SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20509
FORM 8-K-A2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
October 16, 1998
Date of Report
(Date of Earliest Event Reported)
CHEROKEE MINERALS AND OIL, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 02-23729 87-0575839
(State or other juris- (Commission File No.) (IRS Employer
diction of incorporation) I.D. No.)
12222 South 1000 East, Suite #1
Draper, Utah 84020
(Address of Principal Executive Offices)
(801) 553-8790
Registrant's Telephone Number
8989 South Scofield Circle
Sandy, Utah 84093
(Former Address of Principal Executive Offices)
Item 1. Changes in Control of Registrant.
(a) On November 12, 1998, the Registrant and Environmental Systems &
Solutions, Inc., a Nevada corporation ("ESSI"), executed a Agreement and Plan
of Reorganization (the "Plan") as outlined in the Letter of Intent between the
Registrant and ESSI dated October 16, 1998 (see the 8-K and the 8-K/A1 Current
Reports dated October 16, 1998, Item 7, which have been previously filed with
the Securities and Exchange Commission and which are incorporated herein by
reference), whereby the Registrant, subject to the approval of persons owning
not less than 80 percent of outstanding voting securities of ESSI, would
acquire a controlling interest in ESSI, and ESSI would become a majority owned
subsidiary of the Registrant.
The initial offer in a stock for stock exchange was made only to
"accredited investors" and the first 35 non-accredited investors who executed
and delivered a copy of the Plan. As of the closing on December 11, 1998,
ESSI stockholders representing 19,326,244 of the 22,080,000 shares to be
issued under the Plan (approximately 91% of the ESSI stockholders) had
executed and delivered the Plan. It is the intention of management to
continue to attempt to acquire 100% of the outstanding voting securities of
ESSI, on the same terms and conditions afforded the ESSI stockholders who have
already become party to the Plan.
The Plan was adopted, ratified and approved by the Board of
Directors of the Company at a special meeting held on December 11, 1998.
The former principal stockholders of the Registrant and their
percentage of ownership of the outstanding voting securities of the Registrant
prior to the completion of the Plan were: Joe K. Johnson, former President and
Director, owned 2,118,000 shares of the Registrant (47.4%); Melinda Johnson,
former Secretary/Treasurer and Director (and wife of Joe K. Johnson), owned
947,340 shares of the Registrant (21.2%); and Chiricahua Company, owned
947,340 shares of the Registrant (21.2%). Chiricahua Company is wholly-owned
by David C. Merrell, a former director and executive officer of the
Registrant.
As a part of the Plan, the foregoing persons and certain others
agreed to cancel 2,554,539 of the 4,474,539 outstanding pre-Plan shares of
common voting stock of the Registrant, leaving the pre-Plan outstanding shares
at 1,920,000; taking into account the 19,326,244 shares of "restricted
securities" of the Registrant issued under the Plan on its closing on December
11, 1998, there are currently 21,246,244 shares of common stock of the
Registrant issued and outstanding.
The source of the consideration used by ESSI and the ESSI
stockholders to acquire their respective interests in the Registrant was the
exchange of 100% of the outstanding common stock of ESSI pursuant to the Plan.
The basis of the "control" by the ESSI stockholders is stock
ownership or positions held. Pursuant to the Plan, the then members of the
Board of Directors and executive officers resigned, in seriatim, and the
persons named in paragraph (b) below were designated to serve as directors and
executive officers of the Registrant, until the next respective annual
meetings of the stockholders and directors of the Registrant or until their
prior resignations or terminations.
A Preliminary Proxy Statement has been filed with the Securities
and Exchange Commission respecting a resolution of the Board of Directors
providing for an amendment to the Articles of Incorporation changing the name
of the Registrant to "Hydro-Maid International, Inc." This Preliminary Proxy
Statement was filed with the Securities and Exchange Commission on or about
December 15, 1998, and is incorporated herein by reference. See Item 7.
A copy of the Plan, including any material exhibits and related
instruments, was attached to the 8-K-A1 Current Report which was filed with
the Securities and Exchange Commission on December 9, 1998, and is
incorporated herein by reference. See Item 7.
(b) To the knowledge of management and based upon a review of the
stock ledger maintained by the Registrant's transfer agent and registrar, the
following table sets forth the beneficial ownership of persons who own more
than five percent of the Registrant's common stock as of the date hereof, and
the share holdings of new management, to wit:
Amount and Nature Percent
of Beneficial of
Name Title Ownership Class
Culley W. Davis CEO and Chairman 7,000 .000291%
Ronald L. LaFord President -0- -0-
Mark S. Brewer Vice President 36,000 .0015%
Paul A. Kujanpas Vice President -0- -0-
of Manufacturing
John W. Nagel CFO -0- -0-
Bruce H. Haglund, Esq. Secretary and Director 72,000 .003%
All directors and executive 115,000 .00479%
officers as a group (6)
Item 2. Acquisition or Disposition of Assets.
See Item 1 of this Report. The consideration exchanged under the
Plan was negotiated at "arms length" between the directors and executive
officers of the Registrant and ESSI, and the members of the Board
of Directors of the Registrant used criteria used in similar proposals
involving the Registrant in the past, including the relative value of the
assets of the Registrant; its present and past business operations; the future
potential of ESSI; its management; and the potential benefit to the
stockholders of the Registrant. The members of the Board of Directors
determined in good faith that the consideration for the exchange was
reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be an
affiliate of the Registrant had any direct or indirect interest in ESSI prior
to the completion of the Plan, except Joe K. Johnson, the former President and
a director of the Registrant, owned 18,000 shares of ESSI which will be
exchanged for 72,000 "restricted securities" of the Registrant under the Plan.
Business
ESSI was incorporated in 1992 to acquire the patents to HYDRO-MAID ,
a water-powered garbage disposal. This new product is the only water-powered,
totally non-electric garbage disposal on the market. Following extensive
research, development and market testing, ESSI launched the HYDRO-MAID in
1997.
The patented water driven disposal system has many advantages. The
disposal is quieter than typical garbage disposals because it has no electric
motor, which reduces operating costs. Since it requires no electrical hookup,
the cost of installation is also reduced. The HYDRO-MAID also provides
important safety advantages.
The system has five uniquely designed stainless steel cutting blades
that work powerfully together as they oscillate back and forth cutting food
waste into much finer particles than previously possible. This process
greatly reduces the risk of clogging pipes and increases the assimilation of
the waste back into the earth's ecosystem, helping improve the environment.
HYDRO-MAID processes chicken bones, banana peels, whole stalks of celery,
avocado pits and nut shells which cannot be handled by traditional electric
disposals.
HYDRO-MAID's unique design ensures the system will not damage items
such as silverware if accidentally dropped into the unit. If this happens,
the oscillating motion shifts automatically into a harmless "servo" mode until
the object is removed, leaving the silverware free of damage.
HYDRO-MAID accomplishes its task using no more water than an electric
disposal. The same water that powers the five cutting blades also cycles
through the system and flushes the food particles down the drain.
The market for the HYDRO-MAID is any dwelling, new or old, that has a
kitchen sink including single family homes, apartments and condominiums. The
Registrant is developing a commercial model for large food handling
establishments.
ESSI is dedicated to creating a positive impact on the environment.
To keep any discarded HYDRO-MAIDs to adding to the pressure on overcrowded
landfills, ESSI has a ten year warranty and a buy back/recycle policy that
allows the Registrant to melt down and recycle all elements of all repurchased
HYDRO-MAIDs.
Assets
Cash
Receivables-a minor amount for some installment sales of Hydro-Maid
through the infomercial advertising program.
Inventory-Our supplier in Sandwich, IL has shipped 1,520 units to
ESSI which have not been sold to others as of December 11, 1998. 1,280
of these units are enroute to Japan as of the closing date, but are
still in ESSI's inventory until they arrive in Japan. The remaining
units are in the ESSI warehouse in Draper, Utah. Further, there are
some additional work-in-progress units in the supplier's factory in
Sandwich; these would equate to approximately 2,500 finished units.
Property, Plant and Equipment
Rental space: 8,100 square feet (2,100 SF for warehouse, 6,000 SF
for offices) in Draper, Utah, at a monthly lease cost of about
$6,500, with about $50,000 in leasehold improvements of ESSI.
Furniture and Fixtures: FF for six offices and a reception area,
plus a product display and demonstration facility in the lobby of
the rented space. This product demonstration facility is
occasionally transported to various trade show sites, then
returned to the showroom site. There is another demonstration
unit in storage.
Tooling: Tools and dies for the manufacture of the product
situated in our contractors' plants in Sandwich, IL, and China,
plus additional tooling being built by a contractor in China.
Vehicles: 1999 Ford Powerstroke, double cab truck and trailer that
have been painted and equipped to serve as a mobile promotion and
demonstration unit.
Intangibles
Promotion and advertising materials: there is a fully produced 1/2
hour infomercial and other advertising and promotional materials.
Patents: Ten issued and five pending, all US.
Deferred Organization and startup costs.
Management
Names Title or Position Age
Culley W. Davis CEO and Chairman 43
Ronald L. LaFord President 52
Mark S. Brewer Vice President 41
Paul A. Kujanpas Vice President 39
of Manufacturing
John W. Nagel CFO 58
Bruce H. Haglund, Esq. Secretary and Director 47
Resumes
Culley W. Davis, Chief Executive Officer and Chairman of the Board
Mr. Davis was the founder of ESSI and since its inception in 1992 has
held various positions including, President, Secretary, Chief Financial
Officer, Treasurer, and Director. Mr. Davis currently holds the positions of
Chief Executive Officer and Chairman of the Board of ESSI. Since 1992, Mr.
Davis has also served as Chief Executive Officer and Chairman of the Board of
Dancor, Inc., the developer of Vitroseal (trademark), a patented coating
technology for the metal coating market. From 1989 until 1992 Mr. Davis was
President and Chief Executive Officer of Lubrication Research, Inc., a company
engaged in the development and marketing of technology used in the automobile
industry. During the period of 1984 until 1990, Mr. Davis founded and served
as President of Vencor International, Inc., a developer of form-fitted,
reusable, cloth diapers for medical and non-medical applications. From 1979
until 1984 Mr. Davis founded and operated Capital Diamond Corporation, a
diamond and jewelry wholesaling company.
In May 1996, Mr. Davis entered into a stipulation for judgment and
permanent injunction (the "Injunction") with the Department of Finance of the
State of Idaho (the "State") in connection with a complaint (the "Complaint")
filed by the State alleging that Mr. Davis violated provisions of the Idaho
Securities Act. In accordance with the Injunction, Mr. Davis paid a $50,000
fine to the state and was permanently enjoined from violating the Idaho
Securities Act, from offering or selling unregistered securities in Idaho, and
from transacting securities business in Idaho without applicable securities
licenses.
Ronald L. LaFord, President
Mr. LaFord has been serving as President and a member of the Board of
Directors of ESSI since September 1997. From March 1994 until September 1997,
Mr. LaFord served as Director of National Marketing and Advertising for Flying
J Corporation, a Utah based company engaged in the development and operation
of truck stops and service stations. From 1986 to 1994, he served in various
capacities for Citizens Utilities Company including, Director of
Administration and Supply, Managing Coordinator of Marketing and Sales and
Coordinator of Vehicle Procurement and Maintenance. From 1980 until 1985, Mr.
LaFord was a Senior Manager for Union Carbide Corporation. From 1974 until
1979, he was a Senior Consultant for General Telephone and Electronics (GTE).
Mr. LaFord received his A.A. degree in Civil Engineering and B.A. degree in
Marketing and Business Administration from Central Washington University. He
is a graduate of the General Telephone and Electronics School of Management.
Mark S. Brewer, Vice President
Mr. Brewer has been Vice President and a member of the Board of
Directors of ESSI since September 1997. He also serves as President of Search
International and Onkli Incorporated. Search International was founded by Mr.
Brewer in 1990 for the purpose of developing and marketing new products. He
founded Onkli Incorporated in 1991 for the purpose of creating and packaging
consumer houseware products. In 1979, Mr. Brewer joined Advertising
Professionals, a full service advertising agency which he acquired in 1989 and
operated until 1996.
Paul A. Kujanpaa, Vice President of Manufacturing
Mr. Kujanpaa has been Vice President of Manufacturing of ESSI since July
1998. From 1997 to 1998, he served as Senior Manager of Order Fulfillment and
Logistics for Haworth Inc. From 1994 until 1997, Mr. Kujanpaa was a
Management Consulting Manager for Grant Thornton LLP, the country's seventh
largest accounting and management consulting firm. During the period of 1991
to 1993, he held the position of Senior Management Consultant for Booz, Allen
& Hamilton, an international management consulting firm ranked among the top
five in the world. From 1989 until 1991, Mr. Kujanpaa worked as Management
Consultant for A.T. Kearney Incorporated, an international management
consulting firm based in Chicago, Illinois. During the period of 1988 to
1989, Mr. Kujanpaa was a partner of and Engineer Consultant for Metz and
Associates Incorporated, a manufacturing engineering consulting firm which was
sold to A.T. Kearney Incorporated in 1989. From 1986 to 1988, he held the
position of Manufacturing Engineering Consultant for Ingersoll Engineers
Incorporated of Rockford, Illinois. Mr. Kujanpaa received his B.S. in
Manufacturing Engineering from Brigham Young University.
John W. Nagel, Chief Financial Officer
Mr. Nagel joined ESSI as Chief Financial Officer and a member of the
Board of Directors in September 1998. From 1988 to August 1998, Mr. Nagel
served as Director of Finance for WVUE Television of New Orleans, Louisiana.
During the period of 1983 to 1988, he was operator and part owner of several
franchised ice cream parlors. From 1980 to 1983, Mr. Nagel held positions in
administration and management for The Nautilus Group, Inc., a poultry
incubation equipment manufacturer and portable electronic stage lighting
system manufacturer. From 1968 to 1980, Mr. Nagel worked for Arthur Anderson
& Co. in numerous capacities relating to consulting for the design and
implementation of computer-based management information systems. He served as
an officer in the U.S. Navy Supply Corps from 1962 to 1966. Mr. Nagel was
awarded his M.B.A. degree from Harvard University and his B.S. degree in
accounting from Ohio State University.
Bruce H. Haglund, Secretary and Director
Bruce H. Haglund has served as a Director and Secretary of ESSI since
September 1998. Mr. Haglund has practiced law in Orange County, California
since 1980. Since April 1994, Mr. Haglund has been a principal in the law
firm of Gibson, Haglund & Johnson. From February 1991 to April 1994, Mr.
Haglund was a principal in the law firm of Phillips, Haglund, Haddan &
Jeffers. From 1984 to February 1991, he was a partner in the law firm of
Gibson & Haglund. He is member of the Board of Directors of Santa Barbara
Restaurant Group, Inc. and the Secretary of Metalclad Corporation, a public
company whose stock is traded on the NASDAQ Small Cap Market. Mr. Haglund
is also the Secretary and a member of the Board of Directors of Aviation
Distributors, Inc. and Renaissance Golf Products, Inc., public companies whose
stock is traded on the OTC/BB. He is a graduate of the University of Utah
College of Law.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
None; not applicable.
Item 5. Other Events.
See Item 1. Also, the Registrant's new symbol on the OTC Bulletin
Board is "HYII."
Item 6. Resignations of Registrant's Directors.
See Item 1.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(a) Financial Statements of Business Acquired.
Financial statements for the year ended December 31, 1997 (audited)
and September 30, 1998 (unaudited) will be filed on or before
February 24, 1999, which is 75 days after the closing of the Plan on
December 11, 1998.
(b) Pro Forma Financial Information.
Pro Forma financial statements are being prepared and will be filed
on or before February 24, 1999, which is 75 days after the
completion of the Plan on December 11, 1998.
(c) Exhibits.
99 News Release dated December 11, 1998.
Preliminary Proxy Statement filed December 15, 1998*
8-K-A1 Current Report filed December 9, 1998*
Agreement and Plan of Reorganization
Exhibit A-List of ESSI Shareholders
Exhibit B-Letter of Intent*
Exhibit C-Schedule of Options and Contingent
Issuance of Shares
Exhibit D-Exceptions
Exhibit E-ESSI Patents
Exhibit F-ESSI Bank Accounts
Exhibit G-Cherokee Exceptions
Exhibit H-Cherokee Financial Statements*
Exhibit I-Cherokee Bank Accounts
Exhibit J-Form of Power of Attorney
Stockholders letter to ESSI's letter to Stockholders
regarding the Plan
8-K Current Report filed October 21, 1998*
Letter of Intent dated October 16, 1998, regarding
proposed reorganization
Press Release regarding same dated October 19, 1998
10-QSB dated September 30, 1998*
10-SB filed February 5, 1998 with the Securities and Exchange
Commission*
Audited Financial Statements for the years ended December
31, 1997 and 1996
Initial Articles of Incorporation
Articles of Merger dated January 15, 1973
Certificate of Amendment to
Articles of Incorporation dated May 10, 1973
respecting name change
Certificate of Amendment to
Articles of Incorporation dated July 16, 1973
Setting Board of Director numbers
Certificate of Amendment to
Articles of Incorporation dated May 14, 1974
respecting name change and authorized capital
Certificate of Amendment to
Articles of Incorporation dated October 8, 1976
respecting name change
Certificate of Amendment to
Articles of Incorporation dated February 25,
1980 respecting name change
Certificate of Amendment to
Articles of Incorporation dated April 5, 1996
respecting reverse split
Certificate of Amendment to
Article of Incorporation dated January 29, 1998
respecting par value change
Financial Data Schedule
* Incorporated herein by reference.
Item 8. Change in Fiscal Year.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
CHEROKEE MINERALS AND OIL, INC.
Date: 12/16/98 By:/s/Culley W. Davis
--------------------------------------
Culley W. Davis
CEO and Chairman of the Board of Directors
Cherokee Minerals and Oil, Inc.
8989 South Scofield Circle
Sandy, Utah 84093
PRESS RELEASE DECEMBER 11, 1998
Sandy, Utah. Cherokee Minerals and Oil, Inc. ("Cherokee") announced
today that it has closed its Agreement and Plan of Reorganization for the
acquisition of all of the outstanding shares of common stock of Environmental
Systems & Solutions, Inc. ("ESSI"), based in Draper, Utah, in a tax-free,
stock-for-stock reorganization. In accordance with the terms of the
Reorganization, the shareholders of ESSI have acquired 91% of the outstanding
shares of Cherokee. The former shareholders of Cherokee own approximately
1,920,000 shares and the former shareholders of ESSI will own approximately
22,080,000 shares, including shares reserved for issuance in accordance with
formerly outstanding ESSI stock options.
In conjunction with the Reorganization new Directors were elected
including; Culley W. Davis, Ronald L. LaFord, Mark S. Brewer, John W. Nagel
and Bruce H. Haglund. The following Officers were also appointed; Culley W.
Davis as the Chairman of the Board and Chief Executive Officer, Ronald L.
LaFord as President and Chief Operation Officer, Mark S. Brewer as Vice
President, John W. Nagel as Chief Financial Officer, and Bruce H. Haglund as
Secretary.
The Company intend to act immediately to change its name to Hydo-Maid
International, Inc., to more closely reflect the business of the Company.
The HydroMaid is the only non-electric, completely water-powered
garbage disposer in the world. Instead of using a conventional electric
motor, the HydroMaid is powered by common household water pressure from the
existing cold water line to the kitchen sink. Water pressure drives a
patented servomechanism, which in turn oscillates five stainless steel cutting
blades. The blades cut food waste into small particles, reducing drain
clogging problems and promoting faster decomposition as an aid to the
environment. In addition to the normal kitchen refuse
processed by conventional garbage disposers, HydroMaid easily and quietly
processes chicken bones, corn husks, potato peelings, stalks of celery,
avocado pits, nut shells, and other fibrous food waste that most conventional
garbage disposers have difficulty processing. However, if
silverware is accidentally dropped into the HydroMaid, the oscillating motion
shifts automatically into a harmless mode until the object is removed, damage
free.
The HydroMaid will be marketed at a suggested retail price in the
United States of $299.95. With its simple design and sturdy construction, the
dependable HydroMaid will carry an unprecedented 10-year, unconditional
replacement warranty. While broken electric-powered disposers are sent to
landfills, ESSI will purchase old HydroMaid units for $10 per unit and offer a
$25 rebate on replacement units to recycle many of the HydroMaid's component
parts. ESSI is currently completing its manufacturing, assembly, and
distribution arrangements and anticipates that full-scale sales efforts will
commence in the first quarter of 1999.
For further information, contact John W. Nagel, Chief Financial
Officer of ESSI (801-553-8753).
