers with the resources and desire to have their own dedicated servers, Debtor continues to offers specialized co-location server lease facility resources, providing its customers with space to house equipment in its Tier 1 Data Center. Additionally, Debtor continues to offer an expanding package of enhanced Internet tools, including website design services and electronic commerce solutions (i.e., e-Commerce), which enable its customers to undertake private communications and secure transactions with employees, consumers and vendors over the Internet. Debtor's newly implemented business strategy of combining national scale 20 with local presence was specifically developed to serve the needs of the small and medium sized business market. In formulating its business strategy, Debtor concluded that the large, national Internet service providers lacked the local presence to provide customized hands-on support. On the other hand, the smaller, local Internet service providers did not have the requisite scale and resources to provide a full range of services at an acceptable quality and pricing levels. Debtor believes that it has a competitive advantage in serving these business customers because it has combined technical expertise and hands-on support with its own local sales and engineering personnel while still offering the quality and economic efficiency of a national network provider. Debtor's goal is to be a premier, full-service provider of Internet services to small and medium sized businesses. To accomplish this goal, Debtor will expand its market presence, strengthen its Internet access and Web hosting core service platforms, and add additional enhanced value service capabilities through further acquisitions and strategic relationships. Given its large potential customer base, broad distribution channels and established core service strengths in Internet access and Web hosting, Debtor believes that it is an attractive potential acquirer and/or strategic partner. Furthermore, Debtor has integrated its operations into a national network with a highly reliable and scalable national infrastructure supported by Interliant, who is one of only three "Tier One" national network providers in the world. As a direct result thereof, Debtor believes that it will derive increasing revenues from its customers and facilitate its goal of attaining profitability by continuing to offer better performing Web sites, an expanding array of enhanced value Internet services, and 21 additional high capacity Internet data transmission capability. Indeed, by integrating operations and leverage into a national infrastructure, Debtor has reduced its operating costs by 80% and improved its product quality. Debtor believes that its strong balanced position in both the Internet access and Web hosting service platforms gives it a competitive edge in offering high-margin, enhanced value Internet services and bundled packages to meet the evolving needs of its customers. Examples of these Web-based enhanced value Internet services include: Electronic commerce; Web-based faxing and email; Unified messaging, (which is the aggregation of various messaging formats, such as fax, voice, email, into a single point of contact); Office and business process automation capabilities; Audio and video applications and Automated Web site development tools and templates; and redundant "hot" sites, (which are multiple presence Web sites hosted across multiple national and international data centers). Debtor anticipates enhancing the value of such platforms by developing, both internally and through strategic vendor relationships, a further array of higher margin products and services to continue to address changing customer demands. Through its new business strategy, Debtor connects its customers to the Internet via a national high capacity Internet data transmission network. Debtor believes this network is adequate to meet the current and anticipated service needs of its customers; however, by aggregating the capacity of data transmission over the Internet and capacity requirements of its operations onto one national network, Debtor continues to increase its operational control and efficiency, reduce costs, and provide redundancy and higher quality service. In this way, Debtor addresses some of the 22 most significant challenges that an Internet service provider faces in supporting its customers. Debtor's infrastructure also incorporates several other elements critical to maintaining the highest quality Internet service, including a high capacity and reliable national network, peering relationships with other regional, national and international Internet service providers, sophisticated network management tools and engineering support services. The reliability of the national network is the result of many factors, including redundant routers and other critical hardware, carrier class facilities at point of presence locations such as back-up power, fire suppression and climate control, and redundant telecommunications lines. ARTICLE VIII SIGNIFICANT EVENTS DURING THE CHAPTER 11 PROCEEDING As part of its new business strategy and in the ordinary course of business, Debtor has entered into a post-petition month to month contract with Scores Entertainment, Inc. to develop, manage and host its websites. The Debtor will be paid $25,000 a month for providing such services. This contract is quite beneficial for the Debtor in that the monthly fees allow the Debtor to operate profitably immediately. Additionally, the Debtor has, subject to Court approval, entered into an agreement to acquire NetCylinder, Inc., an Internet traffic marketer and software developer, in a tax free exchange of stock. The NetCylinder business model through its unique inbound Internet traffic redirection software program will develop revenue streams for the Debtor via its free web hosting services, acquisition of member webmasters, opt-in email programs with a multiple-brand strategy of products, and services that appeal to complementary and diverse groups of its member webmasters 23 and users of the Internet. NetCylinder is in essence a true vertical site and affiliate network offering its member webmasters high customer acquisition rates which in turn provides a more efficient method of delivering qualified leads through its traffic redirection and opt-in email programs. Net Cylinder will offer its member webmasters free website hosting, free home pages, free e-commerce storefronts, free e-commerce marketing forums and newsletters, and free website usage statistics. In exchange for these free services, NetCylinder will have the right to place rotating banner advertising panels on the member webmasters websites, a link to the NetCylinder home page, an opt-in email form for soliciting email addresses, and the right to redirect 1% of that member webmasters website inbound traffic to other websites chosen by NetCylinder. NetCylinder will also provide each member Webmaster with 25 megabytes of computer storage space which will allow the placement of thousands of different types of products on member websites and 1 gigabyte per month of bandwidth to accommodate a large flow of site traffic. NetCylinder, by focusing on small brick-and-mortar businesses' shift to online sales, allows e-commerce newcomers to get a "foot in the door" by enabling such newcomers to set up an Internet store at no cost. While NetCylinder is not the first company to offer such a service, it is the first company to provide free storefront hosting and member services on a platform that rivals traditional paid hosting platforms. With this strategy, NetCylinder will build a strong multiple-revenue stream (which shall include revenues from sources such as advertising, email marketing, traffic redirection, e-commerce, licensing fees and transaction fees) and will augment its online services 24 with branded properties that add features and/or content across multiple services or platforms. Indeed, NetCylinder will offer its advertising, commerce partners and member webmasters a variety of customized programs, which may include guaranteed numbers of impressions and select sponsorship of particular online areas or Web pages for designated time periods. As merchants recognize the value in NetCylinder's traffic redirection program NetCylinder will be able to earn additional revenues by offering selected merchants exclusive rights to market particular goods or services. In such transactions, NetCylinder will provide its commerce partners certain marketing and promotional opportunities and in return will receive cash payments, the opportunity for revenue sharing, cross-promotions, competitive pricing and online conveniences for member webmasters. Net Cylinder will, as a wholly owned subsidiary of the Debtor, market its products and services towards the millions of Internet newcomers and novice users by promoting the Debtor's ability to provide a webmaster with tried and tested Internet marketing methods to generate high quality leads through the utilization of NetCylinder's traffic redirection program. Rather than relying on traditional search engine or portal listings, NetCylinder will provide webmasters with the most identifiable, simplest way to acquire Internet traffic based upon each Internet user's informational, product and utilities needs. The Debtor believes that this proposed acquisition is integral to the reorganization efforts of the Debtor and in the best interest of all creditors since this acquisition will provide Debtor with monthly website design, web hosting and traffic redirection fees which, in turn, will enable Debtor to continue to build a strong post 25 petition and ultimately post-confirmation business. The Debtor anticipates seeking Court approval of this proposed acquisition in the near future. Furthermore, Debtor has reduced its monthly operating costs from $80,946.00 a month as of March 31st, 2001 to $25,000.00 a month as of June 2001. Debtor has also reduced its workforce to five employees including one executive officer, one sales and marketing manager, one network administrator/technical officer, one receptionist/secretary and one office manager. ARTICLE IX LEGAL PROCEEDINGS TO WHICH THE DEBTOR IS A PARTY On March 21, 2001 a judgment in the amount of $12,359.60 was entered in favor of Diamondpoint.com, Inc. and against the Debtor in Diamondpoint.com. Inc. v. The Internet Advisory Corporation, Case Number 00-19349(18) in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, in connection with a claim of breach of contract. Debtor filed an appeal seeking to overturn this judgment and the appeal is presently pending the 4th District Court of Appeal, Case Number 4D01-1528. On or about May 16, 2001, the Debtor's landlord, Spring Lake Partners, filed a breach of contract and eviction proceeding against the Debtor in the County Court in and for Broward County, Florida, Case Number 01-012448. The case is presently pending. Except as otherwise disclosed herein, no material legal proceedings are pending to which the Debtor or any of its property is subject, not to its knowledge are any such proceedings threatened. 26 ARTICLE X INSIDER AND AFFILIATE CLAIMS AND TRANSACTIONS On December 30, 1999, Debtor entered into a Reorganization Agreement with Richard K. Goldring whereby Debtor issued 4,000,000 shares of Debtor's common stock to Mr. Goldring and his designees in exchange for all of the issued and outstanding voting shares of Sunrise Web Development, Inc., a Florida corporation. At the date of the Reorganization Agreement, Mr. Goldring was a principal shareholder of the Debtor. On December 30, 1999, the assets of Sunrise Web Development Inc. included a $615,000.00 receivable from Richard Goldring. Mr. Goldring made full payment on this obligation during January and February 2000. During the fiscal year ended December 31, 2000, Richard Goldring periodically made loans to the Debtor. As of December 21, 2000, Debtor owed Mr. Goldring an aggregate of $30,500.00. On such date, Debtor issued a promissory note to Mr. Goldring in the principal amount of $30,500.00 with interest at the rate of 10% per annum. The note is due and payable on or before December 31, 2001. ARTICLE XI STOCK OPTIONS ISSUED BY THE DEBTOR On July 13, 2000, Debtor issued 300,000 stock options to Jeffrey Olweean; 300,000 stock options to Nicole Leigh Van Coller; and 50,000 stock options to Donald E. Snyder. At the time of grant, each of the foregoing persons was serving as an officer and director of the Debtor. Each of these options is exercisable for one share of Debtor's common stock at an exercise price of $.50 per share at any time through and including June 30, 2005. On November 1, 2000, Debtor issued 300,000 additional stock options to 27 Jeffrey Olweean and 300,000 additional stock options to Nicole Leigh Van Coller. At the time of grant each of the foregoing persons was serving as an officer and director of the Company. Each of these options is exercisable for one share of Debtor's common stock at an exercise price of $.50 per share at any time through and including November 1, 2005. On March 9, 2001 Debtor granted and issued 400,000 stock options to Richard Goldring and 300,000 stock options to John Neilson. At the time of grant, both Mr. Goldring and Mr. Neilson were serving as officers and directors of the Company. Each option is exercisable for one share of Debtor's common stock at an exercise price of $.25 per share at any time through and including March 8, 2006. ARTICLE XII PREFERENTIAL FRAUDULENT, OR OTHERWISE VOIDABLE TRANSFERS Except as otherwise disclosed herein, the Debtor is not aware of any preferential, fraudulent, or otherwise voidable transfers. ARTICLE XIII FUNDING AND IMPLEMENTATION OF THE PLAN The White Knight Class and Richard Goldring, the Debtor's President and Chief Executive Officer, will fund the plan of re-organization. This funding will be structured as a capital contribution in exchange for retention of stock. ARTICLE XIV MANAGEMENT OF THE REORGANIZED DEBTOR Debtor incurred losses since the inception of its Internet business due to the poor quality and inexperience of former management. In December 2000, a majority 28 of Debtor's shareholders requested that the board of directors and the officers step down. As a result, a new board of directors was elected in December 2000 and replacement of the officers in December 2000 and January 2001. Immediately, the new management team of Richard Goldring and John Neilson reduced the Debtor's operating costs by 50%, and significantly reduced the work force and operating expenses, especially the bandwidth charges which previously accounted for as much as 60% of the Debtor's monthly operating expenses. The Debtor will continue to be managed by Richard Goldring as President & Chief Executive Officer and John Neilson as Vice President & Secretary. ARTICLE XV TAX ASPECTS OF THE PLAN The Creditors are advised to contact their tax counsel or accountants for tax advise on the realization and recognition of income created by any payments received pursuant to this Plan. ARTICLE XVI EXECUTORY CONTRACTS AND UNEXPIRED LEASES As of the date of filing the Plan, the Debtor has expressly rejected all executory contracts and unexpired leases set forth on Exhibit D attached hereto, but for the unexpired contract entered into by and between the Debtor and AT&T. Notwithstanding the foregoing, any executory contract or unexpired lease not assumed by the Debtor under the Plan or pursuant to an order of the Bankruptcy Court entered at any time, shall be deemed rejected by the Debtor at the Confirmation Date. Any Claim which arises by virtue of a rejection at the Confirmation Date shall 29 be filed by such claimant within thirty (30) days after the Confirmation Date or the holder thereof shall be forever barred from asserting a Claim against the Debtor and the Debtor's estate and seeking distribution therefrom. Any damage Claim asserted by a creditor arising out of the rejection of any executory contract or unexpired lease shall be a Class 4 General Unsecured Claim. ARTICLE XVII RISK FACTORS Two alternatives exist if this Plan is not confirmed. First, if the Plan is not accepted by the Creditors and approved by the Bankruptcy Court, the case may be converted to a Chapter 7 liquidation. The Debtor believes that liquidation would not benefit the Unsecured Creditors because administrative expenses to the estate would increase substantially and, based upon the Debtor's liquidation analysis, Unsecured Creditors would not receive any distribution. Second, the case may be dismissed if the Plan is not accepted by the Creditors and approved by the Bankruptcy Court. Upon dismissal of the case, the assets of the estate will revert to the Debtor. In such event, the Bankruptcy Court will no longer exercise control over the Debtor's estate, the United States Trustee's office will no longer review and analyze the Debtor's financial affairs, and all Creditors will be required to seek relief outside of the United States Bankruptcy Court. Although management is very confident that Debtor will be very successful after re-organization, the future prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in an early stage of development, particularly in new and rapidly evolving markets such as the Internet and 30 companies serving the Internet. Such risks for Debtor include, but are not limited to, a constantly evolving business model and the management of both internal and acquisition-based growth. To address these risks, Debtor must, among other things, continue to develop the strength and quality of its hosting facility; maximize the value delivered to its clientele; enhance the Debtor's domain names; respond to competitive developments; acquire financing for its expansion plans, and attract, retain and motivate qualified employees. There can be no assurance that Debtor will be successful in meeting these challenges and addressing such risks, and the failure to do so could have a material adverse effect on its business, results of operations and overall financial condition. Debtor's ability to market its services effectively and Debtor is subject to the risks associated with the Internet services industry which is characterized by rapidly changing technology, evolving industry standards, emerging competition and frequent new services, software and other product innovations. Debtor cannot guarantee that it will identify new service opportunities successfully and develop and bring new products and services to market in a timely and cost-effective manner; or that products, software and services or technologies developed by others will not render its products and services non-competitive or obsolete. In addition, Debtor cannot provide any assurance that its product or service developments or enhancements will achieve or sustain market acceptance or be able to effectively address the compatibility and inter-operatibility issues raised by technological changes or new industry standards. Debtor's future growth will depend on the continued trend of businesses outsourcing their Web site designing and application hosting and its ability to market 31 its services effectively. There can be no assurance that the market for its services will grow, that its services will be adopted, or that businesses will use these Internet-based services to the degree or in the manner that Debtor expects. It is possible that at some point businesses may find it cheaper, more secure or otherwise preferable to design their own Web sites and host their Web sites and applications internally and decide not to outsource the management, of their Web sites and applications. If Debtor is unable to react quickly to changes in the market, if the market fails to develop, if the market develops more slowly than expected, or if Debtor's services do not achieve market acceptance, then Debtor is unlikely to become or remain profitable. Additionally, the market for designing and hosting Web sites and applications is highly competitive. There are few substantial barriers to entry into this market and most of Debtor's current competitors have substantially greater financial, technical and marketing resources, larger customer bases, more data centers, longer operating histories, greater name recognition and more established relationships in the industry than Debtor. Debtor's current and potential competitors in the market include Web hosting service providers, as well as web design companies and countless numbers of individual free-lance web designers. Debtor's competitors may be able to expand their network infrastructures and service offerings more quickly than Debtor. They may also bundle other services with their Web site hosting or application hosting services, which could allow them to reduce the relative prices of their Web site hosting and application-hosting services beyond levels that Debtor could compete with, and generally adopt more aggressive pricing policies. In addition, some competitors entered and will likely continue to enter into joint ventures or alliances to provide 32 additional services, which may be competitive with those Debtor provides. It is also possible that the Web site hosting and application hosting markets are likely to experience consolidation in the near future, which could result in increased price and other competition that would make it more difficult for Debtor to effectively compete. Furthermore, web site designing, application hosting, and related services are susceptible to damage and unauthorized access as a result of human error and tampering, breaches of security, natural disasters, power loss, capacity limitations, software defects, telecommunications failures, intentional acts of vandalism (including computer viruses, and other factors that have caused, and will continue to cause interruptions in service or reduced capacity for its customers). Despite numerous precautions, the occurrence of a security breach, natural disaster, interruption in service or other unanticipated problem could seriously damage Debtor's business and reputation and cause it to lose customers. Additionally, the time and expense required to eliminate computer viruses and alleviate other security problems could be significant and could impair Debtor's service quality. ARTICLE XVIII SOLICITATION OF ACCEPTANCES The Debtor hereby solicits the acceptances of the holders of all Classes. The Debtor believes that the confirmation of its Plan is in the best interests of all Creditors. You are urged to vote to accept the Plan. [SIGNATURE PAGE TO FOLLOW] 33 THE INTERNET ADVISORY CORPORATION By /S/ RICHARD GOLDRING 08/27/01 ------------------------------ -------- Richard Goldring, its President Date I hereby certify that I am admitted to the Bar of the United States District Court for the Southern District of Florida and I am in compliance with the additional qualifications to practice in this court set forth in Local Rule 2090-1(A). STOLL & ASSOCIATES Attorneys for the Debtor 3696 North Federal Highway, Suite 300 Fort Lauderdale, FL 33308 (954) 745-3550 (954) 745-3551 Fax /S/ STEVEN M. STOLL -------------------------------------- Steven M. Stoll, Esq. Florida Bar Number 946230 Christopher J. Gertz, Esq. Florida Bar Number 106951 EXHIBIT A ARTICLE II DEFINITIONS When used herein, the words set forth below shall have the following meaning or meanings: 1. "Administrative Bar Date" means the deadline established by Court order to file fee applications. 2. "Administrative Expense Claim" means those expenses provided by Section 503 and Section 507 of the Bankruptcy Code including, without limitation, the fees of professionals approved by Bankruptcy Court Orders as allowed by the Bankruptcy Court. 3. "Allowed Claim" means a Claim (i) which the Debtor has not scheduled as disputed, contingent or unliquidated and in respect of which no proof of Claim has been filed; or (ii) for which a proof of Claim was timely filed and in respect of which no timely objection thereto has been interposed or, if interposed, such objection has been overruled by Final Order allowing a Claim. 4. "Allowed Priority Tax Claim" means an Allowed Claim of a kind specified in Section 507(a)(8) of the Bankruptcy Code. 5. "Allowed Secured Claim" means an Allowed Claim which has a perfected lien on assets of the Debtor to the extent of the value of the asset in accordance with Section 506 of the Bankruptcy Code. The balance of such a Claim is deemed an "Allowed Unsecured Claim" herein. 6. "Allowed Unsecured Claim" means any Allowed Claim which is not an Allowed Secured Claim, an Administrative Expense Claim, an Allowed Priority Tax Claim or an Equity Security Interest Claim. 7. "Bankruptcy Code" means Title 11 of the United States Code, as amended. 8. "Bankruptcy Court" means the United States Bankruptcy Court for the Southern District of Florida, or such other court as may hereinafter be granted primary jurisdiction for this case and related proceedings. 9. "Bankruptcy Rules" means the Federal Rules of Bankruptcy Procedure, as amended. 10. "Bar Date" shall mean September 26, 2001, the date set by the Bankruptcy Court prior to which Creditors must file proofs of claim with the Court. 11. "Claim" means any right to payment from the Debtor whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmeasured, disputed, undisputed, legal, equitable, secured or unsecured; or any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from the Debtor, whether or not such right to an equitable remedy is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmeasured, disputed, undisputed, legal, equitable, secured or unsecured. 12. "Claim holder" means any holder of an Allowed Claim. 13. "Class" means a category of Claims with regard to confirmation and distribution pursuant to this Plan. A Claim is in a particular Class only to the extent that any portion of the Claim qualifies within the description of that Class and is in a different Class to the extent that the remainder of the Claim qualifies within the description of the different Class. 14. "Confirmation Date" means the date of entry of an Order by the Bankruptcy Court confirming this Plan pursuant to Section 1129 of the Bankruptcy Code. 15. "Contested Claim" means any Claim or any portion of any Claim as to which the Debtor or any other party in interest has timely objected in accordance with the Bankruptcy Code and Bankruptcy Rules and which objection has not been withdrawn or determined by Final Order. 16. "Convenience Class" means all Allowed Unsecured Claims less than $2,500.00. 17. "Debtor" or "TIAC" shall mean The Internet Advisory Corporation, a Utah corporation, the above-styled Chapter 11 Debtor-In-Possession. 18. "Disclosure Statement" means the Disclosure Statement prepared pursuant to Section 1125 of the Bankruptcy Code, and all subsequent amendments or amended version thereto. 19. "Effective Date" means the date ten (10) days after the Confirmation Date regardless of whether the order confirming the Plan is final and non-appealable provided that the order of confirmation has not been stayed by a court of competent jurisdiction and, if so, the date designated as such by the reorganized Debtor not fewer than five (5) days nor more than ten (10) after such stay has been dissolved. 20. "Filing Date" means May 25, 2001, the date on which the Debtor filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code. 21. "Final Order" means an order or judgment of the Bankruptcy Court which has not been reversed, stayed, modified or amended and as to which the time to appeal or to seek certiorari or review has expired and as to which no appeal or petition certiorari or review is pending or as to which any right to appeal or to seek certiorari has been waived. 22."Impaired Claims" means those Claims which are impaired within the meaning of Section 1124 of the Bankruptcy Code. 23. "Local Rules" means the Local Rules of the United States Bankruptcy Court for the Southern District of Florida, as amended. 24. "Plan" means this proposed Chapter 11 Plan of Reorganization, and all subsequent amendments thereto. 25. "Priority Claim" means any pre-petition Claim entitled to priority in payment under Section 507(a)(3), (4) or (6). 26. "Pro Rata" means an amount to be distributed to each creditor in a particular Class in amount equal to the ratio (expressed as a percentage) that the amount of each Allowed Claim in such Class bears to the total amount of Allowed Claims in such Class at the time of such calculation. 27. "Schedules" means those certain bankruptcy Schedules of Assets and Liabilities and Statement of Financial Affairs, and any amendments thereto, filed by the Debtor pursuant to Bankruptcy Rule 1007. 28. "Secured Claim" means any Claim that is secured by a lien, mortgage, security or collateral interest, trust deed, encumbrance or other interest that has been properly perfected as required by law with respect to property of the estate, to the extent of the lesser of the value of the property of the estate securing the Claim or the Amount of the Claim, provided however that such Claim is not subject to avoidance under the Bankruptcy Code or applicable non-bankruptcy law. 29. "Secured Creditor" means any person who is the holder of a Secured Claim. 30. "Unimpaired Claims" means those Claims which are not impaired within the meaning of Section 1124 of the Bankruptcy Code. 31. "Unsecured Claim" means all Claims for unsecured debts, liabilities, demands, or Claims of any character whatsoever arising prior to the Petition Date, including any portion of a Claim which exceeds the value of the property of the estate securing such Claim. 32. "Unsecured Creditor" means any person who is the holder of an Unsecured Claim. 33. "White Knight Class" shall consist of Richard Goldring and all equity security holders of the Debtor that choose to make an additional capital contribution to the Debtor ("White Knight Electors"), as more specifically set forth herein and in the Disclosure Statement attached hereto. 34. "White Knight Electors" means all equity security holders of the Debtor that choose to make an additional capital contribution to the Debtor, as more specifically set forth herein and in the Disclosure Statement attached hereto. 35. As used in the Plan, masculine, feminine and neutral pronouns shall be deemed to include each other, and all terms used in the singular shall be deemed to include the plural, where applicable, and vice-versa. 36. All references to statutory sections are to the Bankruptcy Code, Title 11 of the United States Code, unless otherwise specified. 37. All terms defined herein shall have the same meaning when used in the Disclosure Statement. 38. The words "herein", "hereof", and "hereunder" and other words of similar import refer to the Plan as a whole, including all Schedules, appendices, and exhibits annexed or attached thereto, as the same may from time to time be amended or supplemented and not to any particular article, section or subdivision contained in the Plan. 39. Accounting terms not otherwise defined in the Plan have the meanings assigned to them in accordance with generally accepted principles currently in effect. EXHIBIT B NETCYLINDER, INC. 96 Chestnut Street, Mount Sinai, New York 11766 Steven M.Stoll Esq. Stoll & Associates Suite 300 3696 North Federal Highway Ft Lauderdale, Florida 33304 July 10th, 2001 Re: Equipment Valuation-The Internet Advisory Corporation Dear Mr. Stoll: John Neilson of The Internet Advisory Corporation has requested that I evaluate the equipment located in The Internet Advisory Corporation's data center located at 2455 East Sunrise Boulevard, Ft Lauderdale, Florida 33304. As for my credentials as an expert I have been employed in the Internet Web Hosting industry since 1995 and have built and operated a number of data centers, firstly as The President of Tristar Web, Inc., before its acquisition by Interliant, Inc., one of the industries largest Internet Service Providers and now as President of NetCylinder, Inc. Having inspected the Internet Advisory Corporation's data center and reviewed the equipment that is in place in I have calculated that in the event of a liquidation sale The Internet Advisory Corporation would not realize more than $40,000 to $50,000 in sale proceeds. The equipment although only 3 years old is obsolete and because of advances in hardware technology could be replaced with new and more sophisticated equipment for approximately $75,000 to $100,000 in today's market place. If you have any further questions please do not hesitate to contact me at 631-874-0334. Sincerely /s/ William Nicholson - --------------------- William Nicholson President & CEO EXHIBIT C UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA Fort Lauderdale Division In re: Case No. 01-23925-BKC-RBR The Internet Advisory Corporation, Debtor. Chapter 11 _______________________________________/ BALLOT AND DEADLINE FOR FILING BALLOT ACCEPTING OR REJECTING PLAN The Plan filed by The Internet Advisory Corporation on ________________________. TO HAVE YOUR VOTE COUNT YOU MUST COMPLETE AND RETURN THIS BALLOT BY THE DEADLINE INDICATED BELOW (AS SET PURSUANT TO LOCAL RULE 3018-1). The plan referred to in this ballot can be confirmed by the court and thereby made binding on you if it is accepted by the holders of two-thirds in amount and more than one-half in number of claims in each class and the holders of two-thirds in amount of equity security interests in each class voting on the plan. In the event the requisite acceptances are not obtained, the court may nevertheless confirm the plan if the court finds that the plan accords fair and equitable treatment to the class rejecting it.
TYPE OF CLAIM CLASS IN PLAN AMOUNT OF CLAIM - ------------- ------------- --------------- General Claim Amount Circle One $ Secured/Unsecured Bond Holder Amount of Bond/debenture $ Equity Security Holder Shares of Stock ________________ shares
[Check One Box] __ Accepts __ Rejects the plan for reorganization of the above-named debtor. Signed: ________________________________ Print or type name: ____________________ Company Name: __________________________ Address: _______________________________ Phone: _________________________________ Date: __________________________________ FILE THIS BALLOT ON OR BEFORE ____________________ with Clerk of Bankruptcy Court, 299 E. Broward Blvd., Room 310, Ft. Lauderdale, FL 33301. IF YOU HAVE MORE THAN ONE TYPE O[ILLEGIBLE]BTOR, SEPARATE BALLOTS MUST BE FILED. EXHIBIT D FORM B6G (10/89) In re: The Internet Advisory Corporation Case No. 01-23925-BKC-RBR ------------------------------------- ---------------------- Debtor (if known) SCHEDULE G - EXECUTORY CONTRACTS AND UNEXPIRED LEASES Describe all executory contracts of any nature and all unexpired leases of real or personal property. Include any timeshare interests. State nature of debtor's interest in contract, i.e., "Purchaser," "Agent," etc. State whether debtor is the lessor or lessee of a lease. Provide the names and complete mailing addresses of all other parties to each lease or contract described. NOTE: A party listed on this schedule will not receive notice of the filing of this case unless the party is also scheduled in the appropriate schedule of creditors. / / Check this box if debtor has no executory contracts or unexpired leases.
NAME AND MAILING ADDRESS, DESCRIPTION OF CONTRACT OR LEASE AND NATURE OF INCLUDING ZIP CODE DEBTOR'S INTEREST, STATE WHETHER LEASE IS FOR OF OTHER PARTIES NONRESIDENTIAL REAL PROPERTY. STATE CONTRACT TO LEASE OR CONTRACT NUMBER OF ANY GOVERNMENT CONTRACT - -------------------------------------------------------------------------------- Spring Lake Partners Commercial Lease Attn: Management Office 2455 E. Sunrise BLVD Lease on nonresidential real property Fort Lauderdale, FL 33304 ADT SECURITY SERVICES, INC security system 111 MORSE STREET NORWOOD, MA 02060 EXPANETS bandwidth contract 312 ELM STREET, SUITE 1425 CINCINNATI, OH 45202-2301 GENUITY SOLUTIONS, INC dial-up service contract PO BOX 101765 ATLANTA, GA 30392-1765 QWEST bandwidth contract PO BOX 856169 LOUISVILLE, KY 40285-6169 WINSTAR bandwidth contract 4742 N. 24TH STREET PHOENIX, AZ 85016
FORM B6G (10/89) In re The Internet Advisory Corporation Case No. 01-23925-BKC-RBR ------------------------------------- ---------------------- Debtor (if known) SCHEDULE G - EXECUTORY CONTRACTS AND UNEXPIRED LEASES (Continuation Page)
NAME AND MAILING ADDRESS, DESCRIPTION OF CONTRACT OR LEASE AND NATURE OF INCLUDING ZIP CODE DEBTOR'S INTEREST, STATE WHETHER LEASE IS FOR OF OTHER PARTIES NONRESIDENTIAL REAL PROPERTY. STATE CONTRACT TO LEASE OR CONTRACT NUMBER OF ANY GOVERNMENT CONTRACT - -------------------------------------------------------------------------------- AT&T bandwidth contract PO BOX 78522 PHOENIX, AZ 85062-8522 BELLSOUTH bandwidth contract PO BOX 33009 CHARLOTTE, NC 28243-0001 MCI WORLDCOM bandwidth contract PO BOX 96022 CHARLOTTE, NC 28296-0022 CITICORP VENDOR FINANCE, INC copy machine & fax machine contract PO BOX 41647 PHILADELPHIA, PA 19101-1647
EX-99.3 5 y55341ex99-3.txt ORDER CONFIRMING PLAN OF REORGANIZATION Exhibit 99.3 Order confirming Plan of Reorganization, dated November 14, 2001. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA Fort Lauderdale Division In re: The Internet Advisory Corporation, Case No. 01-23925-BKC-RBR Chapter 11 Debtor ORDER CONFIRMING DEBTOR'S PLAN OF REORGANIZATION A hearing was held on October 25, 2001 at 9:30 a.m. and November 7, 2001 at 9:30 a.m. to consider the confirmation of a plan of reorganization dated August 29, 2001, filed by The Internet Advisory Corporation, the above captioned Debtor-In-Possession, under chapter 11 of the Bankruptcy Code (the "Plan") and the final approval of the Disclosure Statement. The Plan having been transmitted to creditors and equity security holders; and It having been determined after hearing on notice that: 1. The Plan has been accepted in writing by the creditors and equity holders whose acceptance is required by law; and 2. The provisions of chapter 11 of the Code have been complied with and that the Plan has been proposed in good faith and not by any means forbidden by law; and 3. With respect to each unpaired class of claims or interests, each holder of a claim or interest had accepted the Plan, or will receive or retain under the Plan on account of such claim or interest property of a value, as of the effective date of the Plan, that is not less than the amount that such holder would receive or retain if the Debtor were liquidated under chapter 7 of the Bankruptcy Code on such date. The Plan does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that are impaired under the Plan, and had not accepted the Plan; and 4. All payments made or promised by the Debtor or by a person issuing securities or acquiring property under the Plan or by any other person for services or for costs and expenses in, or in connection with, the Plan and incident to the case, have been fully disclosed to the court 1 and are reasonable or, if to be fixed after confirmation of the Plan, will be subject to approval of the court; and 5. The identity, qualifications, and affiliations of the persons who are to be directors or officers, or voting trustees, if any, of the Debtor, after confirmation of the Plan, have been fully disclosed, and the appointment of such persons to such offices, or their continuance therein, is equitable and consistent with the interests of the creditors and equity security holders and with public policy; and 6. The identity of any insider that will be employed or retained by the Debtor and compensation to such insider has been fully disclosed; and 7. The confirmation of the Plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtor or any successor to the Debtor under the Plan, unless such liquidation or further reorganization is proposed in the Plan; and 8. The Plan was modified and such modifications were announced at the confirmation hearings as follows: a) By agreement of the parties, the Priority Tax Claims section of Article IV of the Plan is hereby amended to reflect that the United States Internal Revenue Service shall receive payment in full of its allowed priority tax claim within six years of the date of assessment and shall receive the statutory interest rate of 7% on account of such claim. b) By agreement of the parties, the Priority Tax Claims section of Article IV of the Plan as hereby amended to reflect that the debtor shall file its Federal Unemployment Return with the United States Internal Revenue Service for the tax period ending December 31, 2000, on or before 10 days from the date of this Confirmation Order. c) By agreement of the parties, the language "liens of SunTrust, SBA, and the Judgment Creditors" is hereby stricken as a scrivener's error from the Disclosure Statement and the Plan. 2 d) By agreement of the parties, the debtor's financial projections submitted to the Court at the hearing on November 7, 2001, shall be served simultaneously upon all parties entitled to receive a copy of this Confirmation Order. Additionally, the debtor shall simultaneously serve a notice in bold all caps typeface as follows: "THE DISCLOSURE STATEMENT AND PLAN OF REORGANIZATION HAS NOT BEEN APPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED THERIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE." and "EACH HOLDER OF A CLAIM OR INTEREST SHOULD CONSULT A PERSONAL TAX ADVISOR REGARDING THE EFFECT OF THE CONFIRMATION OF THE PLAN." e) The Designation And Treatment of Impaired Claims section of Article V of the plan is hereby amended to reflect that the time period for the White Knight Class for election as a White Knight Elector is hereby extended until ten days following the service of this Confirmation Order upon the white Knight Class. The debtor shall serve a notice of the extension of the deadline simultaneously with the service of this Confirmation Order. The reverse split of the White Knight Class shall be deferred until twenty days following the service of this Confirmation Order. IT IS THEREFORE: ORDERED that the Disclosure Statement is approved and the Plan is confirmed; and it is further ORDERED that the Court shall retain jurisdiction as provided in the Plan until there is substantial consummation of the Plan; the Plan is modified if it calls for retention of jurisdiction beyond that point; and it is further 3 ORDERED that the Debtor shall pay the United States Trustee the appropriate sum required pursuant to 28 U.S.C. Section 1930(a)(6) within ten (10) days of the entry of this order for pre-confirmation periods and simultaneously provide to the United States Trustee an appropriate affidavit indicating the cash disbursements for the relevant period; and the reorganized Debtor shall further pay the United States Trustee the appropriate sum required pursuant to 28 U.S.C. Section 1930(a)(6) for post-confirmation periods within the time period set forth in 28 U.S.C. Section 1930(a)(6), based upon all post confirmation disbursements made by the Reorganized Debtor, until the earlier of the closing of this case by the issuance of a Final Decree by the Court, or upon the entry of an Order by this Court dismissing this case or converting this case to another chapter under the United States Bankruptcy Code, and the party responsible for paying the post-confirmation United States Trustee fees shall provide to the United States Trustee upon the payment of each post-confirmation payment an appropriate affidavit indicating all the cash disbursements for the relevant period; and it is further ORDERED that all objections to the approval of the Disclosure Statement and the confirmation of the Plan are overruled. ORDERED that Steven M. Stoll, Esq. of Stoll & Associates, is named as disbursing agent without additional compensation for services rendered in such limited capacity; bond is waived; the disbursing agent is directed to make all first instalment payments on the effective date of the Plan. The disbursing agent shall, not later than sixty (60) days after this Order becomes final, file a Final Report of Estate and Motion for Final Decree Closing Case on the Court approved local form. Failure to timely file the Final Report of Estate and Motion For Final Decree Closing Case will result in the imposition of sanctions against the Debtor's counsel, which may include the return of attorney's fees; and it is further ORDERED, that the Court will conduct a post-confirmation status conference on December 19, 2001 at 9:30 A.M., in Courtroom 308, U.S. Courthouse, 299 East Broward Blvd., Ft. Lauderdale, FL., to determine: (i) whether the Debtor has complied with the provisions of this Order, and (ii) whether the disbursing agent and the Plan 4 proponent have timely filed the required Final Report of Estate and Motion For Final Decree Closing Case. At the status conference, the Court will consider the propriety of dismissal or conversion to chapter 7, and/or the imposition of sanctions against the Debtor and/or the Debtor's disbursing agent for failure to timely file the Final Report of Estate and Motion For Final Decree Closing Case or for failure to comply with the provisions of this Order. DONE and ORDERED this 14 day of November, 2001. /s/ Raymond B. Ray Judge Raymond B. Ray Unite States Bankruptcy Court CC: Steven M. Stoll, Esq. U.S. Trustee ALL CREDITORS (The Debtor's counsel is directed to immediately mail a conformed copy of this Order to all creditors and parties in interest and file a certificate of mailing with the Court) 5 -----END PRIVACY-ENHANCED MESSAGE-----