UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g)
of the Securities Exchange Act of 1934
DISTRIBUTION MANAGEMENT SERVICES, INC.
(Name of Small Business Issuer in its Charter)
Florida 65-0574760
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
11601 Biscayne Boulevard - #201
Miami, Florida 33181
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(Address of Principal Executive (Zip Code)
Offices)
Issuer's Telephone Number:
(305) 893-9273
Securities to be registered pursuant to Section 12(b) of the Act:
None
----
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, no par value per share
------------------------------------
(Title of Class)
<PAGE>
PART I
ITEM l. DESCRIPTION OF BUSINESS
(a) Business Development
Distribution Management Services, Inc. ("Distribution" or the
"Company"), was incorporated in Florida on January 25, 1995. The Company was
formed specifically to operate a construction and demolition recycling center.
In furtherance of its business plan, the Company acquired a tract of land at
2000 N. Miami Avenue, Miami, Florida and caused same to be zoned for operation
as a recycling center. The recycling center was licensed with the Florida
Department of Environmental Regulation ("DERM") on July 6, 1995. The license is
renewable annually, through Miami-Dade County, Florida, upon payment of $2,100.
The Company constructed the buildings and placed the improvements on
the land and obtained a temporary Certificate of Occupancy from the City of
Miami on December 4, 1998. It commenced operations on or about February 1, 1999.
The permanent Certificate of Occupancy was obtained from the City of Miami on
June 24, 1999 upon compliance with all state, county and city regulations. These
certificates are issued by the City of Miami to permit occupancy and use of the
facility. The permanent Certificate of Occupancy requires no renewals or
reissuance.
(1) Principal Operations, Services and Markets.
The Company, through a third party operator, operates a
transfer station (also referred to herein as the recycling center) at the site
which provides contractors, truckers and demolition companies, under state
supervision, a conveniently located facility where recyclable materials from
demolition or new construction jobs can be segregated into usable or waste
categories. Once segregated, the materials are disposed of in accordance with
the requirements of DERM.
Materials from the demolition or construction of buildings,
such as aluminum, glass, cardboard, paper, wood and like materials are
segregated and sold to junk dealers. The materials are then sold by such dealers
to manufacturers and are subsequently used in the manufacture of recycled goods
of a like kind. Materials which are not recyclable are delivered to a landfill
operated by Peerless Dade, Inc., at 15490 N.W. 97th Avenue, Miami, Florida. This
landfill is operated under license from Miami-Dade County, Florida. There are
several other landfills scattered in locations throughout Miami-Dade County.
In addition to the transfer station, the Company is exploring
the possibility of expanding its operations into other areas of environmental
concern including the acquisition of a landfill which would be operated in
conjunction with the Company's recycling center and trucking facilities which
would enable the Company to provide a full service operation to contractors and
developers. Management expects that once the recycling center begins to
regularly receive approximately 1,200 yards of material daily, which is
anticipated to occur in the first half of the 2000 fiscal year based upon
current levels, it will finalize its decision to develop the proposed trucking
operations.
In connection with its desire to develop its own trucking
operations, the Company expects to seek financing to acquire fifty, twenty yard
containers which are rented by developers and building contractors to collect
and dispose of construction and demolition waste material for removal from job
sites. Containers typically cost from $2,000 to $3,000 each. Additionally, two
heavy duty Mack trucks at a cost of approximately $35,000 each would initially
be purchased for the trucking operations. Purchase of such equipment is subject
to available financing which can customarily be obtained through regular
automobile finance companies. The Company will then use its own trucking
facilities for "pick up" from construction and demolition sites throughout
Miami-Dade County and Broward County, Florida. Revenues from these operations
are anticipated to be in the range of $650,000 to $1,000,000 per annum once full
operations commence although there can be no assurances that these revenue
levels will be attained.
Presently the Company derives its income solely from its
Amended Operation Agreement (the "Agreement") with Peerless Dade, Inc., the
owner and operator (the "Operator") of the landfill at 15490 N.W. 97th Avenue,
Miami, Florida. The Agreement was entered into by the Company and the Operator
on December 22, 1998, and is for a period of five years with four automatically
renewable terms of one year each. The Operator also has an option to purchase
the property and recycling center (collectively, the "Center") during the
initial five year term of the Agreement at a purchase price of from 115% to 175%
(determined by which year of the Agreement the option is exercised) of
$1,300,000 which was set by the Company and the Operator based, in part, upon
the Company's investment in the recycling center.
The Operator charges construction or waste removal companies
"tipping fees" of $7.00 to $7.50 per yard for dumping of construction waste or
demolition materials at the transfer station which, on average, will receive
from 500 to 1,000 yards of material per day. The Agreement provides for the
Company to receive 6% of the gross amount collected by the Operator from
"tipping fees" for the first 450 yards of materials received each day and 10%
for all yardage received in excess of 450 yards per day. Notwithstanding the
foregoing, pursuant to the terms of the Agreement and commencing in June 1999,
the Operator retains 50% of the Company's share of the gross amount collected by
the Operator until the advance made by the Operator on behalf of the Company in
the sum of $75,000 to obtain the Use Permit for the recycling center from the
City of Miami has been repaid. Interest on the unpaid balance accrues at the
rate of 7% per annum. As of October 31, 1999, the most recent date for which
figures are available, the amount owed to the Operator, including all accrued
interest, was $59,129.34.
The Operator provides all machinery for the operation and
assumes all costs, expenses and maintenance of the operation of the recycling
center. Under the terms of the Agreement, the Company is responsible for the
payment of mortgages, real estate taxes, permits and licenses (which taxes,
permits and licenses cost approximately $2,500 per year in the aggregate) and
any capital improvements.
The transfer station is presently receiving an average of 650
yards of materials per day which constitutes approximately $8,700 per month in
revenues received by the Company, less amounts withheld to repay the $75,000
advance from the Operator.
<PAGE>
(2) Distribution Methods.
Construction and demolition waste materials are delivered to
the recycling center by independent truckers who pay a fee of $7.00 to $7.50 per
yard as "tipping fees" to dispose of the materials. The materials are then
segregated into categories mandated by DERM and are then removed by truckers to
junk dealers or landfill operations. At the present time, the Company does not
handle the materials once they are removed from the Company's transfer station.
If the required financing can be obtained, the Company intends, as set forth
above, to purchase a landfill and acquire the necessary equipment to transport
the materials to the Company's landfill, thereby establishing additional sources
of revenue.
(3) Status of Publicly Announced Products or Services.
On or about December 15, 1998 the Company announced that the
recycling center would be open and ready to receive construction and demolition
waste materials on or about January 15, 1999. On February 1, 1999, the recycling
center opened for formal business and continues in operation through the current
date. At the time of the announcement, the Company was not a reporting company
and, therefore, not subject to the safe-harbor protections of the Private
Securities Litigation Reform Act as set forth in its press release at such time.
(4) Competitive Business Conditions.
The issuance of permits for the operation of facilities
similar to the Company's recycling center are extremely limited. There are
presently no similar facilities available to contractors and waste removal
companies in the City of Miami. Management believes that no additional permits
in proximity to the Company's recycling center will be issued in the near
future. Accordingly, management does not anticipate that it will be subject to
significant competition in the foreseeable future.
(5) Dependence on Major Customer.
The Company's income is presently solely dependent on the
Operator who is the exclusive operator for the recycling center pursuant to the
Agreement. The existence of the Agreement may have an adverse effect on the
income received by the Company since the volume of business is controlled by the
Operator. The Agreement provides, however, that the Operator is required to
exercise commercially reasonable efforts to maximize the business operations of
the recycling center. In the event that the Operator fails to fulfill its
obligations under the Agreement, the Company believes that it would be able to
terminate the Agreement and operate the facility or obtain other operators to do
so on more favorable terms to the Company.
(6) Intellectual Property.
The Company has no intellectual property.
<PAGE>
(7) Governmental Approval.
The Company's recycling center has been approved by and
operates under licenses issued by the State of Florida, City of Miami and
Miami-Dade County, Florida, all in accordance with the regulations imposed by
DERM and enforced through the City of Miami and Miami-Dade County, Florida. As
of the date of this filing, all licenses and permits are in good standing. The
Solid Waste Operating Permit issued, through DERM by Miami-Dade County, Florida,
must be renewed annually.
(8) Governmental Approval, Regulation and Environmental Compliance.
The Company and the Operator are subject, directly and
indirectly, to regulations and various laws of the State of Florida, City of
Miami and Miami-Dade County, Florida relating to the operation of the Company's
business. The Company and the Operator are in material compliance with all
applicable laws relating to the Company's business and operations, particularly
the requirements of DERM which has required that the Company file a
Contamination Assessment Plan (the "Plan"). The Plan was filed with DERM on
September 16, 1999. The Plan was prepared by LandScience, Inc. Environmental
Consultants. LandScience, Inc., whose office is located at 2124 NE 123rd Street,
#206, North Miami, Florida 33181, specializes in environmental concerns. All
groundwater samples from the recycling center were previously submitted to DERM.
On September 1, 1999, Leo Greenfield, the President and a
director of the Company, was individually charged by the State of Florida
with "littering" in violation of Fla.Stat. 403.413(4) which is a third degree
felony and carries a maximum penalty of up to five years imprisonment and a
possible $5,000 fine. Such charge is based on a claim that 22 barrels of liquid
material pumped from a ground storage tank during construction of the facility
were temporarily stored by the contractor in a fenced-off alley adjoining the
Company's property. At such time, Leo Greenfield was not an officer or director
of the Company. Three months prior to the charges being made, the barrels and
material were disposed of in accordance with the requirements and approval of
DERM and in accordance with all environmental regulations. Mr. Greenfield denies
any violation of such statute or wrongdoing of any kind and intends to
vigorously defend this asserted claim.
(9) Research and Development.
The Company is not involved with any research or development
at this time.
(10) Employees and Facilities.
As of the present time the Company has no paid employees. The
President and the Secretary of the Company presently serve without compensation
and have provided the services required to establish the Company's current
business and operation.
The Company's executive offices are located in, and
substantially all of its operating activities are conducted from, the offices of
the President without charge to date. The President is under no continuing
obligation to provide the use of the Company's executive offices free of charge
Management believes that as the Company expands its operations it will enter
into an appropriate
<PAGE>
lease agreement for such facilities as may be necessary for conducting its
operations. Any such lease agreement is expected to be on such terms and
conditions as customary for similar facilities in the Company's geographical
area. The Company's operations are conducted from facilities located on real
property owned by the Company.
(11) Reports to Security Holders.
Prior to filing this Form 10-SB, the Company has not been
required to deliver annual reports. To the extent that the Company is required
to deliver annual reports to security holders through its status as a reporting
Company, or as may be required by the rules or regulations of any exchange upon
which the shares of the Company are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go to the expense of producing and delivering such reports. If the
Company is required to deliver annual reports they will contain audited
financial statements as required.
Prior to the filing of this Form 10-SB the Company has not
filed any other reports with the Securities and Exchange Commission. Once the
Company becomes a reporting company, management anticipates the Forms 3, 4, 5,
10-KSB, 10-QSB, 8-K and Schedules 13D along with appropriate proxy materials
will be filed as they come due. If the Company issues additional shares, the
Company may file additional registration statements for those shares.
The public may read and copy materials the Company files with
the Securities and Exchange Commission at the Commission's Public Reference Room
at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1.800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The Internet
address of the Commission's site is (http://www.sec.gov).
(d) Year 2000 Disclosure.
Since the Company does not presently require extensive
accounting procedures, it is not presently employing any computer facilities. As
its operations expand and computer facilities are required, it will install
systems which are new and are Year 2000 compliant. With respect to the Company's
non-information technology systems, management does not anticipate a problem at
the turn of the century. The Company has discussed the Year 2000 issue with the
Operator to determine the extent to which its computer systems (insofar as they
relate to the Company's business) are Year 2000 compliant and has been assured
that they are so compliant. The Company is currently unable to predict, however,
the extent to which the Year 2000 issue will affect the Operator"s vendors, and,
in turn, the Company, or the extent to which the Company would be vulnerable to
a vendor's failure to remediate any Year 2000 issue on a timely basis. The
failure of a major vendor subject to the Year 2000 to convert its systems on a
timely basis or a effect a conversion that is incompatible with the Operator's
systems could potentially have an adverse effect on the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION.
Results of Operation
The Company received an aggregate of approximately $490,000
from the proceeds of its private placement offering and exercise of its
warrants. A portion of these funds were used for payment of construction costs
of approximately $280,000 in the aggregate. As of August 31, 1999, the Company
had cash on hand of approximately $ 37,800. During the quarterly period ended
August 31, 1999, payments were made against various obligations of the Company,
including the payment of $135,000 in connection with certain litigation. For the
year ended May 31, 1999 the Company received revenues from the operation of the
recycling center of approximately $7,315 based upon the four months that the
facility was open and operating. This amount represents the Company's 6% share
of revenues pursuant to the Operation Agreement described in Note 8 to the
Company's audited financial statements and there were no deductions made for the
then outstanding $75,000 loan made by the Operator. For the quarter ended August
31, 1999, the Company received approximately $12,807 in revenues after deduction
for loan payments due the Operator which have been deducted on a monthly basis
commencing June 1, 1999 and will continue to be deducted until paid in full. As
of October 31,1999, the amount owed to the Operator, including accrued interest,
was approximately $59,100.
The gross volume of materials delivered to the recycling
center averaged approximately 650 yards per day in October 1999 which is
approximately 30% less than the anticipated volume of 1,000 yards per day. The
daily volume, however, continues to increase. The Operator regularly solicits
business throughout Miami-Dade County and Broward County, Florida through
telephone and direct mail advertising Management anticipates that as more
contractors and waste disposal companies become familiar with the convenient
location of the facility and with the continual increase of demolition and
construction activity in downtown Miami and Miami Beach, revenues will continue
to improve during the fourth quarter and thereafter.
Liquidity and Capital Resources
-------------------------------
There has been a steady monthly increase in the number of cubic yards
being delivered to the recycling center which, in turn, increases the monthly
revenue received by the Company pursuant to the Operation Agreement. The monthly
gross revenue received by the Company from February 1999, when the recycling
center commenced operations, through October 31, 1999, has increased from
$164.88 to $8,681.59, respectively. Management believes that these numbers
represent a positive upward trend in the amount of materials that are being
delivered to the recycling center on a daily basis. Management is in the process
of obtaining a commitment to refinance the current mortgage on the recycling
center which it anticipates will occur in the first quarter of 2000. If the
mortgage cannot be refinanced prior to its due date in February 2001, management
expects that the mortgagor will extend the maturity date. The refinanced amount
of the mortgage is expected to be $700,000.
<PAGE>
After repayment of the existing mortgage, the balance of the loan due
the Operator and approximately $80,000 due in settlement of all litigation,
management anticipates that the remaining $180,000 balance, together with cash
flow from revenues which is expected to average approximately $ 10,000 to
$12,000 per month during fiscal 2000, will be sufficient to finance the
Company's working capital requirements for the next 12 months, including the
funds required to pay the expected $7,000 per month mortgage expense. The
existing litigation is related to materialmen's liens in connection with the
construction of the facility in the approximate amount of $30,000 and a lawsuit
claiming an ownership interest in the loan to purchase the Company's real
property. The balance of the cash required to settle the latter lawsuit is
$50,000 and shares of the Company's common stock. There are no future expenses
expected in connection with this litigation. The Company's monthly cash
operating expense averages approximately $6,000, which amount is not expected to
materially increase based upon current operations. If the Company is unable to
refinance its existing mortgage and cannot secure alternative funding necessary
to satisfy its existing obligations, it may be unable to continue as a going
concern.
If the Company refinances its existing mortgage and satisfies its
other outstanding obligations from the proceeds therefrom, it may seek
additional financing in connection with the possible expansion of its business
to include trucking and landfill operations. Such funding will likely come from
conventional sources of financing, including automobile financing companies for
the trucks, the availability of which cannot be assured, and there is no
assurance that the terms of such financing, if available, will be satisfactory
to the Company. If such financing is not available, the Company may seek to
raise funds through the sale of the Company's debt and/or equity securities, the
successful sale of which, if any, cannot be assured.
There are currently outstanding two loans from related parties in the
principal sum of $49,000 and $150,000, respectively. Both loans are due upon
demand and bear interest at the applicable Federal rate. The Company may repay
these loans from the proceeds of the anticipated mortgage refinancing. The
Company and each of the lenders have agreed to execute promissory notes for the
principal amount of each loan at the same annual interest rate with maturity
dates of February 2001. In the event that these notes are not repaid when due,
management expects that the maturity dates will be extended by the lenders.
These related parties have no obligation to make any further loans to the
Company in the future notwithstanding that they have made loans in the past.
From time to time, the Company may evaluate potential acquisitions
involving complementary businesses, services, products or technologies. The
Company has no present agreements or understanding with respect to any such
acquisition. The Company's future capital requirements will depend on many
factors, including acquisitions, if any, growth of the Company's customer base,
economic conditions and other factors including the results of future
operations.
The Company currently has no paid employees. If operations are expanded
through growth or acquisitions, the Company will hire personnel to meet these
needs and may enter into employment agreements with its President or others to
oversee its operations. The number of employees which may be hired will be
determined by the continuity or modification of the present Agreement and/or its
expansion into the trucking and container operations and/or acquisition of a
landfill. The number of employees actually hired will be based on the Company's
ability to support the increased cost through cash flow generated by such
business.
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY
The Company is the owner in fee simple of a tract of land comprising
approximately 32,000 square feet located at 2000 North Miami Avenue, Miami,
Florida, upon which it has constructed the recycling center. The recycling
center is enclosed by an 8' high concrete wall, and consists of a 5,000 square
foot open operations building and a 900 square foot office facility. The
remaining areas of the site are appropriately paved and drained and are used as
receiving areas. The improvements were financed in part by a mortgage loan from
an unaffiliated third party in the aggregate amount of $375,000 which bears
interest at 12% per annum payable monthly until maturity on February 1, 2001.
The executive offices are maintained at the private offices of the
President located off-site at 11601 Biscayne Blvd, Suite 201, Miami, Florida
33181. If additional executive offices are required, such facilities will be
leased at an appropriate location. The Company is not in the business of
investing in real estate or real estate mortgages.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) 5% Shareholders.
The following information sets forth certain information as of November
19, 1999, about each person or entity who is known to the Company to be
beneficial owners of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
Title of Class of Beneficial Owner Beneficial Ownership Percent of Class(1)
- -------------- ------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Common CEDE & CO.
P.O. Box 222
Bowling Green Station
New York, NY 10274 1,241,000 24.6%
Common Empresas Flagler SA
Cable Beach Court
1 West Bay Street
Nassau, Bahamas 380,000 7.5%
Common Fidra Holdings, Inc.
Cable Beach Court
1 West Bay Street
Nassau, Bahamas 570,000 11.3%
<PAGE>
Common F.M.S. Distributors,
8700 N.W. 47th Drive
Coral Springs, FL 33067 500,000 9.9%
(b) Security Ownership of Management:
Title Name and Address Amount and Nature of
of Class of Beneficial Owner Beneficial Ownership Percent of Class(1)
- -------------- ------------------- -------------------- -------------------
Common Double D, Inc.
1721 Trafalgar Circle
Hollywood, FL 33069 1,200,000 23.8%
</TABLE>
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(1) All percentages are calculated based upon 5,050,000 shares issued and
outstanding as of the date of filing this Form 10-SB.
(2) Double D, Inc. is a Florida corporation. 100% of the common stock of
Double D, Inc. is owned by Barbara Greenfield, vice president and a
director of the Company, and the wife of Leo Greenfield, President of
the Company. For the purposes of Rule 13(d), Mr. Greenfield claims
beneficial ownership of these shares with his wife.
(3) Double D, Inc. has committed to deliver 100,000 shares of the 1,200,000
shares of the Company's restricted common stock it owns to Maria Elena
Lopez de Mendoza, Secretary and a director of the Company, for
administrative services provided to the Company without remuneration
from the Company since March 1998
(c) Changes in Control:
There is no arrangement which may result in a change of control.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
(a) Directors and Executive Officers.
As of November 19, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the date of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors, are as follows:
<PAGE>
<TABLE>
<CAPTION>
Period Served
Name Age Position as Director *
- ---- --- -------- -------------
<S> <C> <C> <C>
Leo Greenfield 75 President and Director March 1999 to Present
Barbara Greenfield 61 Vice President and March 1998 to Present
Director
Maria Elena
Lopez de Mendoza 59 Secretary and Director March 1998 to Present
</TABLE>
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* The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed by the Board of Directors and serve at the pleasure of
the Board and subject to employment agreements, if any, approved and ratified by
the Board.
* From inception until March 1999, Romolo Egidi was President and a director of
the Company.
(b) Business Experience:
Leo Greenfield, age 75, has been President and a director of the
Company since March 1999. He is also the vice president of Double D, Inc., a
privately held Florida holding company with no operations or business, which is
a major shareholder of the Company. From May 1997 to March 1998, he acted as
business consultant for the Company in arranging the financing for and
supervising construction of the Company's facilities. In March 1998, he became
the General Manager of the Company. He still serves in that capacity although he
has now become President and Director of the Company. He holds an LLB Degree
from the University of Miami (1948) and a BSBA Degree from the University of
Miami (1950). He served as a fighter pilot in the U.S. Army Air Corps
(1943-1946) in the European Theater. He was award the Purple Heart, the Belgian
Fourragere, Presidential Unit Citation and Air Medal with three Clusters. He
practiced law in Florida from 1948 through 1990. He was an instructor of law at
the University of Miami Law School during 1952-1954. In 1990 he was convicted of
obstruction of justice and resigned from The Florida Bar. He has served on the
boards of Mercantile National Bank, Miami Beach, Florida, Capital National Bank,
Miami, Florida and Curtiss National Bank of Miami Springs, Florida. He has been
owner and operator of resort hotels in Miami Beach, Florida, built and owned
apartment buildings and shopping centers in South Florida and has been employed
as a hotel consultant. On September 1, 1999 Mr. Greenfield was individually
charged by the State of Florida with "littering" in violation of Fla.
Stat.403.413(4), a class three felony with a maximum penalty of five years
imprisonment and possibly up to a $5,000 fine, based on a claim that 22 barrels
of liquid material were pumped from a ground storage tank during construction of
the facility by the contractor and during the time that Mr. Greenfield was not
an officer or director of the Company. They were temporarily stored in a
fenced-off alley adjoining the Company's property. These barrels and the
material were disposed of in accordance with the requirements and approval of
DERM and all environmental regulations three months prior to the charges being
made and. Mr. Greenfield denies any violation of such statute or wrongdoing of
any kind and intends to vigorously defend this asserted claim.
<PAGE>
Barbara Greenfield, age 61, has been Vice President and a director of
the Company since March 1998. She is president of Double D, Inc., a majority
shareholder of the Company. Ms. Greenfield has been employed as a controller and
consultant in designing computer programs. From 1977 through 1996 she was
employed as controller of all books and records at the Law Firm of Leo
Greenfield, P.A., and its successor Harvie DuVal, P.A. d/b/a Greenfield & DuVal.
In 1998 she was employed by Panciera Funeral Homes in Hollywood, Florida and
designed a computer program for their Pre-Need Division. She was formerly
co-owner and co-operator of an apartment building at 1500 N.E. 145th Street,
North Miami, Florida until 1981 when it was sold, and an office building at 1680
N.E. 135th Street, North Miami, Florida 33181, from 1972 until 1994 when it was
sold. She is presently involved in the ownership and management of Powergate
Plaza, a shopping center located in Pompano Beach, Florida. Ms. Greenfield
attended the University of Miami and graduated from the School of Interior
Design, a private design school. She is a licensed practitioner and has been
active in the field since 1969. She continued her education in computing at
Florida International University from 1990 through1997 and has become skilled in
the field of computer operation.
Maria Elena Lopez de Mendoza, age 59, has been Secretary and Director
of the Company since March 1998 and has been providing administrative services
to the Company since such time. She had previously been employed by Mr.
Greenfield, President of the Company, since 1973 in both the operation of his
law office as well as various business enterprises in which he had been engaged.
She is highly skilled in computer operations. She graduated from Merici Academy,
Havana, Cuba, with a degree in Business.
(c) Directors of Other Reporting Companies:
None of the Company's executive officers or directors is a director of
any company that files reports with the Securities and Exchange Commission.
(d) Employees:
In addition to the officers and directors described, the Company
presently employs no other persons.
(e) Family Relationship:
Leo Greenfield and Barbara Greenfield, President/Director and Vice
President/Director of the Company, respectively, have been married since 1959.
No other family relationship exists between the officers or any other person who
may be selected as a director or executive officer of the Company.
(f) Involvement in Certain Legal Proceedings:
None of the officers, directors, promoters or control persons of the
Company have been involved in the past five (5) years in any of the following:
<PAGE>
(1) A bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceedings.
(3) Being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, or any Court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities.
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities laws or commodities law, and the judgment
has not been reversed, suspended, or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
The Company did not compensate prior management in the years ended
December 31, 1998, 1997 and 1996, since it did not engage in business during
those years, nor is it presently compensating its officers or directors. It does
intend at a future date to enter into employment contracts with its officers for
compensation on a reasonable basis as may be approved by the board of Directors.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Annual Restricted Under- Other
Name and Compen- Stock lying LTIP Comp-
Principal Position Year Salary Bonus sation Awards Option Payouts ensation
- ------------------ ---- ------ ----- ------ ------ ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leo Greenfield 1998 None None None None None None None
President/Director 1997 None None None None None None None
1996 None None None None None None None
Barbara Greenfield 1998 None None None None None None None
Vice President/Director 1997 None None None None None None None
1996 None None None None None None None
Maria Elena 1998 None None None None None None None
Lopez de Mendoza 1997 None None None None None None None
Secretary/Director 1996 None None None None None None None
</TABLE>
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past two (2) years, the Company has not, entered
into a transaction with a value in excess of $60,000, with an officer or
director, a beneficial owner of 5% or more of the Company's common stock, except
as disclosed in the following paragraph.
From inception of the Company in 1995 until September 1997,
Romolo Egidi and Dorothy Egidi, his wife, through their wholly owned
corporation, All Florida Demolition, Inc., owned 100% of the common stock of the
Company. On September 23, 1997, the Company issued 1,200,000 shares of common
stock to Double D., Inc., in consideration for arranging and obtaining financing
and providing consulting and supervisory services to the Company, upon payment
of $.001 per share to the Company. As of such date, the shares issued to Double
D, Inc. represented 50% of the issued and outstanding shares of the Company. Mr.
Egidi continued as President and a director of the Company until his resignation
in March 1999 and in June 1999 All Florida Demolition, Inc. sold all of the
shares it owned to six unrelated persons and entities.
On or about December 31, 1997, Double D, Inc., a company owned
by Leo Greenfield, President and a director of the Company, and Barbara
Greenfield, Vice President and a director of the Company, loaned the Company
$150,000. The note is payable upon demand and bears interest at the applicable
Federal rate. The proceeds of this loan provided additional funding for the
construction of the facility.
From approximately May 1998 through December 1998, Greenfield
and DuVal, P.A. loaned the Company an aggregate of approximately $49,000. This
sum is due upon demand and bears interest at the applicable Federal rate. The
proceeds of this loan provided additional funding for the construction of the
facility.
Double D, Inc., a major shareholder of the Company which is
owned and controlled by Leo Greenfield and Barbara Greenfield, both directors
and President and Vice President, respectively, of the Company, has committed to
issue 100,000 shares of the 1,200,000 shares of the Company's common stock which
it owns to Maria Elena Lopez de Mendoza, Secretary and a director of the
Company, in consideration for services she has provided to the Company without
remuneration since March 1998.
ITEM 8. DESCRIPTION OF SECURITIES
The Company's Articles of Incorporation authorize the issuance of
15,000,000 shares of common stock, no par value per share. There is no preferred
stock authorized. Holders of shares of common stock are entitled to one vote for
each share on all matters to be voted on by the stockholders. Holders of shares
of common stock are entitled to share ratably in dividends, if any, as may be
declared from time to time by the Board of Directors in its discretion from
funds legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of shares are entitled to share pro rata
all assets remaining after payment in full of all liabilities. Holders of common
stock have no preemptive or other subscription rights, and there are no
conversion rights or redemption or sinking fund provisions with respect to such
shares.
<PAGE>
PART II.
ITEM 1. MARKET PRICE OF AND DIVIDENDS OF REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS.
Market Information:
The Company's common stock currently trades in the "pink sheets" under
the trading symbol "DMGS". The Company's common stock was listed for trading on
the over-the-counter bulletin board (OTC:BB) on August 17, 1998, but became
ineligible to continue trading on November 3, 1999 because its Form 10-SB was
not effective as of such date. The Company intends to apply for listing on the
OTC:BB once it commences reporting under the Securities Exchange Act of 1934.
The following table sets forth the highest and lowest bid prices for
the common stock for each calendar quarter and subsequent interim period since
the common stock commenced actual trading, as reported by the National Quotation
Bureau, and represent interdealer quotations, without retail markup, markdown or
commission and may not be reflective of actual transactions:
Fiscal 1998 High Bid Low Bid
Third Quarter 2.375 2.375
Fourth Quarter 4.00 3.00
Fiscal 1999
First Quarter 5.375 2.00
Second Quarter 5.75 1.4375
Third Quarter 5.50 1.50
September1- November 3* 3.50 1.50
------------------------------------------------
* Since November 3, 1999, the Company's common stock no longer trades
on the OTC:BB.
There can be no assurance that an active public market for the common
stock will continue or be sustained. In addition, the shares of common stock are
subject to various governmental or regulatory body rules which affect the
liquidity of the shares.
Holders:
There were approximately 26 holders of record of the Company's common
stock as of November 19, 1999.
<PAGE>
Dividends:
The Company has never paid cash dividends on its common stock and does
not intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
ITEM 2. LEGAL
The Company is a party to the following legal proceedings:
a. Suit filed in May 1999 in the Circuit Court, in and for
Miami-Dade County, Florida, Case No. 99-13058 CA 10, Central Concrete v.
Distribution Management Services, Inc., seeking $26,484.93 pursuant to a claim
for payment in connection with construction materials provided to the Company.
The Company has filed affirmative defenses. The case is currently at issue but
no trial date has been set. Management believes that it will settle this matter
prior to trial.
b. Suit filed in March 1998 in the Circuit Court, in and for
Miami-Dade County, Florida, Case No. 98-6581 CA 02 (03). Ronald L. Book v.
Romolo Egidi, et al. Plaintiff claimed an ownership interest in the real
property on which the recycling center is located which collateralized a loan
previously made to the Company to purchase the property. The case was settled
and the Court dismissed the suit but retained jurisdiction to reinstate the
claim in the event the Agreement to Settle and Standstill Agreement entered into
on July 7, 1999, is not complied with. A payment was made by the Company to the
plaintiff in the amount of $135,000, with an agreement to make payment of an
additional sum of $50,000 on or before December 31, 1999. Management intends to
comply with the agreement and make payment in accordance with the said claim.
There is an agreement in principal to settle a cross claim made by another party
which, like the main claim, asserts an interest in the loan made to the Company
to purchase the real property, for shares of the Company's common stock with a
value of $215,000. This settlement agreement has not yet been finalized and no
shares have been issued in connection with this suit.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with the Company's
independent auditor.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On September 23, 1997, the Company issued an aggregate of 2,400,000
shares of common stock to the following:
<PAGE>
All Florida Demolition, Inc. 1,200,000
Double D, Inc. 1,200,000
^
The shares issued to All Florida Demolition were issued in connection
with the recapitalization of the Company and in accordance with an exemption
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"). The shares issued to Double D, Inc. were for services
rendered to the Company at a value of $0.10 per share. The certificates for
these shares bear a restrictive legend restricting transferability under the
Securities Act.
On April 30, 1998, the Company issued an aggregate of
1,200,000 shares of common stock to the following:
Vistra Growth Partners, Inc. 500,000
Devken, Inc. 300,000
Cort Poyner 300,000
Toho Partners 100,000
The shares issued to Devken, Inc., Cort Poyner, Vistra Growth
Partners, Inc. and Toho Partners were for services rendered in connection with
certain environmental matters pertaining to operations and the location of
available landfills for potential acquisition by the Company in accordance with
an exemption provided with Section 4(2) of the Securities Act at a value of
$0.10 per share. All certificates representing these shares bear a restrictive
legend restricting transferability under the Securities Act.
On July 10, 1998, the Company issued an aggregate of 500,000 shares of
its common stock at a purchase price of $.10 per share and 950,000 warrants to
the following in accordance with an exemption from registration provided by Rule
504 of Regulation D promulgated under the Securities Act. Thereafter, on or
about March 4, 1999, upon exercise of all the warrants at an exercise price of
$.40 per share for 850,000 shares and $1.00 for 100,000 shares, an additional
950,000 shares of common stock were issued.
<TABLE>
<CAPTION>
Name and Address Shares
---------------- ------ Shares Issued on
Originally Issued Warrants Exercise of Warrants
----------------- -------- --------------------
<S> <C> <C> <C>
IRAKLIS BOUREKAS 50,000 95,000 95,000
57-51 224th Street
Bayside, NY 11364
KYRIAKI BOUREKAS 10,000 19,000 19,000
37-14 23rd Avenue
Astoria, NY 11705
PAULINO BRITO 10,000 19,000 19,000
55 East 210th Street
Apt. 1G
Bronx, NY 10467
<PAGE>
IAN BROWN 10,000 19,000 19,000
85 Dairy Drive
Acton, Ontario
Canada LZJ2X9
PAUL MARKKUS 50,000 95,000 95,000
494 La Guardia Place
Apt. 2B
New York, NY 10012
EUGENIA KALOGERAS 20,000 38,000 38,000
53-11 250th Street
Little Neck, NY 11362
MARKELLA KATOS 25,000 47,500 47,500
23-17 41st Street
Astoria, NY 11105
KALIOPI LIAKARIS 20,000 38,000 38,000
24-64 Cadillac Drive
East Meadow, NY 11554
PERRY MALLAS 20,000 38,000 38,000
879 71st Street
Brooklyn, NY 11228
VIVIE MATHEOS 50,000 95,000 95,000
33-29 158th Street
Flushing, NY 11358
GILBERTO MONTEIRO 50,000 95,000 95,000
90-50 184th Place
Hollis, New York 11423
PARASKEVI PAPPAS 10,000 19,000 19,000
2476 Cadillac Drive
East Meadow, NY 11554
FEDERICO PENA 5,000 9,500 9,500
817 - 40th Street R
Brooklyn, NY 11232
ANDREW PIRGOUSIS 10,000 19,000 19,000
33-49 159th Street
Flushing, NY 11359
GEORGE PIRGOUSIS 50,000 95,000 95,000
33-23 158th Street
Flushing, NY 11358
ANNA RIZOS 20,000 38,000 38,000
226-11 Horrace Harding
Expressway
Bayside, NY 11364
<PAGE>
NICK SARAGIAS 10,000 19,000 19,000
23-21 121st Street
College Point, NY 11356
CHRYSANTOS TENTOMAS 50,000 95,000 95,000
425 Glenn Drive
Shirley, NY 11967
KIKI TSIAKAS 20,000 38,000 38,000
24-64 Cadillac Drive
East Meadow, NY 11554
JOSE RENALDO
QUINTEROS 10,000 19,000 19,000
1163 Stratford Avenue
New York, NY 10472
</TABLE>
The issuance of the foregoing shares was pursuant to an exemption from
registration provided by Rule 504 of Regulation D. Accordingly, the certificates
representing all of the shares, which were issued prior to April 7, 1999, do not
bear a restrictive legend restricting transferability under the Securities Act.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0850 of the Florida Business Corporation Act (the "FBCA")
allows the Company to indemnify any person who was or is a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the Company, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
liability incurred in connection with such proceeding, including any appeal
thereof, if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he or she reasonably believed to be in,
or not opposed to, the best interests of the Company or, with respect to any
criminal action or proceeding, such person had reasonable cause to believe that
his or her conduct was unlawful.
Section 607.0850 of the FBCA also allows the Company to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed proceeding by or in the right of the Company to
procure a judgment in the Company's favor by reason of the fact that such person
is or was a director, officer, employee or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
<PAGE>
indemnification shall be authorized if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the Company. Indemnification shall not be made for any claim, issue
or matter as to which such a person has been adjudged by a court of competent
jurisdiction determining, after exhaustion of all appeals therefrom, to be
liable to the Company or for amount paid in settlement to the Company, unless
and only to the extent that, the court in which the proceeding was brought, or
any other court of competent jurisdiction, determines upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
Section 607.0850 of the FBCA also provides that to the extent that a
director, officer, employee or agent of the Company has been successful on the
merits or otherwise in defense of any proceeding referred to in the paragraphs
above, or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses actually and reasonably incurred by him or her in
connection therewith.
The Company's by-laws expand the indemnification provisions of the FBCA
by providing that any termination of a civil or criminal action, suit or
proceeding by judgment, settlement, conviction or upon a plea of nolo contendere
shall not in itself create a presumption that any officer or director did not
act in good faith in the reasonable belief that his or her action was in the
best interest of the Company or had reasonable grounds to believe that such
action was not unlawful. The right to indemnification shall apply to the heirs,
executors and administrators of such officer or director.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART F/S
Financial Statements
PART III.
Item 1. Index to Exhibits
The following exhibits are filed with this Form 10-SB:
Assigned Number Description
- --------------- -----------
(2) Articles of Incorporation, as amended*
(3)(ii) Bylaws*
(10)(i) Amended Operation Agreement dated
December 23, 1998*
(27) Financial Data Schedule*
- -------------------------------
* Filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: December 7, 1999
DISTRIBUTION MANAGEMENT SERVICES, INC.
By: /s/ Leo Greenfield
----------------------------
Leo Greenfield, President
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statements of Operations F-3
Statements of Stockholders' Deficiency F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 to F-13
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Stockholders and Directors
Distribution Management Services, Inc.
(A Development Stage Company)
North Miami, Florida
We have audited the accompanying balance sheet of Distribution Management
Services, Inc. (A Development Stage Company) as of May 31, 1999, and the related
statements of operations, stockholders' deficiency and cash flows for each of
the two years in the period then ended. These financial statements are the
responsibility of the management of the Company. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. 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 audit provides 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 Distribution Management
Services, Inc. (A Development Stage Company) as of May 31, 1999 and the results
of its operations and its cash flows for each of the two years in the period
then ended in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring net losses and is
dependent upon the continued sale of its securities or obtaining debt financing
for funds to meet its cash requirements. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
with regard to these matters are described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
RACHLIN COHEN & HOLTZ LLP
Miami, Florida
September 13, 1999
F-1
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
August 31, May 31,
ASSETS 1999 1999
------ ---- ----
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 37,796 $ 207,869
Restricted cash - certificate of deposit 10,000 10,000
Accounts receivable 1,803 --
Prepaid interest 15,786 17,786
--------- -----------
Total current assets 65,385 235,655
Property, Plant and Equipment 907,862 904,846
Other Assets 4,590 4,590
--------- -----------
Total assets $ 977,837 $ 1,145,091
========= ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
Current Liabilities:
Accounts payable, construction liens $ 96,445 $ 96,445
Accrued interest 49,582 45,021
Notes payable - stockholder and related party 194,643 205,534
Advance payable 65,746 75,000
Current portion of obligation related to litigation settlement 50,000 185,000
--------- -----------
Total current liabilities 456,416 607,000
--------- -----------
Long-Term Debt:
Mortgage payable 375,000 375,000
Obligation related to litigation settlement 225,000 225,000
--------- -----------
600,000 600,000
========= ===========
Commitments and Contingencies -- --
Stockholders' Deficiency:
Common stock; 15,000,000 shares of $.001 par value
authorized; 5,050,000 shares issued and outstanding 5,050 5,050
Additional paid-in capital 782,390 777,404
Deficit accumulated during the development stage (862,419) (840,763)
Subscription receivable (3,600) (3,600)
--------- -----------
Total stockholders' deficiency (78,579) (61,909)
--------- -----------
Total liabilities and stockholders' deficiency $ 977,837 $ 1,145,091
========= ===========
</TABLE>
See notes to financials statements.
F-2
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
August 31, Year Ended May 31, Cumulative
---------- ------------------ from
1999 1998 1999 1998 Inception
---- ---- ---- ---- ---------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Recycling fees $ 18,334 $ -- $ 7,315 $ -- $ 25,649
Interest 143 -- 35 -- 178
----------- ----------- ----------- ----------- ---------
18,477 -- 7,350 -- 25,827
----------- ----------- ----------- ----------- ---------
Costs and Expenses:
Compensation 3,900 9,375 27,075 255,625 286,600
General and administrative 18,917 7,241 73,127 17,914 158,854
----------- ----------- ----------- ----------- ---------
22,817 16,616 100,202 273,539 445,454
----------- ----------- ----------- ----------- ---------
Loss from Operations (4,340) (16,616) (92,852) (273,539) (419,627)
----------- ----------- ----------- ----------- ---------
Other Expenses:
Interest 17,316 -- 15,476 -- 32,792
Litigation settlement -- -- 410,000 -- 410,000
----------- ----------- ----------- ----------- ---------
17,316 -- 425,476 -- 442,792
----------- ----------- ----------- ----------- ---------
Net Loss $ (21,656) $ (16,616) $ (518,328) $ (273,539) $(862,419)
=========== =========== =========== =========== =========
Net Loss Per Common Share $ -- $ -- $ (0.12) $ (0.13)
=========== =========== =========== ===========
Weighted Average Number of
Common Shares Outstanding 5,050,000 4,157,613 4,296,140 2,174,247
=========== =========== =========== ===========
</TABLE>
See notes to financials statements.
F-3
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
Stock
Subscription
Shares Amount Receivable
------ ------ ----------
<S> <C> <C> <C> <C> <C>
Balance, Inception, as Restated for 15,000 for 1 Stock Split 1,200,000 $1,200 $(1,200)
Year Ended May 31, 1995:
Net loss -- -- --
--------- ------ -------
Balance, May 31, 1995 1,200,000 1,200 (1,200)
Year Ended May 31, 1996:
Net loss -- -- --
--------- ------ -------
Balance, May 31, 1996 1,200,000 1,200 (1,200)
Year Ended May 31, 1997:
Net loss -- -- --
--------- ------ -------
Balance, May 31, 1997 1,200,000 1,200 (1,200)
Year Ended May 31, 1998:
Credit for estimated fair value of services performed by officer -- -- --
Credit for estimated fair value of office space used -- -- --
Issuance of common stock ($.001 per share) 2,400,000 2,400 (2,400)
Credit for compensation related to issuance of common stock -- -- --
Issuance of common stock in private placement ($.10 per share) 500,000 500 --
Net loss -- -- --
--------- ------ -------
Balance, May 31, 1998 4,100,000 4,100 (3,600)
Year Ended May 31, 1999:
Credit for estimated fair value of services performed by officer -- -- --
Credit for estimated fair value of office space used -- -- --
Exercise of warrants ($.40 per share) 850,000 850 --
Exercise of warrants ($1.00 per share) 100,000 100 --
Net loss -- -- --
--------- ------ -------
Balance, May 31, 1999 5,050,000 5,050 (3,600)
Three Months Ended August 31, 1999 (Unaudited) -- -- --
Credit for estimated fair value of services performed by officer -- -- --
Credit for estimated fair value of office space used -- -- --
Net loss -- -- --
--------- ------ -------
Balance, August 31, 1999 (Unaudited) 5,050,000 $5,050 $(3,600)
========= ====== =======
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Paid-In Development
Capital Stage Total
------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance, Inception, as Restated for 15,000 for 1 Stock Split $ -- $ -- $ --
Year Ended May 31, 1995:
Net loss -- -- --
-------- --------- ---------
Balance, May 31, 1995 -- -- --
Year Ended May 31, 1996:
Net loss -- -- --
-------- --------- ---------
Balance, May 31, 1996 -- -- --
Year Ended May 31, 1997:
Net loss -- (48,896) (48,896)
-------- --------- ---------
Balance, May 31, 1997 -- (48,896) (48,896)
Year Ended May 31, 1998:
Credit for estimated fair value of services performed by officer 15,625 15,625
Credit for estimated fair value of office space used 1,810 1,810
Issuance of common stock ($.001 per share) -- -- --
Credit for compensation related to issuance of common stock 240,000 -- 240,000
Issuance of common stock in private placement ($.10 per share) 49,500 -- 50,000
Net loss -- (273,539) (273,539)
-------- --------- ---------
Balance, May 31, 1998 306,935 (322,435) (15,000)
Year Ended May 31, 1999:
Credit for estimated fair value of services performed by officer 27,075 27,075
Credit for estimated fair value of office space used 4,344 4,344
Exercise of warrants ($.40 per share) 339,150 -- 340,000
Exercise of warrants ($1.00 per share) 99,900 -- 100,000
Net loss -- (518,328) (518,328)
-------- --------- ---------
Balance, May 31, 1999 777,404 (840,763) (61,909)
Three Months Ended August 31, 1999 (Unaudited) -- -- --
Credit for estimated fair value of services performed by officer 3,900 -- 3,900
Credit for estimated fair value of office space used 1,086 -- 1,086
Net loss -- (21,656) (21,656)
-------- --------- ---------
Balance, August 31, 1999 (Unaudited) $782,390 $(862,419) $ (78,579)
======== ========= =========
</TABLE>
See notes to financials statements.
F-4
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
August 31, Year Ended May 31,
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (21,656) $ (16,616) $(518,328) $(273,539)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Litigation settlement -- -- 410,000 --
Expenses paid by issuance of common stock -- -- -- 240,000
Credit for estimated fair value of services
performed by officer 3,900 9,375 27,075 15,625
Credit for esimated fair value of office space 1,086 1,086 4,344 1,810
Depreciation 5,000 -- 5,000 --
Changes in operating assets and liabilities:
Increase in accounts receivable (1,803) -- -- --
Decrease (increase) in prepaid interest 2,000 4,415 (8,924) (8,862)
Increase in deposits -- -- (4,590) --
Increase in accrued interest payable 4,561 -- -- --
Increase (decrease) in accounts payable -- -- 96,445 (23,896)
--------- --------- --------- ---------
Net cash provided by (used in)
operating activities (6,912) (1,740) 11,022 (48,862)
--------- --------- --------- ---------
Cash Flows from Investing Activities:
Restricted cash -- -- (10,000) --
Purchase of land -- -- -- --
Construction of recycling facility (8,016) (103,588) (426,524) (313,301)
--------- --------- --------- ---------
Net cash used in investing activities (8,016) (103,588) (436,524) (313,301)
--------- --------- --------- ---------
Cash Flows from Financing Activities:
Payments of obligation related to litigation settlement (135,000) -- -- --
Proceeds from issuance of common stock -- -- -- 50,000
Proceeds from exercise of warrants -- 100,000 440,000 --
Proceeds from mortgage payable -- -- 50,000 325,000
Proceeds from advance payable -- -- 75,000 --
Repayment of advance payable (9,254) -- -- --
Proceeds from stockholder and related party loans -- 8,912 141,707 283,551
Repayment of stockholder and related party loans (10,891) -- (100,165) (269,559)
--------- --------- --------- ---------
Net cash (used in) provided by financing activities (155,145) 108,912 606,542 388,992
--------- --------- --------- ---------
Net (Decrease) Increase in Cash (170,073) 3,584 181,040 26,829
Cash, Beginning 207,869 26,829 26,829 --
--------- --------- --------- ---------
Cash, Ending $ 37,796 $ 30,413 $ 207,869 $ 26,829
========= ========= ========= =========
Cash Paid and Capitalized During the
Period for Interest $ -- $ -- $ 53,924 $ 23,120
========= ========= ========= =========
</TABLE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Cumulative
from
Inception
---------
(Unaudited)
<S> <C>
Cash Flows from Operating Activities:
Net loss $(862,419)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Litigation settlement 410,000
Expenses paid by issuance of common stock 240,000
Credit for estimated fair value of services
performed by officer 46,600
Credit for esimated fair value of office space 7,240
Depreciation 10,000
Changes in operating assets and liabilities:
Increase in accounts receivable (1,803)
Decrease (increase) in prepaid interest (15,786)
Increase in deposits (4,590)
Increase in accrued interest payable 4,561
Increase (decrease) in accounts payable 96,445
---------
Net cash provided by (used in)
operating activities (69,752)
---------
Cash Flows from Investing Activities:
Restricted cash (10,000)
Purchase of land (125,000)
Construction of recycling facility (747,841)
---------
Net cash used in investing activities (882,841)
---------
Cash Flows from Financing Activities:
Payments of obligation related to litigation settlement (135,000)
Proceeds from issuance of common stock 50,000
Proceeds from exercise of warrants 440,000
Proceeds from mortgage payable 375,000
Proceeds from advance payable 75,000
Repayment of advance payable (9,254)
Proceeds from stockholder and related party loans 575,258
Repayment of stockholder and related party loans (380,615)
---------
Net cash (used in) provided by financing activities 990,389
---------
Net (Decrease) Increase in Cash 37,796
Cash, Beginning --
---------
Cash, Ending $ 37,796
=========
Cash Paid and Capitalized During the
Period for Interest
</TABLE>
See notes to financials statements.
F-5
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation - Development Stage Enterprise
Distribution Management Services, Inc. (the Company) was
incorporated in the State of Florida on January 25, 1995. The
Company was organized for the purpose of operating a transfer
station for recycling of construction and demolition materials in
Miami, Florida. Since incorporation, the Company has been
principally engaged in organizational activities, construction of
its recycling facility and raising capital. Revenues received to
date are primarily the result of the initial operation of the
Company's recycling facility, and are not considered to be
significant. Accordingly, the Company is considered to be in the
development stage, and the accompanying financial statements
represent those of a development stage enterprise.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost, including
interest incurred during the period of construction. Depreciation
has been calculated using the straight-line method of depreciation
over the estimated useful lives of the assets. The estimated useful
life of the recycling facility is 40 years.
Revenue Recognition
The limited revenues generated by the Company consist solely of
recycling fees in connection with the Operation Agreement described
in Note 8. The Company recognizes revenue when the recycling
services are performed.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a
concentration of credit risk consist of cash. At various times
during the year the Company had deposits in financial institutions
in excess of the federally insured limits. At May 31, 1999, the
Company had approximately $118,000 on deposit in excess of these
limits. The Company maintains its deposits with a high quality
financial institution that the Company believes limits these risks.
Unaudited Financial Information
The accompanying financial statements as of August 31, 1999 and for
the three months ended August 31, 1999 and 1998 are unaudited.
However, in the opinion of management, such financial statements
contain all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of financial
position, results of operations and cash flows for such periods.
Results of interim periods are not necessarily indicative of
results to be expected for an entire year.
F-6
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
Net Loss Per Common Share
The net loss per common share in the accompanying statements of
operations has been computed based upon the provisions of Statement
of Financial Accounting Standards No. 128, Earnings Per Share. The
basic and diluted net loss per common share in the accompanying
statements of operations is based upon the net loss divided by the
weighted average number of shares outstanding during each period.
Diluted per share data is the same as basic per share data since
the inclusion of all potentially dilutive common shares that would
be issuable upon the exercise of options and warrants would be
anti-dilutive.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes",
which requires recognition of deferred tax liabilities and assets
for expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "Reporting Comprehensive Income" and No. 131, "Disclosures
About Segments of an Enterprise and Related Information." SFAS No.
130 establishes standards for reporting and displaying
comprehensive income, its components and accumulated balances. SFAS
No. 131 establishes standards for the way that public companies
report information about operating segments in annual financial
statements and requires reporting of selected information about
operating segments in interim financial statements issued to the
public. Both SFAS No. 130 and SFAS No. 131 are effective for
periods beginning after December 15, 1997. The Company adopted
these new accounting standards in 1998, and their adoption had no
effect on the Company's financial statements and disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as
a hedge, the objective of which is to match the timing of the gain
or loss
F-7
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements (Continued)
recognition on the hedging derivative with the recognition of (I)
the changes in fair value of the hedged asset or liability that are
attributable to the hedged risk or (ii) the earnings effect of the
hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the
period of change. SFAS No. 133 is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into derivatives
contracts to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new
standard to affect its financial statements.
NOTE 2. GOING CONCERN
Going Concern
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
assume that the Company will continue on a going concern basis,
including the realization of assets and liquidation of liabilities
in the ordinary course of business. For the three months ended
August 31, 1999 (Unaudited) and during the years ended May 31, 1999
and 1998, the Company incurred net losses of $21,656, $518,328 and
$273,539, respectively, and as of August 31, 1999 (Unaudited) and
May 31, 1999, reflects a stockholders' deficiency of $78,579, and
$61,909, respectively and has minimal operating activities. As more
fully described below under "Liquidity and Plan of Operations",
significant uncertainties exist with regard to the Company's
ability to generate sufficient cash flows from operations or other
sources to meet and fund its commitments with regard to existing
liabilities and recurring expenses. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
Liquidity and Plan of Operations
As of August 31, 1999 (Unaudited) and May 31, 1999, the Company had
cash of $37,796 and $207,869, respectively and negative working
capital of $391,031 and $371,345, respectively. The Company's
ability to meet its future obligations in relation to the orderly
payment of its recurring general and administrative expenses on a
current basis is totally dependent upon its ability to secure and
develop new business opportunities through acquisitions or other
joint venture opportunities. Since the Company's sources of
liquidity are limited, the Company is unable to project how long it
may be able to survive without a significant infusion of capital
from outside sources, and it further is unable to predict whether
such capital infusion, if available, would be at terms and
conditions that are acceptable to the Company.
In order to expand future operating activities, the Company intends
to search for, investigate and attempt to secure and develop,
business opportunities through acquisitions, reverse mergers or
other joint venture activities. However, there can be no assurance
that the Company will be successful in its search for new business
opportunities or that any such businesses or ventures acquired will
be successful.
F-8
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 3. RESTRICTED CASH
At August 31, 1999 (Unaudited) and May 31, 1999 the Company had
restricted cash of $10,000 invested in a certificate of deposit earning
interest at 4.22%, which matures on April 23, 2000. The certificate was
invested for the purpose of securing debt owed to a supplier.
NOTE 4. PROPERTY, PLANT AND EQUIPMENT
August 31,
Estimated Useful 1999 May 31,
Lives (Years) (Unaudited) 1999
------------- ----------- ----
Land - $125,000 $125,000
Recycling facility 40 792,862 784,846
-------- --------
917,862 909,846
Less accumulated depreciation 10,000 5,000
-------- --------
$907,862 $904,846
======== ========
Property and plant includes the capitalization of aggregate interest
costs of $88,804.
Included in capitalized construction costs are labor costs paid to a
related party. Total labor capitalized since inception amounted to
approximately $82,000 paid to this related party.
NOTE 5. MORTGAGE PAYABLE
Mortgage payable to an individual; collateralized by the property,
plant and equipment. Interest at 12% is payable monthly. Principal is
due February 1, 2001. $375,000
== ===== ========
NOTE 6. NOTES PAYABLE - STOCKHOLDER AND RELATED PARTY
<TABLE>
<CAPTION>
August 31, May 31,
1999 1999
---- ----
(Unaudited)
<S> <C> <C>
Note payable to a stockholder; unsecured; interest at the applicable
federal rate (5.63% at May 31, 1999); due on demand $150,000 $150,000
Note payable to a related party; unsecured; interest at the applicable
federal rate (5.63% at May 31, 1999); due on demand 44,643 49,642
Other -- 5,892
-------- --------
$194,643 $205,534
======== ========
</TABLE>
Total interest capitalized to related parties for the years ended May
31, 1999 and 1998 amounted to $12,677 and $9,594, respectively.
F-9
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7. ADVANCE PAYABLE
<TABLE>
<CAPTION>
August 31, May 31,
1999 1999
---- ----
(Unaudited)
<S> <C> <C>
Advance payable to management company; unsecured; interest at
7%; due on demand. $65,746 $75,000
====== ======
</TABLE>
NOTE 8. COMMITMENTS AND CONTINGENCIES
Litigation Settlement
A suit was filed against the Company by two former stockholders
alleging that a principal stockholder of the Company forged their
names on certain agreements, contracts and stock certificates. One
former stockholder entered into a settlement agreement with the
Company which provided for the payment of $185,000 and the issuance
of 5,000 shares of common stock valued at $10,000. On July 7, 1999,
the Company paid $135,000 of this obligation with the remaining
$50,000 of this obligation and the issuance of 5,000 shares of
common stock due December 31, 1999. The Company has reached an
agreement in principle with the second former stockholder to settle
this claim. As settlement, the Company will issue shares of common
stock valued at approximately $215,000. No documents have been
finalized relating to this agreement in principle.
The total of $410,000 related to the settlement of this litigation
has been charged to operations in the year ended May 31, 1999. In
the accompanying balance sheet as of August 31, 1999 (Unaudited)
and May 31, 1999, the portion of the obligation related to this
litigation settlement payable in cash ($50,000 and $185,000,
respectively) has been presented as a current liability; the
portion of this settlement to be settled by issuance of common
stock ($225,000) has been presented as a long-term liability
(obligation related to litigation settlement) inasmuch as this
obligation has been intended to be satisfied by issuance of common
stock as an integral part of the agreement in principle with the
former stockholder. Recognition of this litigation settlement had
the impact of increasing net loss and loss per common share by
$410,000 and $.09, respectively, for the year ended May 31, 1999.
Construction Liens
At August 31, 1999 (Unaudited) and May 31,1999, the Company was
still settling claims and disputes primarily regarding the
construction contractors who built the facility. Estimated costs
for these settlements have been included in accounts payable at
August 31, 1999 (Unaudited) and May 31, 1999. Should the claim
settlements exceed the amounts recorded, the additional expense
will be recognized at the time of settlement.
F-10
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 8. COMMITMENTS AND CONTINGENCIES (Continued)
Operation Agreement
During December 1998, the Company entered into an Operation
Agreement (as amended) with a management company to operate a
recycling facility. The agreement called for an advance to the
Company by the management company in the amount of $75,000 (see
Note 7). The management company will be reimbursed by retaining
fifty percent of the gross amounts collected until the advance is
fully repaid. Interest will accrue on the unpaid balance at a rate
of 7% per annum. Use of the advanced funds was exclusively for the
purpose of obtaining the use permit from the City of Miami and the
completion of any necessary work for the commencement of the
facility's operations.
The agreement also stated that the management company will operate
the facility on a day to day basis, including providing equipment
necessary for operations, performing hiring and firing of its
employees and paying all necessary operating expenses relating to
the operations of the facility.
The Company will receive revenues in an amount equal to 6% of
amounts collected for receipt of 0 - 450 cubic yards of
construction and demolition debris received each day, less any
applicable local, state or federal sales taxes due thereon. For
each cubic yard in excess of 450 yards per day, the Company will
receive an amount equal to 10% of the gross amounts collected.
The agreement also includes an option to purchase the facility. The
option is exercisable during the first five years of the Company's
operation. Based on the timing of the exercise of the option, the
purchase price ranges from $1,495,000 to $2,275,000.
The term of the agreement is for five years commencing December 22,
1998 and automatically renews for four sequential terms of one year
each.
Environmental Regulation and Compliance
The Company is subject directly and indirectly to regulations and
various laws of both the State of Florida and Miami-Dade County as
well as Federal regulations and statutes. The Company believes it
is in compliance with all applicable laws and has obtained an
annual solid waste operating permit, which expires December 31,
1999.
NOTE 9. RELATED PARTY TRANSACTIONS
Officer's Compensation
The current President has agreed not to receive compensation. In
order to reflect all appropriate administrative expenses of the
Company, a provision of approximately $27,000
F-11
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 9. RELATED PARTY TRANSACTIONS (Continued)
Officer's Compensation (Continued)
and $16,000 has been made in the accompanying financial statements
for the estimated fair value of the services rendered by the
President. These amounts have been charged to compensation expense
for the years ended May 31, 1999 and 1998, respectively, with a
corresponding credit to additional paid in capital. This estimate
of the fair value of such services was determined by management
based upon an analysis of compensation paid to presidents of other
organizations and the amount of time spent performing such duties.
For the three months ended August 31,1999 and 1998 (Unaudited) a
provision of approximately $4,000 and $9,000, respectively, has
been made in the accompanying financial statements for the
estimated fair value of the services provided by the President.
Office Rent
The Company uses the office facilities of a related party as its
administrative offices. There is currently no lease agreement with
this related party. However, in order to reflect all appropriate
administrative expenses of the Company, a provision of
approximately $4,000 and $2,000 has been made in the accompanying
financial statements for the estimated fair value of the office
space used by the Company. These amounts have been charged to
general and administrative expense for the years ended May 31, 1999
and 1998, respectively, with a corresponding credit to additional
paid in capital. This estimate of the fair value of office space
used was determined by management based on the terms of the
operating lease executed by the related party. For the three months
ended August 31, 1999 and 1998 (Unaudited) a provision of
approximately $1,000 for both periods has been made in the
accompanying financial statements for the estimated fair value of
the office space used by the Company.
Consulting Fees
The Company paid consulting fees in the amount of $11,750 and
$10,000 to related parties for the years ended May 31, 1999 and
1998, respectively.
NOTE 10. INCOME TAXES
No credit for income taxes has been reflected in the accompanying
financial statements for 1999 and 1998 because of the significant
uncertainty that exists regarding the realization of such income tax
credits (see below).
As of May 31, 1999, the Company estimates that it has net operating
loss carryforwards of approximately $493,000 which expire in various
years through 2014; however, the utilization of the benefits of such
carryforwards may be limited, as more fully discussed below. Sufficient
uncertainty exists regarding the realization of these operating loss
carryforwards and, accordingly, deferred tax assets of approximately
$189,000 as of May 31, 1999 were subject to and presented net of a 100%
valuation allowance.
F-12
<PAGE>
DISTRIBUTION MANAGEMENT SERVICES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 10. INCOME TAXES (Continued)
The Company is delinquent in the filing of various federal, state and
local income and other tax returns. The ultimate determination of the
Company's taxable income, including the amount and expiration dates of
net operating loss carryforwards, is subject to, among other things,
certain restrictions as a result of the late filing of the various tax
returns. The Company may also be subject to possible review and
examination of such tax returns by the appropriate taxing authorities.
Additional income taxes, including penalties for non-compliance and
interest, if any, which may be assessed, will be charged to operations
when determined.
In accordance with certain provisions of the Tax Reform Act of 1986, a
change in ownership of greater than 50% of a corporation within a three
year period will place an annual limitation on the corporation's
ability to utilize its existing tax benefit carryforwards. Under such
circumstances, the potential benefits from utilization of the tax loss
carryforwards as of that date may be substantially limited or reduced
on an annual basis. To the extent that net operating loss
carryforwards, when realized, relate to stock option deductions, the
resulting benefits will be credited to stockholders' equity.
NOTE 11. COMMON STOCK
During 1998, the Company issued a total of 2,400,000 shares of common
stock for certain services rendered, including services rendered in
connection with certain environmental matters pertaining to operations
and the location of available landfills for potential acquisition by
the Company. These shares were valued at $240,000 or $.10 per share,
based upon the price of a recent cash sale of common stock. The Company
charged compensation expense and credited additional paid-in capital
for the value of the services for the year ended May 31, 1998.
F-13
Filed
95 JAN 25 AM 9:56
Secretary of State
Tallahassee, Florida
ARTICLES OF INCORPORATION
OF
DISTRIBUTION MANAGEMENT SERVICES, INC.
THE UNDERSIGNED incorporators to these Articles of Incorporation, each
a natural person competent to contract, hereby associate themselves together to
form a corporation under the laws of the State of Florida.
ARTICLE I. NAME
---------------
The name of this corporation is:
DISTRIBUTION MANAGEMENT SERVICES, INC.
ARTICLE II. NATURE OF BUSINESS
------------------------------
The general nature of the business and the objects and purposes to be
transacted and carried on are to do any and all of the things herein mentioned,
as fully and to the same extent as natural persons might or could do, viz:
A. To engage in any and all legal business transactions of every kind,
nature and description and to do any and all lawful things as may be determined
by the officers and directors of the corporation and to employ personnel of
every kind, nature and description in connection therewith.
B. To improve, buy, sell, exchange, mortgage, rent, lease, invest in,
build, erect, equip, maintain, deal in and with, dispose of, manage and operate
real property, both improved and unimproved, and personal property of whatsoever
nature or kind, as owner, agent, factor or broker;
1
<PAGE>
to build, construct and alter houses, buildings and structures of whatsoever
nature of kind, and to develop real property generally, to loan money upon real
and personal property and to take mortgages and bonds and assignments of
mortgages and bonds upon real and personal property of whatsoever nature or
kind; and to borrow money thereon by mortgage or otherwise; to buy, sell, and
deal in bonds and loans secured by mortgages or other liens on real property or
personal property of all kinds and description;
C. To purchase, manufacture, acquire, hold, own, mortgage, hypothecate,
pledge, lease sell, assign, transfer, invest in, trade in, deal in, borrow and
lend money upon goods, wares, merchandise and real and personal property of
every kind and description;
D. To act as agent, broker or attorney in fact for any persons, firms
or corporation in buying, selling and dealing in real or personal property of
whatsoever nature or kind, and any and every estate and interest therein, and
choses in action secured thereby, judgments resulting therefrom, and other
personal property collateral thereto, in making or obtaining loans upon such
property and loans and all interest in and claims affecting the same, in
effecting insurance against fire and all other risks thereon, and in managing
and conducting any legal actions, proceedings and business relating to any of
the purposes herein mentioned or referred to; to register mortgages and deeds of
trust of real property or chattels real and all other securities collateral
thereto; to investigate and report upon the credit and financial solvency and
sufficiency of borrowers and sureties upon such securities; and to transact all
or any other business which may be necessary or incidental or property to the
exercise of any or all of the purposes of the corporation.
E. To subscribe for, purchase, invest in, hold, own, assign, pledge and
otherwise dispose of shares of capital stock, bonds, mortgages, debentures,
notes and other securities, obligations,
2
<PAGE>
contracts and evidences of indebtedness of any persons, firms, associations, or
other corporations, whether domestic or foreign, and to exercise in respect to
any such shares of stock, bonds, and other securities, any and all rights,
powers and privileges of individual ownership, including the right to vote
thereon, to issue bonds and other obligations, and to secure the same by
pledging or mortgaging the whole or any part of the property of the company, and
to sell such bonds and other obligations for proper corporate purposes, and to
do any and all acts and things tending to increase the value of the property at
any time held by the company.
F. To acquire, hold, undertake and fully exploit the good will,
property, rights, franchises, and assets of every kind, and the liabilities of
any person, firm, association or corporation, either wholly or partly, and to
pay the same in cash, stocks or bonds of the company or otherwise.
G. To borrow money and contract debts when necessary in the purchase or
acquisition of real, personal and intangible property, business rights or
franchises, or for additional working capital, or for any other object in or
about its business or affairs and without limit as to amount, to incur debt and
to raise, borrow and secure the payment of money in lawful manner, including the
issue and sale or other disposition of bonds, warrants, debentures, obligations,
negotiable and transferable instruments and evidences of indebtedness of all
kinds, whether secured by mortgage, pledge, deed of trust or otherwise.
H. In any manner to acquire, enjoy, utilize and to dispose of patents,
copyrights and trademarks, and any license or other rights or interest therein
and thereunder.
I. To conduct business and operations and to have one or more offices
and hold, purchase, mortgage, lease, dispose of, deal in, and convey real and
personal property without
3
<PAGE>
restrictions in this state and in any other of the several states, territories,
possessions and dependencies of the United States, the District of Columbia, and
in any and all foreign countries.
J. To purchase or otherwise acquire, become interested in, deal in and
with, invest in, hold, pledge, sell or turn to account or realize upon as owner,
agent, broker or factor, all forms of securities, including stocks, bonds,
debentures, mortgages, notes, evidences of indebtedness, leases, options,
certificates of interest, participation certificates, voting trust certificates
evidencing shares of or interest in common law trust, trusts and trust estates
or associations, certificates of trust or beneficial interest in trusts,
mortgages, contracts and other instruments, securities and rights; to
investigate and report with respect to, and to undertake, carry on, aid, assist
or participate in the organization, liquidation or reorganization of financial,
commercial, mercantile, manufacturing, industrial or other business concerns,
firms, associations and corporations; to institute, participate in or promote
commercial, mercantile, financial and industrial enterprises and operations.
K. To engage in and carry on any advertising business in connection
with property of any nature, owned, leased or otherwise acquired by this
corporation, as principal or agent, with powers to let contracts for any such
advertising and to make and carry out contracts of every kind and nature that
may be conducive to the accomplishment of any purposes of the corporation.
L. To do any and all things, and everything necessary and proper for
the accomplishment of the objects enumerated in these Articles of Incorporation
or any amendment thereto necessary and incidental to the protection and benefit
of the corporation, and in general to carry on any lawful business necessary or
incidental to the attainment of the objects of the corporation, whether or not
such business is similar in nature to the objects set forth herein, it being
understood that the enumeration of specific powers in these Articles of
Incorporation shall not be deemed to be
4
<PAGE>
exclusive, but all other lawful powers conferred by the Statutes of the State of
Florida are hereby included.
ARTICLE III. CAPITAL STOCK
--------------------------
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is ONE HUNDRED (100) SHARES, with
a par value of TEN CENTS ($0.10) per share. All of said stock shall be payable
in cash, property real or personal, labor or services in lieu of cash, at a just
valuation to be fixed by the Board of Directors of this corporation.
ARTICLE IV. INITIAL CAPITAL
---------------------------
The amount of capital with which this corporation will begin business
is FIVE HUNDRED ($500.00) DOLLARS.
ARTICLE V. TERM OF EXISTENCE
----------------------------
This corporation is to exist perpetually unless sooner dissolved
according to law.
ARTICLE VI. ADDRESS
-------------------
The initial address of the principal office of this corporation in the
State of Florida is:
P.O. Box 1256
Hallandale, Florida 33008
The Board of Directors may from time to time move the principal office
to any other address in Florida.
ARTICLE VII. DIRECTORS
----------------------
This corporation shall have not less than one or more than nine
directors, initially. The number of directors may be increased or diminished
from time to time, by by-laws, adopted by the stockholders, but shall never be
less than one.
5
<PAGE>
ARTICLE VIII. REGISTERED AGENT AND OFFICE
-----------------------------------------
This corporation's initial registered agent and registered office in
the State of Florida shall be:
MICHAEL D. HYMAN, ESQ.
1921 Hiatus Road
Pembroke Pines, FL 33026
ARTICLE IX. INITIAL DIRECTORS
-----------------------------
The name and post office address of each member of the first Board of
Directors is:
ROY EGIDI
P.O. Box 1256
Hallandale, Florida 33008
The members of the first Board of Directors shall hold office until the
first annual meeting of the stockholders of the corporation.
ARTICLE X. INCORPORATORS
------------------------
The name and post office address of each incorporator of these Articles
of Incorporation is:
ROY EGIDI
P.O. Box 1256
Hallandale, Florida 33008
ARTICLE XI. AMENDMENT
---------------------
These Articles of Incorporation may be amended in the manner provided
by law. Every amendment shall be approved by the Board of Directors, proposed by
them to the stockholders, and approved at a stockholders meeting by a majority
of the stock entitled to vote thereon, unless all the directors and all the
stockholders sign a written statement manifesting their intention that a certain
amendment of these Articles of Incorporation be made.
6
<PAGE>
The Directors of this corporation shall have the power to make or amend
the by-laws and to fix the amount to be reversed [sic] for working capital.
The private property of the stockholders shall not be subject to the
payment of the corporate debts in any extent whatsoever. The corporation shall
have a first lien on the shares of its members and upon the dividends due them
for any indebtedness of such members of the corporation.
ARTICLE XII.
------------
The stockholders of this corporation may divide themselves into groups
for the purpose of obtaining unit control in the corporation, and when any
agreement is made between stockholders owning at least seventy-five percent of
the stock then outstanding in the corporation, such agreement shall be binding
upon the corporation, shall be recognized by the directors and shall be observed
by the officers and agents of the company, and particularly, the stockholders
are authorized to include in such agreements entered into between themselves
provisions which will confer upon individual groups the power to elect certain
numbers of directors, and, in particular, stockholders may include in the
agreements between themselves the following as valid matters of agreement, to
wit:
(1) The manner and method in which the persons by whom
directors may be elected;
(2) Any limitation upon the transferability or assignment
of the stock;
(3) The conferring or preemptive rights of purchase upon
stockholders on conditions precedent to the sale of
any other stock;
(4) Any matter relating to effectuating the purpose
included in any of the foregoing matters.
7
<PAGE>
Agreements between stockholders shall continue binding upon the
corporation until there is filed with each office of the corporation, a written
instrument signed by the persons who originally created such stockholders
agreement (or their successors in ownership, providing such a succession in
ownership shall have been accomplished in accordance with the terms of the
stockholders agreement) consenting to the revocation and cancellation of the
agreements among the stockholders.
ARTICLE XIII. ELECTION FOR TAX PURPOSES
---------------------------------------
At the election of the officers of this corporation, this corporation
may be qualified as a Sub- Chapter S corporation pursuant to the laws of the
United States and the Internal Revenue Service. This provision shall be
applicable only if the business in which the corporation engages qualifies for
such tax treatment under the laws of the United States.
ARTICLE XIV. COMMENCEMENT DATE
------------------------------
This corporation shall commence upon the date of filing with the
Secretary of State.
IN WITNESS WHEREOF, I, the undersigned, being the original Incorporator
to the capital stock hereinabove named, for the purpose of forming a corporation
to do business both within and without the State of Florida, under the laws of
Florida, do make and file these Articles of Incorporation, hereby declaring and
certifying that the facts herein stated are true, and do agree to take the
number of shares hereinabove set forth, and hereunto set my hand and seal this
20th day of January, 1995.
/S/ ROY EGIDI (SEAL)
--------------------
ROY EGIDI
8
<PAGE>
STATE OF FLORIDA )
) SS.
COUNTY OF DADE )
I HEREBY CERTIFY that on this day, before me, a Notary Public, duly
authorized in the State and County named above to take acknowledgments,
personally known to me, appeared ROY EGIDI, to me personally known to be the
person described as Incorporator in and who executed the foregoing Articles of
Incorporation, and acknowledged before me that he subscribed to those Articles
of Incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
Miami, Dade County, Florida, this 20th day of January, 1995.
/s/ Maria Casteleiro
--------------------
Notary Public-State of Florida
9
<PAGE>
CERTIFICATE DESIGNATING REGISTERED
AGENT FOR SERVICE OF PROCESS
----------------------------
Pursuant to Chapter 48.091, Florida Statutes, the undersigned hereby
designates;
MICHAEL D. HYMAN, ESQ.
1921 Hiatus Road
Pembroke Pines, FL 33026
as its Registered Agent to accept service of process within this State.
DISTRIBUTION MANAGEMENT SERVICES, INC.
By: /s/ Roy Egidi
-----------------
Roy Egidi
The undersigned hereby accepts the foregoing designation as Registered
Agent for service or process within the State of Florida, and agrees to comply
with the provisions of the law applicable to said designation.
By: /s/ Michael D. Hyman
------------------------
Michael D. Hyman
10
<PAGE>
FILED
97 Sep 23 AM 9:57
Secretary of State
Tallahassee, Florida
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DISTRIBUTION MANAGEMENT SERVICES, INC.
Pursuant to the provisions of section 607.1006, Florida Statutes, this Florida
profit corporation adopts the following articles of amendment to its articles of
incorporation:
FIRST: Amendment(s) adopted: (indicate article number [s] being
amended, added or deleted:
ARTICLE III. CAPITAL STOCK
--------------------------
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is FIFTEEN
MILLION (15,000,000) SHARES, with no par value. All of said
stock shall be payable in cash, property, real or personal,
labor or service in lieu of cash, at a just valuation to be
fixed by the Board of Directors of this corporation.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the
amendment if not contained in the amendment itself, are as
follows:
SEE ABOVE.
THIRD: The date of each amendment's adoption: September 22, 1997
-----------------------
FOURTH: Adoption of Amendment(s)(CHECK ONE)
|_| The amendment(s) was/were approved by the shareholders. The
number of votes cast for the amendment(s) was/were sufficient
for approval.
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<PAGE>
|_| The amendment(s) was/were approved by the shareholders through
voting groups. The following statement must be separately
provided for each voting group entitled to vote separately on
time amendment(s):
The number of votes cast for the amendment(s) was/were
sufficient for approval by _______________________________."
voting group
|_| The amendment(s) was/were adopted by the board of directors
with shareholder action and shareholder action was not
required.
|_| The amendment(s) was/were adopted by the incorporators without
shareholder action and shareholder action was not required.
Signed this 22nd day of September , 1997 .
-----------------------------------------------------
Signature /s/ Romolo Egidi President
- --------------------------------------------------------------------------------
(By the Chairman or Vice Chairman of the Board of Directors,
President or other officer if adopted by the sharehold
Romolo Egidi, President
OR
(By a director if adopted by the directors)
OR
(By an incorporator if adopted by the incorporators)
_________________________________________
Typed or printed name
_________________________________________
Title
12
CORPORATE BY-LAWS
OF
DISTRIBUTION MANAGEMENT SERVICES, INC.
--------------------------------------
ARTICLE I
OFFICES
The principal office shall be in Dade County, Florida. The corporation
may also have offices at such other places both within and without the State of
Florida as the board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
STOCKHOLDERS
Section1. Annual Meeting. The annual meeting of the stockholders of
this corporation shall be held not more than four (4) months after the end of
each fiscal year. The time and place of the meeting shall be designated by the
president. If an annual meeting has not been held with four (4) months after the
end of any fiscal year, any stockholder may call said meeting. The stockholders
shall elect a board of directors and transact any other necessary business at
the annual meeting.
Section 2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by law or by the Articles
of Incorporation, may be called by the president or by a majority of the board
of directors, and shall be called by the president or the secretary at the
request of stockholders owning a majority in the amount of the entire capital
stock of the corporation issued and outstanding and entitled to vote thereat.
Such request shall state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting of stockholders shall be limited to
the purposes stated in the notice thereof.
Section 3. Place of Meeting. The board of directors may designate any
place either within or without the State of Florida unless otherwise prescribed
by law or by the Articles of Incorporation, as the place of meeting for any
annual meeting or for any special meeting of the stockholders. A waiver of
notice signed by all stockholders entitled to vote at a meeting may designate
any place either within or without the State of Florida, unless otherwise
prescribed by law or by the Articles of Incorporation, as the place for the
holding of such a meeting. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal office of the
corporation in the State of Florida.
Section 4. Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting and in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the president or the
secretary, or the officer or the persons calling the meeting, to each
stockholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United States
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mail, addressed to the stockholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon prepaid.
Section 5. Waiver of Notice of Meeting. When stockholders who hold 4/5
of the voting stock having the right and entitled to vote at any meeting shall
be present at such meeting, however called or notified, and shall sign a written
consent thereto on the record of the meeting, the acts of such meeting shall be
as valid as if legally called and notified.
Section 6. Voting Lists. The officer or agent having charge of the
stock transfer books for shares of the corporation shall make at least five (5)
days before each meeting of stockholders, a complete list of stockholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address and number of shares held by each, which
list, for a period of three (3) days prior to such meeting, shall be kept on
file at the principal office of the corporation and shall be subject to
inspection by any stockholder at any time during the usual business hours. Such
list shall also be produced and kept open at the time and place of the meeting
and shall be subject to the inspection of any stockholder during the whole time
of the meeting. The original stock transfer book shall be prima facie evidence
as to who are the stockholders entitled to examine such list or transfer books
or to vote at any meeting of the stockholders.
Section 7. Quorum. Except as otherwise provided in these By-Laws, or as
required by the Articles of Incorporation, or by law, a majority of the
outstanding shares of the corporation entitled to vote, represented in person or
by proxy, shall constitute a quorum at a meeting of stockholders. If less than a
majority of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 8. Voting of Shares. Each stockholder entitled to vote shall at
every meeting of the stockholders be entitled to one vote in person or by proxy,
signed by him, for each share of voting stock held by him. Such right to vote
shall be subject to the right of the board of directors to close the transfer
books or to fix a record date for voting stockholders as hereinafter right, no
share of stock shall be voted at any election for directors which shall have
been transferred on the books of the corporation within five (5) days next
preceding such election. The vote of a majority of the outstanding shares shall
constitute the act of the stockholders.
Section 9. Proxies. At all meetings of stockholders, a stockholder may
vote by proxy, executed in writing by the stockholder or by his duly authorized
attorney-in-fact; but, no proxy shall be voted after three (3) years from its
date unless the proxy provides for a longer period. Such proxies shall be filed
with the secretary of the corporation before or at the time of the meeting.
Section 10. Informal Action By Stockholders. Unless otherwise provided
by law or by the
2
<PAGE>
Articles of Incorporation, any action required to be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize such action at a meeting at which all shares entitled to vote thereon
were present and voted.
Section 11. Stockholder Agreements. So long as the corporation has 100
or fewer stockholders, the stockholders are hereby authorized to enter into any
agreement ("Stockholder Agreement") as described in Florida Statute Section
607.0732, as amended from time to time. Any Stockholder Agreement shall be
approved and signed by all persons who are stockholders at the time the
Stockholder Agreement is made and the Stockholder Agreement shall be made known
to the corporation, and a fully executed copy thereof shall be filed with the
corporate records of the corporation.
ARTICLE III
BOARD OF DIRECTORS
------------------
Section 1. General Powers. The business and affairs of the corporation
shall be managed by its board of directors.
Section 2. Number, Tenure and Qualifications. The board of directors of
the corporation shall consist of between one and nine directors. The number of
directors may be altered from time to time, by the stockholders at any annual or
special meeting; provided that the number of directors shall not be less nor
more than the number fixed by the Articles of Incorporation, Each director shall
hold office until the next annual meeting of stockholders and until his
successor has been qualified, unless sooner removed by the stockholders at any
general or special meeting. All directors shall be of full age.
Section 3. Annual Meeting. After each annual meeting of stockholders,
the board of directors shall hold its annual meeting at the same place as and
immediately following such annual meeting of stockholders for the purpose of the
election of officers and the transaction of such other business as may come
before the meeting; and, if a majority of the directors be present at such place
and time, no prior notice of such meeting shall be required to be given to the
directors. The place and time of such meeting may also be fixed by written
consent of the directors.
Section 4. Regular Meetings. Regular meetings of the board of directors
may be held without notice at such time and at such place as shall be determined
from time to time by the board of directors.
Section 5. Special Meetings. Special meetings of the board of directors
may be called by the chairman of the board, if there be one, or the president or
any two (2) directors. The person or persons authorized to call special meetings
of the board of directors may fix the place for holding any special meetings of
the board of directors called by them.
3
<PAGE>
Section 6. Notice. Notice of any special meeting shall be given at
least three (3) days prior thereto by written notice delivered personally or
mailed to each director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in United States Mail so
addressed with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting, either before,
at or after such meeting. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened.
Section 7. Quorum. A majority of the directors shall constitute a
quorum, but a smaller number may adjourn from time to time, without further
notice, until a quorum is secured.
Section 8. Manner of Action. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the board
of directors.
Section 9. Vacancies. Any vacancy occurring in the board of directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the board of directors, unless otherwise provided
by the Articles of Incorporation, or by law. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Section 10. Compensation. By resolution of the board of directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors, and may be paid a fixed sum for attendance at each
meeting of the board of directors, or a stated salary as directors. No payment
shall preclude any director from serving the corporation in any other capacity
and receiving compensation therefor.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action unless his
dissent shall be entered in the minutes of the meeting or unless he shall file
his written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail, return receipt requested, to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 12. Informal Action by Board Any action required or permitted
to be taken by any provision of law, of the Articles of Incorporation or of
these By-Laws at any meeting of the board of directors or of any committee
thereof may be taken without a meeting, if prior to such action, a written
consent thereto is signed by all members of the board or of such committee, as
the case may be.
Section 13. Removal. Any director may be removed by the stockholders at
any general or special meeting of the stockholders of the corporation whenever,
in their judgment, the best interests
4
<PAGE>
of the corporation shall be served thereby, but, such removal shall be without
prejudice to the contract rights, if any, of the person removed. This By-Law
shall not be subject to change by the board of directors.
ARTICLE IV
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be a
president, a secretary and a treasurer, each of whom shall be elected by the
board of directors. The board of directors may also elect a chairman of the
board, one or more vice presidents, one or more assistant secretaries and
assistant treasurers, and such other officers as the board of directors shall
deem appropriate. The same person may hold more than one office and may hold all
offices of the corporation.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting after
each annual meeting of stockholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient.
Each officer shall hold office until his successor shall have been
elected and qualified, or until death, resignation, or removal.
Section 3. Removal. Any officer elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy due to death, resignation, removal,
disqualification, or otherwise, may be filled by the board for the unexpired
term.
Section 5. Duties of Officers. The president shall be chief executive
officer, shall have general and active management of the affairs of the
corporation subject to the direction of the board, shall preside at all meetings
of stockholders, and preside at all meetings of directors unless directors shall
elect a chairman. The secretary shall have custody of, and maintain all
corporate records except financial records, shall record the minutes of all
meetings of stockholders and directors, and send out notices of meetings. The
treasurer shall have custody of all corporate funds and financial records, keep
full and accurate accounts of receipts and disbursements, and render accounts
thereof, as directed by the president. The secretary, treasurer, and all other
officers shall perform such other duties as may be prescribed by the board of
directors or president. Subject to the foregoing, all officers shall have such
powers and duties as usually pertain to their respective offices under law.
Section 6. Salaries. The salaries of the officers shall be fixed from
time to time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
5
<PAGE>
Section 7. Delegation of Duties. In the absence of or disability of any
officer of the corporation or for any other reason deemed sufficient by the
board of directors, the board may delegate its powers or duties to any other
officer or to any other director for the time being.
ARTICLE V
EXECUTIVE AND OTHER COMMITTEES
------------------------------
Section 1. Creation of Committees. The board of directors may, by
resolution passed by a majority of the whole board, designate an executive
committee and one or more other committees, each to consist of two (2) or more
of the directors of the corporation.
Section 2. Executive Committee. The executive committee, if there shall
be one, shall consult with and advise the officers of the corporation in the
management of its business and shall have and may exercise to the extent
provided in the resolution of the board of directors creating such executive
committee such powers of the board of directors as can be lawfully delegated by
the board.
Section 3. Other Committees. Such other committees shall have such
functions and may exercise the powers of the board of directors as can be
lawfully delegated and to the extent provided in the resolution or resolutions
creating such committee or committees.
Section 4. Meetings of Committees. Regular meetings of the executive
committee and other committees may be held without notice at such time and at
such place as shall from time to time be determined by the executive committee
or such other committees, and special meetings of the executive committee or
such other committees may be called by any member thereof upon two (2) days
notice to each of the other members of such committee, or on such shorter notice
as may be agreed to in writing by each of the other members of such committee,
given either personally or in the manner provided in Section 6 or Article III of
these By-Laws (pertaining to notice for directors' meetings).
Section 5. Vacancies on Committees. Vacancies on the executive
committee or on such other committees shall be filled by the board of directors
then in office at any regular or special meeting.
Section 6. Quorum of Committees. At all meetings of the executive
committee or such other committees, a majority of the committee's members then
in office shall constitute a quorum for the transaction of business.
Section 7. Manner of Action of Committees. The act of a majority of the
members of the executive committee or such other committees, present at any
meeting at which there is a quorum, shall be the act of such committee.
Section 8. Minutes of Committees. The executive committee, if there
shall be one, and such other committees shall keep regular minutes of their
proceedings and report the same to the Board
6
<PAGE>
of Directors when requested.
Section 9. Compensation. Members of the executive committee and such
other committees may be paid compensation in accordance with the provisions of
Article III. Section 10 of these By- Laws (pertaining to compensation of
directors).
ARTICLE VI
INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
The corporation shall, and does hereby, indemnify any person made a
party to an action, suit or proceeding, whether civil or criminal, brought to
impose a liability or penalty on such person in his capacity of director or
officer of this corporation, or of any other corporation which he served as such
at the request of this corporation, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees, actually and
necessarily incurred as a result of such action, suit or proceeding, or any
appeal therein, if such director or officer acted in good faith in the
reasonable belief that such action was in the best interests of this
corporation, and in criminal actions or proceedings, without reasonable ground
for belief that such action was unlawful. The termination of any such civil or
criminal action, suit or proceeding by judgment, settlement, conviction or upon
a plea of nolo contendere shall not in itself create a presumption that any
director or officer did not act in good faith in the reasonable belief that such
action was in the best interests of this corporation or that he had reasonable
ground for belief that such action was unlawful. The foregoing rights of
indemnification shall apply to the heirs, executors and administrators of any
such director or officer and shall not be exclusive of other rights to which any
such director or officer may be entitled pursuant to any provision of the
Articles of Incorporation, these By-Laws, any vote of the stockholders or
otherwise.
ARTICLE VII
CERTIFICATE OF STOCK
--------------------
Section 1. Certificates for Shares. Every holder of stock in the
corporation shall be entitled to have a certificate signed by, or in the name of
the corporation, by the chairman of the board, the president or a vice president
and the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the corporation, exhibiting the holder's name and certifying the
number of shares owned by him in the corporation. The certificates shall be
numbered and entered in the books of the corporation as they are issued.
Section 2. Transfer of Shares. Transfers of shares of the corporation
shall be made upon its books by the holder of the shares in person or by his
lawfully constituted representative, upon surrender of the certificate of stock
for cancellation. The person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for all
purposes and the corporation shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person whether
or not it shall have express or other notice thereof, save as expressly provided
by the laws of the State of Florida.
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<PAGE>
Section 3. Facsimile Signature. Where a certificate is signed (1) by a
transfer agent or an assistant transfer agent or (2) by a transfer clerk acting
on behalf of the corporation and a registrar, the signature of any such chairman
of the board, president, vice president, treasurer, assistant treasurer,
secretary or assistant secretary may be a facsimile. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on any such certificate or certificates shall cease to be such officer or
officers of the corporation, such certificate or certificates may nevertheless
be adopted by the corporation and be issued and delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such officer
or officers of the corporation.
Section 4. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed. When authorizing such issue of
a new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require, and/or to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
ARTICLE VIII
CLOSING OF TRANSFER
BOOKS OR FIXING OF RECORD DATE
------------------------------
The board of directors may close the stock transfer books of the
corporation for a period not exceeding forty (40) days preceding the date of any
meeting of stockholders, or the date for payment of any dividend, or the date
for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or for a period not exceeding
forty (40) days in connection with the obtaining or the consent of stockholders
for any purpose. In lieu of closing the stock transfer books, as aforesaid, the
board of directors may fix in advance a date, not exceeding forty (40) days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining such consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote, at any
such meeting and any adjournment thereof, any such allotment of rights, or to
exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent, and in such case such stockholders and
only such stockholders as shall be stockholders of record on the date so fixed
shall be entitled to such notice of, and to vote at such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid.
8
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ARTICLE IX
DIVIDENDS
---------
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares of capital stock in the
manner and upon the terms and conditions provided by the Articles of
Incorporation and By-Laws. Dividends may be paid in cash, in property, or in
shares of stock, subject to the law.
ARTICLE X
FISCAL YEAR
-----------
The fiscal year of the corporation shall be the 12-month period
selected by the board of directors as the taxable year of the corporation for
federal income tax purposes.
ARTICLE XI
SEAL
----
The seal of the corporation shall be as follows:
ARTICLE XII
AMENDMENTS
----------
These By-Laws may be altered, amended or repealed and new By-Laws may
be adopted by the board of directors, provided that any By-Law or amendment
thereto as adopted by the board of directors may be altered, amended or repealed
by vote of the stockholders entitled to vote thereon, or a new By-Law in lieu
thereof may be adopted by the stockholders. No By-Law which has been altered,
amended or adopted by such a vote of the stockholders may be altered, amended or
repealed by a vote of the directors until two (2) years shall have expired since
such action by vote of such stockholders.
9
AMENDED OPERATION AGREEMENT
---------------------------
THIS AMENDED OPERATION AGREEMENT (this "Agreement") is entered into as
of the 22nd day December, 1998, by and between DISTRIBUTION MANAGEMENT SERVICES,
INC., a Florida corporation, whose address is 1680 N.E. 135th Street, Suite 103
East, North Miami, Florida 33181 ("DISTRIBUTION") and PEERLESS DADE, INC. d/b/a
DADE RECYCLING AND DISPOSAL, a Florida corporation, whose address is 15490 NW
97th Avenue, Miami, Florida 33016 ("DADE").
RECITALS
A. DISTRIBUTION is the owner of that certain real property and
improvements located at 2000 North Miami Avenue, Miami, Florida (the
"Property");
B. DISTRIBUTION and Dade Recycling Services, Inc. entered into an
Operation Agreement on August 27, 1998. DADE has purchased the assets of Dade
Recycling Services, Inc., including the aforementioned "Operation Agreement".
All of Dade Recycling Services, Inc.'s rights under the Operating Agreement have
been assigned to DADE. The parties desire to enter into this Amended Operation
Agreement to modify and amend the terms and conditions of the original Operation
Agreement.
C. DISTRIBUTION is finalizing construction of certain improvements
thereon and the installation of certain fixtures at the Property necessary to
operate a recycling center and construction and demolition debris transfer
station thereon (the "Center") pursuant to the terms and conditions of the
various use, environmental and other necessary permits required by the federal,
state, county and city environmental and governmental agencies ("Operation
Permits"), a list of which is attached hereto as Exhibit "A";
D. DISTRIBUTION has all necessary Operating Permits with the exception
of a certificate of use and occupancy from the City of Miami (the "Use Permit");
E. DISTRIBUTION anticipates that the construction of the improvements
will be completed on or about December 22, 1998 and that it will receive a
certificate of use and occupancy from the City of Miami shortly thereafter;
F. DISTRIBUTION does not have the funds required to complete the Use
Permit process and/or complete remaining improvements and requires financial
assistance from DADE;
G. DADE has agreed to provide DISTRIBUTION up to $75,000 for the
purpose of obtaining the Use Permit and/or completing the remaining
improvements;
H. DADE has experience in the operation of a recycling center and
construction and demolition debris landfill and possesses all necessary
machinery, equipment and employees required to operate the same;
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I. DISTRIBUTION desires that DADE operate the Center pursuant to the
terms and conditions specifically forth herein;
J. DADE desires to operate the Center pursuant to the terms and
conditions specifically set forth herein;
NOW THEREFORE, in consideration of the sum of $10.00 and other good and
valuable consideration, the parties hereto agree as follows:
1. Recitals. The above recitals are true and correct and are
incorporated herein by reference.
2. Use Permit Funding. DADE shall advance up to $75,000 to DISTRIBUTION
to be used exclusively to obtain the Use Permit from the City of Miami and to
complete any additional work required for operation of the Center. DADE shall
pre-approve all work, invoices and payments related to the use of the $75,000.
DADE shall be reimbursed for the money advanced by retaining 50% of
DISTRIBUTION'S share of the Gross Amount Collected as described in Paragraph 7
until the advanced amount is reimbursed in full. Interest will accrue at a rate
of 7% on the unpaid balance until paid in full. In the event that DADE
terminates this Agreement in accordance with the terms hereof and the money
advanced and interest accrued has not been reimbursed in full, then DISTRIBUTION
shall reimburse DADE the unpaid principal and accrued interest within thirty
(30) days of DADE'S termination of the Agreement.
3. Commencement Date. Within ten (10) days of the issuance of the Use
Permit and completion of any remaining work, DADE agrees to commence operation
of the Center (the "Commencement Date"). In the event the Use Permit or any
other Permit required to operate the Center is not received within 90 days of
the execution hereof, DADE may terminate this Agreement by providing
DISTRIBUTION with a written termination notice. In the event of termination,
DISTRIBUTION shall reimburse DADE for all costs expended in the Use Permit
process.
4. Day to Day Operations. DADE shall operate the Center on a day to day
basis using commercially reasonable efforts to maximize the business operations
at the Center. In connection with its duties hereunder, DADE shall provide all
equipment necessary to operate the Center to the extent allowed under the
Permits. DISTRIBUTION shall not have the right to participate in the day to day
operations of the Center, as parties hereto agree that DADE is experienced in
this area and is being hired as such. For example, but without limitation, DADE
shall have the right, without any input or consent of DISTRIBUTION, to establish
prices, set a budget, hire and fire employees, collect accounts receivables,
including filing suit on behalf of the Center when necessary to collect the
same; establish operating hours, contract for services with third parties and
establish bank accounts; and DADE may deem necessary in its sole discretion.
DADE shall not use the Center as a storage facility and all materials shall be
moved in and out of the Center on a daily basis in compliance with the Permits,
as defined in Section 6 below.
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5. Employees. DADE shall be responsible for hiring and firing all
employees necessary to operate the Center. The employees shall be employees of
DADE and not employees of the Center or DISTRIBUTION. Dade shall be responsible
for the payment of local, state and federal taxes required for such employees.
6. Permits. DISTRIBUTION shall be responsible for obtaining and
maintaining all of the Permits for the Center. DADE agrees to operate the Center
in compliance with terms of the Permits as they are currently in effect and all
applicable federal, state and local laws, rules and regulations. DADE agrees to
post any bonds, letters of credit or financial security required under the
Permits for and on behalf of DISTRIBUTION. In the event the Permits are modified
from time to time and any such modification necessitates capital improvements
made to the Center, DISTRIBUTION shall be responsible for completing and paying
all costs related to the same. DADE shall be responsible for equipment related
modifications necessary to comply with the Permits.
7. Distribution of Revenue. As the owner of the Center, DISTRIBUTION
shall receive the following sums generated from the operation of the Center:
(a) For each cubic yard from 0 to 450 cubic yards received
at the Center per operating day, 6% of the Gross Amount Collected therefrom.
(b) For each cubic yard in excess of 450 cubic yards
received at the Center per operating day, 10% of the Gross Amount collected
therefrom.
The term "Gross Amount Collected" shall mean the amount charged and collected
per cubic yard of construction and demolition debris less any applicable local,
state or federal sales taxes due thereon, if any.
DADE shall calculate the Gross Amount Collected on a monthly calendar basis
which shall run from the first of each month until the end of each month and
shall remit all sums due to DISTRIBUTION by the 10th day of the following month.
DISTRIBUTION shall have the right to review the books and records for the
operation of the Center as it may deem necessary from time to time during
regular business hours, to confirm the proper calculation of the Gross Amount
Collected.
8. Operating Expenses. DADE is responsible for paying all expenses
associated with the day to day operations of the Center which shall include but
not be limited to, utility charges such as electricity, water, phone service,
maintenance of the equipment, maintenance of the Property, employee costs and
expenses, advertising, accounting and bookkeeping fees. DISTRIBUTION shall be
responsible for all mortgage payments on the Property, real property taxes, any
permit or license fees, and any capital improvements required to be performed at
the Center. DADE will maintain General Liability and Property Damage insurance
on DISTRIBUTION's buildings and improvements in the amount of one million
dollars ($1,000,000) per occurrence. DISTRIBUTION shall be named as an
additional insured.
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9. Term. The term of this Agreement shall be for a period of five (5)
years, however, DADE shall have the sole right and discretion to terminate this
Agreement after the first six (6) months by providing a written termination
notice to DISTRIBUTION regarding the same. This Agreement shall automatically
renew for four (4) successive terms of one (1) year each, if, prior to the
expiration of any given Term, DADE fails to provide DISTRIBUTION with written
notice of its intent not to renew this Agreement sixty (60) days prior to the
expiration of the then current term. It is further agreed that DADE may, in its
sole and absolute discretion, terminate this Agreement at any time after the
initial one (1) year term, by providing written notice to DISTRIBUTION at least
six (6) months prior to the intended termination date.
10. Option to Purchase. For and in consideration of the terms and
conditions of this Agreement, DADE shall have the exclusive right and option,
during the term of this Agreement, to purchase the Property and Center from
DISTRIBUTION.
(a) In the event DADE exercises its option to purchase the
Property and Center, DISTRIBUTION agrees to sell to DADE and
DADE agrees to purchase the Property and Center for the
purchase price as hereunder set forth:
Year 1 - If the option to purchase is exercised during the
first year of this Agreement, DADE shall pay DISTRIBUTION one
hundred fifteen percent (115%) of DISTRIBUTION'S investment m
the Property and Center as set forth in Exhibit "B" hereto.
Year 2 - if the option to purchase is exercised during the
second year of this Agreement, DADE shall pay DISTRIBUTION
one hundred thirty percent (130%) of DISTRIBUTION'S
investment in the Property and Center as set forth in Exhibit
"B" hereto.
Year 3 - If the option to purchase is exercised during the
third year of this Agreement, DADE shall pay DISTRIBUTION one
hundred forty five percent (145%) of DISTRIBUTION'S
investment in the Property and Center as set forth in Exhibit
"B" hereto.
Year 4 - If the option to purchase is exercised during the
fourth year of this Agreement, DADE shall pay DISTRIBUTION
one hundred sixty percent (160%) of DISTRIBUTION'S investment
in the Property and Center as set forth in Exhibit "B"
hereto.
Year 5 - if the option to purchase is exercised during the
fifth year of this Agreement, DADE shall pay DISTRIBUTION one
hundred seventy five percent (175%) of DISTRIBUTION'S
investment in the Property and Center as in Exhibit "B"
hereto.
The $75,000, or any portion thereof, advanced to DISTRIBUTION to obtain
the Use Permit or complete the additional work and not reimbursed from
DISTRIBUTION'S
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share of the Gross Amount Collected as described in Paragraph 7 shall
be applied toward the purchase price as set forth above.
(b) DADE must communicate to DISTRIBUTION, in writing, its
intention to exercise the Option by executing and delivering
to DISTRIBUTION an executed contract of sale. After delivery
of the executed contract of sale, DISTRIBUTION must execute
that contract of sale within ten (10) days of receipt. The
closing of the transaction shall occur within thirty (30)
days after execution of the contract of sale. DADE may
assign this option and all rights under this option to
purchase on condition that (1) the assignee assumes in
writing all of DADE's obligations under the option, and (2)
DISTRIBUTION gives prior written consent to the assignment.
11. Right of Offset. During the term of this Agreement, DISTRIBUTION
will provide Dade with prompt written notice of any default or non-payment of
its obligations under any promissory note secured by a mortgage, lien or other
security interest ("Mortgage") on the Property, or any lien placed upon the
Property by any federal, state or local taxing or regulatory authority. DADE
shall have the right, but not the obligation, to pay any delinquent Mortgage
payments, ad valorem or other property taxes, and shall be entitled to an offset
or credit against DISTRIBUTION'S share of the Gross Amount Collected, as
described in Paragraph 7, for any payments by DADE. DISTRIBUTION shall advise
any Mortgage holder of the requirements of this provision and request that
notice of any delinquency or default be simultaneously transmitted to DADE. The
parties agree and understand that a notice of DADE'S option to purchase, as set
forth in Paragraph 10, may be recorded in the official records of Dade County,
Florida. DADE agrees to record only the option to purchase.
12. Non-Exclusivity and Covenant Not to Compete. DISTRIBUTION
acknowledges that DADE is in the business of operating similar centers
throughout Florida and by execution hereof acknowledges that this Agreement
shall not be exclusive to DADE and DADE may operate similar centers or
facilities. During the term of this Agreement, DISTRIBUTION further agrees that
it will not, directly or indirectly, own, permit, operate and any other way
participate in the ownership or management of a solid waste or construction and
demolition debris transfer station, recycling center, materials recovery
facility or landfill within Dade County. The term "indirectly", as used above,
includes, but is not limited to, holding any direct or indirect participation in
any solid waste or construction and demolition debris landfill, recycling
facility, transfer station or materials recovery facility as an owner, partner,
limited partner, joint venturer, shareholder or director. The covenant not to
compete shall apply to DISTRIBUTION and any current or future parent, subsidiary
or affiliated company.
13. Public Offering. DISTRIBUTION has caused a 501 statement to be
filed with the United States Securities and Exchange Commission and is
proceeding towards having its common stock registered in the over the counter
market and ultimately on the NASDAQ stock exchange. DADE shall have the option
to merge, consolidate or otherwise become a part of DISTRIBUTION as a public
company upon terms and conditions mutually agreed upon between DADE and
DISTRIBUTION.
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14 Governing Law/Venue. This Agreement shall be governed by and
construed in accordance of the laws of the State of Florida. The forum for any
legal action arising hereunder shall be in Miami-Dade County, Florida.
15. Attorney Fees and Costs. In the even a dispute arises hereunder,
the prevailing party shall have the right to collect its reasonable attorney's
fees and costs incurred in connection with such dispute, whether in pretrial,
trial, on appeal or in bankruptcy, from the non-prevailing party.
16. Force Majeure. In the event an act of God, a strike, governmental
action or other significant work stoppage, beyond the control of DADE, occurs
which prevents DADE from performing its duties hereunder, DADE shall be excused
from performing its duties herein for as long as practically possible after the
occurrence of the same or until the end of the same unless such happening shall
be directly caused by DADE's failure to comply with the Permits.
17. Confidentiality. Neither of the parties hereto shall disclose any
of the provisions of this Agreement to any third party, including but not
limited to, competitors of either DADE or DISTRIBUTION and employees of such
competitors, except as may be required by law or to their respective attorney.
In addition, this Agreement may not be recorded or filed for record in any
public records or with any public body, except as may be required by law or as
provided in Paragraph 11 hereof.
18. Ageement Binding. The terms and conditions of this Agreement shall
be binding upon the successors and assigns of the parties hereto.
19. Survival. Termination of this Agreement shall not affect the rights
or obligations of the parties which arose prior to the termination.
20. Notices. All notices required hereunder shall be delivered to each
of the parties hereto at the address first written above by certified, U.S.
Mail, return receipt requested or by a recognized overnight courier service. A
copy of all notices sent to DADE shall also be sent to G. Stephen Manning, Esq.,
9471 Baymeadows Road, Suite 104, Jacksonville, Florida 32255.
21. No Joint Venture or Partnership. Notwithstanding anything contained
herein to the contrary, neither this Agreement nor the operations required
hereby shall be deemed to create any joint venture, partnership or any other
business enterprises between DADE and DISTRIBUTION.
22. Assignment. Neither DADE nor DISTRIBUTION may assign this Agreement
in whole or in part to any other person or entity
23. Entire Ageement. This Agreement embodies and constitutes the entire
agreement between DADE and DISTRIBUTION in regards to the Property and the
Center, and all prior or
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contemporaneous agreements, understandings, representations and statements,
whether oral or written, are merged into this Agreement.
24. Construction. This Agreement shall not be construed more strictly
against one party or the other, it being recognized that both DADE and
DISTRIBUTION have contributed substantially and materially in preparing this
Agreement.
25. WAIVER OF JURY TRIAL. THE PARTIES HERETO WAIVE ANY RIGHT EITHER OF
THEM MAY HAVE TO A TRIAL BY JURY RELATING TO ANY ACTION THAT MAY ARISE OUT OF A
DISPUTE HEREUNDER. THE PARTIES ACKNOWLEDGE THAT THIS PROVISION HAS BEEN
EXPLAINED TO EACH OF THEM BY THEIR RESPECTIVE ATTORNEYS AND THAT THIS WAIVER OF
JURY TRIAL IS A MATERIAL INDUCEMENT FOR EACH OF THEM TO ENTER INTO THIS
AGREEMENT.
26. Counterparts. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first written above.
<TABLE>
<CAPTION>
<S> <C>
PEERLESS DADE, INC.,
d/b/a DADE RECYCLING AND
DISPOSAL, a Florida corporation
__________________________________
Print Name:_______________________
By:_________________________________
Print Name:
__________________________________
Title:_______________________________
__________________________________
Print Name: ______________________
DISTRIBUTION MANAGEMENT
SERVICES, INC., a Florida corporation
__________________________________
Print Name: ______________________
By:_________________________________
Print Name:__________________________
___________________________________ Title: ______________________________
Print Name:__________________________
</TABLE>
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EXHIBIT "A"
State Operating Permit - SW01190-98
City of Miami - Certificate of Occupancy
City of Miami - Occupational License
County of Dade - Occupational License
Department of
Environmental Protection - GMS I.D. NO. 5013PO7210
GEN. SO13-281088
<PAGE>
EXHIBIT "B"
IT HAS BEEN DISCUSSED AND AGREED THAT THE INVESTMENT REFERRED TO IN THE
AMENDED OPERATION AGREEMENT, IN PARAGRAPH 10 THEREOF, IS THE SUM OF ONE MILLION
THREE HUNDRED THOUSAND ($1,300,000) DOLLARS.
THE SUM IS TO BE ADJUSTED AT TIME OF CLOSING BY THE INTEREST PAID IN
CONNECTION WITH THE FINANCING OF THE PROPERTY SINCE JANUARY 1, 1998, AND TAXES
PAID THEREON.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET, STATEMENT OF OPERATIONS AND STATEMENT OF CASH FLOWS INCLUDED IN THE
COMPANY'S FORM 10 FOR THE THREE MONTHS ENDED AUGUST 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-31-1999
<CASH> 37,796
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 65,385
<PP&E> 917,862
<DEPRECIATION> 10,000
<TOTAL-ASSETS> 977,837
<CURRENT-LIABILITIES> 456,416
<BONDS> 0
<COMMON> 5,050
0
0
<OTHER-SE> (86,629)
<TOTAL-LIABILITY-AND-EQUITY> 977,837
<SALES> 18,334
<TOTAL-REVENUES> 18,477
<CGS> 0
<TOTAL-COSTS> 22,817
<OTHER-EXPENSES> 17,316
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,316
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,340)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,656)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
