<PAGE>
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
MGPX VENTURES, INC.
-----------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 95-4067606
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
17337 Ventura Boulevard, Suite 224, Encino, California 91316
- ------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(818) 981-7074
---------------------------
(Issuer's telephone number)
Securities to be registered under Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
<S> <C>
None None
--------- ----------
</TABLE>
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.04
--------------------------------
(Title of class)
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
----
<C> <S> <C>
Item 1. Description of Business . . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis or Plan of Operation . . . . . . . . . . . . . . . 4
Item 3. Description of Property . . . . . . . . . . . . . . . . . . 5
Item 4. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . . . . . . . . . 6
Item 5. Directors, Executive Officers,
Promoters and Control Persons . . . . . . . . . . . . . . . 7
Item 6. Executive Compensation. . . . . . . . . . . . . . . . . . . 9
Item 7. Certain Relationships and Related Transactions . . . . . . 10
Item 8. Description of Securities. . . . . . . . . . . . . . . . . 10
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters. . . . . . . . 12
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . 13
Item 3. Changes in and Disagreements with
Accountants. . . . . . . . . . . . . . . . . . . . . . . . 13
Item 4 Recent Sales of Unregistered Securities. . . . . . . . . . 13
Item 5. Indemnification of Directors and Officers. . . . . . . . . 14
PART F/S Report of Independent Certified Public Accountants . . . . 15
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . 16
Statements of Operations . . . . . . . . . . . . . . . . . 17
Statements of Shareholders' Equity . . . . . . . . . . . . 18
Statements of Cash Flows . . . . . . . . . . . . . . . . . 19
Notes to Financial Statements. . . . . . . . . . . . . . . 20
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . . 27
Item 2. Description of Exhibits. . . . . . . . . . . . . . . . . . 27
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
2
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
MGPX Ventures, Inc. (the "Company") was incorporated under the laws of the
State of Nevada on August 7, 1986 under the name of Maple Enterprises, Inc.
("Maple"). On July 8, 1988, Maple acquired approximately 99% of the
outstanding shares of Warner Technologies, Inc. ("Warner"), a privately held
California corporation in exchange for shares of common stock and stock
options. On September 16, 1988, Warner merged into Maple, and the name of
the surviving company was changed to Warner Technologies, Inc.
While doing business under the name of Warner Technologies, Inc., the Company
provided energy efficiency products and services in three principal areas:
(1) lighting retrofits, (2) electrical control systems for buildings, and (3)
strategic energy planning services. These products and services were
delivered to commercial, industrial, institutional and government buildings
through contracts with building owners and managers, as well as directly to
utilities for their customers' benefit. However, as a result of deregulation
and other significant changes in the industry, the Company did not have
sufficient capital resources to compete effectively within the electricity
industry.
On February 16, 1998, the Company entered into an agreement (the "Agreement")
to sell its operating business and substantially all of its net operating
assets, effective as of December 31, 1997, to Thomas S. Hathaway and Joseph
A. Ferrari, who were then serving as the Company's President and Executive
Vice President, respectively. The purchase price of $650,000 was established
through arm's length negotiations between the outside members of the
Company's Board of Directors (the "outside directors") and Messrs. Hathaway
and Ferrari and was supported by a fairness opinion obtained by the outside
directors. On March 10, 1998, the Company's shareholders voted to approve
the sale and to change the name of the Company to MGPX Ventures, Inc. The
sale was completed on March 31, 1998. The Company received net proceeds of
$585,000 from the sale after closing costs.
Pursuant to the Agreement, the Company also purchased from Messrs. Hathaway
and Ferrari for $1,000 all of the shares of common stock of the Company
("Common Stock") owned by them (183,481 shares from Mr. Hathaway and 159,396
shares from Mr. Ferrari). In addition, under the Agreement, all of their
options and option rights were canceled.
As a result of the sale of its assets, the Company is now a "shell" company
with minimal operations. The Company's business plan is to identify and
complete an acquisition, merger or other transaction that will enhance
shareholder value. See Part I, Item 2, "Management's Discussion and Analysis
or Plan of Operation."
Until completing any acquisition or merger, the Company does not intend to
hire any full-time employees. Its President and Chief Executive Officer
serves under the terms of a consulting agreement.
3
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATION
As a "shell" company, the Company currently has no revenues from operations.
The Company's operations prior to December 31, 1997 (the effective date of
the sale of the Company's operating business as described in Part I, Item 1,
above) are classified and reported as "discontinued operations" in the
accompanying financial statements as of June 30, 1998 and for each of the two
years in the period then ended.
The Company's business plan is to identify and complete an acquisition,
merger or other transaction that will enhance shareholder value. The
Company's Board of Directors is reviewing potential business opportunities,
without limiting the scope of its review to only one or a few types of
businesses or industries. Currently, the Company has no plans, agreements,
arrangements or understandings, written or oral, with respect to any
acquisition, merger or similar transaction. No assurances can be given as to
the Company's ability to identify and complete a transaction by any given
date or as to the nature of the business or profitability of the Company if a
transaction is completed. A proposed transaction could be subject to
significant regulatory, business, financing and other contingencies and might
require shareholder and other approvals.
RESULTS OF OPERATIONS
The following is a limited discussion of the results of operations for the
fiscal year ended June 30, 1998 compared to those for the fiscal year ended
June 30, 1997. A comparison of the results of operations for the 1998 fiscal
year are not directly comparable to results for the prior year because of the
sale of substantially all of the Company's net operating assets effective
December 31, 1997.
FISCAL 1998 COMPARED TO FISCAL 1997
CONTINUING OPERATIONS. During the last six months of the fiscal year ended
June 30, 1998, when the Company was operating as a shell corporation, it
incurred general and administrative expenses of $16,436. These expenses were
mainly comprised of a consulting fee of $12,510 paid to the Company's
President and Chief Executive Officer. Income for the same period totaled
$7,443, and was derived mainly from interest earned on the Company's cash and
cash equivalents.
Management anticipates that while the Company operates as a shell
corporation, it will incur expenses of approximately $7,500 per month.
Net loss per share for the fiscal year was $.17 from discontinued operations
and $.01 from continuing operations, for a total net loss of $.18 per share,
as compared to net income of $.01 per share in fiscal 1997.
DISCONTINUED OPERATIONS. Effective December 31, 1997, the Company sold
substantially all of its net assets used in operations to management for
$650,000. Net proceeds were approximately $585,000 after closing costs. As
a condition of the transaction, management agreed to the cancellation of its
stock options and the sale of their common shares to the Company for $1,000,
representing more than a 25%
4
<PAGE>
reduction in beneficial control of common shares. As a result, the Company's
operations through December 31, 1997 are reported as discontinued operations.
The results from discontinued operations included total revenues of
approximately $2,605,000 and $3,101,000 and pre-tax net income from
operations of approximately $35,000 and $90,000 for the years ended June 30,
1998 and 1997, respectively. Net income from operations for the year ended
June 30, 1998 includes a nonrecurring non-cash charge of $506,872 related to
providing a full allowance for the Company's net deferred tax assets. The
gain on the sale of the assets to management of $207,572 was calculated by
deducting the net assets sold of $312,428 from the cash received of $650,000.
LIQUIDITY
Working capital at June 30, 1998 was $559,102. The primary component of such
working capital is the Company's cash and cash equivalents of $559,102, which
management believes is sufficient to cover current operations for at least
the next twelve months.
Depending on the success of the Company's efforts to locate a potential
candidate for merger or acquisition, management believes that the Company's
present working capital may need to be supplemented to support the operations
of the merged or acquired company over the next 12 months. Additional
working capital may be sought through additional debt or equity private
placements, additional notes payable to banks or related parties (officers,
directors or shareholders), or from industry-available funding sources at
market rates of interest, or a combination of these. The ability to raise
necessary financing will depend on many factors, including the nature and
prospects of any business to be acquired and the economic and market
conditions prevailing at the time financing is sought. No assurances can be
given that any necessary financing can be obtained on terms favorable to the
Company, or at all.
YEAR 2000 ISSUE
The Company's business does not currently utilize any electronic
processing systems and therefore is not directly at risk for having systems
that will not recognize the Year 2000 ("Y2K") or treat any date after
December 31, 1999 as a date during the twentieth century. However, no
assurances can be given that the Company will be able to avoid all Y2K
problems, especially those that might originate with third parties with whom
the Company transacts business, such as financial institutions, and the
Company has not undertaken any investigation to determine the Y2K readiness
of such parties. In addition, the Company will be required to assess the Y2K
readiness of its potential acquisition and merger candidates and can give no
assurance that all potential Y2K problems of such candidates will be
identified and either corrected or avoided. If the Company, an acquired
business or any third party with whom the Company does business were to have
a Y2K problem, the business of the Company could be disrupted and the
Company's financial condition and results of operations could be materially
adversely affected.
ITEM 3. DESCRIPTION OF PROPERTY
In April 1998, the Company relocated its corporate office to 17337 Ventura
Boulevard, Suite 224, Encino, CA 91316. Under the terms of a consulting
agreement with the Company's President and Chief Executive Officer, Buddy
Young, the office space is provided at no additional cost to the Company.
5
<PAGE>
The Company anticipates that this space will be adequate for its operations
through the end of fiscal 1999.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the beneficial
ownership of the Company's outstanding classes of preferred stock ("Preferred
Stock") and Common Stock as of October 15, 1998, by each person known by the
Company to own beneficially more than 5% of each class, by each of the
Company's Directors and Named Executive Officers (as defined in Part I, Item
6) and by all Directors and Executive Officers of the Company as a group.
Unless otherwise indicated below, to the Company's knowledge, all persons
listed below have sole voting and investment power with respect to their
shares of Preferred Stock and Common Stock except to the extent that
authority is shared by spouses under applicable law.
<TABLE>
<CAPTION>
Number of Number of
Name and Address Preferred Shares(2) Percentage Common Shares Percentage
of Beneficial Owner(1) Beneficially Owned Owned(3) Beneficially Owned Owned(4)
---------------------- ------------------ -------- ------------------ --------
<S> <C> <C> <C> <C>
Richard and Joann Small 2,000 11.96% 24,000(5) 1.56%
1416 Port Washington Avenue
Ambler, PA 19002
Mark S. Laventhal 1,700 10.16% 20,400(6) 1.33%
50 Rowes Wharf
Boston, MA 02110
Joan Gold 1,200 7.17% 14,400(7) .94%
1016 Ridgedale Drive
Beverly Hills, CA 90210
David Wilstein 2,000 11.96% 198,654(8) 12.95%
2080 Century Park East
Los Angeles, CA 90067
J.H. Tromp Meesters -0- -- 112,500 7.45%
9430 Olympic Blvd.
Beverly Hills, CA 90212
Peter Schlesinger 3,666(6) 21.92% 55,992(9)(10) 3.60%
Buddy Young -0- -- -0- --
Gunther H. Schiff -0- -- 12,500 0.83%
Ramon Mouton -0- -- 6,890 0.46%
Thomas S. Hathaway(11) -0- -- -0- --
11859 Wilshire Blvd., #500
Los Angeles, CA 90025
Directors and Executive 3,666 21.92% 75,382(10) 4.85%
Officers as a group (four
persons)
</TABLE>
- --------------------------------
6
<PAGE>
(1) Unless otherwise indicated, the address of each shareholder is 17337
Ventura Blvd., #224, Encino, CA 91316.
(2) Each share of Preferred Stock is convertible by the holder thereof into
12 shares of Common Stock. Each share of Preferred Stock is currently
entitled to 36 votes. See Part I, Item 8, "Description of Securities
--Preferred Stock."
(3) Based on a total of 16,792 shares of Preferred Stock outstanding.
(4) Based on a total of 1,509,865 shares of Common Stock outstanding, plus,
for each individual stockholder named, that number of shares of Common
Stock (if any) which such person has a right to acquire within 60 days
pursuant to options, warrants, conversion privileges or other rights.
(5) Includes 24,000 shares of Common Stock issuable upon conversion of
Preferred Stock.
(6) Includes 20,400 shares of Common Stock issuable upon conversion of
Preferred Stock.
(7) Includes 14,400 shares of Common Stock issuable upon conversion of
Preferred Stock.
(8) Includes 24,000 shares of Common Stock issuable upon conversion of
Preferred Stock.
(9) These shares are beneficially owned indirectly through Apex Investment
Fund, Ltd.
(10) Includes 43,992 shares of Common Stock issuable upon conversion of
Preferred Stock.
(11) Mr. Hathaway resigned as a Director and the President of the Company as
of December 31, 1997. Mr. Hathaway is included in the table as a Named
Executive Officer. See Part I, Item 6.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the current Executive Officers and Directors
of the Company:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Peter Schlesinger 63 Chairman, Chief Financial
Officer and Director
Buddy Young 63 President, Chief Executive
Officer, Secretary and Director
Gunther H. Schiff 71 Director
Ramon M. Mouton 58 Director
</TABLE>
PETER SCHLESINGER has been a Director of the Company since December 1993. A
Canadian citizen, Mr. Schlesinger attended McGill University and Columbia
University, receiving a Bachelor of Commerce degree in 1962. He was a
partner of a Canadian stockbrokerage firm, Annett Partners, for 10 years and
manager of a Bermuda investment company, Tatra Ltd., since 1974. He was
president of Halton Insurance, a Bermuda insurance company, listed on The
Toronto Stock Exchange, from 1988 to 1994. For ten years he has also served
as president of the Canadian Parkinson Disease Foundation.
7
<PAGE>
BUDDY YOUNG has served as President, Chief Executive Officer, and a Director
of the Company since March 31, 1998. During Mr. Young's career he has served
in various executive capacities in the entertainment industry. From 1992
until July 1996, Mr. Young served as President and Chief Executive Officer of
Bexy Communications, Inc., whose core business was the production, financing
and distribution of television programming. During his tenure at Bexy the
company produced and distributed a number of television programs including a
two-hour special, HEARTSTOPPERS . . . HORROR AT THE MOVIES, hosted by George
Hamilton, and a 26 half-hour television series entitled, FEELIN' GREAT,
hosted by Dynasty's John James.
From June 1983 until December 1991, Mr. Young was President, Chief Executive
Officer and a Director of Color Systems Technology, Inc., a publicly held
company whose stock traded on the American Stock Exchange. Color Systems'
major line of business is the use of its patented computer process for the
conversion of black and white motion pictures to color.
Prior to joining Color Systems, Mr. Young served from 1965 to 1975 as
Director of West Coast Advertising and Publicity for United Artists
Corporation, from 1975 to 1976 as Director of Worldwide Advertising and
Publicity for Columbia Pictures Corp., from 1976 to 1979 as Vice President of
Worldwide Advertising and Publicity for MCA/Universal Pictures, Inc., and
from 1981 to 1982 as a principal in the motion picture consulting firm of
Powell & Young, which represented some of the industry's leading film makers.
For the past twenty-five years Mr. Young has been an active member of The
Academy of Motion Picture Arts and Sciences and has served on a number of
industry-wide committees.
GUNTHER H. SCHIFF has been a Director of the Company since April 1990. Mr.
Schiff has practiced law in Los Angeles and Beverly Hills since 1954 and is
presently engaged in his own private law practice in Beverly Hills. He has
been a member and president of the Beverly Hills Civil Service Commission and
acts as counsel to Free Arts for Abused Children and the Young Musicians
Foundation.
RAY M. MOUTON has been a Director of the Company since July 1993. Since
1988, Mr. Mouton has served as President of The MANEX Group Inc., a
consulting firm specializing in mid-sized companies. A seasoned executive
with over 25 years of experience in general management, Mr. Mouton's
consulting clients include firms in financial service, high tech,
manufacturing and distribution industries. From 1978 to 1988 he was Senior
Vice President of Cybertek Corporation, a software company serving the
financial services industry. Previous positions held include Systems
Director for Autologic from 1976-1978, Project Manager for Citicorp from
1975-1976, and General Manager for General Automation from 1970-1975. Mr.
Mouton earned a B.S. Engineering degree from the University of Michigan. Mr.
Mouton currently serves on the boards of STATE Environmental Management, Inc.
and In A Box, Inc. Professional affiliations include The Professional
Network Group, Los Angeles Venture Association and Turnaround Management
Association.
Officers of the Company are elected by the Board of Directors and hold office
until their successors are chosen and qualified, until their death or until
they resign or have been removed from office. All corporate officers serve at
the discretion of the Board of Directors. There are no family relationships
between any Director or Executive Officer of the Company and any other
Director or Executive Officer of the Company.
8
<PAGE>
Directors of the Company hold office until the next annual stockholders
meeting, until successors are elected and qualified or until their earlier
resignation or removal.
ITEM 6. EXECUTIVE COMPENSATION
The tables and discussion below set forth information about the
compensation awarded to, earned by or paid to each of the Company's Chief
Executive Officers (the "Named Executive Officers") during the fiscal years
ended June 30, 1998, 1997 and 1996. No Executive Officer of the Company
received total annual salary and bonus in excess of $100,000 during the
fiscal year ended June 30, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION SHARES
FISCAL ----------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
--------------------------- ------ ------ ----- -------
<S> <C> <C> <C> <C>
Thomas S. Hathaway(1) . . . . 1998 $ 60,000 -- --
President, Chief Executive 1997 $114,800 $15,356 50,000
Officer, Secretary & Director 1996 $ 90,000 -- 100,000
Buddy Young . . . . . . . . . 1998 $ 12,510 -- --
President, Chief Executive 1997 -- -- --
Officer & Director 1996 -- -- --
</TABLE>
------------------------
(1) Mr. Hathaway resigned from all of his positions with the Company on
March 31, 1997, at which time all of his stock options were canceled.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company currently has no employment agreements with its Executive
Officers. On March 28, 1998, the Company entered into a consulting agreement
with Mr. Young. Under the terms of the agreement, Mr. Young serves as the
President and Chief Executive Officer and a Director of the Company and is
paid a monthly fee of $4,170.
OPTION/SAR GRANTS IN FISCAL YEAR ENDED JUNE 30, 1998
The Company did not grant any options or stock appreciation rights during the
most recent completed fiscal year.
9
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
No options or stock appreciation rights were exercised during the fiscal year
ended June 30, 1998, and no options or stock appreciation rights were
outstanding at the end of such year. All previously outstanding options were
canceled on March 31, 1998.
COMPENSATION OF DIRECTORS
Outside Directors of the Company are paid $150 for their attendance at each
meeting of the Board of Directors. Directors who are also officers of the
Company receive no additional compensation for their service as a Director.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 28, 1998, the Company entered into a consulting agreement with Mr.
Young. Under the terms of the agreement, Mr. Young serves as the President
and Chief Executive Officer and as a Director of the Company, and he is paid
a monthly fee of $4,170.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's certificate of incorporation provides for the authorization of
12,375,000 shares of Common Stock, $.04 par value per share. As of October
15, 1998, 1,509,865 shares of Common Stock were issued and outstanding, all
of which are fully-paid and non-assessable.
Holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by stockholders, and are not entitled to
cumulative voting for the election of directors. Upon the liquidation,
dissolution or winding up of the business of the Company, after payment of
all liabilities and payment of preferential amounts to the holders of
Preferred Stock, the shares of Common Stock are entitled to share equally in
the Company's remaining assets. Pursuant to the Company's articles of
incorporation, no shareholder of the Company has any preemptive rights to
subscribe for securities of the Company. The Common Stock is not subject to
redemption.
Holders of Common Stock are entitled to receive such dividends as the Board
of Directors may from time to time declare out of funds legally available for
the payment of dividends. No dividends are payable to holders of Common
Stock until all dividends due on Preferred Stock have been paid. See Part
II, Item 1, "Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters."
PREFERRED STOCK
The Company's certificate of incorporation provides for the authorization of
125,000 shares of Preferred Stock, $.04 par value per share, with such
rights, preferences and privileges as may be determined by the Board of
Directors. Therefore, the Board of Directors is empowered, without
stockholder approval, to issue Preferred Stock in one or more series, and to
fix for any series the
10
<PAGE>
dividend rights, dissolution or liquidation preferences, redemption prices,
conversion rights, voting rights, and other rights, preferences or privileges
for such Preferred Stock which could adversely affect the voting power or
other rights of the holders of Common Stock.
The Board of Directors has designated for issuance up to 50,000 shares of
Series B Preferred Stock. As of October 15, 1998, 16,792 shares of Series B
Preferred Stock were issued and outstanding, all of which were fully-paid and
non-assessable. Currently, the Board of Directors has no plans or
arrangements for the issuance of any additional shares of Preferred Stock.
Such shares could, under certain circumstances, be issued as a method of
discouraging, delaying or preventing a change in control of the Company, and
the issuance of such shares could prevent holders of the Company's Common
Stock from receiving a premium for their shares from a potential third-party
acquiror.
Holders of Series B Preferred Stock are entitled to receive, when and as
declared by the Board of Directors out of legally available funds, a
cumulative 6% per annum dividend payable quarterly. Such dividends accrue
and are cumulative whether or not such dividends are paid. See Part II, Item
1, "Market Price of and Dividends on the Registrant's Common Equity and Other
Shareholder Matters." The Series B Preferred Stock is not subject to
redemption.
Holders of Series B Preferred Stock have no voting rights unless the Company
fails to make two consecutive quarterly dividend payments. In such event,
holders of Series B Preferred Stock are entitled to vote as a class with
holders of the Common Stock, with 36 votes for each share of Series B
Preferred Stock they hold, and are entitled to cumulative voting for the
election of directors. These rights are currently available to holders of
Series B Preferred Stock because the Company has not made the required
quarterly dividend payments since March 1997.
Each share of Series B Preferred Stock is convertible at any time, at the
option of the holder, into 12 shares of Common Stock. If any holder converts
and dividends are accrued and unpaid on the date of conversion, the Company
is required to pay such dividends within 60 days. Each share of Series B
Preferred Stock is convertible into 12 shares of Common Stock at the option
of the Company at any time after December 31, 1994 if, during any ten
consecutive business day period, the closing bid price of the Common Stock is
$4.00 per share or greater and all quarterly dividends prior to the date of
conversion have been paid.
In the event of any liquidation, dissolution or winding up of the Company,
each share of Series B Preferred Stock shall be entitled to receive from the
assets of the Company a cash liquidation preference equal to the stated value
per share of $30 and a further preferential amount in cash equal to all
unpaid accrued cumulative dividends.
TRANSFER AGENT
The Company's transfer agent is U.S. Stock Transfer Corporation, 1745 Gardena
Avenue, Second Floor, Glendale, California 91204, Contact: Mr. William Garza,
Telephone: (818) 502-1404.
11
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
MARKET INFORMATION
The Company's Common Stock is traded over-the-counter on the OTC Bulletin
Board system under the symbol MGPV. Only a limited market exists for the
trading of the Company's Common Stock.
Of the 1,509,865 shares of Common Stock outstanding at October 15, 1998,
1,046,731 are freely tradable and the remaining 463,134 shares qualify for
trading pursuant to Rule 144 of the Securities and Exchange Commission. The
16,792 outstanding shares of Series B Preferred Stock are convertible by the
holders thereof into a total of 201,504 shares of Common Stock, which also
qualify for trading pursuant to Rule 144. The Company currently has no other
securities outstanding which are convertible into or exercisable for the
purchase of Common Stock.
The table below sets forth the high and low trading prices of the Company's
Common Stock for each quarter shown, as provided by the Nasdaq Trading and
Market Services Research Unit.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal 1997
-----------
Quarter ended September 30, 1996 --No Trades Reported--
Quarter ended December 31, 1996 0.61 0.25
Quarter ended March 31, 1997 0.81 0.51
Quarter ended June 30, 1997 0.75 0.51
Fiscal 1998
-----------
Quarter ended September 30, 1997 0.5625 0.20
Quarter ended December 31, 1997 0.125 0.125
Quarter ended March 31, 1998 0.16 0.15
Quarter ended June 30, 1998 0.50 0.04
Fiscal 1999
-----------
Quarter ended September 30, 1998 0.50 0.05
</TABLE>
HOLDERS
The approximate number of holders of record of the Company's Common Stock as
of June 30, 1998 was 122. The number of holders of record of the Company's
Series B Preferred Stock as of June 30, 1998 was 17.
12
<PAGE>
DIVIDENDS
Holders of Common Stock are entitled to receive such dividends as the Board
of Directors may from time to time declare out of funds legally available for
the payment of dividends. The Company has not paid dividends on its Common
Stock and does not anticipate that it will pay dividends in the foreseeable
future. No dividends are payable to holders of Common Stock until all
dividends due on Preferred Stock have been paid.
Holders of Series B Preferred Stock are entitled to receive, when and as
declared by the Board of Directors out of legally available funds, a
cumulative 6% per annum dividend payable quarterly. Such dividends accrue
and are cumulative whether or not such dividends are paid. As of June 30,
1998, $45,339 had been accrued for dividends payable on Series B Preferred
Stock.
ITEM 2. LEGAL PROCEEDINGS
As of October 15, 1998, the Company is not a party to any material legal
proceedings, and none are known to be contemplated against the Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Except as otherwise indicated, the Company believes that each of the
transactions described in the table below was exempt from the registration
requirements of the Securities Act of 1933 pursuant to Section 4(2) as a
transaction not involving any public offering. In each case, the number of
investors was limited, the investors were either accredited or otherwise
qualified and had access to material information about the Company, and
restrictions were placed on the resale of the securities sold.
<TABLE>
<CAPTION>
Date Title Amount Consideration Recipient(s)
- ---- ----- ------ ------------- ------------
<S> <C> <C> <C> <C>
10/95 Options to buy 225,000 Services Officer of
Common Stock options rendered the Company
12/95 Options to buy 11,911 Services Employees and
Common Stock options rendered a consultant of
the Company
6/96 Options to buy 1,527 Services Employee of
Common Stock options rendered the Company
11/96 to Options to buy 300,000 Services Officers of
1/97 Common Stock options rendered the Company
</TABLE>
13
<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada Revised Statutes ("NRS") provides that a
corporation may indemnify any director or officer against expenses (including
attorneys' fees), judgments, fines and settlements arising in connection with
a legal proceeding to which such a person is a party, if the person acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Unless the person is successful upon the merits in such an action,
indemnification may be awarded only after a determination is made by
independent decision of the Board of Directors, by legal counsel, or by a
vote of the stockholders that the applicable standard of conduct was met by
the person to be indemnified.
The circumstances under which indemnification is granted in connection with
an action brought on behalf of the Company is generally the same as those set
forth above; however, with respect to such actions, indemnification is
granted only with respect to expenses actually incurred in connection with
the defense or settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and must not have been adjudged liable for negligence or misconduct.
Section 78.751 also provides that indemnification pursuant to its provisions
shall not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under the articles of incorporation or any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, except that indemnification (unless ordered by a court) may not be
made to any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
Article V of the Company's by-laws provide that the Company shall indemnify
any director or officer against expenses (including attorneys' fees),
judgments, penalties, fines and settlements arising in connection with a
legal proceeding to which such a person is a party to the fullest extent
permitted by the laws of Nevada as they may exist from time to time.
In addition, Article Eleven of the Company's articles of incorporation
provides that no director or officer of the Company shall be liable to the
Company or its shareholders for damages for breach of fiduciary duty as a
director or officer, except for (a) acts of omission which involve
intentional misconduct, fraud or a knowing violation of law; or (b) the
payment of dividends in violation of Section 78.300 of the Nevada Revised
Statutes (regarding unlawful distributions to shareholders).
Under NRS Section 78.752 and Article V of the Company's by-laws, the Company
may purchase and maintain insurance for directors and officers. The Company
purchased a three-year policy effective February 1, 1998, which insures the
Company's directors and officers against certain liabilities, including
liabilities under the federal securities laws.
14
<PAGE>
PART F/S
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
MGPX Ventures, Inc.
We have audited the accompanying balance sheet of MGPX Ventures, Inc. as of
June 30, 1998, and the related statements of operations, shareholders'
equity, and cash flows for each of the two years in the period ended June 30,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MGPX Ventures, Inc. as of
June 30, 1998, and the results of its operations and its cash flows for each
of the two years in the period ended June 30, 1998 in conformity with
generally accepted accounting principles.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
September 4, 1998
15
<PAGE>
MGPX VENTURES, INC.
BALANCE SHEET
JUNE 30, 1998
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 559,102
Prepaid insurance 16,005
-----------
TOTAL CURRENT ASSETS $ 575,107
-----------
-----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 900
Preferred stock dividends payable 45,339
-----------
Total current liabilities 46,239
-----------
SHAREHOLDERS' EQUITY
Convertible Preferred stock, Series B, $0.04 par value
$30 per share liquidation preference and certain voting rights
125,000 shares authorized
16,792 shares issued and outstanding 672
Common stock, $0.04 par value
12,375,000 shares authorized
1,509,865 shares issued and outstanding 60,395
Additional paid-in capital 2,168,399
Accumulated deficit (1,700,598)
-----------
Total shareholders' equity 528,868
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 575,107
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
MGPX VENTURES, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30,
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
GENERAL AND ADMINISTRATIVE EXPENSES $ 16,436 $ -
---------- ----------
LOSS FROM OPERATIONS (16,436) -
---------- ----------
OTHER INCOME
Interest income 6,443 -
Miscellaneous income 1,000 -
---------- ----------
Total other income 7,443 -
---------- ----------
LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR
INCOME TAXES (8,993) -
PROVISION FOR INCOME TAXES 800 -
---------- ----------
NET LOSS FROM CONTINUING OPERATIONS (9,793) -
---------- ----------
DISCONTINUED OPERATIONS
Income from operations, net of provision for income taxes of
$506,872 and $22,434 (497,044) 28,065
Gain on disposition of operations, net of provision for income
taxes of $0 207,572 -
---------- ----------
Net income (loss) from discontinued operations (289,472) 28,065
---------- ----------
NET INCOME (loss) $ (299,265) $ 28,065
---------- ----------
---------- ----------
BASIC EARNINGS (loss) PER SHARE
From continuing operations $ (0.01) $ -
From discontinued operations (0.17) 0.01
---------- ----------
TOTAL BASIC EARNINGS (loss) PER SHARE $ (0.18) $ 0.01
---------- ----------
---------- ----------
WEIGHTED-AVERAGE SHARES OUTSTANDING 1,692,542 1,876,408
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
MGPX VENTURES, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30,
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Preferred Stock Common Stock
----------------------------- ----------------------------
Additional Accumulated
Shares Amount Shares Amount Paid-in Capital Deficit Total
------------- ------------ ------------- ------------ ----------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1996 16,792 $ 672 1,877,241 $ 75,090 $ 2,154,704 $ (1,368,946) $ 861,520
Retirement of
common stock (5,000) (200) 200 -
Cash dividends
payable on
Series B
preferred
stock (30,226) (30,266)
Net income 28,065 28,065
------------- ------------ ------------- ------------ ----------------- ---------------- ------------
Balance,
June 30, 1997 16,792 672 1,872,241 74,890 2,154,904 (1,371,107) 859,359
Cash dividends
payable on
Series B
preferred
stock (30,226) (30,226)
Purchase and
cancellation
of common
stock in
connection
with the sale
of operations (362,376) (14,495) 13,495 (1,000)
Net loss (299,265) (299,265)
------------- ------------ ------------- ------------ ----------------- ---------------- ------------
Balance,
June 30, 1998 16,792 $ 672 1,509,865 $ 60,395 $ 2,168,399 $ (1,700,598) $ 528,868
------------- ------------ ------------- ------------ ----------------- ---------------- ------------
------------- ------------ ------------- ------------ ----------------- ---------------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
MGPX VENTURES, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30,
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (9,793) $ -
Increase (decrease) in
Accounts payable 900 -
Preferred stock dividend payable - 7,556
Prepaids (16,005) -
---------- ---------
Net cash provided by (used in) continuing
operating activities (24,898) 7,556
Net cash provided by (used in) discontinued
operating activities (130,530) 237,209
---------- ---------
Net cash provided by (used in) operating activities (155,428) 244,765
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of assets, net of cash 650,000 -
---------- ---------
Net cash provided by continuing investing
activities 650,000
Net cash used in discontinued investing
activities (21,116) (41,217)
---------- ---------
Net cash provided by (used in) investing
activities 628,884 (41,217)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock (1,000) -
---------- ---------
Net cash used in continuing financing activities (1,000) -
Net cash provided by (used in) discontinued
financing activities 82,612 (208,385)
---------- ---------
Net cash provided by (used in) financing
activities 81,612 (208,385)
---------- ---------
Net increase (decrease) in cash and cash
equivalents 555,068 (4,837)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,034 8,871
---------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 559,102 $ 4,034
---------- ---------
---------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ - $ 6,005
---------- ---------
---------- ---------
Income taxes paid $ - $ 1,729
---------- ---------
---------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Warner Technologies, Inc. was incorporated in Nevada in 1988 and
provided energy efficiency products and services in three principal
areas: 1) turnkey lighting retrofits, 2) building automation & control
systems, and 3) strategic energy planning services. These products and
services were delivered to commercial, industrial, and institutional
buildings through contracts with building owners and managers, as well
as directly to utilities for their customers' benefit. Warner
Technologies, Inc. was headquartered in Los Angeles and maintained
regional offices in Boston and San Diego.
Effective December 31, 1997, Warner Technologies, Inc. sold
substantially all of its operations to its management and was
subsequently renamed MGPX Ventures, Inc. (the "Company") on March 31,
1998 as more fully described in Note 3.
The Company is currently operating as a "shell" corporation, has minimal
operations, and is headquartered in Encino, California. The Company is
in the process of identifying potential merger and acquisition
candidates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
EARNINGS PER SHARE
During the year ended June 30, 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."
Basic earnings per share is computed by dividing income available to
common shareholders by the weighted-average number of common shares
outstanding. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include
the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional
common shares were dilutive. Diluted earnings per share are not
presented for 1998 and 1997 because common stock equivalents are
anti-dilutive.
INCOME TAXES
The Company accounts for income taxes under the asset and liability
method of accounting. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A
valuation allowance is required when it is less likely than not that the
Company will be able to realize all or a portion of its deferred tax
assets.
20
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of revenues and expenses
included in the determination of net earnings from continuing operations
and discontinued operations during the reporting period. Actual results
could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 financial
statements to conform with the 1998 presentation and relate primarily to
the presentation of discontinued operations as more fully described in
Note 3.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows the Company considers all
highly-liquid investments purchased with original maturities of three
months or less to be cash equivalents.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The FASB issued SFAS 130, "Reporting Comprehensive Income," which is
effective for financial statements with fiscal years beginning after
December 15, 1997. Earlier application is permitted. SFAS 130
establishes standards for reporting and display of comprehensive income
and its components in a full set of general-purpose financial
statements. The Company does not expect adoption of SFAS 130 to have a
material impact, if any, on its financial position or results of
operations.
The FASB issued SFAS 131, "Disclosures about Segments of an Enterprise
and Related Information," effective for fiscal years beginning after
December 15, 1997. SFAS 131 requires a company to report certain
information about its operating segments including factors used to
identify the reportable segments and types of products and services from
which each reportable segment derives its revenues. The Company does not
anticipate any material change in the manner that it reports its segment
information under this new pronouncement.
21
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 3 - DISPOSAL OF OPERATIONS
Effective December 31, 1997, Warner Technologies, Inc. sold
substantially all of its net assets used in operations to management for
$650,000. Net proceeds were approximately $585,000 after closing costs.
As a condition of the transaction, management agreed to the cancellation
of its stock options and the sale of their common shares to the Company
for $1,000, representing more than a 25% reduction in beneficial control
of common shares. As a result, the Company's operations through
December 31, 1997 are reported as discontinued operations. The results
from discontinued operations included total revenues of approximately
$2,605,000 and $3,101,000 and net income from operations of
approximately $35,000 and $90,000 for the years ended June 30, 1998 and
1997, respectively.
Net assets sold to management and the resulting pretax gain were
determined as follows:
<TABLE>
<S> <C>
Current assets $ 1,071,562
Property, plant, and equipment 103,170
Other assets 6,665
Current liabilities (788,563)
Non-current liabilities (15,406)
Closing costs (65,000)
------------
Net assets sold 312,428
Less cash received 650,000
------------
PRETAX GAIN ON SALE OF ASSETS $ 207,572
------------
------------
</TABLE>
NOTE 4 - CONVERTIBLE PREFERRED STOCK
On December 31, 1992, the Company issued 16,792 shares of Series B
Convertible Preferred Stock at $30.00 per share and 100,752 Class B
Warrants to purchase common stock at exercise prices between $3.00 and
$5.00 per share in a private placement. Each share of Series B
Preferred Stock is convertible at any time, at the option of the holder,
into 12 shares of Common Stock. If any holder converts and dividends
are accrued and unpaid on the date of conversion, the Company is
required to pay such dividends within 60 days. The Company has the
right to convert Series B Preferred shares into 12 shares of Common
Stock after December 31, 1994, if the closing bid price of the common
stock on any ten consecutive business days equals or exceeds $4.00 per
share, and all quarterly dividends prior to the date of conversion have
been paid.
22
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 4 - CONVERTIBLE PREFERRED STOCK (CONTINUED)
Series B holders are entitled to receive a cumulative 6% per annum
dividend payable quarterly. Series B shares and Class B Warrants are
restricted from trading in accordance with governing SEC rules and
regulations. Series B shareholders are entitled to preference upon
liquidation equal to the stated value of $30.00 per share plus any
accrued but unpaid dividends up to the time of liquidation, but have no
voting rights unless the Company fails to make two consecutive dividend
payments. In that case, Series B holders would have cumulative voting
rights equal to three times the number of common shares into which their
preferred shares may be converted.
The Class B Warrants expired on December 31, 1995.
By order of its Board of Directors, the Company deferred payment of the
dividends payable for the quarters ended March 31, 1997 through June 30,
1998. At June 30, 1998, total cumulative unpaid dividends payable were
$45,339.
NOTE 5 - STOCK OPTIONS
From time to time, the Company may grant options to purchase common
stock to employees, officers, directors, and consultants. The options
generally have a two or three year exercise period, and have exercise
prices set at or above the current market value of the common stock at
the time the options are granted. The following table summarizes the
Company's stock option transactions:
<TABLE>
<CAPTION>
Option Exercise
Shares Prices
-------------------------------
<S> <C> <C>
Outstanding, June 30, 1996 942,232 $0.25 - 2.72
Granted 300,000 $ 0.50
Expired/canceled (677,964) $0.60 - 2.72
----------
Outstanding, June 30, 1997 564,268 $0.25 - 0.88
Expired/canceled (564,268) $0.25 - 0.88
----------
OUTSTANDING, JUNE 30, 1998 -
----------
----------
</TABLE>
23
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 5 - STOCK OPTIONS (CONTINUED)
The Company has adopted only the disclosure provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." It applies Accounting
Principles Bulletin ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations in accounting for its plans
and does not recognize compensation expense for its stock-based
compensation plans. If the Company had elected to recognize compensation
expense based upon the fair value at the grant date for awards under
these plans consistent with the methodology prescribed by SFAS No. 123,
the Company's net income and earnings per share would be reduced to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
For the Years Ended
June 30,
---------------------------
1998 1997
------------ -----------
<S> <C> <C>
Net income (loss) as reported $ (299,265) $ 28,065
Net income (loss), pro forma $ (299,265) $ 13,905
Basic earnings (loss) per share as reported $ (0.18) $ 0.01
Basic earnings (loss) per share, pro forma $ (0.18) $ 0.01
</TABLE>
These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense
related to grants made before June 30, 1995. The fair value of these
options was estimated at the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions for
the year ended June 30, 1997: dividend yield of 0%; expected volatility
of 150%; risk-free interest rate of 6%; and expected life of 3 years.
The weighted-average per share fair value of options granted during the
year ended June 30, 1997 was $0.08, and the weighted-average exercise
price of options granted during the year ended June 30, 1997 was $0.50.
The pro forma amounts shown for the year ended June 30, 1998 are
equivalent to the reported amounts because there were no stock options
granted during the year.
24
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 6 - INCOME TAXES
Significant components of the provision for taxes based on income for
the years ended June 30 are as follows:
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Current
Federal $ - $ -
State 800 2,217
------------ -----------
800 2,217
------------ -----------
Deferred
Federal 494,750 20,217
State 12,122 -
------------ -----------
506,872 20,217
------------ -----------
PROVISION FOR INCOME TAXES $ 507,672 $ 22,434
------------ -----------
------------ -----------
</TABLE>
The provision for income taxes is allocated as follows:
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Continuing operations $ 800 $ -
Discontinued operations $ 506,872 22,434
------------ -----------
PROVISION FOR INCOME TAXES $ 507,672 $ 22,434
------------ -----------
------------ -----------
</TABLE>
A reconciliation of the provision for (benefit from) income tax expense
with the expected income tax computed by applying the federal statutory
income tax rate to income before provision for income taxes for the
years ended June 30 is as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Income tax provision computed at
federal statutory tax rate 34.0% 34.0%
Change in deferred income tax
valuation reserve 223.0 -
State taxes, net of federal benefit 6.0 6.0
Other 1.0 1.0
---------- ----------
TOTAL 264.0% 41.0%
---------- ----------
---------- ----------
</TABLE>
As of June 30, 1998, the Company had federal and state net operating
loss carryforwards of approximately $1,340,000 and $130,000,
respectively, which expire through 2005 and 2011, respectively.
25
<PAGE>
MGPX VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
- -------------------------------------------------------------------------------
NOTE 6 - INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax assets and liabilities
for federal and state income taxes as of June 30, 1998 consisted of the
following:
<TABLE>
<S> <C>
Deferred tax assets (liabilities)
Net operating loss carryforwards $ 469,654
Other (2,116)
------------
467,538
Valuation allowance 467,538
------------
NET DEFERRED TAX ASSET $ -
------------
------------
</TABLE>
During the year ended June 30, 1998, the Company utilized approximately
$217,000 of its federal net operating loss carryforwards.
26
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
The following documents are filed as exhibits to this registration statement:
<TABLE>
<CAPTION>
Exhibit
No. Document Description
------- -----------------------------------------------------------------------------------------
<S> <C> <C>
(2) CHARTER AND BY-LAWS
2.1 Articles of incorporation of the Company, as amended to date
2.2 By-laws of the Company
(3) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
3.1 Facsimile of Common Stock certificate of the Company
3.2 Facsimile of Series B Preferred Stock certificate of the Company
3.3 Certificate of Determination of Series B Preferred Stock of the Company
(6) MATERIAL CONTRACTS
6.1 Agreement for Sale and Purchase of Assets of a Business between the Company, as seller,
and Thomas Hathaway and Joseph Ferrari, as buyers, dated February 16, 1998
6.2 Consulting Agreement between the Company and Buddy Young, dated March 24, 1998
(27) FINANCIAL DATA SCHEDULE
27.1 Financial Data Schedule
</TABLE>
ITEM 2. DESCRIPTION OF EXHIBITS
The Company has included as exhibits to this registration statement those
documents described under exhibit numbers 2, 3 and 6 in Part III of Form 1-A
and has labeled them accordingly in the Exhibits Index above. Other exhibits
described in Part III of Form 1-A are not applicable. The Company has also
included as an exhibit the Financial Data Schedule required by Item
601(b)(27) of Regulation S-B.
27
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: October 15, 1998 MGPX VENTURES, INC.
By: /s/Buddy Young
-----------------------------
Buddy Young, President and
Chief Executive Officer
28
<PAGE>
Exhibit 2.1
ARTICLES OF INCORPORATION
OF
MAPLE ENTERPRISES, INC.
The undersigned, desiring to form a corporation for profit under the
General Corporation Law of Nevada, does hereby certify:
FIRST: The name of said corporation shall be MAPLE ENTERPRISES, INC.
SECOND: The place in the State of Nevada where its principal office is to
be located is One East First Street, Reno, County of Washoe, and the resident
agent in charge thereof is the Corporation Trust Company of Nevada.
THIRD: The purpose for which the corporation is formed is to engage in any
lawful activity.
FOURTH: The maximum number of shares of all classes which the corporation
is authorized to have outstanding is five hundred million (500,000,000) shares,
consisting of four hundred ninety five million (495,000,000) shares of Common
Stock, all par value $.001 and five million (5,000,000) shares of Preferred
Stock, all par value $.001. The holders of preferred stock shall have such
rights, preferences, and privileges as may be determined, prior to the issuance
of such shares, by the Board of Directors.
FIFTH: The members of the governing body shall be styled directors and the
names and post office addresses of the first Board of Directors, to serve until
their successors are elected and qualified, are as follows:
1. Rowland W. Day, II, 650 Town Center Drive, Costa Mesa, California 92626.
2. Jo L. Christensen, 650 Town Center Drive, Costa Mesa, California 92626.
3. Jehu Hand, 650 Town Center Drive, Costa Mesa, California 92626.
The corporation shall initially have three members of the Board of
Directors; the number of directors may be increased or decreased pursuant to the
provisions of the corporation's bylaws and chapter 78 of the Nevada Revised
Statutes.
SIXTH: No capital stock issued by the corporation shall be assessable
following payment of the subscription price or par value therefor.
<PAGE>
SEVENTH: The name and post office address of the incorporator is as
follows:
1. Jehu Hand, 650 Town Center Drive, Costa Mesa, California 92626.
EIGHTH: The corporation shall have perpetual existence.
NINTH: A director or officer of the corporation shall not be disqualified
by his office from dealing or contracting with the corporation as a vendor,
purchaser, employee, agent or otherwise.
No transaction, contract or act of the corporation shall be void or
voidable or in any way affected or invalidated by reason of the fact that any
director or officer of any corporation is a member of any firm, a shareholder,
director or officer of the corporation or trustee or beneficiary of any trust
that is in any way interested in such transaction, contract or act. No director
or officer shall be accountable or responsible to the corporation for or in
respect to any transaction, contract or act of the corporation for any gain or
profit directly or indirectly realized by him by reason of the fact that he or
any firm in which he is a member or any corporation of which he is a trustee, or
beneficiary, is interested in such transaction, contract, or act; provided the
fact that such director or officer or such firm, corporation or trust is so
interested shall have been disclosed or shall have been known to the members of
the Board of Directors as shall be present at any meeting at which action upon
such contract, transaction or act shall have been taken. Any director may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize or take action in respect to any such contract,
transaction or act, and may vote thereat to authorize, ratify or approve any
such contract, transaction or act, and any officer of the corporation may take
any action within the scope of his authority, respecting such contract,
transaction or act, and any officer of the corporation of which he is a
shareholder, director or officer, or any trust of which he is a trustee or
beneficiary, were not interested in such transaction, contract or act. Without
limiting or qualifying the foregoing, if in any judicial other inquiry, suit,
cause or proceeding, the question of whether a director or officer of the
corporation has acted in good faith is material, and notwithstanding any statute
or rule of law or equity to the contrary (if any there be), his good faith shall
be presumed in the absence of proof to the contrary by clear and convincing
evidence.
<PAGE>
TENTH: No shareholder of the corporation shall have any preemptive rights.
Dated this 6th day of August, 1986.
/s/ Jehu Hand
-----------------------------
Jehu Hand, Incorporator
STATE OF CALIFORNIA )ss,
COUNTY OF ORANGE )
On August 6th, 1986, before me, the undersigned, a Notary Public in and for said
State, personally appeared Jehu Hand, personally known to me (or proved to me on
the basis of satisfactory evidence) to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same.
WITNESS my hand and official seal.
Signature /s/ Sheryl Y. Bundy
------------------------------
[SEAL]
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
WARNER TECHNOLOGIES, INC.
INTO
MAPLE ENTERPRISES, INC.
* * * * *
MAPLE ENTERPRISES, INC., a corporation organized and existing under the
laws of Nevada,
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 7th day of August,
1986, pursuant to the Laws of the State of Nevada.
SECOND: That this corporation owns at least ninety percentum of the
outstanding shares of each class of the stock of WARNER TECHNOLOGIES, INC., a
corporation incorporated on the 15th day of October, 1986, pursuant to the Laws
of the State of California the provisions of which permit the merger of a
subsidiary corporation of another state into a parent corporation organized and
existing under the laws of said state.
THIRD: That this corporation, by the following resolutions of its Board of
Directors, duly adopted at a meeting held on the 19th day of August, 1988,
determined to and did merge into itself said WARNER TECHNOLOGIES, INC.:
<PAGE>
RESOLVED, that MAPLE ENTERPRISES, INC. merge, and it hereby does merge into
itself said WARNER TECHNOLOGIES, INC., and assumes all of its obligations; and
FURTHER RESOLVED, that the merger shall be effective upon the date of
filing with the Secretary of State of Nevada.
FURTHER RESOLVED, that the terms and conditions of the merger are as
follows:
The presently issued and outstanding shares of stock of WARNER
TECHNOLOGIES, INC., the merging corporation, which are owned by MAPLE
ENTERPRISES, INC., the surviving corporation, shall be surrendered and
cancelled. No shares of stock of the surviving corporation shall be issued in
exchange for these shares.
Each share of stock of WARNER TECHNOLOGIES, INC., the merging corporation,
which shall be outstanding and not owned by MAPLE ENTERPRISES, INC., the
surviving corporation, on the effective date of the merger and all rights in
respect thereof shall be changed into 3.4351 shares of stock of the surviving
corporation.
After the effective date of this merger, each holder of an outstanding
certificate representing shares of stock of WARNER TECHNOLOGIES, INC., the
merging corporation,
<PAGE>
shall surrender the same to the surviving corporation, and each holder shall be
entitled upon such surrender to receive the number of shares of stock of the
surviving corporation on the basis provided herein. Until so surrendered the
outstanding shares of the stock of the merging corporation which are to be
converted into the stock of the surviving corporation as provided herein, may be
treated by the surviving corporation for all corporate purposes as evidencing
the ownership of shares of the surviving corporation as though said surrender
and exchange had taken place.
FURTHER RESOLVED, that the proper officers of this corporation be and they
hereby are directed to make and execute a Certificate of Ownership and Merger
setting forth a copy of the resolutions to merge said WARNER TECHNOLOGIES, INC.
and assume its liabilities and obligations, and the date of adoption thereof,
and to cause the same to be filed with the Secretary of State and to do all acts
and things whatsoever, whether within or without the State of Nevada, which may
be in anywise necessary or proper to effect said merger; and
FURTHER RESOLVED that this corporation change its corporate name to the
following: WARNER TECHNOLOGIES, INC.
FOURTH: Anything herein or elsewhere to the contrary notwithstanding this
merger may be terminated and abandoned by the board of directors of MAPLE
ENTERPRISES,
<PAGE>
INC. at any time prior to the date of filing the merger with
the Secretary of State.
IN WITNESS WHEREOF, said MAPLE ENTERPRISES, INC. has caused this
certificate to be signed by its President and by its Secretary, this 13 day of
September, 1988.
MAPLE ENTERPRISES, INC.
By /s/ Sidney E. Pelston
-----------------------------
Sidney E. Pelston
President
(SEAL)
By /s/ Eileen F. Brooks
-----------------------------
Eileen F. Brooks
Secretary
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On September 13, 1988 personally appeared before me, a Notary Public,
Sidney E. Pelston and Eileen F. Brooks who acknowledged that they executed the
above instrument.
/s/ Claire O Williams
-----------------------------
Notary Public
(SEAL)
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
WARNER TECHNOLOGIES, INC.
Warner Technologies, Inc., a Nevada corporation (the "Corporation") does
hereby certify that:
1. The Articles of Incorporation of the Corporation shall be amended by
revising Article Fourth to read in full as follows:
"FOURTH: The maximum number of shares of all classes which the
Corporation is authorized to have outstanding is twelve million five
hundred thousand (12,500,000) shares, consisting of twelve million
three hundred seventy-five thousand (12,375,000) shares of Common
Stock, all par value $0.04, and one hundred twenty-five thousand
(125,000) shares of Preferred Stock, all par value $.04. The holders
of Preferred Stock shall have such rights, preferences, and privileges
as may be determined, prior to the issuance of such shares, by the
Board of Directors. As of the date of filing of this Certificate of
Amendment with the Nevada Secretary of State, each outstanding share
of Common Stock is converted into and reconstituted as 1/40
(one-fortieth) of one share of Common Stock. No fractional shares
shall be issued, but in lieu thereof any fractional share shall be
rounded to the nearest whole share."
2. The foregoing amendment has been duly authorized and approved by the
Board of Directors of the Corporation.
3. The foregoing amendment has been duly adopted and approved by the
written consent of the stockholders holding a majority of the Corporation's
outstanding stock entitled to vote thereon in accordance with NRS 78.320.
4. In accordance with NRS 78.320, notice of the adoption and approval of
the foregoing amendment has been promptly given to all stockholders of the
Corporation who have not consented in writing to this corporate action.
Dated: August 8, 1990 WARNER TECHNOLOGIES, INC.
By:/s/ Sidney E. Pelston
-----------------------------
President
By:/s/ Thomas S. Hathaway
-----------------------------
Secretary
<PAGE>
STATE OF CALIFORNIA )
)ss.
COUNTY OF ORANGE )
On August 17 , 1990, before me, the undersigned, a Notary Public in and for
said State, personally appeared Sidney E. Pelston, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument as President on behalf of Warner Technologies,
Inc., the corporation therein named, and acknowledged to me that such
corporation executed the within instrument pursuant to its bylaws or a
resolution of the board of directors.
/s/ Sidney E. Pelston
-----------------------------
WITNESS my hand and official seal.
/s/ Gertrude Murphy [SEAL]
- -------------------------------
STATE OF CALIFORNIA )
)ss.
COUNTY OF ORANGE )
On August 17 , 1990, before me, the undersigned, a Notary Public in and for
said State, personally appeared Thomas S. Hathaway, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person who
executed the within instrument as Secretary on behalf of Warner Technologies,
Inc., the corporation therein named, and acknowledged to me that such
corporation executed the within instrument pursuant to its bylaws or a
resolution of the board of directors.
/s/ Thomas S. Hathaway
-----------------------------
WITNESS my hand and official seal.
/s/ Gertrude Murphy
- --------------------------------
[SEAL]
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
WARNER TECHNOLOGIES, INC.
Warner Technologies, Inc., a Nevada corporation (the "Corporation") does
hereby certify that:
1. The Articles of Incorporation of the Corporation shall be amended by
adding Articles Eleven and Twelve to read in full as follows:
"ELEVENTH: No director or officer of the Corporation shall be
liable to the Corporation or its stockholders for damages for breach
of fiduciary duty as a director of officer, except for (a) acts of
omission which involve intentional misconduct, fraud or a knowing
violation of law; or (b) the payment of dividends in violation of
Nevada Revised Statutes section 78.300.
TWELFTH: The Corporation shall pay the expenses of officers and
directors of the Corporation incurred in defending a civil or criminal
action, suite or proceeding as are incurred and in advance of the
final disposition of the action, suit or proceeding, upon receipt of
an undertaking by or on behalf of the director or officer to repay the
amount it if is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
Corporation. The provisions herein do not affect any rights to
advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise
by law."
2. The foregoing amendment has been duly authorized and approved by the
Board of Directors of the Corporation.
3. The foregoing amendment has been duly adopted and approved by the vote
of the stockholders holding a majority of the Corporation's outstanding stock,
and entitled to vote thereon in accordance with NRS 78.320.
4. In accordance with NRS 78.320, notice or the adoption and approval of
the foregoing amendment has been promptly given to all stockholders of the
Corporation who did not attend the Annual Stockholder Meeting at which time this
corporate action was ratified.
Dated: March 27, 1991 WARNER TECHNOLOGIES, INC.
By: /s/ Sidney E. Pelston
-----------------------------
President
By: /s/ Thomas S. Hathaway
-----------------------------
Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
WARNER TECHNOLOGIES, INC.
Warner Technologies, Inc., a Nevada corporation (the "Corporation" does
hereby certify that:
1. The Articles of Incorporation of the Corporation shall be amended by
revising Article First to read in full as follows:
"FIRST: The name of said corporation shall be "MGPX VENTURES, INC."
2. The foregoing amendment has been duly authorized and approved by the
Board of Directors of the Corporation.
3. The foregoing amendment has been duly adopted and approved by a vote of
the stockholders holding a majority of the Corporation's outstanding stock
entitled to vote at an annual shareholder's meeting in accordance with NRS
78.320.
Dated: March 31, 1998 WARNER TECHNOLOGIES, INC.
By: /s/ Thomas S. Hathaway
-----------------------------
President
By: /s/ Thomas S. Hathaway
-----------------------------
Secretary
<PAGE>
INC. at any time prior to the date of filing the merger with the Secretary of
State.
IN WITNESS WHEREOF, said MAPLE ENTERPRISES, INC. has caused this
certificate to be signed by its President and by its Secretary, this 13 day
of September, 1988.
MAPLE ENTERPRISES, INC.
By /s/ Sidney E. Pelston
------------------------------
Sidney E. Pelston
President
(SEAL)
By /s/ Eileen F. Brooks
------------------------------
Eileen F. Brooks
Secretary
STATE OF CALIFORNIA )
)ss.
COUNTY OF LOS ANGELES )
On September 13, 1988 personally appeared before me, a Notary Public,
Sidney E. Pelston and Eileen F. Brooks who acknowledged that they executed
the above instrument.
/s/ Claire O. Williams
------------------------------
Notary Public
(SEAL)
<PAGE>
EXHIBIT 2.2
BYLAWS
OF
MAPLE ENTERPRISES, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders
of this Company, for the purpose of fixing or changing the number of
directors of the Company, electing directors and transacting such other
business as may come before the meeting, shall be held on such date, at such
time and at such place as may be designated by the Board of Directors.
SECTION 2. SPECIAL MEETINGS. Special meetings of the shareholders
may be called at any time by the president or a vice-president or a majority
of the Board of Directors acting with or without a meeting, or the holder or
holders of one-half of all the shares outstanding and entitled to vote
thereat.
SECTION 3. PLACE OF MEETINGS. Meetings of shareholders shall be
held at the principal office of the Company, unless the Board of Directors
decides that a meeting shall be held at some other place within or without
the State of Nevada and causes the notice thereof to so state.
SECTION 4. NOTICES OF MEETINGS. Unless waived, a written,
printed, or typewritten notice of each annual or special meeting, stating the
day, hour and place and the purpose of purposes thereof shall be served upon
or mailed to each shareholder of record entitled to vote or entitled to
notice, not more than sixty (60) days nor less than ten (10) days before any
such meeting. If mailed, it shall be directed to a shareholder at his or her
address as the same appears on the records of the Company. If a meeting is
adjourned to another time and place, no further notice as to such adjourned
meeting need be given if the time and place to which it is adjourned are
fixed and announced at such meeting. In the event of a transfer of shares
after notice has been given and prior to the holding of the meeting, it shall
not be necessary to serve notice on the transferee. Nothing herein contained
shall prevent the setting of a record date in the manner provided by law for
the determination of the shareholders who are entitled to receive notice of
or to vote at any meeting of shareholders or for any purpose permitted by law.
SECTION 5. WAIVER OF NOTICE. Notice of the time, place and
purpose of any meeting of shareholders may be waived in writing, either
before or after the holding of such meeting, by any shareholder.
SECTION 6. QUORUM. At any meeting of shareholders, the holders of
a majority in amount of the shares of the Company then
<PAGE>
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum for such meeting but no action required by
law, the Articles of Incorporation or these Bylaws to be authorized or taken
by the holders of a designated proportion of the shares of any particular
class, or of each class, may be authorized or taken by a lesser proportion.
The holders of a majority of the voting shares represented at a meeting in
person or by proxy may adjourn such meeting from time to time, and at such
adjourned meeting any business may be transacted as if the meeting had been
held as originally called.
SECTION 7. ORGANIZATION. At each meeting of the shareholders, the
president, or, in the absence of the president, a chairman chosen by a
majority in interest of the shareholders present in person or by proxy and
entitled to vote, shall act as chairman, and the secretary of the Company,
or, if the secretary of the Company not be present, the assistant secretary,
or if the secretary and the assistant secretary not be present, any person
whom the chairman of the meeting shall appoint, shall act as secretary of the
meeting.
SECTION 8. SHAREHOLDERS ENTITLED TO VOTE. Every shareholder of
record shall be entitled at each meeting of shareholders to one vote for each
share standing in his name on the books of the Company.
A corporation owning shares in this Company may vote the same by
its president or its secretary or its treasurer, and such officer shall
conclusively be deemed to have authority to vote such shares and to secure
any proxies and written waivers and consents in relation thereto, unless,
before a vote is taken or a consent or waiver is acted upon, it shall be made
to appear by a certified copy of the regulations, by-laws or resolution of
the Board of Directors of the corporation owning such shares that such
authority does not exist or is vested in some other officer or person.
SECTION 9. SHAREHOLDER VOTING. At each meeting of the
shareholders for the election of directors at which a quorum is present, the
persons receiving the greatest number of votes shall be the directors. Such
election may be by ballot or viva voce, as the shareholders may determine.
All other questions shall be determined by a majority vote of the shares
entitled to vote and represented at the meeting in person or by proxy, unless
for any particular purpose the vote of a greater proportion of the shares, or
of any particular class of shares, or of each class, is otherwise required by
law, the Articles of Incorporation or these Bylaws.
SECTION 10. PROXIES. At meetings of the shareholders any
shareholder of record entitled to vote thereat may be represented and may
vote by a proxy or proxies appointed by an instrument in writing, but such
instrument shall be filed with the secretary of the meeting before the person
holding such proxy shall
2
<PAGE>
be allowed to vote thereunder. No proxy shall be valid after the expiration
of six (6) months after the date of its execution, unless coupled with an
interest of the shareholder executing it shall have specified therein the
length of time it is to continue in force, which in no case shall exceed
seven (7) years from the date of its execution.
SECTION 11. ORDER OF BUSINESS AND PROCEDURE. The order of
business at all meetings of the shareholders and all matters relating to the
manner of conducting the meeting shall be determined by the chairman of the
meeting, whose decisions may be overruled only by majority vote of the
shareholders present and entitled to vote at the meeting in person or by
proxy. Meetings shall be conducted in a manner designed to accomplish the
business of the meeting in a prompt and orderly fashion and to be fair and
equitable to all shareholders, but it shall not be necessary to follow any
manual of parliamentary procedure.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS OF BOARD. The powers of the Company
shall be exercised, its business and affairs conducted, and its property
controlled by the Board of Directors, except as otherwise provided by the law
of Nevada or in the Articles of Incorporation.
SECTION 2. NUMBER AND QUALIFICATION. The number of directors of
the Company, none of whom need be shareholders or residents of Nevada, shall
be at least three. Without amendment of these Bylaws, the number of
directors may be fixed or changed by resolution adopted by the vote of the
majority of directors in office or by the vote of holders of shares
representing a majority of the voting power at any annual meeting, or any
special meeting called for that purpose; but not reduction of the number of
directors shall have the effect of removing any director prior to the
expiration of his term of office.
SECTION 3. TERM OF OFFICE. Unless he shall earlier resign, be
removed as hereinafter provided, die, or be adjudged mentally incompetent,
each director shall hold office until the SINE DIE adjournment of the annual
meeting of shareholders for the election of directors next succeeding his
election, or the taking by the shareholders of an action in writing in lieu
of such meeting, or, if for any reason the election of directors shall not be
held at such annual meeting or any adjournment thereof, until the SINE DIE
election of directors held thereafter as provided for in Section 4 of Article
I of these Bylaws, or the taking by the shareholders of an action in writing
in lieu of such meeting, and until his successor is elected and qualified.
3
<PAGE>
SECTION 4. REMOVAL. Any director may be removed without cause at
any special meeting of shareholders called for such purpose by the vote of
the holders of two-thirds of the voting power entitling them to elect
directors in place of those to be removed, provided that unless all the
directors, or all the directors of a particular class are removed no
individual director shall be removed if the votes of a sufficient number of
shares are cast against his removal which, if cumulatively voted at on
election of directors, or of all directors of a particular class, as the case
may be, would be sufficient to elect at lease one director. In case of any
such removal, a new director may be elected at the same meeting for the
unexpired term of each director removed. Failure to elect a director to
fulfill the unexpired term of any director removed shall be deemed to create
a vacancy in the Board.
SECTION 5. RESIGNATIONS. Any director of the company may resign
at any time by giving written notice to the president or the secretary of the
Company. Such resignation shall take effect at the time specified therein,
and unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
SECTION 6. VACANCIES. Vacancies in the Board of Directors may be
filled by a majority vote of the remaining directors, even though they be
less than a quorum of the entire number of directors constituting a full
Board, until an election to fill such vacancies is had. Within the meaning
of this Section, a vacancy exists if the board of directors increases the
authorized number of directors or if the shareholders increase the authorized
number of directors but fail at the meeting at which such increase is
authorized, or an adjournment thereof, to elect the additional directors
provided for, or if the shareholders fail at any time to elect the whole
authorized number of directors. Any director elected under the provisions of
this Section 6 shall serve until the next annual election of directors and
until their successors are elected and qualified.
SECTION 7. MEETINGS. The directors shall hold such meetings from
time to time as they may deem necessary and such meetings as may from time to
time be called by the president or the chairman of the board. Meetings shall
be held at the principal office of the Company or at such other place within
or without the State of Nevada as the president or a majority of the
directors may determine. A regular meeting of the Board of Directors shall
be held each year at the same place as and immediately after the annual
meeting of shareholders, or at such other place and time as shall theretofore
have been determined by the Board of Directors and notice thereof need not be
given. At its regular annual meeting, the Board of Directors shall organize
itself and elect the officers of the Company for the ensuing year, and may
transact any other business.
4
<PAGE>
SECTION 8. NOTICE OF MEETINGS. Notice of each special meeting or,
where required, each regular meeting, of the Board of Directors shall be
given to each director either by being mailed on at lease the third day prior
to the date of the meeting or by being telegraphed or given personally or by
telephone on at least twenty-four (24) hours notice prior to the date of
meeting. Such notice shall specify the date and time of the meeting, the
purpose or purposes for which the meeting is called. At any meeting of the
Board of Directors at which every director shall be present, even though
without such notice, any business may be transacted. Any acts or proceedings
taken at a meeting of the Board of Directors not validly called or
constituted may be made valid and fully effective by ratification at a
subsequent meeting which shall be legally and validly called or constituted.
Notice of any regular meeting of the Board of Directors need not state the
purpose of the meeting and, at any regular meeting duly held, any business
may be transacted. If the notice of a special meeting shall state as a
purpose of the meeting the transaction of any business that may come before
the meeting, then at the meeting any business may be transacted, whether or
not referred to in the notice thereof. A written waiver of notice of a
special or regular meeting, signed by the person or person entitled to such
notice, whether before or after the time stated therein shall be deemed the
equivalent of such notice, and attendance of a director at a meeting shall
constitute a waiver of notice of such meeting except when the director
attends the meeting and prior to or at the commencement of such meeting
protests the lack of proper notice.
SECTION 9. QUORUM AND VOTING. At all meetings of the directors
fifty percent of all of the authorized directors of the company shall
constitute a quorum, but less than fifty percent of the authorized directors
may adjourn a meeting of the directors from time to time, and at adjourned
meetings any business may be transacted as if the meeting had been held as
originally called. The act of a majority of Directors present at any meeting
at which there is a quorum shall be the at of the Board of Directors, except
as otherwise provided by law, the Articles of Incorporation or these Bylaws.
SECTION 10. COMPENSATION. Directors shall be entitled to receive
for services and expenses such reasonable compensation as the Board of
Directors may determine by affirmative vote of a majority of those directors
in office. The Board of Directors may also delegate its authority to
establish reasonable compensation for directors to one or more officers or
directors by an affirmative vote of a majority of those directors in office.
Any vote taken by the Board of Directors with respect to director
compensation shall be effective irrespective of the financial or personal
interest of any of the directors involved.
SECTION 11. COMMITTEES. The Board of Directors may create any
committee of directors, to be composed of one or more directors, and may
delegate to any such committee any of the
5
<PAGE>
authority and powers of the Board of Directors, however conferred. Each such
committee shall serve at the pleasure of the Board of Directors shall act
only in the intervals between meetings of the Board of Directors and shall be
subject to all times to the control and direction of the Board of Directors.
Any such committee may act by a majority of its members. Any such committee
shall keep written minutes of its meetings and report same to the Board of
Directors prior to or at the next regular meeting of the Board of Directors.
Any act or authorization of an act by any such committee within the authority
delegated to it shall be as effective for all purposes as the act or
authorization of the Board of Directors.
ARTICLE III
OFFICERS
SECTION 1. GENERAL PROVISIONS. The officers of the Company shall
be a president, such number of vice-presidents as the Board may from time to
time determine, a secretary, a treasurer and such other officers as the
directors may elect. The Company may also have, at the discretion of the
Board of Directors, a Chairman of the Board or Vice Chairman who shall have
the duties prescribed by the Board of Directors. Except as specifically
provided in these Bylaws, the directors shall determine the duties and term
of each of the officers of the Company and shall be responsible for the
designation of the Company's chief executive officer. Officers need not be
shareholders of the Company and may be paid such compensation as the Board of
Directors may determine. Any person may hold any two or more officers and
perform the duties thereof. If one person is chosen to hold the offices of
secretary and treasurer, he shall be known as secretary-treasurer if one
person be elected to both of these offices.
SECTION 2. ELECTION, TERM OF OFFICE, AND QUALIFICATION. The
officers of the Company named in Section 1 of this Article III shall be
elected by a majority of the Board of Directors present and constituting a
quorum for an indeterminate term and shall hold office during the pleasure of
the Board of Directors. The qualifications of all officers shall be such as
the Board of Directors may see fit to impose.
SECTION 3. ADDITIONAL OFFICERS, AGENTS, ETC. In addition to the
officers mentioned in Section 1 of this Article III, the Company may have
such other officers, committees, agents, and factors as the Board of
Directors may deem necessary and may appoint, each of whom or each member of
which shall hold office for such period, have such authority, and perform
such duties as may be provided in these Bylaws, or as the Board of Directors
may from time to time determine. The Board of Directors may delegate to any
officer or committee the power to appoint any subordinate officers,
committees, agents or factors. In the absence of any officer of the Company,
or for any other reason the Board of Directors may
6
<PAGE>
deem sufficient, the Board of Directors may delegate, for the time being, the
powers and duties, or any of them, of such officer to any other officer, or
to any director.
SECTION 4. REMOVAL. Any officer of the Company may be removed
either with or without cause, at any time, by resolution adopted by the Board
of Directors at any meeting of the Board, the notices (or waivers of notice)
of which shall have specified that such removal action was to be considered.
Any officer appointed not by the Board of Directors but by an officer of
committee to which the Board shall have delegated the power of appointment
may be removed, with or without cause, by the committee or superior officer
(including successors) who made the appointment, or by any committee or
officer upon whom such power of removal may be conferred by the Board of
Directors.
SECTION 5. RESIGNATIONS. Any officer may resign at any time by
giving written notice to the Board of Directors, or to the president, or to
the secretary of the Company. Any such resignation shall take effect at the
time specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
SECTION 6. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification, or otherwise, shall be filled in the
manner prescribed in these Bylaws for regular appointments or elections to
such office.
ARTICLE IV
DUTIES OF THE OFFICERS
SECTION 1. THE PRESIDENT. The president shall manage and have
general supervision over the business of the Company and over its several
officers, subject, however, to the control of the Board of Directors. He
shall, if present, preside at all meetings of shareholders and of the Board
of Directors. He shall see that all orders and resolutions of the Board of
Directors are carried into effect, and shall from time to time report to the
Board of Directors all matters within his knowledge which the interests of
the corporation may require to be brought to the notice of the Board. He may
sign with the secretary, the treasurer, or any other proper officer of the
company thereunto authorized by the Board of Directors, certificates for
share in the Company. He may sign, execute and deliver in the name of the
Company all deeds, mortgages, bonds, contracts, or other instruments either
when specially authorized by the Board of Directors or when required or
deemed necessary or advisable by him in the ordinary conduct of the Company's
normal business, except in cases where the signing and execution thereof
shall be expressly delegated by these Bylaws to some other officer or agent
of the Company or shall be required by law or otherwise to be signed or
executed by some other officer or affixed to any instrument requiring the
same; and, in general,
7
<PAGE>
perform all duties as from time to time may be assigned to him by the Board
of Directors. In case the president for any reason shall be unable to attend
to any of his duties, such duties may be performed by a vice-president of the
Company.
SECTION 2. VICE-PRESIDENTS. The vice-presidents shall perform
such duties as are conferred upon them by these Bylaws or as may from time to
time be assigned to them by the Board of Directors or the president. At the
request of the president (or in his or her absence or disability, the
vice-president designated by the Board) shall perform all the powers of the
president. The authority of vice-presidents to sign in the name of the
Company all certificates for shares and authorized deeds, mortgages, bonds,
contracts, notes and other instruments, shall be coordinate with like
authority of the president.
SECTION 3. THE TREASURER. The treasurer shall:
(a) Have charge and custody of, and be responsible for, all funds,
securities, notes, contracts, deeds, documents, and all other indicia of
title in the Company and valuable effects of the Company; receive and give
receipts for moneys due and payable to the name of the Company in such banks,
trust companies, or other depositories as shall be selected by or pursuant to
the directions of the Board of Directors; cause such funds to be discharged
by checks or drafts on the authorized depositories of the Company, signed as
the Board of Directors may require; and be responsible for the accuracy of
the amounts of, and cause to be preserved proper vouchers for, all moneys to
be disbursed;
(b) Have the right to require from time to time reports or
statements giving such information as he may desire with respect to any and
all financial transactions of the Company from the officers or agents
transacting the same;
(c) Keep or cause to be kept at the principal office or such other
office or offices of the Company as the Board of Directors shall from time to
time designate correct records of the business and transactions of the
Company and exhibit such records to any of the directors of the Company upon
application at such office;
(d) Have charge of the audit and statistical departments of the
Company;
(e) Render to the president or the Board of Directors whenever
they shall require him so to do an account of the financial condition of the
company and of all his transactions as treasurer and as soon as practicable
after the close of each fiscal year, make and submit to the Board of
Directors a like report for such fiscal year; and
8
<PAGE>
(f) Exhibit at all reasonable times his cash books and other
records to any of the directors of the Company upon application.
SECTION 4. THE SECRETARY. The secretary shall:
(a) Keep the minutes of all meetings of the shareholders and of
the Board of Directors in one or more books provided for that purpose;
(b) See that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) Be custodian of the corporate records and, if one is provided,
of the seal of the Company, and see that such seal is affixed to all
certificates for shares prior to the issue thereof and to all other documents
to which the seal is required to be affixed and the execution of which on
behalf of the Company under its seal is duly authorized in accordance with
the provisions of these Bylaws;
(d) Have charge, directly or through such transfer agent or
transfer agents and registrar or registrars as the Board of Directors shall
appoint, of the issue, transfer and registration of certificates for shares
in the Company and of the records thereof, such records to be kept in such
manner as to show at any time the number of shares in the Company issued and
outstanding, the manner in which and time when such stock was paid for, the
names and addresses of the holders of record thereof, the number of classes
of shares held by each, and the time when each became such holder of record;
(e) Exhibit at all reasonable times to any directors, upon
application, the aforesaid records of the issue, transfer, and registration
of such certificates;
(f) Sign (or see that the treasurer or other proper officer of the
Company thereunto authorized by the Board of Directors shall sign), with the
president or vice-president, certificates for shares in the Company;
(g) See that the books, reports, statements, certificates, and all
other documents and records required by law are properly kept and filed; and
(h) In general, perform all duties incident to the office of
secretary, he shall perform such duties as are conferred upon him by the
officers of the Company, or the Board of Directors, and in the absence or the
inability of the secretary to act, shall perform all the duties of the
secretary and when so acting shall have all the powers of the secretary.
9
<PAGE>
In the event the Board of Directors shall elect an assistant
secretary, he shall perform such duties as are conferred upon him by the
officers of the Company, or the Board of Directors, and in the absence or
inability of the secretary to act, shall perform all the duties of the
secretary and when so acting shall have all the powers of the secretary.
ARTICLE V
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. INDEMNIFICATION. The Company shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened or pending action, suite, or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he, his testator,
or intestate is or was a director or officer 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, or as a member of any committee or similar body against all
expenses (including attorneys' fees), judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding (including appeals) or the defense or
settlement thereof or any claim, issue, or matter therein, to the fullest
extent permitted by the laws of Nevada as they may exist from time to time.
SECTION 2. INSURANCE. The proper officers of the Company without
further authorization by the Board of Directors, may in their discretion
purchase and maintain insurance on behalf of any person who 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 for
another corporation, partnership, joint venture, trust or other enterprise,
against any liability.
SECTION 3. ERISA. To assure indemnification under this provision
of all such persons who are or were "fiduciaries" of an employee benefit plan
governed by the Act of Congress entitled "Employee Retirement Income Security
Act of 1974," as amended from time to time, this Article shall, for the
purposes hereof, be interpreted as follows: an "other enterprise" shall be
deemed to include an employee benefit plan; the Company shall be deemed to
have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Company also imposes duties
on, or otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on a person
with respect to an employee benefit plan pursuant to said Act of Congress
shall be deemed "fines"; and action taken or omitted by a person with respect
to an employee benefit plan in the performance of such person's duties for a
purpose reasonably believed by such person to be in the interest of the
participants and beneficiaries of the plan shall be deemed to
10
<PAGE>
be for a purpose which is not opposed to the best interests of the Company.
SECTION 4. CONTRACTUAL NATURE. The foregoing provisions of this
Article shall be deemed to be a contract between the Company and each
director and officer who serves in such capacity at any time while this
Article is in effect, and any repeal or modification thereof shall not affect
any rights or obligations then existing with respect to any state of facts
then or theretofore existing or any action, suit or proceeding theretofore or
thereafter brought based in whole or in part upon any such state of facts.
SECTION 5. CONSTRUCTION. For the purposes of this Article,
references to "the Company" include in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers and employees or agents, so that any person who is or was a director
or officer of such constituent corporation or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise or as a member of any committee or similar body shall stand in the
same position under the provisions of this Article with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
SECTION 6. NON-EXCLUSIVE. The Company may indemnify, or agree to
indemnify, any person, and pay any expenses, including attorney's fees in
advance of final disposition of any action, suit or proceeding, if such
indemnification and/or payment is approved by the vote of the shareholders,
disinterested directors, or is in the opinion of independent legal counsel
selected by the Board of Directors for an indemnitee who acted in good faith
in a manner he reasonably believed to be in, or not opposed to, the best
interest of the Company.
ARTICLE VI
SEAL
The Board of Directors may provide a corporate seal, which shall be
in the form of a circle and shall bear the full name of the Company, and the
words "Seal and "Nevada".
ARTICLE VII
AMENDMENT OF BYLAWS
These Bylaws may be amended or added to, or repealed and superseded
by new Bylaws, at any annual or special meeting of
11
<PAGE>
shareholders in the notice (or waivers of notice) of which the intention to
consider such amendment, addition, or repeal is stated, by the affirmative
vote of the holders of record of shares entitling them to exercise a majority
of the voting power on such proposal, or at anytime, by the affirmative vote
of the Board of Directors.
ARTICLE VIII
SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATE FOR SHARES. Every owner of one or more
shares in the Company shall be entitled to a certificate, which shall be in
such form as the Board of Directors shall prescribe, certifying the number
and class of paid-up shares in the Company owned by him. The certificates
for the respective classes of such shares shall be numbered in the order in
which they shall be issued and shall be signed in the name of the Company by
the president or vice-president and by the secretary, or any other proper
officer of the Company thereunto authorized by the Board of Directors, or the
treasurer, and the seal of the Company, if any, may be affixed thereto. A
record shall be kept of the name of the person, firm, or corporation owning
the shares represented by each such certificate and the number of shares
represented by each such certificate and the number of shares represented
thereby, the date thereof, and in case of cancellation, the date of
cancellation. Every certificate surrendered to the Company for exchange or
transfer shall be cancelled and no new certificate or certificates until such
existing certificates shall have been so cancelled, except in cases provided
for in Section 2 of this Article.
SECTION 2. LOST, DESTROYED AND MUTILATED CERTIFICATES. If any
certificates for shares in this Company become worn, defaced, or mutilated
but are still substantially intact and recognizable, the directors, upon
production and surrender thereof, shall order the same cancelled and shall
issue a new certificate in lieu of same. The holder of any shares in the
Company shall immediately notify the Company if a certificate therefor shall
be lost, destroyed, or mutilated beyond recognition, and the Board of
Directors may, in its discretion, require the owner of the certificate which
has been lost, destroyed, or mutilated beyond recognition, or his legal
surety or sureties as it may direct, not exceeding double the value of the
stock, to indemnify the Company against any claim that may be made against it
on account of the alleged loss, destruction, or mutilation of any such
certificate. The Board of Directors may, however, in its discretion, refuse
to issue any such new certificate except pursuant to legal proceedings, under
the laws of the State of Nevada in such case made and proved.
SECTION 3. TRANSFERS OF SHARES. Transfers of shares in the
Company shall be made only on the books of the Company by the registered
holder thereof, his legal guardian, executor, or
12
<PAGE>
administrator, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the secretary of the Company or with a transfer
agent appointed by the Board of Directors, and on surrender of the
certificate or certificates for such shares. The person in whose name shares
stand on the books of the Company shall, to the full extent permitted by law,
be deemed the owner thereof for all purposes as regards the Company.
SECTION 4. REGULATIONS. The Board of Directors may make such
rules and regulations as it may deem expedient, not inconsistent with these
Bylaws, concerning the issue, transfer, and registration of certificates for
shares in the Company. It may appoint one or more transfer agents or one or
more registrars or both, and may require all certificates for shares to bear
the signature of either or both.
ARTICLE IX
DEPOSITORIES, CONTRACTS AND OTHER INSTRUMENTS
SECTION 1. DEPOSITORIES. The president and any vice-president of
the Company are each authorized to designate depositories for the funds of
the Company deposited in its name and the signatories and conditions with
respect thereto in each case, and from time to time, to change such
depositories, signatories and conditions, with the same force and effect as
if each such depository, the signatories and conditions with respect thereto
and changes therein had been specifically designated or authorized by the
Board of Directors or by the president, or any vice-president of the Company,
shall be entitled to rely upon the certificate of the secretary or any
assistant secretary of the Company setting forth the fact of such designation
and of the appointment of the officers of the Company or of both or of other
persons who are to be signatories with respect to the withdrawal of funds
deposited with such depository, or from time to time the fact of any change
in any depository or in the signatories with respect thereto.
SECTION 2. EXECUTION OF INSTRUMENTS GENERALLY. Except as provided
in Section 1 of this Article IX, all contracts and other instruments
requiring execution by the Company may be executed and delivered by the
president or any vice-president and authority to sign any such contracts or
instruments, which may be general or confined to specific instances, may be
conferred by the Board of Directors upon any other person or persons. Any
person having authority to sign on behalf of the Company may delegate, from
time to time, by instrument in writing, all or any part of such authority to
any person or persons if authorized so to do by the Board of Directors.
13
<PAGE>
[Front of Certificate]
[Manually typed script:] NAME CHANGE: MGPX VENTURES, INC.
Common Stock Common Stock
WARNER
Number TECHNOLOGIES, INC. Shares
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
__________ ___________
CUSIP 55301E-10-9
This Certifies that: SEE REVERSE FOR
CERTAIN DEFINITIONS
is the owner of
Fully Paid and Non-Assessable Shares of Common Stock,
Par Value of $.04 per share of
WARNER TECHNOLOGIES, INCORPORATED
hereinafter and on the back hereof called the "Corporation," transferable
on the books of the Corporation by the holder hereof in person or by duly
authorized attorney upon the surrender of this Certificate properly endorsed.
This Certificate and the shares represented hereby are issued and shall
be held subject to the laws of the State of Nevada and to the Articles of
Incorporation and the By-laws of the Corporation and any amendments thereto
made as provided by law, to all of which the holder hereof, by accepting this
Certificate, expressly assents and agrees to be bound.
This Certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED:
[SEAL]
WARNER TECHNOLOGIES, INC.
CORPORATE
SEAL
1986
/s/ Thomas S. Hathaway NEVADA /s/ Sidney E. Pelston
SECRETARY PRESIDENT
[Vertical along right margin:]
Countersigned and Registered:
U.S. STOCK TRANSFER CORPORATION
(Glendale, California)
Transfer Agent and Registrar
By
Authorized Officer
<PAGE>
[Reverse of Certificate]
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- Custodian
TEN ENT -- as tenants by the entireties ------------------------------
JT TEN -- as joint tenants with right (Cust) (Minor)
of survivorship and not as under Uniform Gifts to Minors
tenants in common Act
--------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND TRANSFER UNTO
----------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(NAME AND ADDRESS OF TRANSFEREE SHOULD BE PRINTED OR TYPEWRITTEN)
- -------------------------------------------------------------------------------
SHARES
- ----------------------------------------------------------------------
REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY IRREVOCABLY CONSTITUTE AND
APPOINT
ATTORNEY
- ----------------------------------------------------------------------
TO TRANSFER THE SAID SHARES ON THE SHARE REGISTER OF THE WITHIN NAMED
CORPORATION, WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED
--------------------
---------------------------------------------------------
SIGNATURE
SIGNATURE GUARANTEED
NOTICE: THE SIGNATURE TO THE FOREGOING ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE
WITHIN CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER AND SHOULD BE GUARANTEED
BY A COMMERCIAL BANK OR TRUST COMPANY OR BY A MEMBER FIRM OF
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
<PAGE>
[Front of Certificate]
Number Shares
- ---------- ----------
WARNER TECHNOLOGIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP 934624 30 5
THIS CERTIFIES THAT _____________________________________________________ is the
owner of ______________________________________________________________________,
[Superimposed over text below:]
PREFERRED
WARNER TECHNOLOGIES, INCORPORATED
HEREINAFTER AND ON THE BACK HEREOF CALLED "THE CORPORATION," TRANSFERABLE
ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON OR BY DULY
AUTHORIZED ATTORNEY UPON THE SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE ISSUED AND SHALL BE
HELD SUBJECT TO THE LAWS OF THE STATE OF NEVADA AND TO THE ARTICLES OF
INCORPORATION AND THE BY-LAWS OF THE CORPORATION AND ANY AMENDMENTS THERETO MADE
AS PROVIDED BY LAW, TO ALL OF WHICH THE HOLDER HEREOF, BY ACCEPTING THIS
CERTIFICATE, EXPRESSLY ASSENTS AND AGREES TO BE BOUND.
WITNESS THE SEAL OF THE CORPORATION AND THE SIGNATURES OF ITS DULY
AUTHORIZED OFFICERS.
DATED:
[SEAL]
WARNER TECHNOLOGIES, INC.
CORPORATE
SEAL
1986
/s/ Thomas S. Hathaway NEVADA /s/ Sidney E. Pelston
SECRETARY PRESIDENT
[Reverse of Certificate]
FOR VALUE RECEIVED _________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
_________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
______________________________________________________________SHARES REPRESENTED
BY THE WITHIN CERTIFICATE AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
_______________________________________________________________________ATTORNEY
TO TRANSFER THE SAID SHARES ON THE SHARE REGISTER OF THE WITHIN NAMED
CORPORATION, WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED ______________________ 19_____
IN THE PRESENCE OF ________________________ ________________________________
_____________________________________________ _______________________________
[VERTICAL ALONG RIGHT MARGIN:]
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
CERTIFICATE OF DETERMINATION OF
WARNER TECHNOLOGIES, INC.
The undersigned, Sidney E. Pelston and Thomas S. Hathaway, do hereby
certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of Warner Technologies, Inc., a Nevada corporation (the
"Corporation").
2. On October 5, 1992, the Board of Directors of the Corporation
adopted the following resolutions, setting forth the voting powers,
designations, preferences and relative, participation and other rights and
limitations of the Series B Preferred Stock:
ISSUANCE OF PREFERRED STOCK
WHEREAS, Section 78.195 of the Nevada General Corporation Law and
ARTICLE FOURTH of the Corporation's Articles of Incorporation authorized
the Corporation to issue one or more series of Preferred Stock, with
such rights, preferences, and privileges as may be determined by the
Board of Directors.
NOW THEREFORE, BE IT RESOLVED, that the Corporation issue up to 50,000
shares of Series B Preferred Stock, $.04 par value, having the following
terms:
Section 1. NUMBER AND PREFERENCES.
(a) The number of shares constituting the Series B Preferred Stock
shall be 50,000, each of which shall have a stated value ("Stated
Value") of $30.00.
(b) Holders of the Series B Preferred Stock are entitled to receive
cumulative dividends as provided in Section 2 hereof.
(c) Holders of Series B Preferred Stock shall be entitled to a
preference upon liquidation, as set forth in Section 3 hereof.
(d) Holders of the Series B Preferred Stock shall be entitled to voting
rights in the event of certain dividend default as provided in
Section 4 hereof.
(e) The Series B Preferred Stock shall be convertible into Common Stock
of the Corporation, in the manner and upon the conditions provided
in Section 5 hereof.
<PAGE>
Section 2. DIVIDEND RIGHTS.
(a) The holders of Series B Preferred shares shall be entitled to
receive, when and as declared by the Board of Directors out of the
Corporation's capital surplus (subject to the limitations of
Section 2(c)), cumulative dividends in cash at the rate of $1.80
per Series B Preferred share per annum (the "Dividend Rate")
commencing on the date of issuance of such shares. Such dividends
shall be payable quarterly within seven days of the end of the
fiscal quarter.
(b) Dividends on Series B Preferred shares shall accrue and shall be
cumulative whether or not such dividends are earned. Each Series B
Preferred share shall rank on a parity with each other Series B
Preferred share, with respect to dividends. An accumulation of
dividends on Series B Preferred shares shall not bear interest.
(c) Such dividends shall be declared and paid in full for all previous
dividend periods, before the Corporation makes any distribution (as
hereinafter defined) to the holders of shares of Common Stock.
"Distribution" in this paragraph (a) means the transfer of cash or
property without consideration, whether by way of dividend or
otherwise (except a dividend in shares of the Corporation which are
junior to the Preferred shares as to dividends or assets), or the
purchase or redemption of shares of the Corporation for cash or
property, including any such transfer, purchase, or redemption by a
subsidiary of the Corporation.
Section 3. LIQUIDATION RIGHTS. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of Series B Preferred shares shall be entitled to receive from the
assets of the Corporation the Stated Value of such shares in cash and a
further preferential amount in cash equal to all cumulative dividends accrued
and unpaid to the date that payment is made available to the holders of
Preferred shares, all of which shall be paid or set apart for payment before
distribution of any assets of the Corporation to, the holders of Common
shares in connection with such liquidation, dissolution, or winding up. Each
Series B Preferred share shall rank on a parity with each other Series B
preferred share, with respect to the respective preferential amounts fixed
for such series payable upon any distribution of assets by way of
liquidation, dissolution, or winding up of the Corporation. After the
payment or the setting apart of payment to the holders of Series B Preferred
shares of the preferential amount so payable to them, the holders of common
shares shall be entitled to receive, ratably, all remaining assets of the
Corporation. A consolidation or merger of the Corporation with or into any
other corporation or corporations, or sale of all
2
<PAGE>
or substantially all of the assets of this corporation, shall not in itself
otherwise be deemed to be a liquidation, dissolution, or winding up within
the meaning of this paragraph, so long as there is compliance with Section
5(c)(3).
Section 4. VOTING RIGHTS. Holders of Series B Preferred Shares shall
have no voting rights unless the Corporation fails to make two consecutive
dividend payments. In such event, Holders of Series B Preferred Shares shall
vote as a class with holders of common shares; provided that (a) the number
of votes that may be cast for any matter by holders of Series B Preferred
Stock shall be equal to three times the number of common shares into which
such Series B Preferred Stock are convertible pursuant to Section 5 hereof
(without regard to the conversion of accrued dividends into Common stock
under Section 5(a)(1)); and (b) holders of Series B Preferred Stock shall be
entitled to cumulative voting for the election of directors in accordance
with the provisions of Section 78.360 of the Nevada Revised Statutes.
Section 5. CONVERSION RIGHTS. The Series B Preferred shares shall be
convertible as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT.
(1) Each share of Series B Preferred Stock shall be convertible,
at the option of the holder thereof at any time and at the
option of the Corporation at any time after two years from the
date of issuance if during any 10 consecutive business day
period the closing bid price of the Common Stock is $4.00 per
Share or greater, and all quarterly dividends are current for
payment dates prior to the date of the notice, at the office
of the Corporation or any transfer agent for the Preferred
Stock, into Common Stock at the initial conversion rate
("Conversion Rate") of 12 fully paid and nonassessable shares
of Common Stock for each share of Series B Preferred Stock.
If any holder converts and dividends are accrued and unpaid on
the date of such notice, the Corporation shall pay such
dividends within 60 days of the conversion.
(2) No fractional shares of Common Stock shall be issued upon
conversion of the Series B Preferred Stock and any shares of
Series B Preferred Stock surrendered for conversion which
would otherwise result in a fractional share of Common stock
shall be redeemed for the then fair market value thereof as
determined by the Corporation's Board of Directors, payable as
promptly as possible whenever funds are legally available
therefor. If more than one share of Series B Preferred Stock
is
3
<PAGE>
surrendered for conversion at any one time by the same holder,
the number of full shares of Common Stock to be issued upon
conversion shall be computed on the basis of the aggregate
number of shares of Preferred Stock so surrendered.
(b) MECHANICS OF CONVERSION. Before any holder of Series B Preferred
shares shall be entitled to convert the same into shares of Common
Stock, it shall surrender the certificate or certificates therefor
at the office of the Corporation or of any transfer agent for the
Series B Preferred Stock, and shall give written notice to the
Corporation at such office that it elects to convert the same and
shall state therein the name or names in which it wishes the
certificate or certificates for shares of Common Stock to be
issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series B
Preferred Stock, or to its nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which it
shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the
date of such surrender of the shares of Series B Preferred Stock to
be converted, and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such
shares of Common Stock on such date.
(c) ADJUSTMENT TO CONVERSION RATE.
(1) STOCK SPLITS AND COMBINATIONS. If the Corporation shall at
any time subdivide the outstanding shares of Common Stock
without an equivalent subdivision of the Series B Preferred
Stock, the Conversion Rate then in effect immediately before
that subdivision shall be proportionately increased, and, if
the Corporation shall at any time combine the outstanding
shares of Common Stock without an equivalent combination of
the Series B Preferred Stock, the Conversion Rate then in
effect immediately before that combination shall be
proportionately decreased. Any adjustment under this Section
5(c)(1) shall become effective on the close of business on the
date the subdivision or combination becomes effective. A
dividend on any security of the Corporation payable in Common
Stock of the Corporation shall be considered a subdivision of
Common Stock for purposes of this Section 6(c)(1) at the close
of business on the record date for the determination of
holders of any security entitled to receive such dividend.
4
<PAGE>
(2) RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common
Stock issuable on conversion of the Series B Preferred Stock
shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than a
subdivision or combination of shares provided for above), the
holders of the Series B Preferred Stock shall, upon its
conversion, be entitled to receive, in lieu of the Common
Stock which the holders would have become entitled to receive
but for such change, a number of shares of such other class or
classes of stock that would have been subject to receipt by
the holders of conversion of the Series B Preferred Stock
immediately before that change.
(3) REORGANIZATION, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If
at any time there shall be a capital reorganization of the
Corporation's Common Stock (other than a subdivision,
combination, reclassification or exchange of shares provided
for elsewhere in this Section 5(c) or merger of the
Corporation into another corporation, or the sale of the
Corporation's properties and assets as, or substantially as,
an entirety to any other person), then, as a part of such
reorganization, merger or sale, lawful provision shall be made
so that the holders of the Series B Preferred Stock shall
thereafter be entitled to receive upon conversion of the
Series B Preferred Stock, the number of shares of stock or
other securities of property of the Corporation, or of the
successor corporation resulting from such merger, to which
holders of the Common Stock deliverable upon conversion of the
Series B Preferred Stock would have been entitled on such
capital reorganization, merger or sale if the Series B
Preferred Stock had been converted immediately before that
capital reorganization, merger or sale to the end that the
provisions of this paragraph (e) (including adjustment of the
Conversion Rate then in effect and number of shares
purchasable upon conversion of the Series B Preferred Stock)
shall be applicable after that event as nearly equivalently as
may be practicable.
(d) NO IMPAIRMENT. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, merger, dissolution, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder
by the
5
<PAGE>
Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 6 and in the
taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the Series
B Preferred Stock against impairment. No change in the preferences
or other rights of the Series B Preferred Stock may be made, and no
class of common or preferred stock may be issued with rights senior
to that of the Series B Preferred Stock, without the affirmative
vote of a majority of the holders of the Series B Preferred Stock.
(e) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate for any series of
Series B Preferred Stock pursuant to this Section 5, the
Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series B Preferred Stock effected thereby
a certificate setting forth such adjustment or readjustment and
showing in detail the fact upon which such adjustment or
readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Series B Preferred Stock,
furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the
Conversion Rate at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of such
holder's shares of Series B Preferred Stock.
(f) NOTICE OF RECORD DATE. In the event of the establishment by the
Corporation of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend) or other
distribution, the Corporation shall mail to each holder of Series B
Preferred Stock at least twenty (20) days prior to the date
specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution and the amount and character of such dividend or
distribution.
(g) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the shares of the Series B Preferred
Stock such number of its shares of Common Stock as shall from time
to time be
6
<PAGE>
sufficient to effect the conversion of all then outstanding shares
of the Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares
of the Preferred Stock, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
(h) NOTICES. Any notices required by the provisions of this Paragraph
(h) to be given to the holders of shares of Series B Preferred
Stock shall be deemed given if deposited in the Untied States mail,
postage prepaid, and addressed to each holder of record at its
address appearing on the books of the Corporation.
Section 6. RESIDUAL RIGHTS. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
to holders of Series B Preferred Stock shall be vested in the Common Stock.
The foregoing Certificate of Determination of this Corporation has been
duly adopted by the Board of Directors in accordance with Section 78.195 of
the Nevada Revised Statutes.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
November 10 , 1992.
/s/ Sidney E. Pelston
-------------------------------------
Sidney E. Pelston, President
/s/ Thomas S. Hathaway
-------------------------------------
Thomas S. Hathaway, Secretary
The undersigned Sidney E. Pelston, President of Warner Technologies,
Inc., and Thomas S. Hathaway, Secretary of Warner Technologies, Inc., each
certifies under penalty of perjury that the matters set forth in the
foregoing Certificate of Determination are true and correct.
EXECUTED at Los Angeles, California, this 10th day of November, 1992.
/s/ Sidney E. Pelston
-------------------------------------
Sidney E. Pelston
/s/ Thomas S. Hathaway
-------------------------------------
Thomas S. Hathaway
7
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On November 10 , 1992 , before me, the undersigned, a Notary Public in
an for said State, personally appeared Sidney E. Pelston personally known to
me or proved to me on the basis of satisfactory evidence to be the person who
executed the within instrument as the President of the corporation that
executed the within instrument and acknowledged to me that such corporation
executed the within instrument pursuant to its bylaws or a resolution of its
board of directors.
/s/ Julia B. Watkins
-------------------------------------
Notary Public
Julia B. Watkins
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On November 10 , 1992 , before me, the undersigned, a Notary Public in
an for said State, personally appeared Thomas S. Hathaway personally known to
me or proved to me on the basis of satisfactory evidence to be the person who
executed the within instrument as the Secretary of the corporation that
executed the within instrument and acknowledged to me that such corporation
executed the within instrument pursuant to its bylaws or a resolution of its
board of directors.
/s/ Julia B. Watkins
-------------------------------------
Notary Public
Julia B. Watkins
8
<PAGE>
EXHIBIT 6.1
AGREEMENT FOR SALE AND PURCHASE
OF ASSETS OF A BUSINESS
THIS AGREEMENT is made and entered into this 16th day of February,
1998, by and between THOMAS HATHAWAY ("Hathaway") and JOSEPH FERRARI
("Ferrari") jointly ("Buyer") and WARNER TECHNOLOGIES, INC. ("Seller").
W I T N E S S E T H
This Agreement is made with reference to the following facts:
A. Seller has for several years last past, and is presently conducting
a design and build energy-efficient lighting, mechanical and building
automation systems business and selling related products and services in the
energy efficiency and electric industry restructuring business (the
"Business"), with offices located at 11859 Wilshire Boulevard, Suite 500, Los
Angeles, California 90025, 108 Water Street, 3rd Floor, Watertown,
Massachusetts 02172 and at 4807 Mercury Street, Suite F, San Diego,
California 92111 (jointly the "Premises") under the name Warner Technologies,
Inc.
B. Seller desires to sell all of the assets of the Business to Buyer,
and Buyer desires to purchase all of the assets of the Business from Seller
subject to the terms and conditions contained herein.
1
<PAGE>
C. Hathaway and Ferrari contemplate forming a new corporation in the
State of California under the name Warner Technologies Acquisition Company
("Acquisition Co.") to purchase the Business and therefore the term Buyer
shall include Acquisition Co.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants herein contained, Buyer and Seller hereby agree as follows:
1. SALE OF ASSETS.
Pursuant to the terms and conditions set forth in this Agreement,
Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller all
of the Business, assets and property of the Business, including all
manufacturing and assembling equipment, tools, dies and molds, certain
intangibles consisting of trade secrets, software, know-how, plans,
specifications, trademarks and customer lists (including the name "Warner
Technologies"), the Leases assigned for all Premises (jointly the "Leases"),
leasehold improvements, lease deposits, work in process and supplies, and
contract rights, including Envest and LAUSD, and any goodwill of the Business
(collectively, the "Acquired Assets"). The Acquired Assets shall, without
limitation, include all of the assets and property of Seller reflected in
Seller's balance sheet of June 30, 1997, referred to in Paragraph 3B, hereof,
and all of the assets and property hereafter acquired by Seller before the
Closing (as referred to in Paragraph 13, hereof), except those assets used or
2
<PAGE>
disposed of in the ordinary course of business as permitted by this Agreement.
2. CONSIDERATION FROM BUYER.
As full payment for the transfer of the Acquired Assets by Seller
to Buyer, Buyer shall deliver at the Closing a cashier's check payable to the
order of Seller in the amount of Six Hundred and Fifty Thousand Dollars
($650,000.00) (the "Purchase Price").
3. REPRESENTATIONS AND WARRANTIES BY SELLER.
Seller represents, warrants and agrees as follows:
A. OWNERSHIP AND GOOD STANDING. Seller owns 100% of the Business
and the Acquired Assets and Seller is in good standing as a domestic
corporation under the laws of the State of Nevada, and as a foreign
corporation under the laws of the States of California and the Commonwealth
of Massachusetts.
B. FINANCIAL STATEMENTS. The balance sheet of Seller as of June
30, 1997, and Seller's profit and loss statement for the twelve months ended
June 30, 1997, as well as Seller's Quarterly Report for the period ended
December 31, 1997, copies of which are attached hereto, marked EXHIBIT "A"
and "B," respectively (jointly, the "Financials"), accurately present in
accordance with generally accepted accounting principles Seller's financial
condition at said dates and Seller's operations for said periods. Since said
dates there has not been any material adverse change in the financial
condition or operations of Seller from that shown on the Financials, nor have
there been any other changes in such condition except changes occurring in
the ordinary course of Seller's business.
3
<PAGE>
C. UNDISCLOSED LIABILITIES. Seller is not subject to any
obligation or liability of any kind, absolute or contingent, undisclosed in
the Financials or not shown in EXHIBIT "C". EXHIBIT "C" attached hereto and
by this reference made a part hereof contains a true and complete schedule of
all liabilities and obligations of Seller.
D. TITLE TO PROPERTY. Seller has clear and unencumbered title to
the Acquired Assets. Additionally, except for the liabilities disclosed on
EXHIBIT "C" attached hereto, all of which shall be assumed by Seller, Seller
has clear and unencumbered title to all of the property and assets listed or
reflected in the Financials. All assets and property of Seller are in the
possession of Seller and such assets and property are in good operating
condition and repair.
E. TAX AUDITS AND RETURNS. Seller has filed all federal, state
and local tax returns required by law within the times and in the manner
prescribed by law and Seller has paid all taxes, assessments, and penalties
due and payable with respect thereto.
F. LITIGATION. There is no litigation, governmental proceeding
or investigation threatened or in prospect against Seller or relating to any
of Seller's assets or Business other than items listed in EXHIBIT "I".
Seller has no knowledge of any action pending or threatened to change the
zoning of building ordinances affecting The Premises or any pending or
threatened condemnation of The Premises.
4
<PAGE>
G. COMMITMENTS. Except for contracts, agreements and commitments
entered into in the ordinary course of business and which are terminable by
Buyer on not more than thirty (30) days notice and which do not in any one
instance involve a consideration in excess of $20,000.00, and which do not in
the aggregate involve consideration in excess of $150,000.00, except as
listed on EXHIBIT "E" attached hereto and by this reference made a part
hereof, the Business and Acquired Assets are not subject to any written or
oral contracts, agreements, or commitments including, but not limited to,
those of the following types:
(i) Contract for the employment or compensation of any individual;
(ii) Contract with any labor union;
(iii) Contract for the future purchase of materials, supplies, or
equipment, except those entered into in the ordinary course of business, the
aggregate amount of which does not exceed $5,000.00, and wherein the
consideration involved with respect to any one contract is not in excess of
$2,000.00;
(iv) Contract for the future purchase of services wherein receipt
of said services is more than three months after the date of such contract;
(v) Distribution, sale agency contract, franchise agreement, or
advertising commitment;
(vi) Pension, profit sharing, bonus, deferred compensation,
retirement or other employee plan with respect to employees of the Business;
5
<PAGE>
(vii) A lease of real or personal property under which the Business
is a lessor or lessee, except as listed on EXHIBIT "E" attached hereto and by
this reference made a part hereof;
(viii) Any consulting agreement;
(ix) Any other contract, agreement or commitment not made in the
ordinary course of business;
There have been delivered or will be delivered prior to the Closing to
Buyer true and correct copies of each of the contracts, agreements or
commitments listed in each of the exhibits to this Agreement, and where
consents to assignments of such contracts to Buyer is required, Seller shall
obtain all consents to such assignments at or before the Closing. To the
best of Seller's knowledge and belief, Seller has performed all obligations
required to be performed by Seller to date and is not in default under any
contract, agreement, lease, or other commitment to which it is a party, and
all of such contracts are in full force and effect and enforceable in
accordance with their respective terms.
H. NO CHANGE IN CIRCUMSTANCES. Except as set forth in EXHIBIT
"F" attached hereto and by this reference made a part hereof, or otherwise
expressly provided for herein, since June 30, 1997, Seller has not:
(i) Incurred any obligations or liabilities (absolute or
contingent), known or unknown, except liabilities incurred and outstanding
obligations under contracts entered into in the ordinary course of business,
whether now due or to become due;
6
<PAGE>
(ii) Discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent) other than liens,
encumbrances, obligations or liabilities reflected in the Financials;
(iii) Mortgaged, pledged, subjected to any lien, charge or
other encumbrances, any of its assets, tangible or intangible;
(iv) Sold or transferred any of its assets or cancelled any
debts or claims, except in each case in the ordinary course of business;
(v) Suffered any material operating or extraordinary loss or
waived any right of substantial value;
(vi) Made any loan to, borrowed any money from, or entered
into any contract or understanding with any employee or principal of the
Business;
(vii) Made any payment of or contracted for payment of any
bonus, gratuity or other compensation, other than wages and salaries in
effect on June 30, 1997, and wages and salary adjustments made in the
ordinary course of business to non-officer employees;
(viii) Entered into any material transaction other than in the
ordinary course of business;
(ix) Suffered any material adverse change in its business
operations or conditions (financial or otherwise), business organization,
personnel or properties, other than changes
7
<PAGE>
applicable to the industry in general, in which it conducts its business.
I. NO BROKERAGE COMMISSION. Seller has not entered into any
agreement with any person, firm, or corporation or become indirectly a party
to any agreement for the payment of any commission, brokerage, or finder's
fee in connection with this Agreement.
J. CONTINUATION OF FINANCIAL STATUS. Seller is not aware of any
decrease in the profit margin of the Business since the preparation of the
Financials, nor is aware of any of the principal customers of the Business
intending to discontinue doing business which they are now doing business
with.
K. NO UNTRUE STATEMENT. None of the warranties, representations
and agreements made by Seller herein or in the exhibits, schedules or
documents relating hereto, nor the Financials, nor any certificate or
memorandum furnished or to be furnished by Seller or on its behalf, contains
or will contain any statement of a material fact known to be untrue or
knowingly omit to state a material fact necessary to make the statements
contained herein or therein not misleading, and all warranties shall survive
the Closing.
L. PURCHASE OF BUYER'S STOCK AND OPTIONS OF SELLER. Buyers shall
deliver at the closing all of the stock of Seller owned by Buyer along with
any options to purchase stock of Seller (collectively Buyer's Stock), all of
which shall be purchased by Seller for $1,000.00.
8
<PAGE>
4. REPRESENTATIONS AND WARRANTIES BY BUYER. Hathaway, Ferrari and
Acquisition Co. each individually, jointly and collectively, represent,
warrant and agree as follows:
A. INDEPENDENT DUE DILIGENCE INVESTIGATION. Buyers have fully and
completely inspected the Acquired Assets and the Business and have obtained
the advice and counsel of independent consultants, attorneys, accountants and
others in connection with their inspection, evaluation and purchase of the
same.
B. FULL DISCLOSURE. Buyer confirms, acknowledges and affirms that
they in fact have been running the Business and operating the Acquired Assets
and have full and complete knowledge of the same.
C. NO BROKERAGE COMMISSION. Buyer has not entered into any
agreement with any person, firm or corporation or become indirectly a party
to any agreement for the payment of any commission, brokerage or finder's fee
in connection with this agreement.
D. ORGANIZATION AND QUALIFICATION OF ACQUISITION CO. When
Acquisition Co. is formed, it will be a corporation duly incorporated,
validly existing and in good standing under the laws of the State of
California and will have the requisite corporate power to conduct the
Business.
E. ASSIGNMENT OF LEASE. At the Closing, Seller shall deliver to
Buyer assignments of the Lease along with the consents of the landlord with
respect thereto and a release of Seller with respect to any further
obligations under the Leases. Provided,
9
<PAGE>
however, if a Lease has only a month-to-month term, then no such assignment
or consent will be required.
F. NO UNTRUE STATEMENTS. None of the warranties, representations
and agreements made by Buyer herein or in the Exhibit Schedules or documents
relating hereto contains or will contain any statement of a material fact
known to be untrue, or knowingly omit to state a material fact necessary to
make the statements contained herein or therein not misleading, and all
warranties shall survive the Closing.
G. RESIGNATION AS OFFICERS AND DIRECTORS; TERMINATION OF
EMPLOYMENT AGREEMENTS. At the Closing, Hathaway and Ferrari shall each
tender their resignations as Officers and Directors of Seller (the
"Resignation"). Additionally, at the Closing all employment agreements
between Hathaway and Ferrari shall be terminated and cancelled, and except
for the then current accrued and unpaid salary, vacation and sick days, no
further payments, compensation, salary or termination or severance payment of
any kind or nature will be due or payable to them or either of them, however,
prepaid but unearned bonuses of Hathaway and Ferrari in the total amount of
$32,000, with respect to both of them, will be cancelled and the parties
shall execute a release in the form attached hereto marked EXHIBIT G and by
this reference made a part hereof (the Release).
5. ORDINARY COURSE OF BUSINESS AND ACCESS TO BOOKS AND RECORDS.
5.1 Seller agrees that from the date hereof to the
10
<PAGE>
Closing, Seller will conduct its business and affairs only in the "ordinary
course of business" and the ordinary course of business shall mean the
conduct and operation of the Business of Seller only in the manner in which
such business was conducted and operated during the twelve month period
ending June 30, 1997, making due allowance for changes in the operation of
the Business required by any increase in volume of sales subsequent thereto
following usual and ordinary accounting practices making ordinary accruals
incurring ordinary liabilities and expenditures and making ordinary
commitments for merchandise, insurance, rentals, and other ordinary expenses.
5.2 From and after the date hereof, Seller shall afford to Buyer
and the representatives of Buyer full and free access to the personnel,
properties, records and books of account of Seller at all reasonable times
during business hours, and shall furnish to such officers and representatives
such other information as Buyer may reasonably request. Seller shall also
authorize the independent accountants of Buyer to permit Buyer's accountants
and employees to examine records and working papers pertaining to the
Financials of Seller and its tax returns.
6. PURCHASE OF THE ACQUIRED ASSETS.
Subject to the terms and conditions of this Agreement, and in
accordance with the provisions herein set forth, Seller hereby agrees at the
Closing to transfer, convey, assign and deliver to Buyer and Buyer agrees to
acquire and accept at the Closing Date all of the Acquired Assets.
11
<PAGE>
7. ASSUMPTION OF LIABILITIES.
Buyer shall assume all obligations, liabilities or indebtedness
relating to the Acquired Assets or Business operations and which are
specifically set forth in paragraph (a) of EXHIBIT "C" attached hereto except
the liabilities, obligations or indebtedness set forth in paragraph (b) of
EXHIBIT "C" which are to be assumed by Seller.
8. DISCLAIMER BY SELLER; RELEASE BY BUYER. Seller and Buyer
acknowledge, understand, confirm and agree that HATHAWAY and FERRARI have
heretofore been managing and operating the Business and the Acquired Assets
and that each of them have reasonably complete knowledge of the nature and
extent of the future prospects of the Business. Accordingly, Seller makes no
warranties of any kind or nature express or implied as to the future
profitability of the Business, continuation after the Closing of any existing
contract between Seller and any customer of Seller, and future prospects of
the Business, and Buyer is making its own independent judgment and decision
and is additionally relying upon advice of counsel of Buyer's choice as to
these matters.
9. COVENANT NOT TO COMPETE. At the Closing, Seller shall deliver to
Buyer a Covenant Not to Compete from Seller in the form attached hereto
marked EXHIBIT "H" and by this reference made a part hereof.
10. BOARD OF DIRECTORS AND SHAREHOLDERS' APPROVAL. As a condition of
Seller's obligation hereunder, Seller shall have obtained the approval of
this Agreement and the sale of the
12
<PAGE>
Business and Acquired Assets by the majority of the Board of Directors of
Seller and an affirmative vote of greater than 50% of the record-holders of
the voting stock of Seller (collectively the "Approvals").
11. AMENDMENT OF ARTICLES OF INCORPORATION OF SELLER. At the Closing,
Seller shall deliver to Buyer a fully executed copy of an Amendment of the
Articles of Incorporation of Seller changing the name of Seller from Warner
Technologies, Inc. to a name dissimilar thereto (the "Amended Articles")
along with a letter of consent to the Secretary of State of the State of
California authorizing and consenting to the use of the name "Warner
Technologies, Inc." by Acquisition Co. (the "Consent Letter"). At the
Closing, Seller shall cause the Amended Articles to be forwarded to the
Secretary of State of the State of California for filing along with a copy
thereof to counsel for Seller.
12. EVALUATION AND FAIRNESS. Seller shall obtain an independent
valuation of the Business and the Acquired Assets by the accounting firm of
Singer, Lewak, Greenbaum & Goldstein and a fairness opinion from The Mentor
Group. Seller shall be solely responsible for the costs of said evaluation
and fairness opinion.
13. CLOSING.
13.1 The Closing of the transaction provided for herein (the
"Closing") shall take place at the offices of Turner, Gerstenfeld, Wilk,
Aubert & Young, 8383 Wilshire Boulevard, Suite 510, at 10:00 a.m., on March
31, 1998, effective as of December 31, 1997. The date and time when the
Closing takes place is herein
13
<PAGE>
referred to as the "Closing Date." The Closing Date may be postponed until a
later time or date, by mutual agreement of the parties. In the event of any
postponement, all references in this Agreement to the Closing Date shall be
deemed to refer to the time and date to which the Closing Date shall have
been postponed.
13.2 At the Closing, the parties hereto shall deliver the
following items:
By BUYER:
A. A cashier's check in the amount of the Purchase Price.
B. All certificates of Buyer's Stock owned by Buyer with a
due endorsement thereon selling and transferring to Seller said stock and
Buyer's Stock options.
C. The Resignations.
D. The Release executed by Hathaway and Ferrari.
By SELLER:
A. If applicable, the original assignments of the Leases to
the Premises, the landlord's consent thereto and the release of Seller from
any further obligation under the Lease.
B. A good and sufficient Bill of Sale in the form approved
by counsel for Buyer transferring to Buyer all of the Acquired Assets and an
Assignment by Seller to Buyer of all contracts relating to the Business
including, but not limited to, Envest and LAUSD, together with consents to
the assignments of all such contracts.
14
<PAGE>
C. The Covenant Not to Compete in the form attached as
EXHIBIT "H".
D. The Approvals.
E. The Amended Articles of Incorporation.
F. The Consent letter.
G. The Consents to Assignment of Contracts as described in the
last paragraph of Paragraph 3G.
H. The Release executed by Seller
14. CONDITIONS PRECEDENT TO THE PAYMENT.
The obligations of Buyer to consummate this Agreement shall be
subject to and shall be conditioned upon each of the following conditions
precedent any of which may be waived in whole or in part by notice of waiver
delivered, in writing, by Buyer to Seller:
A. No properties or assets of Seller shall have suffered any
destruction or damage by fire, accident or other casualty or act of God
affecting in a material and adverse way the conduct of the business of
Seller, whether or not covered by insurance.
B. Except as otherwise permitted by this Agreement, or consented
to, in writing by Buyer, the representations and warranties of Seller which
are contained in this Agreement, or in any written statement which shall be
delivered to Buyer pursuant to this Agreement, shall be correct in all
material respects on and as of the Closing Date, as though such
representations and warranties
15
<PAGE>
were made at and as of such time and Seller shall have performed all
obligations to be performed by Seller prior to the Closing Date.
15. COVENANTS TO SURVIVE CLOSING.
All covenants, agreements, representations and warranties made
hereunder and in any collateral document delivered at the Closing pursuant
hereto shall be deemed to have been relied upon by Buyer and shall survive
the execution of this Agreement, the Closing, and any investigation that
Buyer or its agent or employees may have made prior to the Closing.
16. NOTICES.
Any notice or communication given pursuant hereto by either party
to the other party shall be in writing and delivered or mailed by registered
or certified mail, postage prepaid, return receipt requested, personal
delivery or facsimile transmission, as follows:
If to Seller: WARNER TECHNOLOGIES, INC.
11859 Wilshire Boulevard
Suite 500
Los Angeles, CA 90025
With copy to: RUBIN M. TURNER, Esq.
8383 Wilshire Boulevard
Suite 510
Beverly Hills, CA 90211
If to Buyer: THOMAS HATHAWAY
JOSEPH FERRARI
11859 Wilshire Boulevard
Suite 500
Los Angeles, CA 90025
16
<PAGE>
With copy to: PETILLON & HANSEN
1260 Union Bank Tower
21515 Hawthorne Boulevard
Torrance, CA 90503
or at such other address as hereafter shall be furnished, in writing, by
either party hereto to the other. Notices shall be deemed given on the
second business day (Saturdays excluded) following the day of mailing.
17. INDEMNIFICATION.
17.1 Seller hereby indemnifies and holds Buyer, Buyer's Board of
Directors and Shareholders and their respective agents, representatives,
attorneys and accountants, and their heirs, successors and assigns
(collectively "Releasees") free and harmless from and of any and all
liability, loss, cost, damage, or expense, including reasonable attorneys'
fees which Releasees may suffer or incur as a consequence of (i) the
incorrectness or breach of or the defense of any claim, action, or proceeding
asserting the incorrectness or breach of any of the representations,
warranties, promises or agreements of Seller which are set forth in this
Agreement, or (ii) the liabilities and obligations assumed by Seller set
forth in paragraph (b) of EXHIBIT "C".
17.2 Buyer hereby indemnifies and holds Seller, Seller's Board of
Directors and Seller's Shareholders and their respective agents,
representatives, attorneys and accountants, and their heirs, successors and
assigns, (collectively Releasees) free and harmless from (i) any and all
liability, loss, cost, damage or expense, including reasonable attorney's
fees which Releasees may
17
<PAGE>
suffer or incur as a consequence of the breach of any undertaking, warranty
or representation of Buyer or any of them with respect to the matters set
forth herein; (ii) the liabilities and obligations assumed by Buyer set forth
in paragraph (a) of EXHIBIT "C"; (iii) ownership of the Acquired Assets and
operation of the Business by Buyer after the Closing Date; and (iv) any and
all liabilities and expenses arising out of the litigation described in
EXHIBIT "I" attached hereto.
17.3 If either party hereunder determines that it may be entitled
to indemnification, such party shall give written notice to the other party
specifying the bases for its claim for indemnification, the nature of the
claim and the estimated amounts for which the claimant is entitled to be
indemnified. If the notified party fails, neglects or refuses to respond in
writing within thirty days after receipt of such notice, the claiming party
shall have the right to request Arbitration. The claiming party shall do so
by making demand for Arbitration upon the other party, specifying in such
demand the nature of the dispute. The Arbitration shall be held in Los
Angeles County, State of California in accordance with the Commercial
Arbitration Rules of the American Arbitration Association to the extent that
they do not conflict with the following provisions which shall supersede: the
parties agree to submit the dispute to one arbitrator before the American
Arbitration Association ("AAA") in Los Angeles County, California, and to use
their best efforts to obtain an expeditious resolution. The decision of the
AAA shall be final and binding and
18
<PAGE>
may be enforced by judgment upon application to a court of competent
jurisdiction. Notwithstanding any rule of the AAA to the contrary,
California Code of Civil Procedure Section 1283.05 shall dictate the rights
of both parties to conduct discovery. The parties also agree that a
restraining order maintaining the status quo and/or a writ of attachment may
be obtained by any party pending the resolution of the dispute from the AAA.
If, for any reason AAA refuses to hear and decide the question of imposition
of a restraining order and/or a writ of attachment as herein contemplated, a
party then may apply to a court of competent jurisdiction for the issuance of
such an order. The arbitration shall then proceed in regards to all other
issues and matters. The award must be based on, and accompanied by, a
written statement of decision explaining the factual and legal basis for the
award as to each of the principal controverted issues at the hearing. The
award shall be confirmed and entered as a judgment by the Superior Court of
this state. The award may be appealed under the same standards specified in
California law applicable to appeals from the Superior Court.
18. INTEGRATION, INTERPRETATION AND MISCELLANEOUS PROVISIONS.
18.1 ENTIRE AGREEMENT. This Agreement is the entire Agreement
between the parties hereto with respect to the subject matter hereof.
18.2 ADDITIONAL DOCUMENTS. Each of the parties hereto agrees to
execute, acknowledge and deliver at or after the Closing such additional
instruments, writings, or documents, including
19
<PAGE>
without limitation, documents of transfer or assignment as may be required in
order to carry out and give effect of the transaction contemplated by this
Agreement.
18.3 ATTORNEYS' FEES. If any party brings an action against the
other party hereto with respect to the interpretation of the terms herein or
by reason of any breach of any agreements, representations, warranties,
duties, obligations or other provisions of this Agreement by the other party,
then the prevailing party in whose favor judgment is entered in such action,
shall be entitled to have and recover of the other party all costs and
expenses incurred or sustained by such party in connection with the
initiation and prosecution of the action including, without limitation,
attorneys' fees, expert witness fees, accountants' fees and court costs, even
though not taxable as such. As used herein, attorneys' fees shall be deemed
to mean the full and actual cost of any legal services actually performed in
connection with the matters involved calculated on the basis of the usual fee
charged by the attorneys performing such services and shall not be limited to
"reasonable attorneys' fees" as defined in any statute or court rule.
18.4 HEIRS, SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of Seller's and Buyer's heirs,
successors and assigns. It is acknowledged, understood and agreed that
HATHAWAY and FERRARI shall have the right to assign all rights hereunder to
Acquisition Co. upon condition, however, that the warranties, representations
and
20
<PAGE>
indemnifications of HATHAWAY and FERRARI shall not be impaired, diminished,
reduced or exonerated.
18.5 PARTIES IN INTEREST. Nothing herein, whether express or
implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their
respective successors and assignees, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision give any
third party any right of subrogation or action over or against any parties to
this Agreement.
18.6 EXPENSES. Seller shall pay all costs and expenses incurred or
to be incurred by it in negotiating and preparing this Agreement and in
closing and consummating the transactions contemplated by this Agreement,
including all costs for legal, accounting, fairness opinion and related
services, not to exceed an aggregate of $75,000. Buyer shall pay any such
costs in excess of $75,000.
18.7 WAIVERS AND AMENDMENTS. This Agreement may be amended,
modified, superseded, cancelled, renewed or extended and the terms and
conditions hereof may be waived only by written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance.
18.8 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of California.
21
<PAGE>
18.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
18.10 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
interpretation of this Agreement.
18.11 VALIDITY. In the event that any provision in this
Agreement shall be held invalid, the same shall not affect in any respect
whatsoever the validity of the remainder of this Agreement.
18.12 EXHIBITS AND SCHEDULES. The Exhibits and Schedules
attached hereto are part of this Agreement as if set forth in full herein.
Any material or information disclosed or set forth in this Agreement or in
any Exhibit or Schedule delivered in connection herewith shall be deemed set
forth at each relevant portion of this Agreement without the necessity of
repetition thereof.
18.13 FURTHER ASSURANCES. If, at any time, any of the parties
hereto shall consider or be advised that any further assignments or
assurances in law or any other things are necessary or desirable to assure
itself the benefit of this Agreement according to the terms hereof, or the
title to any property or rights transferrable hereunder, the other party
shall execute and make all such reasonable, proper assurances and assignments
and do all things reasonably necessary and proper to vest title in such
property or rights in such party, and otherwise carry out the terms of this
Agreement.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first set forth above.
/s/ Thomas S. Hathaway
-----------------------------
THOMAS HATHAWAY
/s/ Joseph A. Ferrari
-----------------------------
JOSEPH FERRARI
WARNER TECHNOLOGIES ACQUISITION
COMPANY
11859 Wilshire Boulevard,
Suite 500
Los Angeles, California 90025
Telephone: (310) 444-0488
By: /s/ Thomas S. Hathaway
--------------------------
By: /s/ Joseph A. Ferrari
--------------------------
"Buyer"
WARNER TECHNOLOGIES, INC.
By: /s/ Peter Schlesinger
--------------------------
"Seller"
23
<PAGE>
LIST OF ATTACHMENTS TO EXHIBIT 6.1
The following attachments to Exhibit 6.1 will be furnished supplementally to
the Securities and Exchange Commission upon request:
EXHIBIT "A" Seller's Balance Sheet and Profit and Loss Statement for the
Twelve Months Ended June 30, 1997
EXHIBIT "B" Seller's Quarterly Report for the Three-Month and Six-Month
Period Ended December 31, 1997
EXHIBIT "C" Schedule of Liabilities and Obligations of Seller
EXHIBIT "D" Contracts, Agreements and Commitments As of December 31, 1997
EXHIBIT "E" Lease of Real or Personal Property
EXHIBIT "F" No Change in Circumstances
EXHIBIT "G" General Release
EXHIBIT "H" Seller's Covenant Not to Compete
EXHIBIT "I" Litigation
<PAGE>
EXHIBIT 6.2
MGPX Ventures, Inc.
(Formerly known as Warner
Technologies, Inc.)
March 24, 1998
Mr. Buddy Young
President, C.E.O.
Advantage Mergers & Acquisitions
17337 Ventura Blvd. Suite 224.
Encino, CA 91316
Dear Mr. Young:
This letter, when signed by both of us, will constitute a letter of
intent with respect to the matters set forth herein:
1. We agree that you will be elected President, C.E.O. and Secretary,
effective concurrent with the closing of the sale of the Company's assets, as
approved by the shareholders at the annual meeting held on March 10. You will
serve in these capacities as a non exclusive independent contractor, and not
an employee of the Company.
2. Your compensation will be at the annual rate of $50,000, payable
monthly. In addition, you will be reimbursed for any expenses incurred on
behalf of the Company. Prior approval will be required for any expense
exceeding $100.
3. You will be indemnified and held harmless from any and all matters
and things arising, occurring or existing prior to the date hereof.
4. You will provide an office facility for our operations at your
present offices located at 17337 Ventura Blvd., Encino, California 91316. The
Company will pay all costs relating to the installation and monthly charges
for its telephone and fax lines.
5. We will not provide any medical or health plans or programs for
you, nor any life insurance.
<PAGE>
6. In addition to performing the general duties of the President and
C.E.O., as called for in the Company's Articles of Incorporation and By Laws,
you will use your best efforts to re-establish MGPX Ventures as a fully
reporting company with the S.E.C., insure that all necessary disclosure forms
and tax returns are filed in a timely manner, communicate with the preferred
shareholders, and seek a reverse merger or other business opportunities for
the Company.
7. We will consider the possibility of a stock position being made
available to you, however, this matter is solely within the Board of
Director's complete discretion and does not constitute a commitment,
assurance or obligation of any kind or nature to, in fact, provide a stock
position with our company.
This arrangement will be on a month-to-month basis, subject to
termination by either of us upon thirty (30) days written notice. You agree
to resign as President and Director of the Company, immediately upon
termination.
The parties will use their best efforts to execute a more definitive
agreement. Until such time, both parties shall abide by the terms of this
Letter of Intent.
If the foregoing fully sets forth our understanding, please indicate
this by signing below.
Very truly yours,
MGPX Ventures, Inc.
(Formerly known as
Warner Technologies, Inc.)
By: /s/ Peter Schlesinger
---------------------------
PETER SCHLESINGER,
CHIEF FINANCIAL OFFICER
The foregoing is understood, acknowledged, accepted and agreed to:
/s/ Buddy Young
- --------------------------
BUDDY YOUNG
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1998 AND IS QUALIFED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 559,102
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 575,107
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 575,107
<CURRENT-LIABILITIES> 46,239
<BONDS> 0
0
672
<COMMON> 60,395
<OTHER-SE> 467,801
<TOTAL-LIABILITY-AND-EQUITY> 575,107
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,436
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,443
<INCOME-PRETAX> (8,993)
<INCOME-TAX> 800
<INCOME-CONTINUING> (9,793)
<DISCONTINUED> (289,472)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (299,265)
<EPS-PRIMARY> (.18)<F1>
<EPS-DILUTED> 0
<FN>
<F1> Includes (.01) from continuing operations and (.17) from discontinued
operations.
</FN>
</TABLE>
