Item
7.01 Regulation FD Disclosure
“Safe
Harbor” statement under the Private Securities Litigation Reform Act of 1995:
This release contains forward looking statements identified by the use of words
such as should, believes, plans, goals, expects, may, will, objectives,
missions, or the negative thereof, other variations thereon or comparable
terminology. Such statements are based on currently available information which
management has assessed, but which is dynamic and subject to rapid change due
to
risks and uncertainties that affect our business, including, but not limited
to,
other risks detailed from time to time in the Company’s filings with the
Securities and Exchange Commission. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, goals, assumptions or future events or performance
are
not statements of historical fact and may be forward looking statements. Forward
looking statements involve a number of risks and uncertainties which could
cause
actual results or events to differ materially from those presently anticipated.
Item
8.01 Other Events.
IJJ
Corporation (“IJJ”), the registrant, announces that on March 7, 2006 its
wholly-owned operating subsidiary, Management Solutions and Systems, Inc.
(“MSSI”), filed a petition for protection under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the District of Maryland, Case
No. 06-11211. The bankruptcy filing was made pursuant to a resolution approved
by MSSI’s Board of Directors on March 7, 2006. In MSSI’s Bankruptcy Schedule B -
Personal Property, it lists an unliquidated claim against IJJ for payments
made
by MSSI to cover IJJ’s costs related to IJJ’s status as a SEC reporting company
and to the costs associated with IJJ’s “reverse merger” transaction with its
predecessor, Sun & Surf, Inc. (“SSI”).
According
to MSSI’s Disclosure Statement filed on September 19, 2006 (“Disclosure
Statement”), many of the problems which impelled MSSI into its Chapter 11 case
stem from a series of complex securities transactions comprising the “reverse
merger,” which occurred in late 2003 and early 2004. The “reverse merger”
involved SSI, a public corporation shell incorporated in New York, which thereby
became the parent and sole shareholder of MSSI. Shortly after the transaction
had been completed, in February 2004, SSI changed its name to IJJ Corporation.
More information regarding the reverse merger transaction is available in IJJ’s
Form 10-KSB/A for the fiscal year ending October 31, 2004, filed by IJJ
Corporation, which is on file with the U.S. Securities and Exchange Commission
(“SEC”) and is also available online through the SEC website, www.sec.gov.
MSSI’s
Disclosure Statement states further that since MSSI is the only operating
entity, and with SSI (IJJ) having no operating business of its own, all of
the
costs of the reverse merger transaction were paid for by MSSI, including paying
for IJJ’s continuing reporting obligations imposed under the Federal securities
laws. MSSI asserts that the reverse merger/recapitalization transaction cost
approximately $572,000 in legal and management consulting fees. IJJ burdened
MSSI with these costs, and some of which are still unpaid. There are also some
substantial obligations which IJJ obliged took on itself and did not pass along
to MSSI which still remain unpaid. According to the Disclosure Statement, IJJ
presently owes MSSI approximately $400,000 and has been deemed uncollectible
by
MSSI.
With
regard to IJJ’s ownership of MSSI, an overview of MSSI’s Plan of Reorganization
filed on September 19, 2006 (the “Plan”) follows. IJJ, MSSI’s sole shareholder,
owes approximately $400,000 to MSSI relating to MSSI’s financial support of
various activities of IJJ relating to IJJ’s status as an SEC reporting company
and relating to the “reverse merger” transaction which led to the present
ownership structure. This debt is considered to be uncollectible by MSSI
according to Schedule B of MSSI’s bankruptcy schedules as filed.
IJJ’s
management believes that it is not able to contribute “new value” so as to be in
a position to retain its stock ownership position in MSSI. Consequently, the
Plan provides that the stock in MSSI owned by IJJ will be cancelled. Larry
L.
Brooks, the president and CEO of MSSI, will become the new sole shareholder
of
MSSI as new stock will be issued to Mr. Brooks in consideration of a “new value”
capital contribution of $30,000.00, to be paid after confirmation of the Plan
by
the Bankruptcy Court. This capital contribution will be part of the funding
for
the initial payment to the general unsecured creditors, in addition to earnings
from post-petition operations.
According
to MSSI, the importance of the Plan’s proposed recapitalization extends well
beyond the value of the $30,000.00 contribution. Mr. Brooks is the “key man” to
the company in terms of future operations, and his retention in a management
position is considered to be crucial to the future success of the company.
Several key MSSI personnel have indicated that they would not remain with the
company if Mr. Brooks were to leave or be replaced from his present position.
Furthermore, MSSI asserts that the success which the Company has enjoyed while
in bankruptcy is due primarily to Mr. Brooks’ expertise in marketing and to the
personal relationships built up over a period of time between Mr. Brooks and
the
procurement personnel of the various customer agencies. Some of these agencies
have expressed particular confidence in Mr. Brooks’ ability to operate the
company and, it is believed, Mr. Brooks’ retention as CEO is essential to the
retention of major customer contracts and major lender, especially MSSI’s HUD
contract. Finally, the fact that Mr. Brooks is a service-disabled veteran has
made it possible for the company to qualify for set-aside or preferential
programs administered by the U.S. Small Business Administration (“SBA”), similar
to the SBA’s Section 8(a) program, which is expected to expand contracting
opportunities in the future. Under this program, businesses which qualify as
owned by service-disabled veterans are eligible for preferred status in
procurement; the current target of the program is to assure that 3 percent
of
government contracts are “set aside” for such businesses.
IJJ’s
disinterested Board of Directors met to discuss the adequacy of disclosure
in
MSSI’s Disclosure Statement and merits of MSSI’s proposed Plan of Reorganization
as supported by the appointed Official Committee of Unsecured Creditors. IJJ’s
disinterested Board of Directors has determined that IJJ has no other business
other than the business of MSSI; has no assets or means to make any payments
due
MSSI; has no financial means to provide “new value” to MSSI to retain its stock
ownership interest in MSSI; and, has no financial means to propose an
alternative confirmable Plan.
IJJ’s
disinterested Board of Directors does not intend to object to the adequacy
of
the disclosure contained in MSSI’s Disclosure Statement. IJJ’s disinterested
Board of Directors intends to vote in favor of confirmation of the Plan, if
a
vote is required by applicable rules under the Bankruptcy Code.