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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
June 7, 2004 (May 25, 2004)
IMPROVENET, INC.
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(Exact name of registrant as specified in its charter)
Delaware 000-29927 77-0452868
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(State or other Jurisdiction (Commission (IRS Employer
of Incorporation File No.) Identification No.)
10799 N. 90th Street, Suite 200
Scottsdale, Arizona 85260
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(Address of Registrant's Principal Executive Offices) (Zip Code)
(480) 346-0000
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(Registrant's telephone number, including area code)
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Items in Form 8-K
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Page
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Facing Page .......................................................... 1
Item 2. Acquisition or Disposition of Assets ........................ 3
Item 7. Financial Statements and Exhibits ........................... 3
Signatures ........................................................... 4
Exhibit Index ........................................................ 4
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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The Registrant reached agreement on a payment plan related to the arbitration
award rendered in the arbitration matter in Phoenix, Arizona involving its
wholly owned subsidiary, First Systech International, Inc., now known as
eTechLogix, Inc. The Registrant has previously disclosed information related to
the status of the arbitration matter in its filings on Form 10-QSB and Form
10-KSB. The agreement involves only First Systech International and does not
directly involve the Registrant. This proceeding concerned the 1998 sale of an
ERP software product license to a client who demanded a refund of the purchase
price, and First Systech International counterclaimed for the balance due on the
contract plus additional work performed and professional expenses of the
arbitration. The matter was before an arbitrator who entered an award against
First Systech International for $116,886 plus simple interest at 10% per year.
Friedman Corporation, to whom First Systech International had sold all right,
title, and interest to the ERP software product in an October 2000 transaction,
made payment of this arbitration award, and pursuant to provisions of an
indemnification agreement dated July 3, 2002 and related to Friedman's purchase
of the ERP software product, sought reimbursement from First Systech
International. First Systech International has reached agreement with Friedman
pursuant to terms and conditions of a Repayment and Security Agreement effective
May 25, 2004 (the "Agreement") which finalizes a payment plan for First Systech
International's obligations for the arbitration award that Friedman has paid.
Currently, the amount owing is approximately $182,000 with interest accruing at
8% per annum from April 2, 2004 and attorney's fees incurred by Friedman in the
minimum amount of $4,500 and not to exceed $10,000 as set forth therein.
Payments of $5,000 per month commencing June 20, 2004 are to be made with annual
increases of a minimum of $5,000 per month until the outstanding balance is paid
in full. Pursuant to provisions of the Agreement, First Systech International
has granted a security interest and lien on all of its assets to secure
performance of its obligations under the Agreement. First Systech International
continues to maintain ownership of all of the assets that it has pledged. The
Agreement allows First Systech International to quantify its specific payment
obligations for the arbitration award.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS.
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(c) Exhibits.
Exhibit No. Description
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99.1* Repayment and Security Agreement executed
effective May 25, 2004
* Filed herewith
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMPROVENET, INC.
By: /s/ Jeffrey I. Rassas
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Jeffrey I. Rassas,
Dated: June 7, 2004 CEO
EXHIBIT INDEX
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Exhibit No. Description
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99.1* Repayment and Security Agreement executed
effective May 25, 2004
*Filed herewith
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