0001165527-11-001212.txt : 20111216 0001165527-11-001212.hdr.sgml : 20111216 20111215182421 ACCESSION NUMBER: 0001165527-11-001212 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20111207 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20111216 DATE AS OF CHANGE: 20111215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VICTORIA INTERNET SERVICES INC CENTRAL INDEX KEY: 0001486297 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 271320213 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-165391 FILM NUMBER: 111264542 BUSINESS ADDRESS: STREET 1: 2470 EAST 16TH STREET CITY: BROOKLYN STATE: NY ZIP: 11235 BUSINESS PHONE: 7183440866 MAIL ADDRESS: STREET 1: 2470 EAST 16TH STREET CITY: BROOKLYN STATE: NY ZIP: 11235 8-K 1 g5647.txt CURRENT REPORT DATED 12-7-11 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: December 7, 2011 VICTORIA INTERNET SERVICES, INC. (Exact name of Registrant as specified in its charter) Nevada 333-165301 27-1320213 (State or other jurisdiction (Commission (IRS Employer of incorporation or organization) File number) Identification No.) Office 1 The Falls Centre Corner Great North and Webb Northmead, Benoni 1522 Republic of South Africa (Address of principal executive offices) (Zip Code) (Registrant's Telephone Number, Including Area Code) +27 11 425 1666 2470 East 16th Street Brooklyn, New York 11235 (Former Address If Changed since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation for the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS All share and per share numbers in the narrative portion of this report reflect a 50 for 1 forward stock split resulting from the filing of a certificate of amendment to our articles of incorporation on November 14, 2011 which is reported in Item 3.01 of this report. We have applied to FINRA for the necessary clearances to effect this forward stock split, but these have not been received. On December 7, 2011, a simultaneous execution and closing was held under an Agreement and Plan of Reorganization (the Plan"), by and among Victoria Internet Services, Inc. (the "Company" "us" "we" ), Leon Golden (our then principal shareholder) ("Golden") and Earn-A-Car (PTY), LTD., a corporation organized under the laws of the Republic of South Africa ("EAC") and Depassez Investments Ltd, a Seychelles corporation ("DPL"), owned by Graeme Hardie (our new principal shareholder) ("Hardie"). Under the Plan DPL acquired 78,500,000 shares of our common stock from Golden for $150,000 and the balance of Golden's 205,000,000 shares were submitted to the transfer agent for cancellation and DPI contributed all of the shares of EAC to the Company so that EAC became a wholly owned subsidiary of the Company and the business of the Company is now the business of EAC. Mr. Golden also resigned as an officer and director of the Company and John Storey ("Storey") and Hardie were elected our directors and Storey was appointed our CEO and President with Hardie being appointed our Chairman of the board. BUSINESS OF EAC EAC was incorporated in South Africa on July 2, 2005, and is primarily engaged in the business of the rental of vehicles to retail customers through company-owned stores in the country of South Africa. On July 18, 2011, its name was changed from "Easy Cars Rental and Sales (PTY) Ltd." to "Earn-A-Car (PTY) Ltd.". EAC's business strategy is to enter car rental agreements that allow the renter to return the car at any time, but also allow the renter to earn credits by retaining the car pursuant to rental which allow the renter to own the car after approximately 3 1/2 years. EAC's vehicles are equipped with immobilizing and positioning devices to protect the company if rental payments are not current. EAC's business model is to rent to persons whose financial credit would not ordinarily allow them to finance the purchase of an automobile. Because EAC are renting automobiles rather than financing the sale thereof, they are not subject to certain South African financial regulatory schemes that generally apply to the automobile finance industry. INDUSTRY OVERVIEW Vehicle sales in South Africa were as high as 650,000 units in 2006, but have declined in subsequent years first as a result of high interest rates in late 2008 as a result of general world economic conditions. One in two vehicle finance applications are declined by all financiers because of poor credit. Management believes that these factors have led to a pent up demand for new vehicles and this demand is reflected by the fact that automobile sales grew 11.7% in November 2011 as compared to November 2010 and were 49,499 units (Source www.automotiveworld.com - parts of this site require a subscription). This represents an annualized rate of almost 600,000 vehicles and may indicate a longer term upward trend. We believe that we offer an opportunity to acquire vehicles to fill this demand that is not ordinarily available for persons with limited credit history. Currently the business is able to only able to supply 1/70 of its inquiries. 2 OUR BUSINESS MODEL EAC rent cars on a basis where the customer may return the car to us at any time on one month's notice. However, we charge significant administrative and rental fees at the inception of the rental (Normally approaching one quarter of the value of the car). This means that persons that rent cars from us, although under no legal obligation to do so, will generally be persons that have a genuine long term interest in acquiring the car. Our cars are equipped so that a when a customer does not pay the monthly rental we can turn off the car remotely. In our history of renting out 400 cars for over 3 years, we have only lost 3 vehicles, these to professional car thieves, never to a client. EAC renters receive loyalty cash bonuses from us for every month that they rent the car and these loyalty points may be applied to purchase the car. Renters are allowed to drive 3,500km a month and pay an additional 15c a km on any overage. (We guarantee that the loyalty points and the application of the 20% up front administration fee to the purchase price will be sufficient for our renter to purchase the car typically after 42 months.) The customers' credit rating are also improved while they rent a car from EAC as their payment record is provided to credit bureaus. Our South African counsel has confirmed to us that we are not subject to the Banks Act or the National Credit Act and this allows us to keep our rental to purchase program competitive and get our vehicles back easily if nonpayment occurs. We believe that our model, which offers a path to car ownership for persons with compromised credit, has potential for significant growth. We are currently only able to service a very small fraction of the inquiries that we receive. We operate our own repair and reconditioning facilities and believe this allows us significant savings. COMPETITION We compete with other car rental companies, car leasing companies and banks. However, we believe that our operations, which we believe are not subject to the Banks Act or the National Credit Act, allow us to operate without direct competition in the market of persons with less than ideal credit histories who wish to acquire a car. PROPERTIES We currently rent our offices and workshop on a month to month basis at a cost of R24,000 ($3,000) for our offices (300m2)and R10,000 ($1,250) per month (300m2) for our repair facility (which we share with an unaffiliated party). Our need for premises will grow as we expand using the capital from the listing and EAC will be looking to lease larger premises in the future. EMPLOYEES As of December 11, 2011, we have 26 employees of whom 4 are executive, 4 are in sales 8 are clerical and 10 are engaged in automobile repairs. Our employees are (are not) covered by a collective bargaining agreement and we consider our employee relations to be good. MARKETING We market through google on the internet, referrals and word of mouth. INSURANCE We maintain insurance on all cars valued at R70,000 or more ($8,750). We self insure other cars. Our average car is worth R60,000 ($7,500). In South Africa should a driver cause damage to another vehicle or individual, the driver is held responsible, not EAC. Consequentially, there is no need for insurance for liability imposed on owners of cars in accidents as there may be in the USA. 3 MANAGEMENT Our management team consists of John Storey, CEO and a Director and Graeme Hardie, who is Chairman of the Board and a director as well as secretary and treasurer. Bruce Dunnington is the COO of our South African subsidiary. Messrs Storey and Dunnington have each worked for the South African operation for at least five years and are certified accountants with large firm experience. Mr. Hardie is an architect and an investor. Management (Storey and Dunnington) earn a simple salary of approximately $100,000 per annum each and receive a discretionary bonus in December. PRINCIPAL STOCKHOLDERS The following table sets forth information regarding beneficial ownership of our common stock as of December 9, 2011 by (i) any person or group with more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all such executive officers and directors as a group. Unless otherwise specified, the address of each of the persons set forth below is in care of the Company, Office 1 The Falls Centre, Corner Great North and Webb, Northmead, Benoni 1522, Union of South Africa. Except as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in the table to our knowledge have sole voting and investment power with respect to all shares of securities shown as beneficially owned by them.. Name and Address of Amount and Nature of Percent Beneficial Owner Office Beneficial Owner of Class ---------------- ------ ---------------- -------- John Storey Director, CEO, 0 0% President Graeme Hardie Chairman of the 78,750,000(1) 70.0%(1) 210 Rutgers Place Board and a Nutley, New Jersey 07110 Director Bruce Dunnington COO and Treasurer 0 0% Depassez Investments Ltd -- 78,750,000(1) 70.0%(1) All Officers and Directors as a group (3 Persons) 70.0% ---------- (1) Depassez Investments Ltd is a Seychelles corporation and holds these shares. Mr. Hardie owns all of the shares of Depassez Investments Ltd and accordingly, is the indirect owner of these shares. The Company does not have any change of control or retirement arrangements with its executive officers. CHANGES IN CONTROL We know of no contractual arrangements which may at a subsequent date result in a change of control in the Company. 4 MANAGEMENTS DISCUSSION AND ANALYSIS FY ended February 28, 2011 v. FY ended February 28, 2010 Revenues increased modestly from $2,033,811 in FY 2010 to $2,137,606 in FY 2011 or by $103,795 or 5% as our ability to expand our operations was limited by capital constraints. We adopted various operating efficiencies which allowed us to reduce our expenses from $1,767,834 in FY 2010 to $1,737,041 in FY 2011, a decrease of $30,793 or approximately 1.6%. As a result of increased revenue and decreased expenses, net income increased from $266,416 in FY 2010 to $400,720 in FY 2011 or by $134,304 or 50.4%. If we are to grow, we must increase our level of operations in terms of automobiles rented as well as our marketing effort. This may cause periodic fluctuations in our results. Q2 FY ending February 2, 2010 v. Q2 FY ended February 28, 2011 Revenues increased from $504,189 in Q2 of FY 2011 to $632,509 in Q2 of FY 2012 or by $128,320 or 25.5% as our ability to expand was enhanced by our increased investment capital and we expanded our marketing effort. We continued various operating efficiencies, however, we also strove to increase our overall level of operations. As a result, our operating expenses rose from $353,909 in Q2 of FY 2011 to $528,476 in Q2 of FY 2012 or $174,567 or 49.3%. As a result of increases in expense exceeding increases in revenue, net income declined from $150,346 in Q2 of FY 2011 to $95,034 in Q2 of FY 2012. As we continue to seek to expand our operations, we anticipate continued fluctuations in our results. LIQUIDITY AND CAPITAL RESOURCES We had total current assets of $192,999 at August 31, 2011. This is not sufficient to expand our operations and meet demand. The bulk of our assets are $2,597,691 in revenue earning vehicles. While we could continue to operate at present levels without a capital infusion, we have become a public company in the United States in an effort to access capital markets to expand from our current operations in the Johannesburg area to several other metropolitan areas in South Africa. RISK FACTORS This report includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See "Forward-Looking Statements," above. Factors that could cause or contribute to such differences include those discussed below. In addition to the risk factors discussed below, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties actually occur, our business could be harmed substantially. RISKS RELATED TO OUR FINANCIAL CONDITION AND OUR BUSINESS PLANS FOR ADDITIONAL FINANCING As at August 31, 2011, we had $120,822 cash on hand. These cash resources are not sufficient for us to execute our expansion plan. If we do not generate sufficient cash from our intended financing activities and sales, we will be unable to operate our business at expanded levels which management believes would benefit shareholders. If we are able to arrange debt or equity financing it may be on terms that are not beneficial to our shareholders. 5 IF WE ARE UNABLE TO CONTINUE TO RETAIN THE SERVICES OF JOHN STOREY OR IF WE ARE UNABLE TO SUCCESSFULLY RECRUIT QUALIFIED MANAGERIAL AND COMPANY PERSONNEL, WE MAY NOT BE ABLE TO CONTINUE OPERATIONS. Our success depends to a significant extent upon the continued services of John Storey our CEO and President. The loss of the services of Mr. Storey could have a material adverse effect on our growth, revenues, and prospective business. Mr. Storey does not have an employment agreement with us. We do not have a "key person" life insurance policy on Mr. Storey. In order to successfully implement and manage our business plan, we will be dependent upon, among other things, Mr Dunnington remaining on as qualified managerial and company personnel having experience in car rental operations. Competition for qualified individuals is intense. There can be no assurance that we will be able to retain Mr Dunnington or other existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms. ANY FUTURE INTERNATIONAL EXPANSION WILL SUBJECT US TO RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS THAT COULD INCREASE OUR COSTS AND DECREASE OUR PROFIT MARGINS. International operations are subject to several inherent risks that could increase our costs and decrease our profit margins including: * changes in a specific South Africa's economic conditions; * changes in tax laws. If we determine to seek sales or contract for manufacturing outside the United States, we will be subject to these risks. However, we plan to be in a strong financial position before we would attempt to do so. IF WE CANNOT EFFECTIVELY MANAGE OUR INTERNAL GROWTH, OUR BUSINESS PROSPECTS, REVENUES AND PROFIT MARGINS MAY SUFFER. If we fail to effectively manage our internal growth in a manner that minimizes strains on our resources, we could experience disruptions in our operations and ultimately be unable to generate revenues or profits. We expect that we will need to significantly expand our operations to successfully implement our business strategy. As we add marketing, sales and build our infrastructure, we expect that our operating expenses and capital requirements will increase. To effectively manage our growth, we must continue to expend funds to improve our operational, financial and management controls, and our reporting systems and procedures. In addition, we must effectively expand, train and manage our employee base. If we fail in our efforts to manage our internal growth, our prospects, revenue and profit margins may suffer. WE MAY BE SUBJECT TO ADDITIONAL GOVERNMENTAL REGULATION. We offer cars on a proprietary rent to buy program which our South African attorneys have advised us is not subject to regulation under the Banks Act or the National Credit Act. We believe this affords us substantial savings and is beneficial to our shareholders. If a court or government agency were to find that we were subject to these laws, it could substantially impair our financial results and our share value would likely suffer. We cannot assure you that such adverse findings will not be made in the future. WE ARE TO ESTABLISH AND MAINTAIN REQUIRED DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING AND TO MEET THE PUBLIC REPORTING AND THE FINANCIAL REQUIREMENTS FOR OUR BUSINESS. 6 Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Because we have limited resources, we may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure controls and procedures. In addition, the attestation process by our independent registered public accounting firm is new and we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accounting firm. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure controls or implement sufficient control procedures, or our independent registered public accounting firm is not expressly reporting on our internal controls and the lack of such report on such assessment, may cause investor confidence and share value may be negatively impacted. We currently do not have a sufficient number of management employees to establish adequate controls and procedures. OUR OFFICERS HAVE NO EXPERIENCE IN MANAGING A US PUBLIC COMPANY. Our present officers have no previous experience in managing a United States public company and we do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identify other deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly. CONTROL BY MANAGEMENT Our company is effectively controlled by management, specifically Graeme Hardie our Chairman of the Board, who owns 78.750,000 shares or 70% of our 112,500,000 issued and outstanding shares of common stock as of December 9, 2011. Accordingly, he will be able to elect our board of directors and control our corporate affairs for the foreseeable future. RISKS RELATED TO COMMON STOCK THE LARGE NUMBER OF SHARES ELIGIBLE FOR IMMEDIATE AND FUTURE SALES MAY DEPRESS THE PRICE OF OUR STOCK. As of December 9, 2011 we had 112,500,000 shares of common stock outstanding. 33,750,00 shares are "free trading" and may serve to overhang the market and depress the price of our common stock. 7 ADDITIONAL FINANCINGS MAY DILUTE THE HOLDINGS OF OUR CURRENT SHAREHOLDERS. In order to provide capital for the operation of the business, we may enter into additional financing arrangements. These arrangements may involve the issuance of new shares of common stock, debt securities that are convertible into common stock or warrants for the purchase of common stock. Any of these items could result in a material increase in the number of shares of common stock outstanding, which would in turn result in a dilution of the ownership interests of existing common shareholders. In addition, these new securities could contain provisions, such as priorities on distributions and voting rights, which could affect the value of our existing common stock. THERE IS CURRENTLY A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK. FAILURE TO DEVELOP OR MAINTAIN A TRADING MARKET COULD NEGATIVELY AFFECT ITS VALUE AND MAKE IT DIFFICULT OR IMPOSSIBLE FOR YOU TO SELL YOUR SHARES. Our common stock trades on the OTCBB under the Symbol VRIS. There has been a limited public market for our common stock and an active public market for our common stock may not develop. Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop, the market price of our common stock may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common stock. NO DIVIDENDS We never have paid any dividends on our common stock and we do not intend to pay any dividends in the foreseeable future. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired Financial Statements for the years ended February 28, 2011 and 2010 Financial Statements for the six months ended August 31, 2011 and 2010 (unaudited) (b) Pro-Forma Financial Information Pro Forma Financial Statements (c) Exhibits 10.1 Agreement and Plan of Reorganization, by and among VICTORIA INTERNET SERVICES, INC., a Nevada corporation, Leon Golden and Earn-A-Car (PTY), LTD., a corporation organized under the laws of the Republic of South Africa. 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Victoria Internet Services, Inc. By: /s/ John Storey, CEO ------------------------------------ John Storey, CEO Dated: December 15, 2011 9 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) FINANCIAL STATEMENTS FEBRUARY 28, 2011 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) CONTENTS Report of Independent Registered Public Accounting Firm F-1 Balance Sheets as of February 28, 2011 and 2010 F-2 Statements of Operations for the years ended February 28, 2011 and 2010 F-3 Statements of Other Comprehensive Income (Loss) for the years ended February 28, 2011 and 2010 F-4 Statement of Stockholders' Equity as of February 28, 2011 F-5 Statements of Cash Flows for the years ended February 28, 2011 and 2010 F-6 Notes to the Financial Statements F-7 Silberstein Ungar, PLLC CPAs and Business Advisors Phone (248) 203-0080 Fax (248) 281-0940 30600 Telegraph Road, Suite 2175 Bingham Farms, MI 48025-4586 www.sucpas.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Earn-A-Car (PTY) Ltd. (formerly EasyCars Rental and Sales (PTY) Ltd.) Benoni, South Africa We have audited the accompanying balance sheets of Earn-A-Car (PTY) Ltd. (formerly EasyCars Rental and Sales (PTY) Ltd.) as of February 28, 2011 and 2010, and the related statements of operations, other comprehensive income (loss), stockholders' equity (deficit), and cash flows for the years ended February 28, 2011 and 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Earn-A-Car (PTY) Ltd. (formerly EasyCars Rental and Sales (PTY) Ltd.) as of February 28, 2011 and 2010, and the results of their operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ Silberstein Ungar, PLLC ---------------------------------------- Silberstein Ungar, PLLC Bingham Farms, Michigan November 5, 2011 F-1 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) BALANCE SHEETS FEBRUARY 28, 2011 AND 2010
2011 2010 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 69,480 $ 31,274 Receivables, net 38,961 55,346 ------------ ------------ TOTAL CURRENT ASSETS 108,441 86,620 ------------ ------------ Property and equipment, net 9,607 1,665 ------------ ------------ Revenue-earning vehicles, net 2,363,832 2,188,884 ------------ ------------ OTHER ASSETS Loans receivable - shareholders 13,169 0 Loan receivable 16,682 0 ------------ ------------ TOTAL OTHER ASSETS 29,851 0 ------------ ------------ TOTAL ASSETS $ 2,511,731 $ 2,277,169 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 220,402 $ 292,784 Accrued expenses 21,032 15,406 Current portion of leases payable 398,908 352,312 Current portion of loans payable 201,162 0 ------------ ------------ TOTAL CURRENT LIABILITIES 841,504 660,501 ------------ ------------ LONG-TERM DEBT Loans payable - shareholders 97,878 332,099 Leases payable 241,474 341,033 Loans payable 898,840 918,344 ------------ ------------ TOTAL LONG-TERM DEBT 1,238,192 1,591,476 ------------ ------------ TOTAL LIABILITIES 2,079,696 2,251,977 ------------ ------------ STOCKHOLDERS' EQUITY Common Stock, $.12 par value, 1,000 shares authorized, 500 and 100 shares issued and outstanding, respectively 60 10 Accumulated other comprehensive income (loss) (5,792) (11,865) Retained earnings 437,767 37,047 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 432,035 25,192 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,511,731 $ 2,277,169 ============ ============
See accompanying notes to financial statements. F-2 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENTS OF OPERATIONS FOR THE YEARS ENDED FEBRUARY 28, 2011 AND 2010
Year Ended Year Ended February 28, February 28, 2011 2010 ---------- ---------- REVENUES Vehicle rentals $2,124,939 $2,019,805 Other 12,667 14,006 ---------- ---------- TOTAL REVENUES 2,137,606 2,033,811 ---------- ---------- EXPENSES Direct vehicle and operating 1,068,370 1,073,202 Vehicle depreciation and lease charges 204,303 182,989 Selling, general, and administrative 370,474 415,698 Interest expense 93,894 95,945 TOTAL EXPENSES 1,737,041 1,767,834 ---------- ---------- Operating Income 400,565 265,977 OTHER INCOME Interest income 155 439 ---------- ---------- Net Income Before Provision for Income Taxes 400,720 266,416 Provision for Income Taxes 0 0 ---------- ---------- NET INCOME $ 400,720 $ 266,416 ========== ========== Earnings per Share $ 1,335.73 $ 2,664.16 ========== ========== Weighted Average Common Shares Outstanding 300 100 ========== ==========
See accompanying notes to financial statements. F-3 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS) FOR THE YEARS ENDED FEBRUARY 28, 2011 AND 2010 Year Ended Year Ended February 28, February 28, 2011 2010 -------- -------- NET INCOME $400,720 $266,416 -------- -------- FOREIGN CURRENCY TRANSLATION: Change in cumulative translation adjustment 6,073 (41,796) -------- -------- TOTAL $ 6,073 $(41,796) ======== ======== See accompanying notes to financial statements. F-4 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE YEARS ENDED FEBRUARY 28, 2011 AND 2010
Accumulated Other Common Stock Comprehensive Retained ---------------------- Income Earnings Shares Amount (Loss) (Deficit) Total ------ ------ ------ --------- ----- Balance, March 1, 2009 100 $ 10 $ 29,931 $(229,369) $(199,428) (Loss) on currency translation -- -- (41,796) -- (41,796) Net income for the year -- -- -- 266,416 266,416 --------- --------- --------- --------- --------- Balance, February 28, 2010 100 10 (11,865) 37,047 25,192 Common stock issued for cash at par 400 50 -- -- 50 Gain on currency translation -- -- 6,073 -- 6,073 Net income for the year -- -- -- 400,720 400,720 --------- --------- --------- --------- --------- Balance, February 28, 2011 500 $ 60 $ (5,792) $ 437,767 $ 432,035 ========= ========= ========= ========= =========
See accompanying notes to financial statements. F-5 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED FEBRUARY 28, 2011 AND 2010
2011 2010 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income for the year $ 406,793 $ 224,620 Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Depreciation expense 206,757 183,419 Net losses on dispositions of revenue-earning vehicles 66,386 51,649 Changes in Assets and Liabilities: Decrease in receivables 16,386 19,226 Increase (decrease) in accounts payable (72,382) 179,796 Increase in accrued expenses 5,626 9,514 ---------- ---------- CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 629,566 668,224 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of revenue-earning vehicles (445,636) (852,476) Purchases of property and equipment (10,396) (2,095) Loans extended (16,682) 14,715 ---------- ---------- CASH FLOWS USED BY INVESTING ACTIVITIES (472,714) (839,856) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common stock 50 0 Payments on leases payable (net) (52,963) 18,997 Payments of loans payable (net) 181,657 918,344 Payments on loans payable - shareholders (net) (247,390) (750,941) ---------- ---------- CASH FLOWS PROVIDED BY FINANCING ACTIVITIES (118,647) 186,399 ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 38,205 14,767 Cash, beginning of period 31,274 16,508 ---------- ---------- Cash, end of period $ 69,480 $ 31,274 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 93,894 $ 95,945 ========== ========== Cash paid for income taxes $ 0 $ 0 ========== ==========
See accompanying notes to financial statements. F-6 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS - The Company, incorporated in South Africa on July 2, 2005, is primarily engaged in the business of the daily rental of vehicles to business and leisure customers through company-owned stores in the country of South Africa. On July 18, 2011, its name was changed from "EasyCars Rental and Sales (PTY) Ltd." to "Earn-A-Care (PTY) Ltd.". BASIS OF PRESENTATION- The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and are presented in U.S. dollars. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The Company has selected a February 28 year end. ESTIMATES - The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ materially from those estimates. CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand and on deposit, including highly liquid investments with initial maturities of three months or less. At February 28, 2011 and 2010 the Company had $69,480 and $31,274 of cash respectively. ALLOWANCE FOR DOUBTFUL ACCOUNTS - An allowance for doubtful accounts is generally established during the period in which receivables are recorded. The allowance is maintained at a level deemed appropriate based on loss experience and other factors affecting collectability. FINANCING ISSUE COSTS - Financing issue costs related to vehicle debt are deferred and amortized to interest expense over the term of the related debt using the effective interest method. RECEIVABLES AND PAYABLES- Trade receivables and payables are measured at initial recognition at fair value, and are subsequently measured using the effective interest rate method of valuation. Appropriate allowances for estimated uncollectible receivable balances are recognized in profit or loss when there is evidence of impairment. REVENUE-EARNING VEHICLES AND RELATED VEHICLE DEPRECIATION EXPENSE - Revenue-earning vehicles are stated at cost, net of related discounts. The Company must estimate what the residual values of these vehicles will be at the expected time of disposal to determine monthly depreciation rates. The estimation of residual values requires the Company to make assumptions regarding the age and mileage of the car at the time of disposal, as well as the general used vehicle auction market. The Company evaluates estimated residual values periodically, and adjusts depreciation rates accordingly, on a prospective basis. Differences between actual residual values and those estimated by the Company result in a gain or loss on disposal and are recorded as an adjustment to depreciation expense. Actual timing of disposal either shorter or longer than the life used for depreciation purposes could result in a loss or gain on sale. Generally, the average holding term for vehicles is approximately 7 years. PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost and are depreciated using principally the straight-line method over the estimated useful lives of the related assets. Estimated useful lives generally range from ten to thirty years for buildings and improvements and two to seven years for furniture and equipment. Leasehold improvements are amortized over the estimated useful lives of the related assets or leases, whichever is shorter. The average useful lives of fixed assets are as follows: Motor vehicles 6 years Computer equipment 3 years Computer software 2 years Leased assets - motor vehicles 6 years F-7 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LONG-LIVED ASSETS - The Company reviews the value of long-lived assets, including software, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable based upon estimated future cash flows and records an impairment charge, equaling the excess of the carrying value over the estimated fair value, if the carrying value exceeds estimated future cash flows. FOREIGN CURRENCY TRANSLATION - The Company's functional currency is the South African Rand, the translation into US dollars is the presentation bases of these financial statements. Foreign assets and liabilities are translated using the exchange rate in effect at the balance sheet date, and results of operations are translated using an average rate for the period. Translation adjustments are accumulated and reported as a component of accumulated other comprehensive income or loss. REVENUE RECOGNITION - Revenues from vehicle rentals are recognized as earned on a daily basis under the related rental contracts with customers. ADVERTISING COSTS - Advertising costs are primarily expensed as incurred. The Company incurred advertising expense of $17,492 and $40,670, respectively. INCOME TAXES - The Company has provided for income taxes on its separate taxable income or loss and other tax attributes. Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The Company has no tax liability in the United States. EARNINGS PER SHARE - Basic earnings per share ("EPS") is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is based on the combined weighted average number of common shares and common share equivalents outstanding which include, where appropriate, the assumed exercise of options. There were no such common stock equivalents outstanding during the years ended February 28, 2011 and 2010. OTHER COMPREHENSIVE INCOME (LOSS) - Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholder's equity that, under GAAP, are excluded from net income (loss), including foreign currency translation adjustments, gains and losses related to certain derivative contracts, and gains or losses, prior service costs or credits, and transition assets or obligations associated with pension or other postretirement benefits that have not been recognized as components of net periodic benefit cost. STOCK-BASED COMPENSATION- Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). To date, the Company has not adopted a stock option plan and has not granted any stock options. NEW ACCOUNTING STANDARDS - The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow. 2. REVENUE-EARNING VEHICLES Revenue-earning vehicles consist of the following: 2011 2010 ---------- ---------- Revenue-earning vehicles $3,081,754 $2,770,948 Less: accumulated depreciation (717,922) (582,064) ---------- ---------- $2,363,832 $2,188,884 ========== ========== Rent expense for vehicles leased under operating leases was $16,287 and $24,007 for the years ended February 28, 2011and 2010, respectively, and is included in vehicle depreciation and lease charges, net. F-8 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 3. PROPERTY AND EQUIPMENT Major classes of property and equipment consist of the following: 2011 2010 -------- -------- Computer equipment $ 9,385 $ 2,124 Computer software 3,192 0 -------- -------- 12,577 2,124 Less: accumulated depreciation and amortization (2,970) (459) -------- -------- $ 9,607 $ 1,665 ======== ======== During 2011 and 2010, the Company recorded no provisions for the impairment of assets. 4. LOAN RECEIVABLE At February 28, 2011, the Company has a $16,682 receivable due under a settlement agreement with a former employee. This loan is to be repaid with interest of 10% in 48 equal installments of about $425 beginning in March 2011. 5. DEBT AND OTHER OBLIGATIONS Debt and other obligations consist of the following: 2011 2010 ---------- ---------- Loan payable - individual - unsecured, interest bearing, no fixed repayment terms $ 27,804 $ 0 Loan payable - individual - unsecured, interest bearing, no fixed repayment terms 69,510 0 Loan payable - individual - unsecured, non-interest bearing, no fixed repayment terms 95,229 0 Loan payable - individual - unsecured, non-interest bearing, no fixed repayment terms 110,013 0 Loan payable - other-unsecured, non-interest bearing, no fixed repayment terms 596,284 918,344 Loan payable - Jay & Jayendra (Pty) Ltd. - secured by company vehicles, bearing an interest rate of the prime rate, payable within twelve months. Guaranteed by a related party, Cobalt Capital (Pty) Ltd. 166,824 0 Loan payable - individual - unsecured, interest bearing, payable within twelve months 34,338 0 ---------- ---------- Total 1,100,002 918,344 ---------- ---------- Less: current portion of loans payable 201,162 0 ---------- ---------- Long-term portion of loans payable $ 898,840 $ 918,344 ========== ========== F-9 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 5. DEBT AND OTHER OBLIGATIONS (CONTINUED) Expected maturities of debt and other obligations outstanding at February 28, 2011 are as follows: Loan Amounts Leases Total ------------ ------ ----- Year ended February 29, 2012 $ 201,162 $ 398,908 $ 600,070 Year ended February 28, 2013 0 134,324 134,324 Year ended February 28, 2014 0 90,261 90,261 Year ended February 28, 2015 0 16,890 16,890 Year ended February 29, 2016 0 0 0 Thereafter 898,840 0 898,840 ---------- ---------- ---------- Total $1,100,002 $ 640,382 $1,740,385 ========== ========== ========== 6. PROVISION FOR INCOME TAXES The Company has no obligation for any federal or state income taxes in the United States. Further, no provision has been made for taxes in South Africa for 2011 nor 2010 because the taxable losses and loss carryovers exceeded the income in those years. 7. EQUITY The Company is authorized to issue 1,000 common shares of stock. As of February 28, 2011 and 2010 there were 500 and 100 common shares outstanding, respectively. 8. COMMITMENTS AND CONTINGENCIES OPERATING LEASES The Company operates from various leased premises under operating leases with terms up to 5 years. Some of the leases contain renewal options. No contingent rent is payable. Expenses incurred under operating leases for the period were as follows: 2011 2010 -------- -------- Operating leases: Premises $ 46,283 $ 52,628 Motor vehicles 16,465 25,599 -------- -------- $ 62,748 $ 78,227 ======== ======== Expected future minimum rentals and fees under non-cancelable operating leases for office premises and equipment are presented in the following table: February 29, 2012 $62,748 February 28, 2013 $62,748 February 28, 2014 $62,748 February 28, 2015 $62,748 February 29, 2016 $62,748 At February 28, 2011, the Company had no outstanding vehicle purchase commitments over the next twelve months. F-10 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 9. RELATED PARTY TRANSACTIONS The Company engages in activities with parties who hold ownership in the Company. The Company borrows funds from related parties and pays consulting fees to related parties. The related party transactions are as follows: 2011 2010 -------- -------- Loans payable to shareholders: Cobalt Capital (Pty) Ltd. $ 26,174 $232,443 M. DuPlessis 0 10,491 G. Yannakopoulos 71,704 89,165 -------- -------- Total loans payable to related parties $ 97,878 $332,099 ======== ======== Loans receivable from shareholders: M. DuPlessis $ 13,169 $ 0 ======== ======== 10. SUBSEQUENT EVENTS On October 12, 2011, the Company executed a letter of intent (the "LOI") with Victoria Internet Services, Inc. ("Victoria"), a Nevada, United States of America, corporation, where the company will sell all its shares to Victoria. Victoria in turn will issue additional shares. The LOI is subject to the parties' due diligence and the execution and delivery of a formal agreement. These events have not yet occurred. The Company has analyzed its operations subsequent to February 28, 2011 through November 5, 2011, the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose. F-11 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) FINANCIAL STATEMENTS AUGUST 31, 2011 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) CONTENTS Balance Sheets as of August 31, 2011 and February 28, 2011 (Unaudited) F-1 Statements of Operations for the three and six months ended August 31, 2011 and 2010 (Unaudited) F-2 Statements of Other Comprehensive Income (Loss) for the three and six months ended August 31, 2011 and 2010 (Unaudited) F-3 Statement of Stockholders' Equity as of August 31, 2011 (Unaudited) F-4 Statements of Cash Flows for the six months ended August 31, 2011 and 2010 (Unaudited) F-5 Notes to the Financial Statements F-6 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) BALANCE SHEETS (UNAUDITED) AUGUST 31, 2011 AND FEBRUARY 28, 2011 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) BALANCE SHEETS (UNAUDITED) AUGUST 31, 2011 AND FEBRUARY 28, 2011
August 31, February 28, 2011 2011 ---------- ---------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 120,822 $ 69,480 Receivables, net 72,177 38,961 ---------- ---------- TOTAL CURRENT ASSETS 192,999 108,441 ---------- ---------- Property and equipment, net 12,335 9,607 ---------- ---------- Revenue-earning vehicles, net 2,597,691 2,363,832 ---------- ---------- OTHER ASSETS Loans to shareholders 144,302 13,169 Loan receivable 15,835 16,682 ---------- ---------- TOTAL OTHER ASSETS 160,137 29,851 ---------- ---------- TOTAL ASSETS $2,963,162 $2,511,731 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES CURRENT LIABILITIES Accounts payable $ 236,825 $ 220,402 Accrued expenses 0 21,032 Current portion of leases payable 398,908 398,908 Current portion of loans payable 567,765 201,162 ---------- ---------- TOTAL CURRENT LIABILITIES 1,203,498 841,504 ---------- ---------- LONG-TERM DEBT Loans from - shareholders 0 97,878 Leases payable 616,568 241,474 Loans payable 553,514 898,840 ---------- ---------- TOTAL LONG-TERM DEBT 1,170,082 1,238,192 ---------- ---------- TOTAL LIABILITIES 2,373,580 2,079,696 ---------- ---------- STOCKHOLDERS' EQUITY Common stock, $.12 par value, 1,000 shares authorized, 60 60 500 shares issued and outstanding Accumulated other comprehensive income (loss) (2,052) (5,792) Retained earnings 591,574 437,767 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 589,582 432,035 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,963,162 $2,511,731 ========== ==========
See accompanying notes to financial statements. F-1 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2011 AND 2010
For the Three For the Three For the Six For the Six Months Ended Months Ended Months Ended Months Ended August 31, August 31, August 31, August 31, 2011 2010 2011 2010 ---------- ---------- ---------- ---------- REVENUES Vehicle rentals $ 632,729 $ 500,728 $1,229,760 $1,037,650 Other (9,220) 3,462 6,600 6,284 ---------- ---------- ---------- ---------- TOTAL REVENUES 623,509 504,189 1,236,360 1,043,935 ---------- ---------- ---------- ---------- EXPENSES Direct vehicle and operating 235,150 233,190 509,864 445,179 Vehicle depreciation and lease charges 157,743 28,422 296,553 52,000 Selling, general and administrative 94,062 65,824 198,525 143,253 Interest expense 41,520 26,473 77,612 52,992 ---------- ---------- ---------- ---------- TOTAL EXPENSES 528,476 353,909 1,082,554 693,424 ---------- ---------- ---------- ---------- Operating Income 95,033 150,280 153,806 350,511 OTHER INCOME Interest income 1 66 1 93 ---------- ---------- ---------- ---------- Net Income Before Provision for Income Taxes 95,034 150,346 153,807 350,604 Provision for Income Taxes 0 0 0 0 ---------- ---------- ---------- ---------- NET INCOME $ 95,034 $ 150,346 $ 153,807 $ 350,604 ========== ========== ========== ========== Earnings per Share $ 190.07 $ 1,503.46 $ 307.61 $ 3,506.04 ========== ========== ========== ========== Weighted Average Common Shares Outstanding 500 100 500 100 ========== ========== ========== ==========
See accompanying notes to financial statements. F-2 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2011 AND 2010
For the Three For the Three For the Six For the Six Months Ended Months Ended Months Ended Months Ended August 31, August 31, August 31, August 31, 2011 2010 2011 2010 ---------- ---------- ---------- ---------- NET INCOME $ 95,034 $ 150,346 $ 153,807 $ 350,604 ---------- ---------- ---------- ---------- FOREIGN CURRENCY TRANSLATION Change in cumulative translation adjustment (12,436) (431,066) 3,740 (163,061) ---------- ---------- ---------- ---------- TOTAL $ (12,436) $ (431,066) $ 3,740 $ (163,061) ========== ========== ========== ==========
See accompanying notes to financial statements. F-3 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) AS OF AUGUST 31, 2011
Accumulated Other Common Stock Comprehensive Retained ---------------------- Income Earnings Shares Amount (Loss) (Deficit) Total ------ ------ ------ --------- ----- Balance February 28, 2009 100 $ 10 $ 29,931 $ (229,369) $ (199,428) Gain (loss) on currency translation -- -- (41,796) -- (41,796) Net earnings -- -- -- 266,416 266,416 ---------- ---------- ---------- ---------- ---------- Balance February 28, 2010 100 10 (11,865) 37,047 25,192 Common stock issued for cash at par 400 50 -- -- 50 Gain (loss) on currency translation -- -- 6,073 -- 6,073 Net earnings -- -- -- 400,720 400,720 ---------- ---------- ---------- ---------- ---------- Balance, February 28, 2011 500 60 (5,792) 437,767 432,035 Gain (loss) on currency translation -- -- 3,740 -- 3,740 Net earnings -- -- -- 153,807 153,807 ---------- ---------- ---------- ---------- ---------- Balance, May 31, 2011 500 $ 60 $ (2,052) $ 591,574 $ 589,582 ========== ========== ========== ========== ==========
See accompanying notes to financial statements. F-4 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED AUGUST 31, 2011 AND 2010
For the Six For the Six Months Ended Months Ended August 31, August 31, 2011 2010 ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income and other comprehensive income $ 157,547 $ 187,543 Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: Depreciation 296,553 52,000 Net losses from disposition of revenue-earning vehicles 20,076 0 Change in Assets and Liabilities: (Increase) decrease in receivables (33,216) 72,402 Increase (decrease) in accounts payables 16,422 (184,810) Increase (decrease) in accrued expenses (21,032) 776 ---------- ---------- CASH FLOWS PROVIDED BY OPERATING ACTIVITIES 436,350 127,912 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Revenue-earning vehicles: Purchases (550,489) 0 Proceeds from sales 0 (8,813) Property, equipment and software: Purchases (2,728) (9,282) Proceeds from sales 0 0 Loans extended (130,285) 0 ---------- ---------- CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES (683,502) (18,095) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common stock 0 0 Proceeds from (Payments on) leases payable (net) 375,095 (102,488) Proceeds from (Payments on) loans payable (net) 21,278 80,223 Proceeds from (Payments on) shareholder loans (net) (97,879) (66,063) ---------- ---------- CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES 298,494 (88,328) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 51,342 21,489 Cash, beginning of period 69,480 31,274 ---------- ---------- Cash, end of period $ 120,822 $ 52,764 ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 77,612 $ 26,473 ========== ========== Cash paid for income taxes $ 0 $ 0 ========== ==========
See Accompanying Notes to Financial Statements. F-5 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2011 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS - The Company, incorporated in South Africa on July 2, 2005, is primarily engaged in the business of the daily rental of vehicles to business and leisure customers through company-owned stores in the country of South Africa. On July 18, 2011, its name was changed from "EasyCars Rental and Sales (PTY) Ltd." to "Earn-A-Car (PTY) Ltd.". BASIS OF PRESENTATION- The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and are presented in U.S. Dollars. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The Company has selected a February 28 year end. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended February 28, 2011. The results of operations for the three and six months ended August 31, 2011 may not be indicative of the results that may be expected for the full year. ESTIMATES - The preparation of the Company's consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the consolidated financial statements. Actual results could differ materially from those estimates. CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash on hand and on deposit, including highly liquid investments with initial maturities of three months or less. At August 31, 2011 and February 28, 2011 the Company had $120,822 and $69,480 in cash and cash equivalents, respectively. ALLOWANCE FOR DOUBTFUL ACCOUNTS - An allowance for doubtful accounts is generally established during the period in which receivables are recorded. The allowance is maintained at a level deemed appropriate based on loss experience and other factors affecting collectability. FINANCING ISSUE COSTS - Financing issue costs related to vehicle debt are deferred and amortized to interest expense over the term of the related debt using the effective interest method. RECEIVABLES AND PAYABLES- Trade receivables and payables are measured at initial recognition at fair value, and are subsequently measured using the effective interest rate method of valuation. Appropriate allowances for estimated uncollectible receivable balances are recognized in profit or loss when there is evidence of impairment. REVENUE-EARNING VEHICLES AND RELATED VEHICLE DEPRECIATION EXPENSE - Revenue-earning vehicles are stated at cost, net of related discounts. The Company must estimate what the residual values of these vehicles will be at the expected time of disposal to determine monthly depreciation rates. The estimation of residual values requires the Company to make assumptions regarding the age and mileage of the car at the time of disposal, as well as the general used vehicle auction market. The Company evaluates estimated residual values periodically, and adjusts depreciation rates accordingly, on a prospective basis. Differences between actual residual values and those estimated by the Company result in a gain or loss on disposal and are recorded as an adjustment to depreciation expense. Actual timing of disposal either shorter or longer than the life used for depreciation purposes could result in a loss or gain on sale. Generally, the average holding term for vehicles is approximately 7 years. F-6 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2011 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost and are depreciated using principally the straight-line method over the estimated useful lives of the related assets. Estimated useful lives generally range from ten to thirty years for buildings and improvements and two to seven years for furniture and equipment. Leasehold improvements are amortized over the estimated useful lives of the related assets or leases, whichever is shorter. The average useful lives of fixed assets are as follows: Motor vehicles 6 years Computer equipment 3 years Computer software 2 years Leased assets - motor vehicles 6 years LONG-LIVED ASSETS - The Company reviews the value of long-lived assets, including software, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable based upon estimated future cash flows and records an impairment charge, equaling the excess of the carrying value over the estimated fair value, if the carrying value exceeds estimated future cash flows. FOREIGN CURRENCY TRANSLATION - The Company's functional currency is the South African Rand, the translation into US dollars is the presentation bases of these financial statements. Foreign assets and liabilities are translated using the exchange rate in effect at the balance sheet date, and results of operations are translated using an average rate for the period. Translation adjustments are accumulated and reported as a component of accumulated other comprehensive income or loss. REVENUE RECOGNITION - Revenues from vehicle rentals are recognized as earned on a daily basis under the related rental contracts with customers. ADVERTISING COSTS - Advertising costs are primarily expensed as incurred. During the six months ended August 31, 2011 and 2010, the Company incurred advertising expense of $5,801 and $6,362, respectively. INCOME TAXES - The Company has provided for income taxes on its separate taxable income or loss and other tax attributes. Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The Company has no tax liability in the United States. EARNINGS PER SHARE - Basic earnings per share ("EPS") is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is based on the combined weighted average number of common shares and common share equivalents outstanding which include, where appropriate, the assumed exercise of options. There were no such common stock equivalents outstanding during the years ended February 28, 2011 and 2010. OTHER COMPREHENSIVE INCOME (LOSS) - Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting stockholder's equity that, under GAAP, are excluded from net income (loss), including foreign currency translation adjustments, gains and losses related to certain derivative contracts, and gains or losses, prior service costs or credits, and transition assets or obligations associated with pension or other postretirement benefits that have not been recognized as components of net periodic benefit cost. STOCK-BASED COMPENSATION- Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718). To date, the Company has not adopted a stock option plan and has not granted any stock options. NEW ACCOUNTING STANDARDS - The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow. F-7 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2011 2. REVENUE-EARNING VEHICLES Revenue-earning vehicles consist of the following: August 31, February 28, 2011 2011 ---------- ---------- Revenue-earning vehicles $3,547,993 $3,081,754 Less accumulated depreciation (950,303) (717,922) ---------- ---------- $2,597,691 $2,363,832 ========== ========== Rent expense for vehicles leased under operating leases was $8,144 and $12,004 for the six months ending August 31, 2011 and 2010, respectively, and is included in vehicle depreciation and lease charges, net. 3. PROPERTY AND EQUIPMENT Major classes of property and equipment consist of the following: August 31, February 28, 2011 2011 ---------- ---------- Computer equipment $ 8,507 $ 9,385 Computer software 3,828 3,192 ---------- ---------- 12,335 12,577 Less accumulated depreciation 0 (2,970) ---------- ---------- $ 12,335 $ 9,607 ========== ========== During 2011 and 2010, the Company recorded no provisions for the impairment of assets. 4. LOANS RECEIVABLE At August 31, 2011, the Company has loans receivable from shareholders of $81,919 to Cobalt Capital, $28,531 to M. Du Plessis, and $33,852 to G. Yannakopoulos. At February 28, 2011, the Company has a loan receivable from a shareholder of $13,169 from M. Du Plessis. These are short-term loans expected to be collected within 90 days. At August 31, 2011 and February 28, 2011, the Company has a receivable due under a settlement agreement with a former employee with a balance of $15,835 and $16,682, respectively. This loan is to be repaid with interest of 10% in 48 equal installments of about $425 beginning in March 2011. F-8 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2011 5. DEBT AND OTHER OBLIGATIONS Debt and other obligations consist of the following: August 31, February 28, 2012 2012 ---------- ---------- Loan payable - individual - unsecured, interest bearing, no fixed repayment terms $ 28,343 $ 27,804 Loan payable - individual - unsecured, interest bearing, no fixed repayment terms 70,855 69,510 Loan payable - individual - unsecured, interest bearing, no fixed repayment terms 97,071 95,229 Loan payable - individual - unsecured, interest bearing, no fixed repayment terms 112,141 110,013 Loan payable - other - unsecured, interest bearing, no fixed repayment terms 607,817 596,284 Loan payable - Jay & Jayendra (Pty) Ltd. Secured by company vehicles, bearing an interest rate of the prime rate, payable within 12 months Guaranteed by a related party, Cobalt Capital (Pty) Ltd. 170,051 166,824 Loan payable - other - unsecured, interest bearing, no fixed repayment terms 35,002 34,338 ---------- ---------- Total $1,121,280 $1,100,002 ---------- ---------- Current portion of loans payable 567,765 201,162 ---------- ---------- Long-term portion of loans payable $ 553,515 $ 898,840 ========== ========== Expected maturities of debt and other obligations outstanding at August 31, 2011 are as follows: Loan Amounts Lease Amounts Total ------------ ------------- ----- Year ending August 31, 2012 $ 567,765 $ 398,908 $ 966,673 Year ending August 31, 2013 -- 268,205 268,205 Year ending August 31, 2014 -- 168,788 168,788 Year ending August 31, 2015 -- 179,575 179,575 Year ending August 31, 2016 -- -- -- Thereafter 553,515 -- 553,515 ---------- ---------- ---------- Total $1,121,280 $1,015,476 $2,136,756 ========== ========== ========== F-9 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2011 6. PROVISION FOR INCOME TAXES The Company has no obligation for any federal or state income taxes in the United States. Further, no provision has been made for taxes in South Africa for 2011 nor 2010 because the taxable losses and loss carryovers exceed the income in those years. 7. EQUITY The Company is authorized to issue 1,000 common shares of stock. As of August 31, 2011 and February 28, 2011 there were 500 common shares outstanding. 8. COMMITMENTS AND CONTINGENCIES OPERATING LEASES The Company operates from various leased premises under operating leases with terms up to 5 years. Some of the leases contain renewal options. No contingent rent is payable. Expenses incurred under operating leases for the period were as follows: August 31, ----------------------------- 2011 2010 -------- -------- Operating leases: Premesis $ 6,487 $ 6,688 Motor vehicles 6,965 6,723 -------- -------- $ 13,452 $ 13,411 ======== ======== Future minimum rentals and fees under non-cancelable operating leases for the 12 month periods are presented in the following table: August 31, 2012 $ 62,748 August 31, 2013 $ 62,748 August 31, 2014 $ 62,748 August 31, 2015 $ 62,748 August 31, 2016 $ 62,748 At August 31, 2011, the Company had no outstanding vehicle purchase commitments over the next twelve months. F-10 EARN-A-CAR (PTY) LTD. (FORMERLY - EASYCARS RENTAL AND SALES (PTY) LTD.) NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2011 9. RELATED PARTY TRANSACTIONS The Company engages in activities with parties who hold ownership in the Company. The Company borrows funds from related parties and pays consulting fees to related parties. The related party transactions are as follows: August 31, February 28, 2011 2011 -------- -------- Loans payable to shareholders: Cobalt Capital (Pty) Ltd. $ 0 $ 26,174 G. Yannakopoulos 0 71,704 -------- -------- Total loans payable to related parties $ 0 $ 97,878 ======== ======== Loans receivable from shareholders Cobalt Capital (Pty) Ltd. $ 81,919 $ 0 M. DuPlessis 28,531 13,169 G. Yannakopoulos 33,852 0 -------- -------- Total loans receivable from related parties $144,302 $ 13,169 ======== ======== Consulting fees paid to related party Cobalt Capital (Pty) Ltd. $ 1,062 $ 0 ======== ======== 10. SUBSEQUENT EVENTS On October 12, 2011, the Company executed a letter of intent (the "LOI") with Victoria Internet Services, Inc. ("Victoria"), a Nevada, United States of America, corporation, where the company will sell all its shares to Victoria. Victoria in turn will issue additional shares. The LOI is subject to the parties' due diligence and the execution and delivery of a formal agreement. These events have not yet occurred. The Company has analyzed its operations subsequent to August 31, 2011 through December 2, 2011, the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose. F-11 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION. On October 12, 2011, Victoria Internet Services, Inc. ("the Company") executed a letter of intent with Earn-A-Car (PTY) LTD, a South African corporation ("EAC"). The LOI contemplates, among other things, the Company acquiring all of the issued and outstanding shares of Earn-a-Car from its shareholders, in exchange for 1,575,000 of the outstanding common shares of the Company and the cancellation of 2,425,000 of the outstanding shares of common stock. The following unaudited pro forma combined balance sheets and income statements are based on historical financial statements of the companies. The unaudited pro forma combined financial statements are provided for information purposes only. The pro forma financial statements are not necessarily indicative of what the financial position or results of operations actually would have been had the acquisition been completed at the dates indicated below. In addition, the unaudited pro forma combined financial statements do not purport to project the future financial position or operating results of the combined company. The unaudited pro forma combined financial information has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. For pro forma purposes: * The unaudited Pro Forma Combined Balance Sheets as of February 28, 2011 and December 31, 2010 combines the historical balance sheets of the companies as of the years ended February 28, 2011 and December 31, 2010, giving effect to the acquisitions/mergers as if they had occurred at the beginning of the most recent year ended. * The unaudited Pro Forma Combined Statements of Operations for the years ended February 28, 2011 and December 31, 2010 combines the historical income statements of the companies for the indicated period, giving effect to the acquisitions/mergers as if they had at the beginning of the most recent year ended. * The unaudited Pro Forma Combined Balance Sheets as of February 28, 2010 and December 31, 2009 combines the historical balance sheets of the companies as of the years ended February 28, 2010 and December 31, 2009, giving effect to the acquisitions/mergers as if they had occurred at the beginning of the most recent year ended. * The unaudited Pro Forma Combined Statements of Operations for the years ended February 28, 2010 and December 31, 2009 combines the historical income statements of the companies for the indicated period, giving effect to the acquisitions/mergers as if they had at the beginning of the most recent year ended. These unaudited pro forma combined financial statements and accompanying notes should be read in conjunction with the separate audited financial statements of Victoria Internet Services, Inc. and Earn-A-Car (PTY) LTD as of and for the years ended February 28, 2011 and 2010 and December 31, 2010 and 2009, respectively. VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD TABLE OF CONTENTS Pro Forma Combined Balance Sheets (Unaudited) as of February 28, 2011 and December 31, 2010 3 Pro Forma Combined Statements of Operations (Unaudited) for the years ended February 28, 2011 and December 31, 2010 4 Pro Forma Combined Balance Sheets (Unaudited) as of February 28, 2010 and December 31, 2009 5 Pro Forma Combined Statements of Operations (Unaudited) for the years ended February 28, 2010 and December 31, 2009 6 Notes to the Pro Forma Adjustments 7 2 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED) FEBRUARY 28, 2011 AND DECEMBER 31, 2010
Victoria Earn-A-Car Internet (PTY) Ltd. Services, Inc. February 28, December 31, Pro Forma 2011 2010 Adjustments Total ------------ ------------ ----------- ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 69,480 $ 68 $ 69,548 Receivables, net 38,961 0 38,961 ------------ ------------ ------------ TOTAL CURRENT ASSETS 108,441 68 108,509 ------------ ------------ ------------ Property and equipment, net 9,607 0 9,607 ------------ ------------ ------------ Revenue-earning vehicles, net 2,363,832 0 2,363,832 ------------ ------------ ------------ OTHER ASSETS Loans receivable - shareholders 13,169 0 13,169 Loan receivable 16,682 0 16,682 ------------ ------------ ------------ TOTAL OTHER ASSETS 29,851 0 29,851 ------------ ------------ ------------ TOTAL ASSETS $ 2,511,731 $ 68 $ 2,511,799 ============ ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 220,402 $ 0 $ 220,402 Accrued expenses 21,032 6,590 27,622 Loan from shareholder 0 9,163 9,163 Current portion of leases payable 398,908 0 398,908 Current portion of loans payable 201,162 0 201,162 ------------ ------------ ------------ TOTAL CURRENT LIABILITIES 841,504 15,753 857,257 ------------ ------------ ------------ LONG-TERM DEBT Loans payable - shareholders 97,878 0 97,878 Leases payable 241,474 0 241,474 Loans payable 898,840 0 898,840 ------------ ------------ ------------ TOTAL LONG-TERM DEBT 1,238,192 0 1,238,192 ------------ ------------ ------------ TOTAL LIABILITIES 2,079,696 15,753 2,095,449 ------------ ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) a(60) Common stock 60 1 b(0) 1 ` a60 Paid in capital 0 26,749 b0 26,809 Accumulated other comprehensive loss (5,792) 0 (5,792) Retained earnings (Accumulated deficit) 437,767 (42,435) 395,332 ------------ ------------ ------------ TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 432,035 (15,685) 416,350 ------------ ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 2,511,731 $ 68 $ 2,511,799 ============ ============ ============
See accompanying notes to the Pro Forma adjustments. 3 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED) YEARS ENDED FEBRUARY 28, 2011 AND DECEMBER 31, 2010
Victoria Earn-A-Car Internet (PTY) Ltd. Services, Inc. February 28, December 31, Pro Forma 2011 2010 Adjustments Total ---------- ----------- ----------- ----------- GROSS REVENUES $2,137,606 $ 0 $2,137,606 OPERATING EXPENSES 1,737,041 29,922 1,766,963 ---------- ---------- ---------- OPERATING INCOME (LOSS) 400,565 (29,922) 370,643 OTHER INCOME (EXPENSE) 155 0 155 ---------- ---------- ---------- NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 400,720 (29,922) 370,798 PROVISION FOR INCOME TAXES 0 0 0 ---------- ---------- ---------- NET INCOME (LOSS) $ 400,720 $ (29,922) $ 370,798 ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 300 4,195,411 ========== ========== NET INCOME (LOSS) PER SHARE $ 1,335.73 $ (0.01) ========== ==========
See accompanying notes to the Pro Forma Adjustments. 4 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED) FEBRUARY 28, 2010 AND DECEMBER 31, 2009
Victoria Earn-A-Car Internet (PTY) Ltd. Services, Inc. February 28, December 31, Pro Forma 2010 2009 Adjustments Total ---------- ---------- ----------- ---------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 31,274 $ 13,900 $ 45,174 Receivables, net 55,346 0 55,346 ---------- ---------- ---------- TOTAL CURRENT ASSETS 86,620 13,900 100,520 ---------- ---------- ---------- Property and equipment, net 1,665 0 1,665 ---------- ---------- ---------- Revenue-earning vehicles, net 2,188,884 0 2,188,884 ---------- ---------- ---------- OTHER ASSETS Loans receivable - shareholders 0 0 0 Loan receivable 0 0 0 ---------- ---------- ---------- TOTAL OTHER ASSETS 0 0 0 ---------- ---------- ---------- TOTAL ASSETS $2,277,169 $ 13,900 $2,291,069 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 292,784 $ 0 $ 292,784 Accrued expenses 15,406 6,000 21,406 Loan from shareholder 0 413 413 Current portion of leases payable 352,311 0 352,311 Current portion of loans payable 0 0 0 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 660,501 6,413 666,914 ---------- ---------- ---------- LONG-TERM DEBT Loans payable - shareholders 332,099 0 332,099 Leases payable 341,033 0 341,033 Loans payable 918,344 0 918,344 ---------- ---------- ---------- TOTAL LONG-TERM DEBT 1,591,476 0 1,591,476 ---------- ---------- ---------- TOTAL LIABILITIES 2,251,977 6,413 2,258,390 ---------- ---------- ---------- STOCKHOLDERS' EQUITY (DEFICIT) a(10) Common stock 10 1 b(0) 1 a10 Paid in capital 0 19,999 b0 20,009 Accumulated other comprehensive loss (11,865) 0 (11,865) Retained earnings (Accumulated deficit) 37,047 (12,513) 24,534 ---------- ---------- ---------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 25,192 7,487 32,679 ---------- ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $2,277,169 $ 13,900 $2,291,069 ========== ========== ==========
See accompanying notes to the Pro Forma adjustments. 5 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED) YEARS ENDED FEBRUARY 28, 2010 AND DECEMBER 31, 2009
Victoria Earn-A-Car Internet (PTY) Ltd. Services, Inc. February 28, December 31, Pro Forma 2010 2009 Adjustments Total ---------- ---------- ----------- ---------- GROSS REVENUES $2,033,811 $ 400 $2,034,211 OPERATING EXPENSES 1,767,834 12,913 1,780,747 ---------- ---------- ---------- OPERATING INCOME (LOSS) 265,977 (12,513) 253,464 OTHER INCOME (EXPENSE) 439 0 439 ---------- ---------- ---------- NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 266,416 (12,513) 253,903 PROVISION FOR INCOME TAXES 0 0 0 ---------- ---------- ---------- NET INCOME (LOSS) $ 266,416 $ (12,513) $ 253,903 ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 100 1,831,325 ========== ========== NET INCOME (LOSS) PER SHARE $ 2,664.16 $ (0.01) ========== ==========
See accompanying notes to the Pro Forma adjustments. 6 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD NOTES TO THE PRO FORMA ADJUSTMENTS (UNAUDITED) (a) Exchange of 1,575,000 shares of common stock of Victoria Internet Services, Inc. for 100% of the issued and outstanding shares of Earn-A-Car (PTY) LTD. (b) Cancellation of 2,425,000 shares of common stock of Victoria Internet Services, Inc. 7 UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION. On October 12, 2011, Victoria Internet Services, Inc. ("the Company") executed a letter of intent with Earn-A-Car (PTY) LTD, a South African corporation ("EAC"). The LOI contemplates, among other things, the Company acquiring all of the issued and outstanding shares of Earn-a-Car from its shareholders, in exchange for 1,575,000 of the outstanding common shares of the Company and the cancellation of 2,425,000 of the outstanding shares of common stock. The following unaudited pro forma combined balance sheets and income statements are based on historical financial statements of the companies. The unaudited pro forma combined financial statements are provided for information purposes only. The pro forma financial statements are not necessarily indicative of what the financial position or results of operations actually would have been had the acquisition been completed at the dates indicated below. In addition, the unaudited pro forma combined financial statements do not purport to project the future financial position or operating results of the combined company. The unaudited pro forma combined financial information has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. For pro forma purposes: * The unaudited Pro Forma Combined Balance Sheets as of August 31, 2011 and June 30, 2011 combines the historical balance sheets of the companies as of the six months ended August 31, 2011 and June 30, 2011, giving effect to the acquisitions/mergers as if they had occurred at the beginning of the most recent year ended. * The unaudited Pro Forma Combined Statements of Operations for the six months ended August 31, 2011 and June 30, 2011 combines the historical income statements of the companies for the indicated period, giving effect to the acquisitions/mergers as if they had occurred at the beginning of the most recent year ended. These unaudited pro forma combined financial statements and accompanying notes should be read in conjunction with the separate unaudited financial statements of Victoria Internet Services, Inc. and Earn-A-Car (PTY) LTD as of and for the six months ended June 30, 2011 and August 31, 2011, respectively. VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD TABLE OF CONTENTS Pro Forma Combined Balance Sheets (Unaudited) as of August 31, 2011 and June 30, 2011 3 Pro Forma Combined Statements of Operations (Unaudited) for the six months ended August 31, 2011 and June 30, 2011 4 Notes to the Pro Forma Adjustments 5 2 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD PRO FORMA COMBINED BALANCE SHEETS (UNAUDITED) AUGUST 31, 2011 AND JUNE 30, 2011
Victoria Earn-A-Car Internet (PTY) Ltd. Services, Inc. August 31, June 30, Pro Forma 2011 2011 Adjustments Total ---------- ---------- ----------- ---------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 120,822 $ 745 $ 121,567 Receivables, net 72,177 0 72,177 ---------- ---------- ---------- TOTAL CURRENT ASSETS 192,999 745 193,744 ---------- ---------- ---------- Property and equipment, net 12,335 0 12,335 ---------- ---------- ---------- Revenue-earning vehicles, net 2,597,691 0 2,597,691 ---------- ---------- ---------- OTHER ASSETS Loans receivable - shareholders 144,302 0 144,302 Loan receivable 15,835 0 15,835 ---------- ---------- ---------- TOTAL OTHER ASSETS 160,137 0 160,137 ---------- ---------- ---------- TOTAL ASSETS $2,963,162 $ 745 $3,963,907 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 236,825 $ 0 $ 236,825 Accrued expenses 0 0 0 Loan from shareholder 0 21,913 21,913 Current portion of leases payable 398,908 0 398,908 Current portion of loans payable 567,765 0 567,765 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 1,203,498 21,913 1,225,411 ---------- ---------- ---------- LONG-TERM DEBT Loans payable - shareholders 0 0 0 Leases payable 616,568 0 616,568 Loans payable 553,514 0 553,514 ---------- ---------- ---------- TOTAL LONG-TERM DEBT 1,170,082 0 1,170,082 ---------- ---------- ---------- TOTAL LIABILITIES 2,373,580 21,913 2,395,493 ---------- ---------- ---------- STOCKHOLDERS' EQUITY (DEFICIT) a(60) Common stock 60 1 b(0) 1 a60 Paid in capital 0 26,749 b0 26,809 Accumulated other comprehensive loss (2,052) 0 (2,052) Retained earnings (Accumulated deficit) 591,574 (47,918) 543,656 ---------- ---------- ---------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 589,582 (21,168) 568,414 ---------- ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $2,963,162 $ 745 $2,963,907 ========== ========== ==========
See accompanying notes to the Pro Forma adjustments. 3 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD PRO FORMA COMBINED STATEMENTS OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED AUGUST 31, 2011 AND JUNE 30, 2011
Victoria Earn-A-Car Internet (PTY) Ltd. Services, Inc. August 31, June 30, Pro Forma 2011 2011 Adjustments Total ---------- ---------- ----------- ---------- GROSS REVENUES $1,236,360 $ 0 $1,236,360 OPERATING EXPENSES 1,082,554 5,483 1,088,037 ---------- ---------- ---------- OPERATING INCOME (LOSS) 153,806 (5,483) 148,323 OTHER INCOME (EXPENSE) 1 0 1 ---------- ---------- ---------- NET INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 153,807 (5,483) 148,324 PROVISION FOR INCOME TAXES 0 0 0 ---------- ---------- ---------- NET INCOME (LOSS) $ 153,807 $ (5,483) $ 148,324 ========== ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 500 4,675,000 ========== ========== NET INCOME (LOSS) PER SHARE $ 307.61 $ (0.00) ========== ==========
See accompanying notes to the Pro Forma adjustments. 4 VICTORIA INTERNET SERVICES, INC. EARN-A-CAR (PTY) LTD NOTES TO THE PRO FORMA ADJUSTMENTS (UNAUDITED) (a) Exchange of 1,575,000 shares of common stock of Victoria Internet Services, Inc. for 100% the issued and outstanding shares of Earn-A-Car (PTY) LTD. (b) Cancellation of 2,425,000 shares of common stock of Victoria Internet Services, Inc. 5 EX-10.1 2 ex10-1.txt AGREEMENT & PLAN OF REORGANIZATION EXHIBIT 10.1 AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") made and entered into as of December 7, 2011 by and among, VICTORIA INTERNET SERVICES, INC. ., a Nevada corporation (hereinafter referred to as the "Company" or "VRIS"), Leon Golden (the "Control Stockholder") and the persons identified on Schedule A hereto (the "Buyers") and Earn-A-Car (PTY), LTD., a corporation organized under the laws of the Republic of South Africa ("EAC"). RECITALS WHEREAS, the Control Stockholder owns a total of 205,000,000 restricted shares of the Company's common stock ("Control Stock") which shares were not included in the Company's Registration Statement on Form S-1 number 333-165391ordered effective June 23, 2010 (the "Registration Statement"); and WHEREAS, Buyers desire to (i) acquire 78,750,000 shares out of the Control Stock in the amounts set forth on Schedule A (the "Sold Shares") and the Control Stockholder desires to sell the Control Stock for $150,000 (the "Purchase Price") and (ii) contribute of 100% of the capital of EAC (the "EAC Shares") (the "Contribution") and the Control Stockholder desires to sell all of his Sold Shares to EAC for $150,000 conditioned upon the Contribution and the Company is willing to accept the Contribution on the terms hereinafter set forth; and WHEREAS, all share numbers in this document have been adjusted to reflect a 50 for one forward stock split initiated in November 2011. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in reliance upon the representations and warranties hereinafter set forth, the parties agree as follows: 1. PURCHASE OF THE SHARES AND CONSIDERATION 1.1 Shares Being Purchased. Subject to the terms and conditions of this Agreement, at the closing provided for in Section 2 hereof (the "Closing"), the Control Stockholder shall sell, assign, transfer and deliver to EAC the Sold Shares. 1.2 Consideration. Subject to the terms and conditions of this Agreement and in consideration of the sale, assignment, transfer and delivery of the Sold Shares to the Buyers, at the Closing the Buyers shall transfer the EAC Shares to the Company and pay the Control Shareholder $150,000, said $150,000 (the "Cash Portion"), which Cash Portion the parties hereto recognize as already paid in full by Estripoint Capital Partners Limited, on behalf of EAC. If this Agreement shall be terminated, the Cash Portion shall be returned to Estripoint Capital Partners Limited as per Schedule A hereto. 2. THE CLOSING 2.1 Time and Place. The closing of the transactions contemplated by this Agreement shall be held at the offices of Gary B Wolff, 485 Madison Avenue - Suite 1100, New York, New York 10022 at 2:00 p.m. on December 7, 2011, or on such other date and at such other time and place as the parties may agree upon in writing (the "Closing"). 2.2 Deliveries by the Control Stockholder. At the Closing, the Control Stockholder shall deliver to the Buyers the stock certificate(s) representing the Sold Shares, duly endorsed or accompanied by stock power(s) duly executed in blank or otherwise in form acceptable for transfer on the books of the Company. 2.3 Deliveries by Buyers. At the Closing, the Buyers shall deliver the Purchase Price to the Control Stockholder and EAC Shares to the Company in form acceptable to counsel to the Company. 2.4 Cancelation. The Control Shareholder shall cause the remaining 126,250,000 shares owned by the Control Shareholder to be cancelled. 3. INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE CONTROL STOCKHOLDER The Control Stockholder, represents and warrants to EAC as follows: 3.1 Title. The Control Stockholder owns all of the Control Shares and all of the Sold Shares, and shall transfer to the Buyers at the Closing good and valid title to the Sold Shares, free and clear of all restrictions on transfer (other than any restrictions under federal and state securities laws), liens, claims, options, charges, pledges, security interests, and encumbrances of every kind, character or description. The Control Stockholder is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Company. 3.2 Valid and Binding Agreement. The Control Stockholder has the full and unrestricted right, power and authority and capacity to execute and deliver this Agreement and consummate the transactions contemplated herein. This Agreement has been duly executed and delivered by the Control Stockholder and constitutes the valid and binding obligation of the Control Stockholder, enforceable in accordance with its terms. 3.3 Non-contravention. The execution and delivery of this Agreement and consummation of the transactions contemplated hereby do not violate or conflict with or constitute a default under any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which the Control Stockholder is a party or by which the Control Stockholder or the Control Stockholder's property is bound, or to the knowledge of the Control Stockholder any existing applicable law, rule, regulation, judgment, or court order. The Control Stockholder is not and will not be required to give any notice to or obtain any consent from any Person in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. 3.4 Accurate Information. To the best of such Control Shareholder's knowledge, after due investigation; (i) the information filed by the Company pursuant to the Securities Act of 1933, as amended (the "1933 Act") and the Securities and Exchange Act of 1934, as amended (the "1934 Act") and (ii) the Company's representations and warranties hereunder are all true accurate and complete and do not omit any facts, necessary to make such documents or representations and warranties not misleading. 4. REPRESENTATIONS AND WARRANTIES OF THE BUYERS AND EAC. Each Buyer and EAC represents and warrants to the Company and the Controlling Shareholder as follows: 4.1 Authority. The Buyer has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated herein. This Agreement constitutes the valid and binding obligation of the Buyer, enforceable in accordance with its terms. (This representation is made by the Buyers only.) 4.2 Litigation. There is no claim, action suit or proceeding, at law or in equity, pending or threatened against Buyer affecting any of the EAC Shares, (nor, to the knowledge of the Buyer, is there any basis therefore) that might 2 result, either in any case or in the aggregate, in any material adverse change in the business of EAC, nor is there any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against the Buyer or relating to the EAC or the EAC Shares having, or which insofar as can be reasonably foreseen, in the future may have, any such effect. There is no claim, action, suit or proceeding by the Buyer currently pending or which Buyer intends to initiate that might potentially result in a counterclaim affecting EAC or the EAC Shares. . (This representation is made by the Buyers only.) 4.3 No Conflict. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not and will not conflict with, or result in a breach of any term or provision of, or constitute a default under or result in a violation of any agreement, contract, lease, license or instrument to which the Buyer is a party or by which it or any of his properties or assets are bound, or any judgment, decree, order, or writ by which EAC is bound or to which it or any of his properties or assets are subject. 4.4 Consent. No consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality is required by or with respect to the Buyer, EAC or the EAC Shares in connection with the execution and delivery of this Agreement or the consummation by the Buyer of the transactions contemplated herein. 4.5 Organization. 4.5(a) EAC is a corporation duly organized, validly existing, and in good standing under the laws of the Republic of South Africa; has the corporate power and authority to carry on its business as presently conducted; and is qualified to do business as a foreign corporation and is in good standing under the laws of each state in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the business or financial condition of the Company. 4.5(b) The copies of the Articles of Incorporation, and all amendments thereto, of the Company, as certified by the government of the Republic of South Africa, and the bylaws of EAC and all amendments thereto, as certified by the Secretary of EAC, which will be delivered to the Company for examination prior to the Closing, are complete and correct copies of the Articles of Incorporation and bylaws of EAC in effect on the date hereof. All minutes of meetings and actions in writing without a meeting of the Board of Directors and stockholders of EAC are contained in the minute book of EAC, which will be delivered to the Company for examination prior to the Closing, and no minutes or actions in writing without a meeting will be included in such minute book since delivery to the Company that will not also be delivered to the Company. The minute book of EAC contains complete and accurate records of all meetings and other corporate actions of its Board of Directors and stockholders. 4.6 Share Issuance Restriction. EAC covenants that after the Closing hereunder it will not sell any of its shares except to the Company, which shall be permitted to buy additional shares in EAC. 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to EAC as follows: 5.1 Authority. The Company has all requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated herein. The execution and delivery of this Agreement, and the consummation of the transactions contemplated herein, have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable in accordance with its terms. 3 5.2 Organization. 5.2(a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada; has the corporate power and authority to carry on its business as presently conducted; and is qualified to do business as a foreign corporation and is in good standing under the laws of each state in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so qualified would not have a material adverse effect on the business or financial condition of the Company. 5.2(b) The copies of the Articles of Incorporation, and all amendments thereto, of the Company, as certified by the Secretary of State of Nevada, and the bylaws of the Company and all amendments thereto, as certified by the Secretary of the Company, which will be delivered to EAC for examination prior to the Closing, are complete and correct copies of the Articles of Incorporation and bylaws of the Company in effect on the date hereof. All minutes of meetings and actions in writing without a meeting of the Board of Directors and stockholders of the Company are contained in the minute book of the Company, which will be delivered to EAC and Buyers for examination prior to the Closing, and no minutes or actions in writing without a meeting will be included in such minute book since delivery to EAC and Buyers that will not also be delivered to EAC and Buyers. The minute book of the Company contains complete and accurate records of all meetings and other corporate actions of its Board of Directors and stockholders. 5.3 Capitalization. 5.3(a) The authorized capital stock of the Company consists of 250,000,000 shares of Common Stock, $.0000001 par value, of which 238,750,000 shares are issued and outstanding and 20,000,000 shares of blank check Preferred Stock, $0.0000001 par value, of which there are no shares issued and outstanding or designated. All of the issued and outstanding shares of Common Stock of the Company are duly authorized, validly issued, fully paid and non-assessable, are not subject to preemptive rights created by statute, the Company's charter documents or bylaws or any agreement to which the Company is a party or by which it is bound, and were offered and sold in compliance with applicable state and Federal securities laws. 5.3(b) There are no outstanding options, warrants, subscriptions, calls, rights, demands, commitments, convertible securities or other agreements or arrangements of any character or nature whatsoever to which the Company is a party or by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, sold or delivered, additional shares of capital stock of the Company or obligating the Company to grant, extend or enter into any such option, warrant, subscription, call, right, demand, commitment, convertible security or other agreement. 5.4 Equity Investments. The Company does not own any capital stock or have any interest in any corporation, partnership, or other form of business entity. 5.5 Financial Statements. The Company has delivered to EAC copies of its audited balance sheet for the fiscal year ended December 31, 2010 (the "Balance Sheet") and the related audited statements of operations, changes in stockholders' equity and cash flows for the year ended December 31, 2010 together with appropriate notes to such financial statements, a copy of which is included in the Annual Report on Form 10-K filed by the Company with the SEC, and copies of its unaudited balance sheet as of September 30, 2011 and the related unaudited statements of operations, changes in stockholders' equity and cash flows for the three and nine month periods ended September 30, 2011 (the "Company Financial Statements"), a copy of which is included in the Company's Quarterly Report on Form 10-Q for the three month period ended September 30, 2011filed by the Company with the SEC. The Company Financial Statements have been prepared in accordance with generally accepted accounting principles 4 consistently applied, and present fairly the financial condition and results of operations of the Company at the dates and for the periods covered by the Company Financial Statements. 5.6 Absence of Liabilities. As of the date of the date of Closing, the Company does will not have any debts, liabilities, or obligations of any nature, including, but not limited to expenses and costs, stock transfer fees and accounting fees in connection with the Transaction contemplated by this agreement and any agreements relating to the Company or its shares entered into contemporaneously or substantially contemporaneously herewith. 5.7 Tax Returns. Within the times and in the manner prescribed by law, the Company has filed all federal, state, and local tax returns required by law and has paid in full all taxes, including, without limitation, all net income, gross receipts, sales, use, withholding, payroll, employment, social security, unemployment, excise and property taxes, plus applicable penalties and interest thereon (all such items are collectively referred to as "Taxes") due to, or claimed to be due by, any governmental authority. The Balance Sheet fully accrues all current and deferred Taxes. The Company has not been delinquent in the payment of any Taxes and has no tax deficiency or claim outstanding, proposed or assessed against it, and there is no basis for any such deficiency or claim. As of the date of Closing, the Company will not have any liability for Taxes which has not been paid or noted in the Company Financial Statements. 5.8 Litigation. There is no claim, action, suit, proceeding or investigation, at law or in equity, pending or threatened against the Company affecting any of its properties or assets or, to the knowledge of the Company, against any officer or director of the Company that might result, either in any case or in the aggregate, in any material adverse change in the business, operations, affairs or condition of the Company or any of its properties or assets, or that might call into question the validity of this Agreement, or any action taken or to be taken pursuant hereto, nor is there any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against the Company having, or which, insofar as can be reasonably foreseen, in the future may have, any such effect. 5.9 Compliance with Applicable Law. The Company has complied with all applicable laws, regulations, orders and other requirements of all governmental entities having jurisdiction over it and its assets, properties and operations, except in any case where the failure to comply would not have a material adverse effect on the business, assets or financial condition of the Company. The Company has not received any notice of any material violation of any such law, regulation, order or other legal requirement, and is not in material default with respect to any order, writ, judgment, award, injunction or decree of any governmental entity, applicable to the Company or any of its assets, properties or operations. 5.10 Contracts and Agreements. The Company is not a party to or bound by nor are any of its properties and assets subject to any contract, instrument, lease, license, agreement, guaranty, commitment or undertaking. 5.11 Employees; Employee Plans. The Company is not a party to or bound by any employment, consulting, or retainer agreement, or any profit-sharing, deferred compensation, bonus, savings, stock option, stock purchase, or incentive plan or agreement. 5.12 No Conflict. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not and will not conflict with or result in a breach of any term or provision of, constitute a default under or result in a violation of, the Articles of Incorporation or bylaws of the Company, as amended, any agreement, contract, instrument, lease, license, agreement or undertaking to which the Company is a party or by which it or any of its assets are bound, or any judgment, decree, order or writ by which the Company is bound or to which it or any of its assets or properties are subject. 5 5.13 Consent. The Company is not required to submit any notice, report, statement, or other filing with and no consent, approval, order or authorization by any Person is required to be obtained by the Company in connection with the execution and delivery of this Agreement, other than (a) such consents, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable state securities law and (b) such other consents, approvals, orders, authorizations, registrations, declarations and filings which if not obtained or made would not have a material adverse effect on the Company. 5.14 Stockholder List. A complete and accurate list of the stockholders of record of the Company will be delivered to EAC prior to the Closing. 5.15 Registration Rights. No Person has demand or other rights to cause the Company to file any registration statement under the Securities Act of 1933 relating to any securities of the Company or any right to participate in any such registration statement. 5.16 Compliance with Securities Laws. 5.16(a) All reports required to be filed by the Company with the Securities and Exchange Commission (collectively, the "Reports") have been properly filed and comply in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder with respect to such Reports. None of the filed Reports contain any untrue statement of a material fact, or fail to state any material fact required to be stated therein or necessary to make the statements made therein not misleading. 5.16(b) No formal or informal investigation or examination by the Securities and Exchange Commission or by the securities administrator of any state is pending or threatened against the Company. 5.16(c) The Company has not been convicted of any felony or misdemeanor in connection with the purchase and sale of any security or involving the making of any false filing with the Securities and Exchange Commission. 5.16(d) The Company is not subject to any order, judgment or decree of any court of competent jurisdiction, temporarily or preliminarily restraining or enjoining, or subject to any order, judgment or decree of any court of competent jurisdiction, permanently restraining or enjoining, the Company from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the Securities and Exchange Commission. 5.16(e) The Company does not have a class of securities registered under and is not subject to Section 12(g) of the Securities Exchange Act of 1934. 5.17 Investment Company. The Company is not required to be registered as an investment company under the Investment Company Act of 1940, as amended, and neither the Company nor its officers or directors are required to be registered as investment advisors under the Investment Advisor Act of 1940, as amended. 6. COVENANTS RELATING TO CONDUCT OF BUSINESS OF THE COMPANY During the period from the date of this Agreement and continuing until the Closing, the Company agrees (except as expressly contemplated by this Agreement or to the extent that each and every Buyer shall otherwise consent in writing) that: 6 6.1 Ordinary Course. The Company shall not conduct any business or engage in any activities other than activities related to the closing of the transactions contemplated by this Agreement. In such connection, the company further represents and warrants to EAC that since June 30, 2011, (a) there has not been any Material Adverse Change in the business, operations, properties, assets, or condition of the Company; (b) the Company has not (i) amended its Articles of Incorporation; (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any outstanding capital stock; (iii) made any material change in its method of management, operation, or accounting; (iv) entered into any material transaction; or (v) made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (c) The Company has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (ii) paid any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the most recent MNXU balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any material assets, properties, or rights, or canceled, or agreed to cancel, any material debts or claims; or (iv) made or permitted any material amendment or termination of any contract, agreement, or license to which it is a party; (d) Notwithstanding anything to the contrary in the foregoing, VRIS shall have divested itself of all of its assets and have not liabilities on the date of the Closing and all of the business operations of VRIS as described in the VRIS prospectus shall have been discontinued. 6.2 Dividends; Changes in Stock. The Company shall not and shall not propose to (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of capital stock of the Company, or (iii) repurchase or otherwise acquire any shares of its capital stock or rights to acquire any shares of its capital stock. 6.3 Issuance of Securities. The Company shall not issue, deliver or sell or authorize or propose the issuance, delivery or sale of, any shares of its capital stock of any class or securities convertible into, or rights, warrants or options to acquire, any such shares or other convertible securities. 6.4 Governing Documents. The Company shall not amend its Articles of Incorporation or Bylaws. 6.5 No Contracts or Undertakings. The Company shall not become a party to or become bound by or agree to become a party to or become bound by any contract, instrument, lease, license, agreement, commitment or undertaking. 6.6 No Obligations or Liabilities. The Company shall not incur or agree to incur any amount of long or short-term debt for money borrowed, or indemnify or agree to indemnify others, or incur or agree to incur any debts, obligations or liabilities whatsoever. 7. ADDITIONAL AGREEMENTS 7.1 Access to Information. (a) EAC shall afford to the Company and shall cause its independent accountants to afford to the Company, and its accountants, counsel and other 7 representatives, reasonable access during normal business hours during the period prior to the Closing to all information concerning the EAC and the EAC Shares, as the Company may reasonably request, provided that EAC shall not be required to disclose any information which he is legally required to keep confidential. The Company will not use such information for purposes other than this Agreement and will otherwise hold such information in confidence (and the Company will cause its consultants and advisors also to hold such information in confidence) until such time as such information otherwise becomes publicly available, and in the event of termination of this Agreement for any reason the Company shall promptly return, or cause to be returned, to the disclosing party all documents obtained from EAC, and any copies made of such documents, extracts and copies thereof. (b) The Company shall afford to EAC and shall cause its independent accountants to afford to EAC and its accountants, counsel and other representatives, reasonable access during normal business hours during the period prior to the Closing to all of the Company's properties, books, contracts, commitments and records and to the audit work papers and other records of the Company's independent accountants. During such period, the Company shall use reasonable efforts to furnish promptly to EAC such information concerning the Company as EAC may reasonably request, provided that the Company shall not be required to disclose any information that it is legally required to keep confidential. EAC will not use such information for purposes other than this Agreement and will otherwise hold such information in confidence (and EAC will cause his consultants and advisors also to hold such information in confidence) until such time as such information otherwise becomes publicly available, and in the event of termination of this Agreement for any reason EAC shall promptly return, or cause to be returned, to the disclosing party all documents obtained from the Company, and any copies made of such documents, extracts and copies thereof. 7.2 Communications. Between the date hereof and the Closing Date, the Company will not, without the prior written approval of the Buyers, furnish any communication to the public if the subject matter thereof relates to the other party or to the transactions contemplated by this Agreement, except as may be necessary, in the opinion of their respective counsel, to comply with the requirements of any law, governmental order or regulation. 7.3 No Shop. From the date of this Agreement until the earlier of (i) the Closing Date, or (ii) the termination of this Agreement; neither Company nor the Buyers shall cause their respective shareholders, officers, directors, employees and other agents to directly or indirectly, take any action to solicit, initiate or encourage any offer or proposal or indication of interest in a merger, consolidation or other business combination involving any equity interest in, or a substantial portion of the assets of itself, other than in connection with the transactions contemplated by this Agreement. Each of the parties hereto shall immediately advise the other party of the terms of any offer, proposal or indication of interest that it receives or otherwise becomes aware of. 7.4 Public Announcements. The Company, the Buyers and EAC shall consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and will not issue any such press release or make any such public statement prior to such consultation and without the written consent of the other party. 7.5 Notices of Certain Events. In addition to any other notice required to be given by the terms of this Agreement, each of the parties shall promptly notify the other party hereto of: (a) any notice or other communication from any person or entity alleging that the consent of such person or entity is or may be required in connection with any of the transactions contemplated by this Agreement; 8 (b) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; and (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge threatened against, relating to or involving or otherwise affecting such party that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Sections 3,4 and 5 (as the case may be) or that relate to the consummation of the transactions contemplated by this Agreement 8. CONDITIONS PRECEDENT 8.1 Conditions to Obligations of the Company. The obligations of the Company to consummate the transactions contemplated by this Agreement are subject to the satisfaction on or before the date of Closing of the following conditions, unless waived by the Company: (a) Representations and Warranties of the Buyers and EAC. The representations and warranties of the Buyers and EAC and set forth herein shall be true and correct in all material respects as of the date of this Agreement and on the date of the Closing. (b) Additional Closing Documents. The Company shall have received such other documents and instruments as are required to be delivered pursuant to the provisions of this Agreement or otherwise reasonably requested by the Company. 7.2 Conditions to Obligations of the Buyers. The obligations of the Buyers to consummate the transactions contemplated by this Agreement are subject to the satisfaction on or before the date of Closing of the following conditions unless waived by the Buyers: (a) Representations and Warranties of the Company. The representations and warranties of the Company set forth herein shall be true and correct in all material respects as of the date of this Agreement and on the date of Closing, and the Buyers and shall have received a certificate signed by an executive officer of the Company to such effect. (b) Election of Directors and Officers. Persons designated by the Buyers shall have been elected to the Board of Directors of the Company as well as its CEO and all of the Company's officers and directors shall have resigned. (c) Additional Closing Documents. The Buyers shall have received the following documents and instruments: (1) Certified resolutions of the Company's Board of Directors (a) authorizing the execution and delivery of this Agreement and the performance by the Company of its obligations hereunder, (b) electing persons designated by EAC as the officers and directors of the Company effective as of the date of Closing; (2) a current list of the Company's stockholders certified by the Company's stock transfer agent; (3) an indemnification agreement, in form and substance reasonably acceptable to the Buyers, EAC and its counsel wherein the Control Shareholder agrees to indemnify, defend and hold harmless each of the Buyers and EAC and the Company and any subsidiary or affiliate thereof and each person who is now, or has been at any time prior to the date hereof or who becomes prior to the Closing, a shareholder, officer, director or partner of EAC, any subsidiary or affiliate thereof or an employee of EAC, any subsidiary or affiliate thereof and their respective heirs, legal representatives, successors and assigns (the "EAC Indemnified Parties") against all losses, claims, damages, costs, expenses (including reasonable attorneys' fees), liabilities or judgments or amounts that are paid in settlement of or in connection with any threatened or actual third party claim, action, suit, proceeding or investigation based in whole or in part on or arising in whole or in part out of (i) any material breach of this Agreement by the Company or any subsidiary or affiliate thereof, including but not limited to inaccuracy or breach of any representation or warranty to be true and correct at or before the Closing, or (ii) any willful or grossly negligent act, omission or conduct of any officer, director or agent of the Company or any subsidiary or affiliate thereof prior to the Closing, whether asserted or claimed prior to, at or after, 9 the Closing and (4) such other documents and instruments as are required to be delivered pursuant to the provisions of this Agreement or otherwise reasonably requested by the Buyers or EAC. 9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES The representations and warranties contained herein shall survive the Closing, but shall expire on the first anniversary date following the date of Closing, unless a specific claim in writing with respect to these matters shall have been made, or any action at law or in equity shall have been commenced or filed before such anniversary date. Any investigations made by or on behalf of any of the parties prior to the date of Closing shall not affect any of the parties' obligations hereunder. Completion of the transactions contemplated herein shall not be deemed or construed to be a waiver of any right or remedy of any of the parties. 10. TERMINATION 10.1 Termination. This Agreement may be terminated at any time prior to the Closing Date: (a) by mutual written consent of the Company, the Controlling Stockholders and the Buyers; (b) by the Company or the Controlling Stockholders if there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement by EAC or the Buyers; or (c) by EAC or the Buyers if there has been a material breach of any representation, warranty, covenant or agreement contained in this Agreement by the Company or the Controlling Stockholder. 10.2 Effect of Termination. Termination of this Agreement in accordance with Section 11.1 may be effected by written notice from either the Company, the Control Shareholder, a Buyer, or EAC, as appropriate, specifying the reasons for termination and shall not subject the terminating party to any liability for any valid termination. 11. MISCELLANEOUS 11.1 Further Assurances. From time to time, at the other party's request and without further consideration, each of the parties will execute and deliver to the others such documents and take such action as the other party may reasonably request in order to consummate more effectively the transactions contemplated hereby. 11.2 Payment of Fees and Expenses. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 11.3 Parties in Interest. Except as otherwise expressly provided herein, all the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective heirs, beneficiaries, personal and legal representatives, successors and assigns of the parties hereto. 11.4 Entire Agreement; Amendments. This Agreement, including the Schedules, Exhibits and other documents and writings referred to herein or delivered pursuant hereto, which form a part hereof, contains the entire understanding of 10 the parties with respect to its subject matter. There are no restrictions, agreements, promises, warranties, covenants or undertakings other than those expressly set forth herein or therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended only by a written instrument duly executed by the parties or their respective successors or assigns. 11.5 Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 11.6 Pronouns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require. 11.7 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 11.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York as they are applied to contracts executed, delivered and to be performed entirely within such state. 11.9 Person. For purposes of this Agreement, the term "Person" shall mean any individual, corporation, partnership, joint venture or other business enterprise or entity and any governmental agency, federal, state or local. 11.10 Notices. Any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing and shall be validly given or made to another party if given by personal delivery, telex, facsimile, telegram or if deposited in the United States mail, certified or registered, postage prepaid, return receipt requested. If such notice, demand or other communication is given by personal delivery, telex, facsimile or telegram, service shall be conclusively deemed made at the time of receipt. If such notice, demand or other communication is given by mail, such notice shall be conclusively deemed given forty-eight (48) hours after the deposit thereof in the United States mail addressed to the party to whom such notice, demand or other communication is to be given as hereinafter set forth: If to EAC: At the address set forth below his name on the signature page of this Agreement. If to the Company or the At the address set forth below its name on the Controlling Shareholder: signature page of this Agreement. Copy to: Gary B. Wolff, P.C. 485 Madison Avenue New York, New York 10022 If to the Buyers or EAC: At the address set forth below their name on the signature page of this Agreement. Copy to: Frank J Hariton, Esq. 1065 Dobbs Ferry Road White Plains, NY 10607 11 11.11 Payment of Expenses. The Company and EAC shall each bear their own fees and expenses (including legal fees) incurred incident to the preparation and carrying out of the transactions contemplated herein. 12. APPOINTMENT OF AGENT The Company and the Controlling Stockholder hereby irrevocably constitute and appoint Gary B Wolff, P.C. as their true and lawful attorney (the "Agent") with full right and power in their names and stead to take any and all action by and on behalf of them necessary or desirable to consummate the transactions contemplated by this Agreement, including without limitation, the right and power to receive and distribute the Purchase Price upon their written instruction. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the parties hereto as of the date first above written. Victoria Internet Services, Inc. a Nevada corporation By: /s/ Leon Golden --------------------------------------- Leon Golden, President 2470 East 16th Street Brooklyn, NY 11235 Leon Golden, Individually 2470 East 16th Street Brooklyn, NY 11235 Earn-A-Car (PTY) Ltd By: /s/ John Storey --------------------------------------- John Storey, CEO Office 1 The Falls Centre Corner Great North and Webb Northmead, Benoni 1522 Union of South Africa BUYERS /s/ Greame Hardie --------------------------------- Graeme Hardie 12