U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
NORTHPORT INDUSTRIES, INC.
--------------------------
(Name of Small Business Issuer as specified in its charter)
NEVADA 93-0947269
------ ----------
(State or other jurisdiction of (I.R.S. incorporation or
organization) Employer I.D. No.)
Spur 239 & Alderete Road
Del Rio, Texas 78840
P. O. Box 1428
Del Rio, Texas 78841
---------------------------
(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (830) 775-0734
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.001 par value common stock
-------------------------------
Title of Class
DOCUMENTS INCORPORATED BY REFERENCE: None.
<PAGE>
PART I
Item 1. Description of Business.
- ---------------------------------
Business Development.
- ---------------------
Organization and Charter Amendments
-----------------------------------
Northport Industries, Inc. (the "Company") was organized
under the laws of the State of Nevada on April 20, 1987, under the name
"Environmental Pyrogenics, Inc." The Company was formed to engage in any
lawful activity.
This Registration Statement is being filed on a voluntary basis to
maintain the Company's quotations of its common stock on the OTC Bulletin
Board of the National Association of Securities Dealers, Inc. (the "NASD").
See the heading "Effects of Existing or Probable Governmental Regulations,"
Part I, Item I.
The Company's initial authorized capital consisted of 25,000,000
shares of $0.001 par value common voting stock and 12,500,000 shares of $0.25
preferred stock.
The following amendments to the Company's Articles of
Incorporation were duly adopted and filed with the Secretary of State of
Nevada in accordance with the Nevada Revised Statutes from inception to the
date hereof, to wit:
* Changed name to "Northport Industries, Inc." and a reverse
split of both the common and preferred shares on a basis of one
for 157.7668, while retaining the authorized capital and par
value, and with appropriate adjustments in the stated
capital and capital surplus accounts of the Company
(1/8/98).
* Authorized Series A Non-Voting Preferred Stock with the
following rights, privileges and preferences: (i) non-voting;
(ii) Redemption or Face Value of $1 per share; (iii) 5%
cumulative dividend on the Redemption or Face Value; (iv)
callable at any time by the Company, by payment of the
Redemption or Face Value and any accrued 5% cumulative
dividends; (v) convertible at the option of the holder into
"restricted securities" in common stock of the Company at the
Redemption or Face Value, on the closing bid of the common
stock of the Company on the OTC Bulletin Board of the NASD or
any other recognized market where these securities publicly
trade on the day prior to the conversion; (vi) that the holder
can "put" the unconverted preferred stock to the Company at the
Redemption or Face Value three years after the issuance date of
the preferred stock; and (vii) in the event for any reason the
preferred stock is still outstanding after three years from its
issuance, the Company, at its option, may convert the
Redemption or Face Value into "restricted securities" in common
stock of the Company on the closing price of the common stock
of the Company on the OTC Bulletin Board of the NASD or any
other recognized market where these securities publicly trade
on the day prior to conversion (12/1/98).
All computations in this Registration Statement take into account
this reverse split.
Copies of the Initial Articles of Incorporation of the Company and
these amendments are attached hereto and incorporated herein by reference.
See Item 13.
Public Offerings
----------------
(1) Conducted public offering pursuant to Rule 504 of Regulation
D of the Securities and Exchange Commission (1987).
(2) Sold 280,000 shares pursuant to Rule 504 (8/98).
Reorganizations
---------------
The Company has been party to the following reorganizations since
its inception:
(1) Acquired 100% of the outstanding securities of Versatech
Manufacturing, Inc., a Texas corporation ("Versatech" and the "Versatech
Plan") in exchange for 3,000,000 shares of the Company's common stock,
designated as "restricted securities." The Versatech Plan was effective on
December 24, 1997.
* The Versatech Plan was adopted, ratified and approved by the
Boards of Directors of the Company and Versatech, and by all
of the stockholders of Versatech.
* The source of the consideration used by the Versatech
stockholders to acquire their respective interest in the
Company was the exchange of the outstanding securities of
Versatech.
* The basis of the "control" by the Versatech stockholders was
stock ownership.
* The former controlling stockholders of the Company prior to
the completion of the Versatech Plan were Michael Silvey,
William A. Silvey, Jr. and W. Scott Thompson, directors and
executive officers. William A. Silvey, Jr. was a beneficial
owner of approximately 1,900 pre-Versatech Plan outstanding
voting securities of the Company, and received 135,000
shares of the Company's common stock for services related to
the Versatech Plan, which were designated as "restricted
securities." W. Scott Thompson was a beneficial owner of 6
pre-Versatech Plan outstanding voting securities of the
Company, and received 135,000 shares of the Company's common
stock for services related to the Versatech Plan, which were
designated as "restricted securities."
* No director or executive officer of the Company had any
interest in Versatech prior to the completion of the
Versatech Plan.
A copy of the Versatech Plan, together with all material exhibits,
is attached hereto and incorporated herein by reference. See Part III, Item
1. Also, see the caption "Recent Sales of Unregistered Securities," Part II,
Item 4.
(2) Acquired 100% of the outstanding securities of JOH Rubber, Inc.,
an Ontario corporation ("JOH" and the "JOH Purchase"), in exchange for 193,767
shares of the Company's common stock, designated as "restricted securities."
The JOH Purchase was effective on July 8, 1998.
* 400,000 shares of Series A Non-voting Preferred Stock were
also issued to the JOH stockholders on January 8, 1999.
* No director or executive officer of the Company had any
interest in the JOH Purchase prior to the completion of the
JOH Purchase, except Matt Baumgartner, an executive officer
and director of the Company, who owned approximately 40% of
JOH at the time of the JOH Purchase.
A copy of the JOH Purchase, together with all material exhibits, is
attached hereto and incorporated herein by reference. See Part III, Item 1.
Also, see the caption "Recent Sales of Unregistered Securities," Part II, Item
4.
Changes of Control During the Past Three Years
----------------------------------------------
Pursuant to the Bylaws and the Nevada Revised Statues, the
following changes of control have occurred during the past three years:
* Michael Silvey, William A. Silvey, Jr. and W. Scott Thompson
were elected to serve as directors; and William A. Silvey, Jr.
was elected President; and W. Scott Thompson was elected
Secretary/Treasurer (10/2/92).
* Messrs. Silvey, Silvey and Thompson resigned, in seratim, and
designated Robert L. Michelini, Len Baker, Bradley D. Osgood
and Matt Baumgartner, to serve as directors, and Robert L.
Michelini was elected President, Len Baker was elected Vice
President and Treasurer and Bradley D. Osgood was elected
Secretary (12/24/97).
See the caption "Security Ownership of Certain Beneficial Owners
and Management," Part I, Item 4.
Sales of "unregistered" and "restricted" securities over the past three
years
-----
See the caption "Recent Sales of Unregistered Securities," Part
II, Item 4.
Business.
- ---------
The Company is an original Equipment Manufacturer ("OEM") of sports
and golf bags and a supplier to U.S. corporate clients with three divisions:
automotive, infant products and golf equipment. In the automotive division,
services range from assembly only to design, materials procurement and full
wrap of gearshift handles and gearshift boots for Cadillac, Oldsmobile and
Saturn; infant car seats in the infant products division; and, in the golf
equipment division, twelve styles and sizes of golf bags, from junior to
professional, are produced for various OEM customers; the Company also sells
these products under its own brand, "Ever-Green."
Year 2000
- ---------
The Company has been advised by BusinessVision Management Systems,
Inc., who is the supplier of the Company's management systems and accounting
software, that it is Year 2000 compliant in all areas.
The Company can give no assurance that third parties with whom it
does business (e.g., banks and utilities) will ensure Year 2000 compliance in
a timely manner or that, if they do not, their computer systems will not have
an adverse effect on the Company. However, the Company does not believe that
Year 2000 compliance issues of such third parties will result in a material
adverse effect on its financial condition or results of operations.
Principal Products and Services.
- --------------------------------
The Company is an OEM of sports and golf bags and a supplier to U.S.
corporate clients with three divisions: automotive, infant products and golf
equipment.
Automotive Division
* Assembly to design.
* Materials procurement and full wrap of gearshift handles and
gearshift boots for Cadillac, Oldsmobile and Saturn.
* Electrical harnesses for heated seats.
Infant Products
* Infant car seats.
Golf Equipment Division
* Golf bags, with twelve styles and sizes of golf bags from
junior to professional are produced for various OEM
customers.
* Sales of golf bags under the Company's own brand name "Ever-
Green."
Distribution Methods of the Products or Services.
- -------------------------------------------------
The Company uses direct trucking contracts and customer trucks to
distribute their products.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
Pursuant to the JOH Purchase, the Company acquired all of the
outstanding securities of JOH and the U.S. Patent for a vulcanized-in-place
sealing system for automotive engines and transmissions.
Competitive Business Conditions.
- --------------------------------
The Company has established itself as a leader in producing juvenile
products. A "nitch" market-gearshift handles, wrapping-has only one other
competitor.
Sources and Availability of Raw Materials and Names of Principal
Suppliers.
- -----------
The Company's major raw material/supplies required include thread,
material for golf bags and child infant seats, leather and various plastic
components. A list of major suppliers includes, but is not limited to the
following companies: Evenflo, American & Efrid, Brookwood Rolls Goods, Seiler
Plastics, Tape Craft, Seton, Coat's Bell and Creative Foam.
Dependence on One or a Few Major Customers.
- -------------------------------------------
The Company's major customer is Evenflo, with whom it has a three
year agreement that the Company will provide 80% of their soft pads. The
Company is the process of negotiating a five year agreement with Evenflo, with
an estimated completion date of the end of March 1999.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts.
- ------------------------------
The Company recently acquired JOH and its vulcanized-in-place
sealing system for automotive engines and transmissions. JOH owned Patent
#4,819,953, dated April 11, 1989.
Need for any Governmental Approval of Principal Products or
Services.
- ---------
There are no material governmental regulations which affect the
current business operations of the Company.
Effect of Existing or Probable Governmental Regulations on
Business.
- ---------
Effective January 4, 1999, the NASD adopted rules and regulations
requiring that prior to any issuer having its securities quoted on the OTC
Bulletin Board of the NASD that such issuer must be "reporting issuer" which
is required to file reports under Section 13 or 15(d) of the Securities and
Exchange Act of the 1934, as amended (the "1934 Act"). The Company is not
currently a "reporting issuer," and this Registration Statement will bring the
Company into compliance with these listing provision of the OTC Bulletin Board
and prevent the NASD from delisting quotations of the Company's common stock.
Under the "phase-in" schedule of the NASD, the Company has until February,
2000, within which to become a "reporting issuer." See Part II, Item 1.
Research and Development.
- -------------------------
The Company sets aside 5% of sales for Research and Development.
None was expended as of December 31, 1997, since the Company had only recently
commenced business operations. As of September 30, 1998, the Company had
expended approximately $60,000 on R & D for its golf bag line and automotive
gearshift products. It anticipates spending approximately $20,000 more by
December 31, 1998.
Cost and Effects of Compliance with Environmental Laws.
- -------------------------------------------------------
Since the nature of the Company's business is to cut and sew, the
Company does not have an environmental problem. The foam that the Company
brings into Mexico to cut is either returned as part of the product to the
U.S. or, if scrap material, is returned to the U.S. from Mexico and is
disposed of appropriately.
Number of Employees.
- --------------------
Approximately 450.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- --------------------------------------------------------------------
Plan of Operation.
- ------------------
The Company will be adding three new customers within the next 12
months, ETM, W.E.T. and Libracter.
During the next 12 months, the Company's foreseeable cash
requirements will be met by bank financing or raising an additional $700,000
through debt or equity financing. The Company plans on continuing to do
research in the "JOH Rubber" area, primarily in the composite polymoric
material in either thermosetting or thermoplastic. The Company has purchased
a new auto CAD system at an approximate cost of $75,000, and plans on
improving its manufacturing plant at a cost of $150,000 and on purchasing two
injection molding machines at a cost of approximately $400,000. The financing
for the two injection molding machines will come from bank financing through
the German Export Group.
The Company also expects to grow from 450 employees to approximately
600 employees, all in Mexico, within the next six months.
Results of Operations.
- ---------------------
There was no activity through December 1997, since the Company did
not commence operations until January 1998. Operations improved dramatically
throughout 1998. Revenue improved from $753,976 to $2,177,155. Earnings
improved from a loss of ($482,486) to a profit of $186,721. Primarily, this
was due to improved plant efficiency from 30% to 80%. Efficiency is expected
to be at 100% by the end of the year. Additionally, the Company secured long-
term commitments from two new customers--May & Scofield and Evenflo.
Liquidity.
- ---------
Liquidity improved with approximately $154,700 in equity financing,
and from increased revenues.
Item 3. Description of Property.
- ---------------------------------
The Company leases several properties.
* Office and warehouse at Spur 277 and 239 Alderete Lane, Del
Rio, Texas, which is leased for $2,500 per month with the
lease ending January 31, 1999. The space is being leased on
a month to month basis until the Company determines its
long-term needs.
* Building at 4 Carretera Presa in Coahuila, Mexico, which is
leased for $5,000 per month, with the lease ending November
1999.
* Building in Coahuila, Mexico, for $3,440 per month, with the
lease being renewable.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of the date
hereof with the number of outstanding shares at 5,892,069, which includes
280,000 shares in the Company's treasury that are to be canceled:
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ --------
<S> <C> <C>
Fairfax Industries, Inc.(1) 1,488,000 25.25%
46641 Arboretum
Plymouth, Michigan 48170
Cenote Plastics(2) 900,000 15.28%
P. O. Box 421812
Del Rio, Texas 78842-1812
</TABLE>
(1)Robert L. Michelini and Bradley D. Osgood each own 40% of Fairfax
Industries, Inc.
(2)Matt Baumgartner owns 50% of Cenote Plastics.
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of the date hereof:
<TABLE>
Number of Shares Percentage of
Name and Address Beneficially Owned of Class
- ---------------- ------------------ -------------
<S> <C> <C>
Robert L. Michelini(1) 745,200 12.65%
Bradley D. Osgood(1) 595,200 10.10%
Matt Baumgartner(2) 460,240 7.81%
Fernando Gonzales Garza -0- -0-
Len Baker -0- -0-
--------- -------
Directors and Officers as
a group 1,800,640 30.56%
</TABLE>
(1) Robert L. Michelini and Bradley D. Osgood each own 40% of Fairfax
Industries, Inc. (40% of Fairfax's holdings are included in each person's
ownership), with Robert L. Michelini having an additional 300,000 shares in
his name.
(2) Matt Baumgartner owns 50% of Cenote Plastics, (50% of Cenote's
holdings are included in his ownership), with an additional 10,240 shares in
his name.
See the caption "Directors, Executive Officers, Promoters and
Control Persons," below, Part I, Item 5, for information concerning the
offices or other capacities in which the foregoing persons serve with the
Company.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- -------- -------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders or until their successors are elected
or appointed and qualified, or their prior resignation or termination.
<TABLE>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Robert L. Michelini President, 12/24/97 *
Chairman, 12/24/97 *
CEO 12/24/97 *
and Director 12/24/97 *
Matt Baumgartner Secretary 2/15/98 *
and Director 12/24/97 *
Bradley D. Osgood Treasurer 2/15/98 6/30/98
and Director 12/24/97 *
Secretary 12/24/97 2/15/98
Len Baker Vice President 12/24/97 *
Treasurer 12/24/97 *
Director 12/24/97 *
Assistant Sec 12/24/97 *
Fernando Gonzalez
Garza Director 10/2/98 *
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- --------------------
Robert L. Michelini, President, Chairman, CEO and a director. Mr.
Michelini is 61 years of age and graduated with a B.B.A. from Western Michigan
University, with a minor in Math and an MBA from the University of Detroit.
He began his business career as a Systems, Analyst with I.B.M. Corporation
where he set up and designed computer systems (1960-1963) and from there moved
on to Bendix Corporation as the Director of Corporate Computer Systems (1963-
1970). From 1970 to 1979, Mr. Michelini worked for Lear Corporation as the
President of Acts Computing and as Vice President of the corporation. During
this time, he developed, set up and ran the online lotto for the State of
Michigan and managed the facility management contract on the largest computer
in the world. Beginning his career as an entrepreneur, Mr. Michelini opened
the doors on Computer Alliance. As Chairman and 60% owner of the Company, his
leadership was instrumental to it being designated as the fastest growing
company in Michigan and 18th in the United States in 1984 (1979-1985). As
President and 50% owner of Fair Haven Industries (1983-1990), Mr. Michelini's
expertise resulted in automotive sales that increased from $2,000,000 to
$22,000,000, with an eventual buy-out by Lear Corporation. From 1990-1994,
Mr. Michelini acted as President of the Bauerhim division of Gecamex
Industries, Inc. ("Gecamex"), while simultaneously holding the position of
Vice President of Gecamex. As such, he was directly responsible for taking
the company from a $500,000 loss in 1990 to a $1,500,000 dollar profit in
1993. Mr. Michelini acted as President of Fairfax/Versatech from 1994-1997.
Matt Baumgartner, Secretary and a director. Mr. Baumgartner is 57
years of age and graduated with a Bachelor of Science in Chemical Engineering
and an MBA from the University of Windsor. He worked as a process engineer
for a supplier of automotive plastics from 1964 to 1967, and taught college
mathematics from 1967 to 1980. Since 1980, through the present, Mr.
Baumgartner has been a leader in the entrepreneurial start-up of companies in
the automotive supply industry, together with German partners. Mr.
Baumgartner was the co-founding manager, looking after all aspects of managing
the start-up of the Canadian manufacturing facility in the following
companies: Kautex (now part of Textron), which produced blow-molded plastic
fuel tanks; Kuester (now part of Magna), which produced cable-drive window
lifters; Rasmussen (still independent), which produces quick-connect hose
mechanisms and hose clamps; JOH (now part of the Versatech group of
Companies), which produces power-train composite cover/sealing systems;
Bauerhin (now part of the Versatech group of Companies), which produces
interior trim assemblies and electric seat heaters; Knapp Plastics (now part
of LDM Technologies), which produces interior and exterior molded plastic
automotive parts; Gecamex (now part of the Versatech group of Companies),
which was a merger of the JOH and Bauerhin companies taken public on the
Toronto Stock Exchange in 1993.
Bradley D. Osgood, director. Mr. Osgood is 59 years of age and
graduated from Hillsdale College with a degree in Business. After graduation,
he worked for a large CPA firm for the next five years. He then became
Chairman of Fair Haven Industries, which was eventually bought out by Lear
Corporation. Since that time, he has been President of Red River Company, a
manufacturer's representative business out of Austin, Texas.
Len Baker, Vice President, Treasurer, Assistant Secretary and
director. Mr. Baker is 37 years of age and graduated from the Manufacturing
engineering program at St. Clair College in Windsor, Ontario Canada and has
continued his education by completing one year in the St. Clair College
Architectural Engineering Technology program; received certification from
completion from the Ontario Management Development Program; received a Human
Resources Certificate through part-time studies; and completed two years of
study toward a business of Commerce degree at the University of Windsor. From
August 1983 through March 1993, Mr. Baker held positions as Quality Control
Inspector, Quality Control Supervisor/Statistical Process Control Coordinator,
Plant Manufacturing Engineer, and Quality Control Manager at various
automotive manufacturing companies in Canada. He was personally responsible
for ensuring the quality conformance of stamped automotive parts, training in
the use of S.P.C. and various inspection methods and for the preparation of
Initial Sample Inspection Reports. From March 1993 through December 1997, Mr.
Baker has held positions as General Manager for an Ontario facility that
manufactured seating for Chrysler and was accountable for the profitability of
the operations; Vice President of Manufacturing for manufacturing facilities
for two locations in Canada, one operation in Michigan and the Del Rio,
Texas/Ciudad Acuna operations. Mr. Baker accepted the position of General
Manager of Gecamex in October of 1994, a position he held through the recent
reorganization and continues to hold for Versatech.
Fernando Gonzales Garza, Director. Mr. Gonzales is 43 years of age
and graduated with a degree in Business Administration from Universidad
Regiomontana in Monterrey, Nuevo Leon, Mexico and continued his education at
Texas A & M International University, Laredo, Texas, receiving a Master of
Business Administration on International Trade. He founded AFRASA
International in 1977. Mr. Gonzalez in President and CEO of AFRASA, a company
engaged in retailing and distributing auto parts. The company employs 44
people and maintains six retail stores and two warehouses. Mr. Gonzalez is
and has been actively involved in politics in Acuna, and is a member of the
Chamber of Commerce on both sides of the border.
Significant Employees.
- ----------------------
The Company has no significant employees who are not executive
officers.
Family Relationships.
- ---------------------
None.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director,
executive officer or person nominated to become a director or an executive
officer of the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
Item 6. Executive Compensation.
- --------------------------------
The following table sets forth the aggregate compensation paid
by the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L.
Michelini, 12/31/96 0 0 0 0 0 0 0
President, 12/31/97 0 0 0 0 0 0 0
Chairman, 9/30/98 0 0 0 0 0 0 $60000
CEO and
Director
Matt
Baumgartner,12/31/96 0 0 0 0 0 0 0
Secretary 12/31/97 0 0 0 0 0 0 0
and Director 9/30/98 0 0 0 0 0 0 0
Bradley D.
Osgood, 12/31/96 0 0 0 0 0 0 0
Treasurer 12/31/97 0 0 0 0 0 0 0
and Director 9/30/98 0 0 0 0 0 0 0
Len Baker, 12/31/96 0 0 0 0 0 0 0
Director 12/31/97 $85000 0 0 0 0 0 0
9/30/98 $45000 0 0 0 0 0 0
</TABLE>
Other than the salary listed above, no cash compensation, deferred
compensation or long-term incentive plan awards were issued or granted to the
Company's management during the fiscal years ended December 31, 1997 or 1996
or the period ended September 30, 1998. Further, no member of the Company's
management has been granted any option or stock appreciation rights;
accordingly, no tables relating to such items have been included within this
Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
The following is the material transaction between the Company and any
director, executive officer, five percent stockholder or promoter or founder
of the Company:
* See the heading "Reorganizations," Part I, Item 1, paragraph
(2) and also see Part III, Item 1, Exhibit 10.2, "Offer to
Purchase dated August 14, 1998 of JOH Rubber Inc."
Parents of the Issuer.
- ----------------------
The Company has no parents. See the caption "Business
Development," Part I, Item 1.
Item 8. Description of Securities.
- -----------------------------------
The Company has two classes of securities authorized, consisting of
25,000,000 shares of $0.001 par value common voting stock and 12,500,000
shares of $0.25 par value non-convertible preferred voting stock.
Common Stock
------------
The holders of the Company's common stock are entitled to one vote
per share on each matter submitted to a vote at a meeting of stockholders.
The shares of common stock do not carry cumulative voting rights in the
election of directors.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is
not subject to redemption rights and carries no subscription or conversion
rights. In the event of liquidation of the Company, the shares of common
stock are entitled to share equally in corporate assets after satisfaction of
all liabilities. All shares of the common stock now outstanding are fully
paid and non-assessable.
There are no outstanding options, warrants or calls respecting any
of the authorized but unissued common stock of the Company.
There is no provision in the Company's Articles of Incorporation, as
amended, or Bylaws, as amended, that would delay, defer, or prevent a change
in control of the Company.
Preferred Stock
---------------
The are two classes of preferred stock authorized to be issued by
the Board of Directors (i) preferred stock, and (ii) Series A Non-Voting
Preferred Stock.
Preferred Stock
---------------
* Non-voting.
* $233,541 liquidation preference.
* Convertible to common on a basis of one for one.
* 5,921 shares outstanding.
Series A non-voting
--------------------
* Non-voting.
* Redemption or Face Value of $1 per share.
* 5% cumulative dividend on the Redemption or Face Value.
* callable at any time by the Company, by payment of the
Redemption or Face Value and any accrued 5% cumulative
dividends.
* convertible at the option of the holder into "restricted
securities" in common stock of the Company at the Redemption
or Face Value, on the closing bid of the common stock of the
Company on the OTC Bulletin Board of the NASD or any other
recognized market where these securities publicly trade on
the day prior to the conversion.
* that the holder can "put" the unconverted preferred stock to
the Company at the Redemption or Face Value three years
after the issuance date of the preferred stock.
* in the event for any reason the preferred stock is still
outstanding after three years from its issuance, the
Company, at its option, may convert the Redemption or Face
Value into "restricted securities" in common stock of the
Company on the closing price of the common stock of the
Company on the OTC Bulletin Board of the NASD or any other
recognized market where these securities publicly trade on
the day prior to conversion.
* 400,000 were issued to the JOH stockholders; see the heading
"Reorganizations," Part I, Item 1, paragraph (2).
There are no outstanding options, warrants or calls respecting any
of the authorized but unissued preferred stock of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- --------------------------
Market Information.
- -------------------
The Company's common stock is quoted on the OTC Bulletin Board of
the NASD under the symbol "PESO." Quotations commenced on July 1, 1997, as
"unpriced."
The following quotations were provided by the National Quotation
Bureau, LLC, and do not represent actual transactions; these quotations do not
reflect dealer markups, markdowns or commissions.
<TABLE>
<CAPTION>
STOCK QUOTATIONS*
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
<S> <C> <C>
September 30, 1997 unpriced
December 31, 1997 unpriced
March 31, 1998 unpriced
June 30, 1998 5.00 5.00
September 30, 1998 5.75 .1875
December 31, 1998 1.5625 .16
</TABLE>
Restricted Securities
- ---------------------
There are currently 5,892,069 outstanding voting securities of the
Company, which includes 280,000 shares in the Company's treasury to be
canceled, 5,312,258 of which are designated as "restricted securities." Of
these 5,312,258 "restricted securities," 4,608,191 have satisfied the one year
holding period of Rule 144, and may be publically sold in accordance with this
Rule; the effectiveness of this Registration Statement will enable the Company
to have "current public information" available for resale of "restricted
securities" 90 days after the effective date (60 days after its filing), so
long as all required reports have been filed. Any sales of these "restricted
securities" could have an adverse affect on the current or any future public
market for the Company's common stock.
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Registration Statement is approximately 178.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to
its common stock or its preferred stock, and does not intend to declare
dividends in the foreseeable future. The future dividend policy of the
Company cannot be ascertained with any certainty, no such policy will be
formulated. There are no material restrictions limiting, or that are likely
to limit, the Company's ability to pay dividends on its securities.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding. No
federal, state or local governmental agency is presently contemplating any
proceeding against the Company. No director, executive officer or affiliate
of the Company or owner of record or beneficially of more than five percent of
the Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
There have been no changes in the Company's principal independent
accountant in the past two fiscal years or as of the date of this Registration
Statement.
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
Date Number of Aggregate
Name or Group Acquired Shares Consideration
------------- -------- --------- -------------
Common Stock
Versatech Plan
Versatech stockholders 12/24/97 3,000,000 (1)
Consultants and
attorneys 12/24/97 450,000 (2)
Finders and their
donees 12/24/97 1,150,000 (3)
Private Placement 12/24/97 350,000 (4)
JOH Purchase
JOH stockholders 8/14/98 193,767 (5)
Leonard W. Burningham,
Esq. 1/21/99 7,500 (6)
Preferred Stock
JOH Purchase
JOH Stockholders 8/14/98 400,000 (7)
(1) These shares were issued in exchange for shares owned in Versatech.
See Part III, Item 1, Exhibit A of Exhibit 10.1; also see Section 1.1(i)
of Exhibit 10.1.
(2) 450,000 shares of "unregistered" and "restricted" common stock for non-
capital raising services rendered by Consultants and Attorneys, all
issued pursuant to Rule 701 of the Securities and Exchange Commission.
See Part III, Item 1, Schedule A of Exhibit 10.1; see also Section
1.1(ii) of Exhibit 10.1, and Exhibit 10.3.
(3) "Unregistered" and "restricted" common stock issued under an exemption
from registration provided for under Section 4(2) of the Securities Act
of 1933, as amended, (the "1933 Act"), as finders and their donees. See
Part III, Item 1, Schedule B, C, D and E of Exhibit 10.1; see also
Section 1.1(iii) and (iv) of Exhibit 10.1.
(4) "Unregistered" and "restricted" common stock issued pursuant to a
Private Placement made in reliance on Section 4(2) of the 1933 Act. See
Part III, Item 1, Exhibit B of Exhibit 10.1; see also Section 1.1(v) of
Exhibit 10.1.
(5) 193,767 "restricted" shares issued pursuant to the JOH Purchase. See
Part III, Item 1, Exhibit 10.2.
(6) Issued pursuant to an Engagement Letter under Rule 701 of the Securities
and Exchange Commission. See Part III, Item 1, Exhibit 10.4.
(7) Issued to the JOH Stockholders; see the heading "Reorganization," Part
I, Item 1, paragraph (2).
Management believes each of the foregoing persons or entities was
either an "accredited investor," or "sophisticated investor" as defined in
Regulation D, Rule 506. Each had access to all material information regarding
the Company prior to the offer, sale or issuance of these "restricted
securities." The Company believes these shares were exempt from the
registration requirements of 1933 Act, pursuant to Section 4(2) thereof.
Item 5. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS")
authorizes a Nevada corporation to indemnify any director, officer, employee,
or corporate agent "who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or
in the right of the corporation" due to his or her corporate role. Section
78.751(1) extends this protection "against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of
the reasonable defense or settlement expenses of a corporate director,
officer, employee or agent who is sued, or is threatened with a suit, by or in
the right of the corporation. The party must have been acting in good faith
and with the reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or
agent is successful on the merits or otherwise in defending any action or
proceeding referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of
the NRS requires that he be indemnified "against expenses, including
attorneys' fees, actually and reasonably incurred by him or her in connection
with the defense."
Section 78.751 (4) of the NRS limits indemnification under
Sections 78.751 (1) and 78.751(2) to situations in which either (1) the
stockholders, (2)the majority of a disinterested quorum of directors, or (3)
independent legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may
advance an officer's or director's expenses incurred in defending any action
or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides
that the rights to indemnification and advancement of expenses shall not be
deemed exclusive of any other rights under any bylaw, agreement, stockholder
vote or vote of disinterested directors. Section 78.751(6)(b) extends the
rights to indemnification and advancement of expenses to former directors,
officers, employees and agents, as well as their heirs, executors, and
administrators.
Regardless of whether a director, officer, employee or agent has
the right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his or her
corporate role.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements*
- --------------------
Audited Financial Statements for the year ended December 31, 1997 and the
period from December 27, 1996 (inception) through December 31, 1996
-------------------------------------------------------------------
Independent Auditors' Report
Balance Sheets
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
<PAGE>
INDEPENDENT AUDITORS REPORT
To the Board of Directors
Northport Industries, Inc.
(formerly Versatech Manufacturing, Inc.,
Hawk Systems, Inc., and Environmental Pyrogenics, Inc.)
Del Rio, Texas
We have audited the accompanying consolidated balance sheet of
Northport Industries, Inc. and subsidiary as of December 31,
1997, and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended and
the period from December 27, 1997 (Date of Inception) through
December 31, 1997. These consolidated financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
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 consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Northport Industries, Inc. and subsidiary as of
December 31, 1997, and the results of their operations and their
cash flows for the periods then ended in conformity with
generally accepted accounting principles.
Malone & Bailey, PLLC
Houston, Texas
February 20, 1998
(except for Note 2, as to
which the date is June 23, 1998)
<TABLE>
NORTHPORT INDUSTRIES, INC.
(Formerly Versatech Manufacturing, Inc.,
Hawk Systems, Inc., and Environmental Pyrogenics, Inc.)
<CAPTION>
BALANCE SHEET
December 31, 1997
ASSETS
<S> <C>
Current Assets
Cash $ 33,796
Accounts receivable 248,929
Common stock subscriptions receivable 20,000
Inventory 279,466
Prepaid expenses 12,345
Total Current Assets 594,536
Property and Equipment,
net of $41,427 accumulated depreciation 444,746
TOTAL ASSETS $1,039,282
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of installment debt $ 14,754
Due to related parties 202,592
Accounts payable 220,704
Accrued expenses 38,639
Total Current Liabilities 476,689
Long-Term Debt
Installment debt
43,577
Due to related parties 390,000
Total Liabilities 910,266
Stockholders' Equity
Preferred stock, no par value, 12,500,000
shares authorized, 5,921 shares issued
and outstanding 1,542
Common stock, $.001 par value, 25,000,000
shares authorized, 5,000,000 shares issued
and outstanding 5,000
Paid in capital 958,764
Retained <deficit> (836,290)
Total Stockholders' Equity 129,016
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,039,282
</TABLE>
See notes to financial statements.
<TABLE>
NORTHPORT INDUSTRIES, INC.
(Formerly Versatech Manufacturing, Inc.,
Hawk Systems, Inc., and Environmental Pyrogenics, Inc.)
INCOME STATEMENTS
<CAPTION>
Period Ended
Year Ended December 31,
1997 1996
<S> <C> <C>
Revenues, net of returns and allowances
of $120,000 $1,740,902 -
Cost of sales (2,115,787) No Activity
Gross Margin (Deficit) ( 374,885)
Operating Expenses
Selling 32,030
General and administrative 195,296
Related party salary 80,000
Depreciation 41,427
Interest 62,522
Bad debts 50,130
461,405
Net (loss) $( 836,290)
Net loss per common share $(0.27)
Weighted average common shares
outstanding 3,038,356
</TABLE>
See notes to financial statements.
<TABLE>
NORTHPORT INDUSTRIES, INC.
(Formerly Versatech Manufacturing, Inc.,
Hawk Systems, Inc., and Environmental Pyrogenics, Inc.)
STATEMENTS OF CASH FLOWS
<CAPTION>
Period Ended
Year Ended December 31,
1997 1996
<S> <C> <C>
Cash Flows Used By Operating Activities
Net (loss) $( 836,290)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 41,427 No Activity
Expenses offset by contribution to equity
Stockholder salary 74,400
Stockholder loan interest 62,070
Stockholder services 15,583
Changes in net assets and liabilities
Accounts receivable ( 248,929)
Inventory ( 249,466)
Prepaid expenses ( 12,345)
Accounts payable 220,705
Accrued expenses 38,639
Net Cash Used By Operating Activities ( 894,205)
Cash Flows From Investing Activities
Purchases of property and equipment ( 115,474)
Cash Flows From Financing Activities
Proceeds from advances by stockholders 984,144
Proceeds from new installment debt 59,597
Payments of installment debt ( 1,266)
Sale of common stock 1,000
Net Cash Provided From
Financing Activities 1,043,475
Net increase in cash 33,796
Cash Balance
- at beginning of year 0
- at end of year $ 33,796
</TABLE>
See notes to financial statements.
<TABLE>
NORTHPORT INDUSTRIES, INC.
(Formerly Versatech Manufacturing, Inc.,
Hawk Systems, Inc., and Environmental Pyrogenics, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Preferred Common Paid In Accumulated
Shares Amount Shares Amount Capital (Deficit) Totals
<S> <C> <C> <C> <C> <C> <C> <C>
- - No activity prior to January 1, 1997 - -
Stock issued for
Initial Contributions
- Cash 100 $ 100 $ 900 $ 1,000
Conversion to equity of
additional amounts payable
to original stockholders
- Cash 407,137 407,137
- Equipment 370,699 370,699
- Accrued loan interest 56,606 56,606
Reverse merger with EPI:
Existing EPI stock 5,921 $1,542 50,000 50 (1,592)
Additional capital
contributions by
EPI shareholders
- Cash 350,000 350 49,650 50,000
- Services 1,600,000 1,600 158,400 160,000
Exchange of $1 par
Company stock for
$.001 par EPI stock
- reversal of $1 par (100) (100) 100
- issuance of $.001 par 3,000,000 3,000 (3,000)
Less: costs of issuance (160,000) (160,000)
Contribution of services
by officer 74,400 74,400
Imputed interest on stockholder
cash advances 5,464 5,464
Net deficit $(836,290)(836,290)
Balances,
December 31, 1997 5,921 $1,542 5,000,000 $5,000$958,764$(836,290)$129,016
</TABLE>
See notes to financial statements.
NORTHPORT INDUSTRIES, INC.
(Formerly Versatech Manufacturing, Inc.,
Hawk Systems, Inc., and Environmental Pyrogenics, Inc.)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business. Northport Industries, Inc. (the "Company")
originally incorporated itself in Texas as Hawk Systems, Inc. on
December 27, 1996. The Company renamed itself Versatech
Manufacturing, Inc. ("VMI") in June, 1997. On December 24, 1997,
the Company entered into a merger with an inactive 1933 Act
public shell, Environmental Pyrogenics, Inc. ("EPI"), in a
transaction accounted for as a reverse merger using the purchase
method of accounting. The merger transaction was accomplished by
exchanging all 100 outstanding shares (100%) of VMI for 3,000,000
shares (60%) of EPI. As part of the merger Agreement, the
Company renamed itself Northport Industries, Inc.
The Company is the result of the evolution of a joint venture
between a wholly-owned subsidiary [Gecamex Industries, Inc.
("Gecamex")] of the Canadian public company Versatech Industries,
Inc. ("Versatech"), and Fairfax Industries, Inc. ("Fairfax"), a
Michigan corporation. The Company currently operates a 20,000
square foot warehouse in Del Rio, Texas and a 40,000 square foot
maquiladora production plant in Acuna, Mexico, across the border
from Del Rio. The Company machine sews golf bags, auto parts and
child safety seats.
Principles of consolidation. The financial statements include
the accounts of the Company and its wholly-owned subsidiary,
Versatech Marketing, Inc. Significant intercompany transactions
and balances have been eliminated. The Company subcontracts all
Mexican plant operations to a nominee owner in Mexico, through
which the Company substantially directs all such operations. All
such costs are paid weekly and included as manufacturing costs of
the Company.
Estimates and assumptions. Preparing financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses at
the balance sheet date and for the period then ended. Actual
results could differ from these estimates.
Foreign currencies. All Mexican costs and expenses are paid as
incurred in U. S. dollars translated at the then-prevailing
exchange rate. No assets or liabilities exist at balance sheet
date that are denominated in any foreign currency. No funds are
held in foreign currencies and no currency trading gains or
losses are recorded during the year.
Revenue recognition. Revenue is recognized when products are
shipped. Bad debts are considered insignificant and are written
off as identified.
Cash and equivalents represent cash and short-term, highly liquid
investments with original maturities three months or less.
Inventory is stated at the lower of cost or market. Cost is
determined using the first-in, first-out (FIFO) method. A
summary of inventory is as follows:
Finished goods $113,733
Raw materials 165,733
$279,466
Property and equipment are recorded at cost. Assets acquired
from either of the two original shareholders are recorded at
their original cost. Depreciation for financial reporting
purposes is determined on a straight-line basis with the
following estimated useful lives, by class:
Production and warehouse equipment 10 years $377,121
Vehicles 5 " 59,514
Office furniture and equipment 10 " 19,538
$456,173
Income taxes. Mexican income taxes are reported by the nominee
Mexican entity on nominal earnings and are reimbursed by the
Company. Such amounts are considered immaterial and are included
as a cost of goods sold. No U. S. income taxes are due as the
Company has operated at a loss.
Earnings per share are computed on the basis of the weighted
average number of common shares outstanding, in accordance with
FASB Statement 128. One outstanding stock option existed at
year-end, and was immaterial with respect to this calculation.
There were no stock-based compensation arrangements.
Cash flow statement disclosures include interest actually paid
during 1997 of $452. Other non cash transactions include:
contribution of inventory and fixed assets by Versatech, $30,000
and $370,699, respectively; exchange of services for stock by EPI
consultants valued at $160,000; imputed officer salary and
related party imputed loan interest of $74,400 and $5,464,
respectively; Gecamex debt accrued interest contributed to
capital of $56,606; and stockholder consulting services owed of
$15,583. The imputed and accrued interest and imputed
stockholder salary were contributions to capital in 1997.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements during the year ended December 31, 1997, the Company incurred a
loss of $972,242. In addition, several major customers during 1997 are no
longer customers of the Company, due to billing and quality control disputes.
Further, the Company has been notified by its minority shareholder Gecamex
that it might be in violation of terms of its December 15, 1997 shareholder
agreement relating to share transferability, right of first refusal and a
commitment to obtain additional timely financing (see Note 6). These factors
among others may indicate that the Company will be unable to continue as a
going concern for a reasonable period of time.
The financial statements do not Include any adjustments relating to the
recoverability and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company has
reached an agreement with a beet efforts clause to raise $1,000,000 in new
equity financing. In addition, the Company has obtained significant new sales
orders from new customers and management projects profitable operations for
the first half of 1998. The Company's continuation as a going concern is
dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis, to comply with the terms of its stock
repurchase from Gecamex, to obtain additional financing as may be required, to
successfully increase production, and ultimately to attain profitability.
NOTE 3 - INSTALLMENT DEBT
A summary as of December 31, 1997 is as follows:
Two notes payable to GMAC, payable in 36
remaining equal monthly installments of $1,056,
including interest at 9.6% APR, collateralized
by two 1997 Chevrolet vans $ 41,851
Note payable to Clark Credit, payable in 33
remaining equal monthly installments of $573,
including interest at 10.4% APR, collateralized
by a forklift 16,481
Less: amounts due in 1998 (14,754)
Net long-term portion due $ 43,578
Long-term debt is due $16,054 in 1999 and $27,524 in 2000.
NOTE 4 - RELATED PARTY DEBT
A summary as of December 31, 1997 is due as follows:
Note payable to Gecamex, payable $25,000 in two
installments in each of 1998, 1999, 2000 and
2001, plus interest at prime + 2%, secured by
substantially all assets owned by the Company
as of June 30, 1997 $100,000
Note payable to Gecamex, payable $75,000 in two
installments in each of 1998, 1999, 2000, and
2001, plus interest at prime + 2%, secured by
substantially all assets owned by the Company
as of June 30, 1997 300,000
Advances payable to Gecamex, representing
additional loans made to the Company made
since June 30, 1997, unsecured, payable on
demand, and bearing no interest 46,834
Advances payable to Fairfax, representing loans
made to the Company since inception, unsecured,
payable on demand, and bearing no interest 27,000
Advance made by Cenote Plastics, Inc., in
anticipation of a purchase of 900,000 shares
of common stock, consummated in February, 1998,
unsecured and bearing no interest 90,000
Advance made by Robert Michelini, net of
repayments of $13,744, unsecured, payable on
demand, and bearing no interest 28,758
Less: amounts due in 1998 (202,592)
Net long-term portion due $390,000
Long term debt is due $100,000 in each of 1999, 2000, and 2001.
The $90,000 was reclassified into stockholders' equity in
February, 1998. Imputed interest of $5,464 at 9% was added to
stockholders' equity for the other non-interest bearing notes.
NOTE 5 - CONTINGENCIES
Mexican law requires termination pay for employees who are laid
off. Such payment is based on a formula including pay rate and
years of service. Consistent with the practice of many other
maquiladora plants, the Company has not set up a reserve for such
payments, contending they are unlikely to ever be due. If an
employee quits, he or she is not entitled to any such termination
pay. The Company estimates its maximum theoretical exposure to
such a liability, as if all employees had been laid off on
December 31, 1997, of $100,000.
Many debts of TTM (see Note 6), incurred before its assets were
purchased by the Company on February 3, 1995, remain unpaid due
to the insolvency of TTM. While the Company claims priority
creditor status due to its filing of a lien in Texas for unpaid
debts due by TTM to the Company, some of these debts are from
Mexico where Texas law regarding priority status of secured
creditors may not apply. The Company has set up a $30,000
reserve for the possible future payment of some claims. Only one
lawsuit has been filed regarding such a claim, for $9,800. No
lawsuits have been threatened.
NOTE 6 - CAPITAL STOCK
The Company is the result of the evolution of a joint venture
between Gecamex and Fairfax. Gecamex was formed in 1991 to set
up a maquiladora plant in Piedras Negras, Mexico in a joint
venture with Century Products, Inc., who bought out Gecamex's
share in 1996. This plant joint venture was managed by Robert
Michelini, a founder and one of two principal shareholders of
Fairfax. Mr. Michelini left in 1994 to pursue his Fairfax
business exclusively. Gecamex then set up a second facility by
buying Twin Plant International, Inc. ("Twin Plant") in Acuna in
1994.
In 1992, Greg Hykes formed TTM, Inc. ("TTM"), a maquiladora plant
in Acuna, which made toys and performed contract machine sewing.
Fairfax was formed in 1986 by Robert Michelini and Brad Osgood
for the purpose of machine sewing auto parts and sporting goods,
plastic injection molding, and making aerospace tools. Fairfax
purchased Trim & Design, Inc. ("Trim & Design"), a Michigan
corporation which was formerly a wholly-owned subsidiary of
Versatech, in 1994. Trim & Design machine sewed marine seats and
auto parts. Fairfax then purchased the assets and customer base
of TTM in 1995 by assuming certain debts and issuing 20% of its
outstanding stock to Mr. Hykes. Fairfax shut down both Trim &
Design and TTM in late 1996.
On January 2, 1997, Fairfax entered into an agreement with
Gecamex to form the Company, with $300,000 in fair value of
sewing machines and related equipment loaned by Fairfax, and
$300,000 in cash loaned by Gecamex. Fairfax received 49
shares for a 49% ownership interest and Gecamex received 51
shares, for a 51% ownership. During 1997, Gecamex decided to
reduce its ownership of its maquiladora operations. On December
15, 1997, Gecamex and Fairfax entered into a Stock Purchase and
Settlement Agreement, whereby Gecamex (i) returned 38.75 shares
to the Company, and (ii) contributed all monies advanced over the
original $300,000 agreed-upon note balance, including $373,512 in
cash, $26,392 in equipment, and $56,606 in accrued interest, to
contributed capital. As consideration, Gecamex received a
$100,000 promissory note, due over a 3-year period, and a 5%
royalty of all revenues (less certain expenses) from one specific
major customer for 1998 and thereafter, until both of the
$100,000 and the original $300,000 promissory notes are paid in
full. In addition, Fairfax agreed to obtain $400,000 additional
financing for the Company on or before March 15, 1998. The
agreement also calls for restrictions on ownership transfer and
gives Gecamex the right of first refusal on any sales of stock by
the Company. Gecamex and the Company each have the option to
require the sale of Gecamex's remaining shares (12.25 before the
exchange with EPI, which occurred December 2, 1997, and 367,500
shares afterwards) to the Company anytime before December 31,
2002. The purchase price is based on a formula involving net
average income of the Company. The 38.75 shares returned
(1,162,500 post EPI exchange shares) are collateral for
performance by the Company.
Also in December, Tom Michelini, son of Robert Michelini,
purchased the 20% Company stock ownership interest of Mr. Hykes
for $10,000 in cash and $25,000 in former TTM debt assumptions.
Earlier in the year, Mr. Hykes left the Company to pursue other
opportunities.
Subsequent to year-end, Gecamex shut its Twin Plant operation,
and entered into negotiations with the Company to assume all of
its sewing and plastic injection-molding operations.
NOTE 7 - OPERATING LEASES
The Company currently leases its Del Rio warehouse under a month-
to-month arrangement for $1,650 per month. Its two Mexican
facilities are leased through its Mexican nominee company for
$8,579 per month, renewable December 1, 1999. Minimum lease
payments due are $102,948 in 1998 and $94,369 in 1999.
NOTE 8 - MAJOR CUSTOMERS AND VENDORS
Major customers during 1997 were:
Colortex $309,793 or 19.1% of sales
Ace Bayou 253,390 " 15.6%
Gerry Baby Products 280,197 " 17.2%
Evenflo 276,592 " 17.0%
Of the above, Colortex is no longer a customer of the Company.
Colortex and Ace Bayou were significant customers of TTM in 1996,
accounting for 52% of TTM's $1,076,000 1996 sales.
The Company transferred $1,170,830 to the Mexican corporation
during 1997 to pay for Mexican plant rent, salaries and other
overhead for 1997. There were no other vendors that accounted
for 10% or more separately of the Company's cost of goods sold.
Unaudited Financial Statements for the period ended
September 30, 1998
------------------
Balance Sheet
Statements of Operations
Statements of Stockholders' Equity
Statements of Cash Flows
Notes to the Financial Statements
<PAGE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
BALANCE SHEET
September 30, 1998
UNAUDITED
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $ 37,077
Accounts receivable 236,215
Inventory 268,967
Other 41,839
Total Current Assets 584,098
Property and Equipment, net of $96,854
accumulated depreciation 647,840
Patent 405,824
TOTAL ASSETS $1,637,762
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of installment debt $ 14,754
Due to related parties 55,758
Accounts payable 379,801
Accrued expenses 70,457
Total Current Liabilities 520,770
Long-Term installment debt 26,802
Total Liabilities 547,572
Redeemable Common stock, 80,400 shares 241,200
Stockholders' Equity
Preferred stock, no par value, 12,500,000 shares
authorized, 5,921 shares issued and outstanding 1,542
Common stock, $.001 par value, 25,000,000 shares
authorized, 5,274,569 shares issued and
outstanding 5,275
Paid in capital 1,582,599
Retained <deficit> ( 740,426)
Total Stockholders' Equity 848,990
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,637,762
</TABLE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
INCOME STATEMENTS
Nine Months Ended September 30, 1998 and 1997
UNAUDITED
<CAPTION>
1998 1997
<S> <C> <C>
Revenues
Sales of products $2,392,788 $1,272,994
License fee revenue 405,823
Total Revenues 2,798,611 1,272,994
Cost of sales 2,108,452 1,536,841
Gross Margin (Deficit) 690,159 ( 263,847)
Operating Expenses
Selling 36,901 25,501
General and administrative 416,091 198,131
Depreciation 11,930 31,070
Interest 15,708 44,559
Bad debts 113,666 50,129
Total Operating Expenses 594,296 349,390
Net income (loss) before taxes 95,863 ( 613,237)
Income taxes 0 0
Net income (loss) $ 95,863 $( 613,237)
Net income (loss) per common share $ 0.02 $(0.27)
Weighted average common shares
outstanding 5,274,569 3,038,356
</TABLE>
<TABLE>
NORTHPORT INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1998 and 1997
UNAUDITED
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows Used By Operating Activities
Net income (loss) $ 95,863 $(613,237)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 55,427 24,499
Expenses offset by contribution to equity
Stockholder salary 60,000
Stockholder loan interest 40,000
Stockholder services 15,583
License fee revenue ( 405,823)
Shares issued for services 140,000
Changes in net assets and liabilities
Accounts receivable ( 147,286) (288,484)
Inventory 10,499 (295,280)
Other current assets ( 29,494) ( 16,046)
Accounts payable 159,098 137,048
Accrued expenses 31,818 39,600
Net Cash Used By Operating Activities ( 89,898) (896,317)
Cash Flows From Investing Activities
Purchases of property and equipment ( 76,745) ( 95,649)
Cash Flows From Financing Activities
Sale of common stock 154,700 1,000
Collection of stock subscriptions
receivable 20,000
Proceeds from advances by stockholders 12,000 953,369
Proceeds from new installment debt 43,813
Payments of installment debt ( 16,776) ( 906)
Net Cash Provided From
Financing Activities 169,924 997,276
Net increase in cash 3,281 5,310
Cash Balance
- at beginning of year 33,796 0
- at end of year $ 37,077 $ 5,310
</TABLE>
NORTHPORT INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Northport
Industries, Inc. have been prepared in accordance with generally accepted
accounting principles and the rules of the Securities and Exchange
Commission ("SEC"), and should be read in conjunction with the audited
financial statements and notes thereto contained elsewhere in this Form 10.
In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial
position and the results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods
are not necessarily indicative of the results to be expected for the full
year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for
1997 have been omitted.
NOTE 2 - BANK CREDIT LINE
The Company secured a new $300,000 revolving credit line from Del Rio
National Bank on October 27, 1998. This line bears interest at prime + 3%,
matures April 25, 1999, and is secured by certain accounts receivable.
NOTE 3 - ISSUANCE OF COMMON STOCK
During 1998 the Company sold 51,750 shares of its common stock for $78,500,
and issued another 235,752 shares of stock for $76,200 cash plus financial
consulting and other services valued at $140,000.
* Audited financial statements of the Company for the years ended December
31, 1998 and 1997, will be filed with the Securities and Exchange
Commission
prior the effective date of this Registration Statement.
PART III
Item 1. Index to Exhibits.
- ---------------------------
The following exhibits are filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
3.1 Initial Articles of Incorporation
3.2 Certificate of Amendment to
Articles of Incorporation dated January 8, 1998
respecting name change and 157.7668 for 1 reverse split
3.3 Certificate of Amendment to the Articles of Incorporation
dated December 1, 1998, regarding the Series A Non-Voting
Preferred Stock
3.4 By-Laws
10.1 Agreement and Plan of Reorganization dated December 24, 1997
Exhibit A-Versatech Manufacturing Inc. stockholders
Schedule A-701 securities
Schedule B-Section 4(2) securities
Schedule C-Section 4(2) securities
Schedule D-Section 4(2) securities
Schedule E-Section 4(2) securities
Exhibit B-Private Placement Stockholders
Exhibit C-Environmental Pyrogenics, Inc. financial statements
for the years ended December 31, 1996 and 1995 and
for the period ended March 31, 1997
Exhibit D-Exceptions
Exhibit E-Versatech Manufacturing, Inc. financial statements
Exhibit F-Exceptions
Exhibit G-Investment Letter
Exhibit H-Certificate of Officer for Environmental Pyrogenics,
Inc.
Exhibit I-Certificate of Officer for Versatech Manufacturing,
Inc.
10.2 Offer to Purchase dated August 14, 1998 of JOH Rubber Inc.
Schedule B-Release
10.3 Written Compensation Agreement dated December 22, 1997
10.4 Engagement Letter
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this
Registration Statement are modified in their
entirety by reference to these Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities
Exchange Act of 1934, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized.
NORTHPORT INDUSTRIES, INC.
Date: 3/8/99 By:/s/Robert L. Michelini
------------------------
Robert L. Michelini, Director
and President
Date: 3/8/99 By:/s/Matt Baumgartner
------------------------
Matt Baumgartner, Director
Secretary
Date: March 8, 99 By:/s/Len Baker
---------------------------
Len Baker, Treasurer, Assistant
Secretary, Vice President and
Director
Date: March 8, 1999 By:/s/Fernando Gonzalez
---------------------------
Fernando Gonzales Garza
Director
Date: 3/8/99 By:/s/Bradley D. Osgood
---------------------------
Bradley D. Osgood, Director
ARTICLES OF INCORPORATION
OF
ENVIRONMENTAL PYROGENICS, INC.
The undersigned, to form a Nevada corporation, CERTIFIES THAT:
I. NAME: The name of the corporation is:
ENVIRONMENTAL PYROGENICS, INC.
II. PRINCIPAL OFFICE: The location of the principal office of this
corporation within the State of Nevada is 6121 Lakeside Drive, Suite 250,
Reno, Nevada; this corporation may maintain an office or offices in such other
place within or without the State of Nevada as may be from time to time
designated by the Board of Directors or by the By-Laws of the corporation; and
this corporation may conduct all corporation business of every kind or nature,
including the holding of any meetings of directors or shareholders, within the
State of Nevada, as well as without the State of Nevada.
III. PURPOSE: The purpose for which this corporation is formed is:
To engage in any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total
authorized capital stock of the corporation shall be Twenty-Five Million
(25,000,000) shares of common stock with a par value of $.001 per share and
Twelve Million Five Hundred Thousand shares of preferred stock with a par
value of $.25 per share.
V. INCORPORATOR: The name and post office address of the
incorporator signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
Fiona S. Ehrlich 6121 Lakeside Drive,
Suite 250
Reno, Nevada 89511
VI. DIRECTORS: The governing board of this corporation shall be
known as directors, and the first board shall consist of three directors.
So long as all of the shares of this corporation are owned
beneficially and of record by either one or two shareholders, the number of
directors may be fewer than three, but not fewer than the number of
shareholders. otherwise, the number of directors shall not be fewer than
three.
Subject to the foregoing limitations, the number of directors may,
at any time or times, be increased or decreased by a duly adopted amendment to
these Articles of incorporation, or in such manner as provided in the By-Laws
of this corporation.
The name and post office address of the directors constituting the
first Board of Directors are as follows:
NAME POST OFFICE ADDRESS
Jon J. King MCO Plaza, Suite 1050
5718 Westheimer
Houston, Tx 77057
Edwin G. B. Terry MCO Plaza, Suite 1050
5718 Westheimer
Houston, Tx 77057
Larry K. Seedall MCO Plaza, Suite 1050
5718 Westheimer
Houston, Tx 77057
VII. STOCK NON-ASSESSABLE: The capital stock or the holders thereof,
after the amount of the subscription price has been paid in, shall not be
subject to any assessment whatsoever to pay the debts of the corporation.
VIII. TERM OF EXISTENCE: This corporation shall have perpetual
existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in
the election of directors.
X. PREEMPTIVE RIGHTS: Shareholders shall not be entitled to
preemptive rights.
THE UNDERSIGNED, being the incorporator hereinbefore named for the
purpose of forming a corporation pursuant to the General Corporation Law of
the State of Nevada, does make and file these Articles of Incorporation,
hereby declaring and certifying the facts herein stated are true, and,
accordingly, has hereunto set her hand this 14 day of April, 1987.
/s/Fiona S. Ehrlich
STATE OF NEVADA )
)ss.
COUNTY OF WASHOE )
On, this 14th day of April 1987, before me, a Notary Public, personally
appeared Fiona S. Ehrlich who acknowledged she executed the above instrument.
/s/MICHAEL J. MORRISON
Notary Public
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
ENVIRONMENTAL PYROGENICS, INC.
We, the undersigned, William A. Silvey, Jr., President, and W. Scott
Thompson, Secretary, of Environmental Pyrogenics, Inc., a Nevada corporation
(the "Corporation"), do hereby certify:
I
Pursuant to Section 78.390 of the Nevada Revised Statutes, the
Articles of Incorporation of the Corporation shall be amended as follows:
The name of the Corporation is "Northport Industries, Inc."
II
The foregoing amendment was adopted by Consent of the Board of
Directors pursuant to Section 78.315 of the Nevada Revised Statutes and by
Consent of Majority Stockholders pursuant to Section 78.320 of the Nevada
Revised Statutes.
III
Pursuant to resolutions adopted by the Board of Directors and the
Majority Stockholders as set forth in Paragraph II above, the 7,888,334 common
outstanding shares and the 934,167 non-covertible preferred outstanding shares
of the Corporation were reverse split on a basis of 157.7668 for 1, retaining
the authorized common shares at 25,000,000 and the par value at one mill
($0.001) per share, and the authorized preferred shares at 12,500,000 and the
par value at twenty five cents ($0.25) per share, with appropriate adjustments
being made in the additional paid in capital and stated capital accounts of
the Corporation.
IV
The number of common shares entitled to vote on the amendment was
7,888,334; and the number of preferred shares entitled to vote on the
amendment 934,167.
V
The number of common shares voted in favor of the amendment was
4,800,154, with none opposing and none abstaining. The number of preferred
shares voted in favor of the amendment was 642,160, with none opposing and
none abstaining.
/s/William A. Silvey, Jr.
---------------------------------
William A. Silvey, Jr., President
/s/W. Scott Thompson
---------------------------------
W. Scott Thompson, Secretary
STATE OF TEXAS )
) ss
COUNTY OF )
On the 22nd day of December, 1997, personally appeared before me, a
Notary Public, William A. Silvey, Jr., who acknowledged that he is the
President of Environmental Pyrogencis, Inc., and that he is authorized to and
did execute the above instrument.
/s/Maria I. Garcia
--------------------------------
NOTARY PUBLIC
(Notary Seal)
STATE OF TEXAS )
) ss
COUNTY OF )
On the 22nd day of December, 1997, personally appeared before me, a
Notary Public, W. Scott Thompson, who acknowledged that he is the Secretary of
Environmental Pyrogencis, Inc., and that he is authorized to and did execute
the above instrument.
/s/Maria I. Garcia
-------------------------------
NOTARY PUBLIC
(Notary Seal)
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORTION OF
NORTHPORT INDUSTRIES, INC.
We, the undersigned, Robert Michelini, President, and Mathias
Baumgartner, Secretary, of Northport Industries, Inc., a Nevada corporation
(the "Corporation"), do hereby certify:
Pursuant to Section 78.1955 of the Nevada Revised Statutes, the Articles
of Incorporation of the Corporation shall be amended as follows:
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total authorized
capital stock of the Corporation shall be:
A. Twenty-Five Million (25,000,000) shares of common stock with a
par value of $0.001 per share;
B. Twelve Million Five Hundred Thousand shares of preferred stock
with a par value of $0.25 per share, 400,000 of which have been designated by
the Board of Directors as Series A Non-Voting Preferred Stock with the
following rights, privileges and preferences: (i), non-voting; (ii),
Redemption or Face Value of $1 per share; (iii), 5% cumulative dividend on the
Redemption or Face Value; (iv), callable at any time by the Company, by
payment of the Redemption or Face Value and any accrued 5% cumulative
dividends; (v), convertible at the option of the holder into "restricted
securities" in common stock of the Company at the Redemption or Face Value, on
the closing price of the common stock of the Company on the OTC Bulletin Board
of the NASD or any other recognized market where these securities publicly
trade on the day prior to the conversion; (vi), that the holder can "put" the
unconverted preferred stock to the Company at the Redemption or Face Value
three years after the issuance date of the preferred stock; and (vii) in the
event for any reason the preferred stock is still outstanding after three
years from its issuance, the Company, at its option, may convert the
Redemption or race Value into "restricted securities" in common stock of the
Company on the closing price of the common stock of the Company on the OTC
Bulletin Board of the NASD or any other recognized market where these.
securities publicly trade on the day prior to conversion;
The amendment was adopted by unanimous vote of the Board of Directors of
the Corporation pursuant to Section 78.1955 of the Nevada Revised Statutes.
/s/Robert Michelini
Robert Michelini, President
/s/Mathias Baumgartner
Mathias Baumgartner, Secretary
STATE OF TEXAS
COUNTY OF VAL VERDE )ss
On the 13th day of November, 1998, personally appeared before me, a Notary
Public, Robert Michelini, who acknowledged that he is the President of
Northport Industries, Inc., and that he is authorized to and did execute the
above instrument.
/s/Diana Lopez
Notary Public, State of Texas
(Notary Seal)
PROVINCE OF ONTARIO
ss
COUNTY OF ESSEX
On the 12th day of November, 1998, personally appeared before me, a Notary
Public, Mathias Baumgartner, who acknowledged that he is the Secretary of
Northport Industries, Inc., and that he is authorized to and did execute the
above instrument.
/s/Robert Paul Layfield
Notary Public, Ontario
BY-LAWS
OF
ENVIRONMENTAL PYROGENICS, INC.
ARTICLE I
Name of Corporation
Section 1: This corporation shall be known as ENVIRONMENTAL PYROGENICS, INC.
ARTICLE II
Offices
Section 1: The principal office of the corporation will be located at 6121
Lakeside Dr., Suite 250, Reno, Nevada. The corporation may maintain such other
offices as the Board of Directors may designate from time to time.
ARTICLE III
Stockholders
Section 1: The annual meeting of the stockholders shall be held in December of
each year, at a date and time to be specified by the Board of Directors. Said
meeting shall be for the purpose of electing directors for the ensuing year
and for the transaction of such other business as may come before the meeting.
If the election of directors shall not be held on the day designated for the
annual meeting of the stockholders, or at any adjournment thereof, the Board
of Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as possible.
Section 2: Special meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by Statute, may he called by the President or by
the Board of Directors and shall be called by the President at the request of
the holders of not less than one-tenth of all the outstanding shares of the
corporation entitled to vote at the meeting.
Section 3: The Board of Directors may designate any place within or without
the State of Nevada as the site for any annual or special stockholders
meeting. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the State of Nevada,
as the site for any meeting hereinabove authorized. If no designation is made,
the place of the meeting shall be at the principal office of the corporation
in the State of Nevada.
Section 4: Written or printed notice stating the site, date and time of the
meeting and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) days nor more
than sixty (60) days before the date of the meeting, either personally or by
mail, by or at the direction and over the signature of the President, or the
Secretary, or the officer or person calling the meeting, to each stockholder
of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed
to the stockholder at his address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid.
Section 5: For the purpose of determining stockholders entitled to notice of
or to vote at any meeting of stockholders, or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make
a determination of stockholders for any other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer books shall
be closed for a stated period, not to exceed twenty ('20) days. In lieu of
closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such de"Cermination of stockholders, such date
in any case to be not more than sixty (60) days and, in case of a meeting of
stockholders, not less than fifteen (15) days prior to the date on which the
particular action requiring such determination of stockholders is to be taken.
If the stock transfer books are not closed and no record dates fixed for the
determination of stockholders entitled to notice of or to vote, or entitled to
receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for
such determination of stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof,
except where the determination has been made through the closing of the stock
transfer books and the stated perlod of closing has expired.
Section 6: The officer or agent having charge of the stock transfer books for
share of the corporation shall make, at least ten (10) days before each
meeting of stockholders, a complete list of the stockholders entitled to vote
at such meeting, or any adjournment thereof, arranged in alphabetical order,
with the address of, and the number of shares held by, each, which list, for a
per-Lod of ten (10) days prior to such meeting, shall be kept on file at the
principal office of the corporation and shall be subject to the inspection of
any stockholder during the meeting.
Section 7: A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at a
meeting of stockholders. If less than a majority of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
Section 8: At all meetings of stockholders, a stockholder may vote by proxy
which shall be executed in writing by the stockholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after six (6) months from the date of its execution, unless otherwise provided
in the proxy or coupled with an interest.
Section 9: Each outstanding share otherwise entitled to vote shall be entitled
to one (1) vote upon each matter submitted to a vote at a meeting of
stockholders. A majority vote of those shares present and voting at- a duly
organized meeting shall suffice to defeat or enact any proposal unless the
Statutes of the State of Nevada require a greater-than-majority vote, in which
event the higher vote shall be required for the action to constitute the
action of the corporation.
Section 10: Shares held by an administrator, executor, guardian or conservator
may be voted by him, either in person or by proxy, without the transfer of
such shares into his name. Shares standing in the name of a trustee may be
voted by him, either in person or by proxy, but no trustee shall be entitled
to vote shares held by him without transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority to do so be
contained in an appropriate order of the Court by which such receiver was
appointed.
A stockholder whose shares are pledged shall be entitled to vote such shares
until the shares are transferred into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11: An action required to be taken at a meeting of the stockholders,
or any other action which may be taken at a meeting of the stockholders, may
be taken without a meeting, if a consent in writing, setting forth the action
so taken, shall be signed by a majority of the stockholders entitled to vote
with respect to the subject matter thereof, unless a greater-than-majority
vote would be required at a duly organized meeting, in which event said
greater-than-majority stockholder approval must be obtained. Such consent
shall be filed with the Minutes of Proceedings.
Section 12: The following order of business shall be observed at all meetings
of the stockholders, so far as practicable:
(a) Calling the roll;
(b) Reading, correcting and approving of minutes of previous meeting;
(c) Reports of officers;
(d) Reports of Committees;
(e) Election of Directors;
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
ARTICLE IV
Board of Directors
Section 1: The business and affairs of the corporation shall be managed by its
Board of Directors.
Section 2: As provided in the Articles of Incorporation, the Board of
Directors shall consist of five (5) persons, but may be increased by
resolution of the Board of Directors. The directors shall hold office until
the next annual meeting of stockholders and until their successor shall have
been elected and qualified. Directors need not be residents of the State of
Nevada or stockholders of the corporation.
Section 3: Directors shall be elected at an annual or special stockholders'
meeting by secret ballot of those stLockholders present and entitled to vote,
a plurality of the vote being cast being required to elect. Each stockholder
shall be entitled to one (1) vote for each share of stock owned. If there is
but one (1) nominee for any office, it shall be in order to move that the
Secretary cast the elective ballot to elect the nominee.
Section 4: A regular meeting of the Board of Directors shall be held without
notice, other than this By-Law immediately after, and at the same place as,
the annual meeting of stockholders. The Board of Directors may provide, by
resolution, the day, time and place for the holding of additional regular
meetings without other notice than such resolution. The Secretary of the
corporation shall serve as Secretary for the Board of Directors and
shall issue notices for all meetings as required by the By-Laws; shall keep a
record of the minutes of the proceedings of the meetings of directors; and
shall perform such other duties as may be properly required of him by the
Board of Directors.
Section 5: Special meetings of the Board of Directors may be called by or at
the request of the President or any director. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, within
or without the State of Nevada, as the place for holding any special meeting
of the Board of Directors called by them.
Section 6: Notice of any special meeting shall be given at least two (2) days
prior thereto by written notice delivered personally or mailed to each
director at his business address, or by telegram. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so
addressed, with postage prepaid thereon. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business to be transacted at,
nor the purpose of, any regular or special meeting of the Board of Directors
need be specified in the notice or waiver of such meeting.
Section 7: A majority of the number of directors-fixed according to Section 2
of this Article IV shall constitute a quorum for the transaction of business
at any meeting of the Board of Directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice. Once a quorum has been
established at a duly organized meeting, the Board of Directors may
continue to transact corporate business until adjournment notwithstanding the
withdrawal of enough members to leave less than a quorum.
Section 8: The act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors unless
the Statutes of the State of Nevada require a greater-than-majority vote, in
which case, such greater vote shall be required for the act to be that of the
Board of Directors.
Section 9: Any vacancy occurring in the Board* of Directors may be filled by
the affirmative vote of a majority of the remaining directors, though less
than a quorum of the Board of Directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by election at an annual meeting or at a special meeting of
the stockholders called for that purpose.
Section 10: By resolution of the Board of Directors, the directors may be paid
their expenses, if any, of attendance at each meeting of the Board of
Directors, and may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor.
Section 11: A director of the corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the Secretary of the meeting before the
adjournment thereof or shall express such dissent by written notice
sent by registered mail to the Secretary of the corporation within one (1) day
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
Section 12: Any action required to be taken at a meeting of the Board of
Directors, or any other action which may be taken at a meeting of the Board of
Directors, amy be taken without a meeting if a written consent thereto is
signed by all the members of the Board. Such written consent shall be filed
with the minutes of proceedings of the Board. Any meeting of the Board of
Directors may be held by conference telephone call, with minutes
thereof duly prepared and entered into the Minute Book.
ARTICLE V
Officers
Section 1: The officers of the corporation shall be a President, a
Vice-President, a Secretary, a Treasurer, and a Resident Agent, each of whom
shall be elected by the Board of Directors. Other officers and assistant
officers may be authorized and elected or appointed by the Board of Directors.
Any two (2) or more offices may be held by the same person.
Section 2: The officers of the corporation shall be elected annually by the
Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the stockholders. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
convenient. Each officer shall hold office until his successor shall have been
duly elected and shall have qualified or until his death or until he shall
resign or shall be been removed in the manner hereinafter provided. Each
officer shall serve for a term of one (1) year, or until his successor is
chosen and qualified.
Section 3: Any officer or agent elected or appointed by the Board of Directors
may be removed by the Board of Directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Section 4: A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by majority vote of the Board of
Directors for the unexpired portion of the term of such office.
Section 5: The President shall preside at all meetings of the ctors and the
stockholders and shall have general charge and control over the affairs of the
corporation subject to the Board of Directors. He shall sign or countersign
all certificates, contracts and other instruments of the corporation as
authorized by the Board of Directors and shall perform such other duties as
are incident to his office or are required of him by the Board of Directors.
Section 6: The Vice-President shall exercise the functions of the President,
in the President's absence, and shall have such powers and duties as may be
assigned to him from time to time by the Board of DIrectors.
Section 7: The Secretary shall issue notices for all meetings a s required by
the By-Laws, shall keep a record of the minutes of the proceedings of the
meetings of stockholders and directors, shall have charge of the Seal and of
the corporate books, and shall make such reports and perform such other duties
as are incident to his office, or properly required of him by the Board of
Directors.
Section 8: The Treasurer shall have the custody of all monies and securities
of the corporation and shall keep regular books of account. He shall disburse
the funds of the corporation in payment of the Just demands against the
corporation, or as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the Board of Directors,
from time to time as may be required of him, an account of all his
transactions as Treasurer and of the financial condition of the corporation.
He shall perform all duties incident to this office or which are properly
required of him by the Board of Directors.
Section 9: The Resident Agent shall be in charge of the corporat.-I.on's
registered office, upon whom process against the corporation may be served, an
shall perform all duties required of him by statute.
Section 10: The salaries of all officers shall be fixed by the Board of
Directors, and may be changed from time to time by a majority vote of the
Board of Directors.
ARTICLE VI
Agreements and Finances
Section 1: The Board of Directors may authorize any officer or officers, agent
or agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the corporation, and such authority may be
general or confined to specific instances.
Section 2: No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
Section 3: All checks, drafts or other orders for the payment of money, notes
or other evidences of indebtedness issued in the name of the corporation shall
be signed by such duly authorized officer or officers, or agent or agents of
the corporation and in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 4: All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of Directors may select.
ARTICLE VII
Certificate of Shares
Section 1: Certificates representing shares of the corporation shall be in
such form as shall be determined by the Board of Directors. Such certificates
shall be signed by the President and by the Secretary. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except in case of a lost, destroyed or mutilated certificate, a new
one may be issued therefor upon such terms and indemnity to the corporation as
the Board of Directors may prescribe.
Section 2: Transfer of shares of the corporation shall be made only on the
stock transfer books of the corporation by the holder of record therof or by
his legal representative, who shall. furnish proper evidence of authority to
transfer, or by his attorney authorized by power of attorney duly executed and
filed with the Secretary of the corporation, and on surrender for cancellation
of the certificate for such shares. The person in whose name shares stand on
the books of the corporation shall be deemed by the corporation to be the
owner thereof for all purposes, unless otherwise notified by such person in
writing.
ARTICLE VIII
Fiscal Year
Section 1: The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
ARTICLE IX
Seal
Section 1: The corporation may or may not have a corporate seal, as may from
time to time be determined by resolution of the Board of Directors. If a
corporate seal is adopted, it shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" and "Nevada". The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or in any
manner reproduced.
ARTICLE X
Amendments
Section 1: Those By-Laws may be amended by a majority vote of all the stock
issued and outstanding and entitled to vote at any annual or special meeting
of the stockholders, provided notice of intention to amend shall have been
contained in the notice of the meeting.
Section 2: The Board of Directors, by a majority vote of the entire Board at
any meeting, may amend these By-Laws, including By-Laws adopted by the
stockholders.
ARTICLE X!
Indemnification of Directors and Officers
Section 1: Every person who was or is a party to, or is threatened to be made
a part to, or is involved in any action, suit or proceedings, whether civil,
criminal, administrative or investigative, by reason of the fact that he or a
person of whom he is the legal representative is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venturel trust or other enterprise, shall be indemnified
and held harmless to the fullest extent legally permissible under the laws of
the State of Nevada from time to time against all expenses, liability and
loss, including attorneys' fees, judgments, fines and amounts paid or to be
paid in settlement, reasonably incurred or suffered by him in connection
therewith, pursuant to NRS 73.151. Such right of indemnification shall be a
contract right which may be enforced in any manner desired by such person.
This indemnification is intended to provide at all times the fullest
indemnification permitted by the laws of the State of Nevada and the
corporation may purchase and maintain insurance on behalf of any person who is
or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer of another corporation, or
as its representative in a partnership, joint venture, trust or other
enterprise against any liability asserted against such person and incurred in
any such capacity or arising out of such status, whether or not the
corporation would have the power to indemnify such person.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of ENVIRONMENTAL PYROGENICS, INC. and
that the foregoing By-Laws, consisting of ten (10) pages, constitutes the Code
of ENVIRONMENTAL PYROGENICS, INC. as duly adopted by the Board of Directors of
the Corporation effective this 21st day of April, 1987.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 21st day of April
1987.
/s/Larry K. Sudall
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Plan") is made this 24th day of December, 1997,
between Environmental Pyrogenics, Inc., a Nevada corporation ("EPI");
Versatech Manufacturing, Inc., a Texas corporation ("Versatech"); and the
persons listed in Exhibit A hereof who are the owners of record of all of the
outstanding common stock of Versatech and who execute and deliver a copy of
this Plan (the "Versatech Stockholders").
EPI wishes to acquire all of the outstanding common stock of
Versatech in exchange for common stock of EPI in a transaction qualifying as a
tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended; and
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Exchange of Stock
1.1 Number of Shares. The Versatech Stockholders agree to
transfer to EPI at the closing (the "Closing") 100% of the outstanding
securities of Versatech, which are listed in Exhibit A hereof attached hereto
and incorporated herein by reference (the "Versatech Shares"), in exchange for
3,000,000 post-split shares (as outlined below in Section 1(i) hereof) of the
one mill ($0.001) par value "unregistered" and "restricted" common voting
stock of EPI, amounting to sixty percent (60%) of EPI's post-Plan outstanding
shares (see Sections 1(ii), (iii), (iv) and (v) below [taking into account the
issuance of the shares of common stock of EPI outlined therein and the reverse
split outlined in Section 1(ii) hereof, there will be 2,000,000 pre-Plan
outstanding post-split shares of EPI]) and, to-wit:
(i) Prior to the completion of the Plan, EPI shall
reverse split its outstanding common and preferred
stock on a basis of 157.7668 for one (reducing the
common outstanding shares [7,888,334 shares] to 50,000
post-split shares and the preferred outstanding shares
[934,167 non-convertible shares having a $0.25 per
share liquidation preference and, subject to Board of
Director approval, a $0.03125 per share yearly
dividend or $29,192 in the aggregate] to 5,921 post-
split shares), while retaining their respective
current par values and authorized shares, with
appropriate adjustments in the additional paid in
capital and stated capital accounts of EPI;
(ii) EPI shall issue 450,000 post-split shares of its
"unregistered" and "restricted" common stock for non-
capital raising services rendered and pursuant to a
written compensation agreement and Rule 701 of the
Securities and Exchange Commission as follows: Leonard
W. Burningham, Esq., 90,000 post-split shares; Roger
N. Schmidt, Esq., 90,000 post-split shares; William A.
Silvey, Jr., 135,000 post-split shares; and W. Scott
Thompson, 135,000 post-split shares;
(iii) EPI shall also issue 450,000 post-split shares
of its "unregistered" and "restricted" common stock to
Northport Industries, Inc. for services rendered and
to be rendered (100,000 of these shares shall be held
in escrow by Leonard W. Burningham, Esq. pending
satisfaction of the performance of such services by
the Board of Directors of EPI);
(iv) Further, EPI shall issue the following
additional post-split shares of its "unregistered" and
"restricted" common stock for services rendered:
Thomas C. Pritchard, Esq., 50,000 shares; Maureen
Michelsen, 10,000 shares; Continental Capital
Corporation, 50,000 shares (these shares shall be held
in escrow by Leonard W. Burningham, Esq. pending
satisfaction of the performance of such services by
the Board of Directors of EPI); Dufo, Ltd., 20,000
shares; Aurous, Ltd., 130,000 shares; Fulton Holding,
Ltd., 195,000 shares; Post Oak, Ltd., 175,000 shares;
Rene' Bourgoyne, 20,000 shares; and Finders
Performance Escrow, 50,000 shares (these shares shall
be held in escrow by Leonard W. Burningham, Esq.
pending satisfaction of the performance of such
services by the Board of Directors of EPI); and
(v) Subject to $350,000 being deposited in escrow by
the persons listed in Exhibit B prior to or
simultaneous with the execution and delivery of this
Plan, which sum shall be paid to the designees of EPI
on Closing, an additional 350,000 post-split shares of
EPI's "unregistered" and "restricted" common stock
shall be issued to the persons listed in Exhibit B.
Versatech shall have no responsibility whatsoever for
these payments.
1.2 Delivery of Certificates by Versatech Stockholders. The
transfer of the Versatech Shares by the Versatech Stockholders shall be
effected by the delivery to EPI at the Closing of stock certificate or
certificates representing the transferred shares duly endorsed in blank or
accompanied by stock powers executed in blank, with all signatures witnessed
or guaranteed to the satisfaction of EPI and with all necessary transfer taxes
and other revenue stamps affixed and acquired at the Versatech Stockholders'
expense.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the Versatech Stockholders shall execute such additional
instruments and take such other action as EPI may request in order to exchange
and transfer clear title and ownership in the Versatech Shares to EPI.
1.4 Resignation of Present Directors and Executive Officers
and Designation of New Directors and Executive Officers. On Closing, the
present directors and executive officers of EPI shall resign and designate the
directors and executive officers nominated by Versatech to serve in his place
and stead, until the next respective annual meetings of the stockholders and
Board of Directors of EPI, and until their respective successors shall be
elected and qualified or until their respective prior resignations or
terminations, who shall be: Robert Michelini. President, Chairman of the Board
of Directors and a director; Len Baker, Vice President, Treasurer and a
director; and Brad Osgood, Secretary and a director.
1.5 Change of Name and Reverse Split. The Closing shall be
subject to the Certificate of Incorporation of EPI being amended to effect a
reverse split of its currently outstanding shares of common and preferred
stock as outlined in Section 1(i) above; and EPI shall change its name to
"Northport Industries, Inc."
1.6 Assets and Liabilities of EPI at Closing. EPI shall have
no material assets and no liabilities at Closing, and all costs incurred by
EPI incident to the Plan shall have been paid or satisfied.
Section 2
Closing
The Closing contemplated by Section 1.1 shall be held at the offices
of Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East 500 South,
Salt Lake City, Utah 84111, unless another place or time is agreed upon in
writing by the parties. The Closing may be accomplished by wire, express mail
or other courier service, conference telephone communications or as otherwise
agreed by the respective parties or their duly authorized representatives.
Section 3
Representations and Warranties of EPI
EPI represents and warrants to, and covenants with, the Versatech
Stockholders and Versatech as follows:
3.1 Corporate Status. EPI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada
and is licensed or qualified as a foreign corporation in all states in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary (Nevada only.) EPI is a
publicly held company, having previously and lawfully offered and sold a
portion of its securities in accordance with applicable federal and state
securities laws, rules and regulations. There is presently no public market
for these or any other securities of EPI, though EPI has a Symbol on the OTC
Bulletin Board of "EPYR."
3.2 Capitalization. The authorized capital stock of EPI
consists of 25,000,000 shares of one mill ($0.001) par value common voting
stock, of which 7,888,334 pre-split shares are issued and outstanding, all
fully paid and non-assessable; and 12,500,000 shares of twenty-five cent
($0.25) par value preferred stock, of which 934,167 pre-split shares are
issued and outstanding. Except as otherwise provided herein, there are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any authorized and unissued common or preferred stock of
EPI.
3.3 Financial Statements. The financial statements of EPI
furnished to the Versatech Stockholders and Versatech, consisting of audited
financial statements for the years ended December 31, 1996 and 1995 and the
period ended March 31, 1997, attached hereto as Exhibit C and incorporated
herein by reference, are correct and fairly present the financial condition of
EPI at such dates and for the periods involved; such statements were prepared
in accordance with generally accepted accounting principles consistently
applied, and no material change has occurred in the matters disclosed therein,
except as indicated in Exhibit D, which is attached hereto and incorporated
herein by reference. Such financial statements do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
3.4 Undisclosed Liabilities. EPI has no liabilities of any
nature except to the extent reflected or reserved against in its balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit D.
3.5 Interim Changes. Since the date of its balance sheets,
except as set forth in Exhibit D, there have been no (1) changes in financial
condition, assets, liabilities or business of EPI which, in the aggregate,
have been materially adverse; (2) damages, destruction or losses of or to
property of EPI, payments of any dividend or other distribution in respect of
any class of stock of EPI, or any direct or indirect redemption, purchase or
other acquisition of any class of any such stock; or (3) increases paid or
agreed to in the compensation, retirement benefits or other commitments to
employees.
3.6 Title to Property. EPI has good and marketable title to
all properties and assets, real and personal, reflected in its balance sheets,
and the properties and assets of EPI are subject to no mortgage, pledge, lien
or encumbrance, except for liens shown therein or in Exhibit D, with respect
to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending,
or to the knowledge of EPI, threatened, against or relating to EPI, its
properties or business, except as set forth in Exhibit D. Further, no
officer, director or person who may be deemed to be an affiliate of EPI is
party to any material legal proceeding which could have an adverse effect on
EPI (financial or otherwise), and none is party to any action or proceeding
wherein any has an interest adverse to EPI.
3.8 Books and Records. From the date of this Plan to the
Closing, EPI will (1) give to the Versatech Stockholders and Versatech or
their respective representatives full access during normal business hours to
all of its offices, books, records, contracts and other corporate documents
and properties so that the Versatech Stockholders and Versatech or their
respective representatives may inspect and audit them; and (2) furnish
such information concerning the properties and affairs of EPI as the Versatech
Stockholders and Versatech or their respective representatives may reasonably
request.
3.9 Tax Returns. EPI has filed all federal and state income
or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter if
there is no Closing), EPI and its representatives will keep confidential any
information which they obtain from the Versatech Stockholders or from
Versatech concerning the properties, assets and business of Versatech. If the
transactions contemplated by this Plan are not consummated by December 31,
1997, EPI will return to Versatech all written matter with respect to
Versatech obtained by EPI in connection with the negotiation or consummation
of this Plan.
3.11 Investment Intent. EPI is acquiring the Versatech Shares
to be transferred to it under this Plan for investment and not with a view to
the sale or distribution thereof, and EPI has no commitment or present
intention to liquidate Versatech or to sell or otherwise dispose of the
Versatech Shares.
3.12 Corporate Authority. EPI has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to the Versatech Stockholders and Versatech or their
respective representatives at the Closing a certified copy of resolutions of
its Board of Directors authorizing execution of this Plan by its officers and
performance thereunder, and the sole director adopting and delivering such
resolutions is the duly elected and incumbent director of EPI.
3.13 Due Authorization. Execution of this Plan and performance
by EPI hereunder have been duly authorized by all requisite corporate action
on the part of EPI, and this Plan constitutes a valid and binding obligation
of EPI and performance hereunder will not violate any provision of the
Articles of Incorporation, Bylaws, agreements, mortgages or other commitments
of EPI.
3.14 Environmental Matters. EPI has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of EPI. In addition,
to the best knowledge of EPI, there are no substances or conditions which may
support a claim or cause of action against EPI or any of its current or former
officers, directors, agents or employees, whether by a governmental agency or
body, private party or individual, under any Hazardous Materials Regulations.
"Hazardous Materials" means any oil or petrochemical products, PCB's,
asbestos, urea formaldehyde, flammable explosives, radioactive materials,
solid or hazardous wastes, chemicals, toxic substances or related materials,
including, without limitation, any substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," or "toxic substances" under any applicable federal or state laws
or regulations. "Hazardous Materials Regulations" means any regulations
governing the use, generation, handling, storage, treatment, disposal or
release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.15 Access to Information Regarding Versatech. EPI acknowledges
that it has been delivered copies of what has been represented to be
documentation containing all material information respecting Versatech and its
present and contemplated business operations, potential acquisitions,
management and other factors; that it has had a reasonable opportunity to
review such documentation and discuss it, to the extent desired, with its
legal counsel, directors and executive officers; that it has had, to the
extent desired, the opportunity to ask questions of and receive responses from
the directors and executive officers of Versatech, and with the legal and
accounting firms of Versatech, with respect to such documentation; and that to
the extent requested, all questions raised have been answered to its complete
satisfaction.
Section 4
Representations, Warranties and Covenants of Versatech
and the Versatech Stockholders
Versatech and the Versatech Stockholders represent and warrant to,
and covenant with, EPI as follows:
4.1 Versatech Shares. The Versatech Stockholders are the
record and beneficial owners of all of the Versatech Shares listed in Exhibit
A, free and clear of adverse claims of third parties; and Exhibit A correctly
sets forth the names, addresses and the number of Versatech Shares
respectively owned by the Versatech Stockholders.
4.2 Corporate Status. Versatech is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Texas and is licensed or qualified as a foreign corporation in all states
in which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of Versatech
consists of 1,000,000 shares of Class a common voting stock, one dollar
($1.00) par value, of which 100 shares are issued and outstanding, all fully
paid and non-assessable. There are no outstanding options, warrants or calls
pursuant to which any person has the right to purchase any authorized and
unissued capital stock of Versatech.
4.4 Financial Statements. The financial statements of
Versatech furnished to EPI, consisting of an unaudited balance sheet for the
period ended October 31, 1997, attached hereto as Exhibit E, and incorporated
herein by reference, are correct and fairly present the financial condition of
Versatech as of these dates and for the periods involved, and such statements
were prepared in accordance with generally accepted accounting principles
consistently applied, and no material change has occurred in the matters
disclosed therein, except as indicated in Exhibit F, which is attached
hereto and incorporated herein by reference. These financial statements do
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. Versatech has no material
liabilities of any nature except to the extent reflected or reserved against
in the balance sheets, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit F attached hereto and incorporated herein
by reference.
4.6 Interim Changes. Since the date of these balance sheets,
except as set forth in Exhibit F, there have been no (1) changes in the
financial condition, assets, liabilities or business of Versatech, in the
aggregate, have been materially adverse; (2) damages, destruction or loss of
or to the property of Versatech, payment of any dividend or other distribution
in respect of the capital stock of Versatech, or any direct or indirect
redemption, purchase or other acquisition of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to their employees.
4.7 Title to Property. Versatech has good and marketable
title to all properties and assets, real and personal, proprietary or
otherwise, reflected in these balance sheets, and the properties and assets of
Versatech are subject to no mortgage, pledge, lien or encumbrance, except as
reflected in the balance sheet or in Exhibit F, with respect to which no
default exists.
4.8 Litigation. There is no litigation or proceeding pending,
or to the knowledge of Versatech, threatened, against or relating to Versatech
or its properties or business, except as set forth in Exhibit F. Further, no
officer, director or person who may be deemed to be an affiliate of Versatech
is party to any material legal proceeding which could have an adverse effect
on Versatech (financial or otherwise), and none is party to any action or
proceeding wherein any has an interest adverse to Versatech.
4.9 Books and Records. From the date of this Plan to the
Closing, the Versatech Stockholders will cause Versatech to (1) give to EPI
and its representatives full access during normal business hours to all of its
offices, books, records, contracts and other corporate documents and
properties so that EPI may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Versatech as EPI may
reasonably request.
4.10 Tax Returns. Versatech has filed all federal and state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if
there is no Closing), Versatech, the Versatech Stockholders and their
representatives will keep confidential any information which they obtain from
EPI concerning its properties, assets and business. If the transactions
contemplated by this Plan are not consummated by December 31, 1997, Versatech,
the Versatech Stockholders will return to EPI all written matter with respect
to EPI obtained by them in connection with the negotiation or consummation of
this Plan.
4.12 Investment Intent. The Versatech Stockholders are
acquiring the shares to be exchanged and delivered to them under this Plan for
investment and not with a view to the sale or distribution thereof, and the
Versatech Stockholders have no commitment or present intention to liquidate
the Company or to sell or otherwise dispose of the EPI shares. The Versatech
Stockholders shall execute and deliver to EPI on the Closing an Investment
Letter attached hereto as Exhibit G and incorporated herein by reference,
acknowledging the "unregistered" and "restricted" nature of the shares of EPI
being received under the Plan in exchange for the Versatech Shares, and
receipt of certain material information regarding EPI.
4.13 Corporate Authority. Versatech has full corporate power
and authority to enter into this Plan and to carry out its obligations
hereunder and will deliver to EPI or its representative at the Closing a
certified copy of resolutions of its Board of Directors authorizing execution
of this Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and performance
by Versatech hereunder have been duly authorized by all requisite corporate
action on the part of Versatech, and this Plan constitutes a valid and binding
obligation of Versatech and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Versatech.
4.15 Environmental Matters. Versatech and the Versatech
Stockholders have no knowledge of any assertion by any governmental agency or
other regulatory authority of any environmental lien, action or proceeding, or
of any cause for any such lien, action or proceeding related to the business
operations of Versatech or its predecessors. In addition, to the best
knowledge of Versatech, there are no substances or conditions which may
support a claim or cause of action against Versatech or any of its current
or former officers, directors, agents, employees or predecessors, whether by a
governmental agency or body, private party or individual, under any Hazardous
Materials Regulations. "Hazardous Materials" means any oil or petrochemical
products, PCB's, asbestos, urea formaldehyde, flammable explosives,
radioactive materials, solid or hazardous wastes, chemicals, toxic substances
or related materials, including, without limitation, any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations. "Hazardous Materials Regulations" means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
4.15 Access to Information Regarding EPI. Versatech and the
Versatech Stockholders acknowledge that they have been delivered copies of
what has been represented to be documentation containing all material
information respecting EPI and its present and contemplated business
operations, potential acquisitions, management and other factors;
that they have had a reasonable opportunity to review such documentation and
discuss it, to the extent desired, with their legal counsel, directors and
executive officers; that they have had, to the extent desired, the opportunity
to ask questions of and receive responses from the directors and executive
officers of EPI, and with the legal and accounting firms of EPI, with respect
to such documentation; and that to the extent requested, all questions raised
have been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of Versatech and the Versatech
Stockholders
All obligations of Versatech and the Versatech Stockholders under
this Plan are subject, at their option, to the fulfillment, before or at the
Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of EPI contained in this Plan shall be deemed
to have been made again at and as of the Closing and shall then be true in all
material respects and shall survive the Closing.
5.2 Due Performance. EPI shall have performed and complied
with all of the terms and conditions required by this Plan to be performed or
complied with by it before the Closing.
5.3 Officers' Certificate. Versatech and the Versatech
Stockholders shall have been furnished with a certificate signed by the
President of EPI, in such capacity, attached hereto as Exhibit H and
incorporated herein by reference, dated as of the Closing, certifying (1) that
all representations and warranties of EPI contained herein are true and
correct; and (2) that since the date of the financial statements (Exhibit C
hereto), there has been no material adverse change in the financial condition,
business or properties of EPI, taken as a whole.
5.4 Opinion of Counsel of EPI. Versatech and the Versatech
Stockholders shall have received an opinion of counsel for EPI, dated as of
the Closing, to the effect that (1) the representations of Sections 3.1, 3.2
and 3.12 are correct; (2) except as specified in the opinion, counsel knows of
no inaccuracy in the representations in 3.5, 3.6 or 3.7; and (3) the shares of
EPI to be issued to the Versatech Stockholders under this Plan will, when so
issued, be validly issued, fully paid and non-assessable.
5.5 Assets and Liabilities of EPI. EPI shall have no material
assets and no liabilities at Closing, and all costs, expenses and fees
incident to the Plan shall have been paid.
5.6 Resignation of Directors and Executive Officers and
Designation of New Directors and Executive Officers. The present directors
and executive officers of EPI shall resign, and shall have designated nominees
of Versatech as outlined in Section 1.4 hereof as directors and executive
officers of EPI to serve in their place and stead, until the next respective
annual meetings of the stockholders and Board of Directors of EPI, and
until their respective successors shall be elected and qualified or until
their respective prior resignations or terminations.
5.7 Reverse Split and Name Change of EPI. The requirements of
Section 1.5 hereof shall have been fully satisfied at Closing.
Section 6
Conditions Precedent to Obligations of EPI
All obligations of EPI under this Plan are subject, at its option,
to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Versatech and the Versatech Stockholders
contained in this Plan shall be deemed to have been made again at and as of
the Closing and shall then be true in all material respects and shall survive
the Closing.
6.2 Due Performance. Versatech and the Versatech Stockholders
shall have performed and complied with all of the terms and conditions
required by this Plan to be performed or complied with by them before the
Closing.
6.3 Officers' and Stockholders' Certificate. EPI shall have
been furnished with a certificate signed by the President of Versatech, in
such capacity, attached hereto as Exhibit I and incorporated herein by
reference, dated as of the Closing, certifying (1) that all representations
and warranties of Versatech and the Versatech Stockholders contained herein
are true and correct; and (2) that since the date of the financial
statements (Exhibit E), there has been no material adverse change in the
financial condition, business or properties of Versatech, taken as a whole.
6.4 Books and Records. The Versatech Stockholders or the
Board of Directors of Versatech shall have caused Versatech to make available
all books and records of Versatech, including minute books and stock transfer
records; provided, however, only to the extent requested in writing by EPI at
Closing.
6.5 Acceptance by Versatech Stockholders. The terms of this
Plan shall have been accepted by the Versatech Stockholders who own not less
than 50.1% of the outstanding Versatech Shares by their execution and delivery
of a copy of the Plan and related instruments.
6.6 Reverse Split and Stock Issuance. The reverse split
outlined in Section 1.5 hereof shall have been effected, and the
"unregistered" and "restricted" post-split shares of common stock of EPI
outlined in Sections 1(ii), (iii), (iv) and (v) hereof prior to or
simultaneous with the Closing.
6.7 Payment of $350,000. The $350,000 raised by EPI though
the issuance of certain "unregistered" and "restricted" shares of its common
stock as outlined in Section 1(v) hereof and Exhibit B hereto shall have been
deposited in escrow and be available for payment to the designees of EPI as
outlined in the Action By Unanimous Consent of Directors of EPI adopting,
ratifying and approving the Plan.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual consent
in writing; (2) by either the sole director of EPI or Versatech and the
Versatech Stockholders if there has been a material misrepresentation or
material breach of any warranty or covenant by the other party; or (3) by
either the sole director of EPI or Versatech and the Versatech Stockholders if
the Closing shall not have taken place, unless adjourned to a later date by
mutual consent in writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to time,
after the Closing, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Plan.
8.2 Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Each party represents to the other parties
hereunder that no broker or finder has acted for it in connection with this
Plan, and agrees to indemnify and hold harmless the other parties against any
fee, loss or expense arising out of claims by brokers or finders employed or
alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first-class registered or certified mail, return
receipt requested, as follows:
If to EPI: 5444 Westheimer, Suite 2000
Houston, Texas 77056
With a copy to: Leonard W. Burningham, Esq.
Suite 205 Hermes Building
455 East 500 South Street
Salt Lake City, Utah 84111
If to Versatech: P. O. Box 1227
Spur 239 and Alderete Lane
Del Rio, Texas 78841
With a copy to: Thomas C. Pritchard, Esq.
1111 Bagby Street, Suite 2450
Houston, Texas 77002
If to the Versatech To the Addresses listed in Exhibit A
Stockholders:
8.5 Entire Agreement. This Plan constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, including the
Letter of Intent dated December 1, 1997, between the parties hereto relating
to the transactions contemplated herein or the subject matter hereof.
8.6 Headings. The section and subsection headings in this
Plan are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and
construed and enforced in accordance with the laws of the State of Nevada,
except to the extent pre- empted by federal law, in which event (and to that
extent only), federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of, and
be binding upon, the parties hereto and their successors and assigns; provided
however, that any assignment by any party of its rights under this Plan
without the prior written consent of the other parties shall be void.
8.9 Counterparts. This Plan may be executed simultaneously 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.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
ENVIRONMENTAL PYROGENICS, INC.
Date: 12/22/97. By/s/William A. Silvey, Jr.
William A. Silvey, Jr., President
VERSATECH MANUFACTURING, INC.
Date: 12/24/97. By/s/Robert Michelini
Robert Michelini, President
VERSATECH STOCKHOLDERS
Date: 12/24/97. By/s/Thomas Michelini
Thomas Michelini
FAIRFAX INDUSTRIES, INC.
Date: 12/24/97. By/s/Robert Michelini
Robert Michelini, President
EXHIBIT A
Number of Shares of
Number of Shares EPI
Owned of to be
Name and Address Versatech Received in the Exchange
Fairfax Industries, Inc. 80 2,400,000
46641 Arboretum Circle
Plymouth, Michigan 48170
Gecamex Industries, Inc. 12 360,000
Spur 239 & Alderete Lane
Del Rio, Texas 78840
Thomas Michelini 8 240,000
474 North Lake Shore Drive
Apt. #3609
Chicago, Illinois 60611
<PAGE>
Environmental Pyrogenics, Inc
c/o 5444 Westheimer, Suite 2000
Houston, Texas 77056
SCHEDULE "A"
(450,000 post-split shares of its "unregistered" and "restricted" common stock
for non-capital, raising services rendered, all to be issued pursuant to Rule
701 of the Securities and Exchange Commission)
Shareholders Post Reorganization Shares
Burningham, Leonard W., Esq. 90,000
Hermes Building, Suite 205
455 East Fifth South
Salt Lake City, Utah 84111-3323
Schmidt, Roger N. 90,000
P.O. Box 22254
Houston, Texas 77227
Silvey, W.A. Jr. 135,000
5227 Cripple Creek Court
Houston, TX 77017
Thompson, W. Scott 135,000
P.O. Box 27701
Houston, TX 77227
Total Shares: 450,000
<PAGE>
Environmental Pyrogenics, Inc
c/o 5444 Westheimer, Suite 2000
Houston, Texas 77056
SCHEDULE "B"
(Unregistered and Restricted Common Stock Shares)
(Issued under an exemption from registration provided
for under Section 4(2) of the Securities Act of 1933, as
amended to Northport Industries, Inc. as the Finder)
Shareholders Post Reoreanization Shares
Northport Industries, Inc. 350,000
One West Loop South, Suite 100
Houston, Texas 77027
Burningham, Leonard W., Esq. 100,000
Hermes Building, Suite 205
455 East Fifth South
Salt Lake City, Utah 84111-3323
Total Shares: 450,000
The 100,000 common stock shares will be held for benefit of Northport
Industries by the Trustee and released to Northport when earned. Earned is
defined as Northport Placement or causing the Placement of not less than
200,000 USD of the $1,000,000 Initial Financing placement to be initiated at
closing of the Reorganization and completed in not less than 180 days from
said closing date.
<PAGE>
Environmental Pyrogenics, Inc
c/o 5444 Westheimer, Suite 2000
Houston, Texas 77056
SCHEDULE "C"
(Unregistered and Restricted Common Stocks Shares)
(Issued under an exemption from registration provided for under Section 4(2)
of the Securities Act of 1933, as amended to Northport Industries, Inc. as the
Finder)
Shareholders Post Reorganization Shares
Burningham, Leonard W., Esq. 50,000
Hermes Building, Suite 205
455 East Fifth South
Salt Lake City, Utah 84111-3323
Total Shares: 50,000
The 50,000 common stock shares will be held for benefit of Continental Capital
Corp., by the Trustee, and released to Continental Capital Corp. when earned.
<PAGE>
Environmental Pyrogenics, Inc
c/o 5444 Westheimer, Suite 2000
Houston, Texas 77056
SCHEDULE "D"
Unregistered and restricted common stocks shares issued under an exemption
from registration provided for under Section 4(2) of the Securities Act of
1933, as amended
Name & Address Post Reorganization Shares
Aurous, Ltd 110,000
P.O. Box 2097
Grand Cayman, Cayman Islands
B.W.I.
Aurous, Ltd. 20,000
P.O. Box 2097
Grand Cayman, Cayman Islands
B.W.I.
Bourgoyne, Rene' 20,000
6002 Lawn
Houston, Texas 77088
DUFO, Ltd.P.O. Box 2097 20,000
Grand Cayman, Cayman Islands
B.W.I.
Fulton Holdings, Ltd., #1 185,000
P.O. Box 2097
Grand Cayman, Cayman Islands
B.W.I.
Fulton Holdings, Ltd., #2 10,000
P.O. Box 2097
Grand Cayman, Cayman Islands
B.W.I.
Michelsen, Maureen 10,000
9700 Leawood, #1214
Houston, Texas 77099
Post Oak, Ltd., #1 165,000
P.O. Box 2097
Grand Cayman, Cayman Islands
B.W.I.
Post Oak, Ltd., #2 10,000
P.O. Box 2097
Grand Cayman, Cayman Islands
B.W.I.
Pritchard, Thomas, Esq. 50,000
1111 Bagby, Suite 2450
Houston, Texas 77002
Total: 600,000
<PAGE>
Environmental Pyrogenics, Inc
c/o 5444 Westheimer, Suite 2000
Houston, Texas 77056
SCHEDULE "E"
WORKOUT
(Unregistered and restricted common stocks shares issued under
an exemption from registration provided for under Section 4(2)
of the Securities Act of 1933, as amended)
(These shares are the 50,000 shares original1y to be held in Escrow by
Leonard Burningbam, Esq., pending satisfaction of performance)
Name & Address Post Reorganization Shares
Corbin Trusts 1996 8,000
450 First National Bank Bldg.
Amarillo, Texas 97101
Crumly, Richard 8,000
P.O. Box 460633
San Antonio, Texas 78246
Dailey, Joseph J. 6,400
1110 Romaine Lane
Houston, Texas 77090
Eric, Inc. 500
24 Greenway Plaza, #616
Houston, Texas 77046
Forster, Fred III 600
P.O. Box 698
Alto, New Mexico 88312
Jefferson Fund 1 2,500
1861 Brown Blvd., Suite 669
Arlington, Texas 76006
Mills, Danny 8,000
10010 San Pedro St.
San Antonio, Texas 78216
Smith, Daniel T. 10,100
2004 Tennessee
Baytown,Texas 77520-6336
Segall, Celia L 500
1201 MoDuffie, #178
Houston, Texas 77019
Serafino, Victor C. 600
14738 Cindywood
Houston, Texas 77079
Wooten, Odis C. 4,000
c/o Nanosoft
3040 Post Oak Blvd.
Houston, TX 77056
Zummo, Pete F. 800
5775 Clinton Ave.
Beaumont, Texas 77706
50,000
<PAGE>
Environmental Pyrogenics, Inc
c/o 5444 Westheimer, Suite 2000
Houston, Texas 77056
EXHTBIT "B"
PRIVATE PLACEMENT STOCKHOLDERS
(Subject to $350,000 being deposited in escrow by the persons listed prior to
or simultaneous with the execution and delivery of this Plan, which sum shall
be paid to the designees of EPI on Closing, an additional 350,000 post-split
shares of EPI's "unregistered" and "restricted" common stock shall be issued
as follows:)
Shareholders Post Reorganization Shares
Leonard W. Burningham-ESCROW 21,500
455 East 500 South, Suite #205
Salt Lake City, Utah 84111-3323
Leonard W. Burningham 7,500
455 East 500 South, Suite #205
Salt Lake City, Utah 84111-3323
Gerard J. Bushey 5,000
35 Brookville Road
Brookville, NY 11545
Canine, Ltd. 25,000
P. O. Box 2097 GT
3rd Floor, Genesis Building
Grand Cayman, Cayman Islands B.W.I.
Claxton Management (D. Millican) 5,000
5319 Holly
Bellaire, TX 77469
Kenny Davidson 25,000
1922 Thompson Crossing
Richmond, TX 77469
DUFO, Ltd. 10,000
P. O. Box 2097
3rd Floor, Genesis Building
Grand Cayman, Cayman Islands
B.W.I.
J. Wayne Dyer 5,000
13 Farrell
Houston, TX 77022
Shirley Emmons 1,000
4314 Blind River
Pasadena, TX 77504
Thomas H. Haney 1,000
2806 Oeander
Pasadena, TX 77502
Franidin J. Harberg, jr. 10,000
11 Greenway Plaza, #2100
Houston, TX 77046-1106
Steve & Rahkel Jackson 60,000
7913 Haydenberry Ct. 40,000
Nashville, TN 37221
Richard Kemmerer 1,000
17333 Thunder Creed Rd.
Eureka, MO 63025
John A. LaBeilo 2,000
2902 Veva Dr.
Pearland, TX 77584
Darrel Lewis 100,000
5016 Long Street Drive
Nashville, TN 37027
Henry Mathews 2,000
3204 Bennington
Pasadena, TX 77503
R. Edwin Pitts, M.D. 10,000
7710 Beechnut, Suite 100 10,000
Houston, TX 77074
Debra B. Roberts 1,000
10010 Kirkbuff Dr.
Houston, TX 77074
John P. Sterner 5,000
11727 Dorrance Lane
Stafford, TX 77477
Amanda Tackett 1,000
1710 Jane Dr.
Pasadena, TX 77502
TOTAL 350,000
<PAGE>
EXHIBIT C
ENVIRONMENTAL PYROGENICS, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED
DECEMBER 31, 1996 AND 1995 (AUDITED)
AND THE PERIOD ENDED
MARCH 31, 1997 (AUDITED)
<PAGE>
Environmental Pyrogenics, Inc.
(A Development Stage Company)
Financial Statements
3 Months Ended March 31, 1997, the 2 Years Ended December 31, 1996 and 1995,
and the Period from December 8, 1986 (Date of Inception) Through December 31,
1994
<PAGE>
Malone & Bailey [letterhead]
May 1, 1997
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Environmental Pyrogenics, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Environmental Pyrogenics,
Inc. (a Nevada corporation, and a development stage company) as of March 31,
1997, and December 31, 1996, 1995 and 1994, and the related statements of
income, stockholders' equity and cash flows for the 3 months, 2 years and the
period from December 8, 1986 (date of inception) through December 31, 1994.
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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Environmental Pyrogenics,
Inc. at March 31, 1997, December 31, 1996, 1995 and 1994, and results of their
operations and their cash flows for the 3 months, 2 years and the period from
December 8, 1986 (date of inception) through December 31, 1994, in conformity
with generally accepted accounting principles.
/s/Malone & Bailey, PLLC
<TABLE>
ENVIRONMENTAL PYROGENICS, INC.
(A Development Stage Company)
BALANCE SHEETS
March 31, 1997, December 31, 1996, 1995 and 1994
1997 1996 1995 1994
<S> <C> <C> <C> <C>
ASSETS
Cash $ 0 $ 0 $ 0 $ 0
Other - - - -
TOTAL ASSETS 0 0 0 0
LIABILITIES
Accounts payable $ 0 $ 0 $ 0 $ 0
STOCKHOLDERS' EQUITY
Preferred stock, $.25 par value,
12,500,000 shares authorized,
934,167 shares issued and
outstanding 233,542 233,542 233,542 233,542
Common stock, $.001 par value,
25,000,000 shares authorized,
7,888,334 shares issued and
outstanding 7,888 7,888 7,888 7,888
Deficit paid in capital (131,144) (135,380) (135,380) (135,380)
Deficit accumulated during the
development stage (110,286) (106,059) (106,050) (106,059)
TOTAL STOCKHOLDERS' EQUITY 0 0 0 0
TOTAL LIABILITIES AND EQUITY $ 0 $ 0 $ 0 $ 0
</TABLE>
See notes to financial statements.
<TABLE>
ENVIRONMENTAL PYROGENICS, INC.
(A Development Stage Company)
STATEMENTS OF INCOME
3 Months Ended March 31, 1997,
the 2 Years Ended December 31, 1996 and 1995, and the
Period from December 8, 1986 (Date of Inception) Through December 31, 1994
<CAPTION>
Period from
Dec. 8, 1986
(Inception)
Through
1997 1996 1995 Dec.31,1994
<S> <C> <C> <C> <C>
Revenues $ 0 $ 0 $ 0 $ 0
Selling, General and
Administrative Expenses 4,236 0 0 0
Net income from continuing
operations (4,236) 0 0 0
Net (loss) from discontinued
operations 0 0 0 (106,050)
Net (loss) $ (4,236) $ 0 $ 0 $(106,050)
</TABLE>
See notes to financial statements.
<TABLE>
ENVIRONMENTAL PYROGENICS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
3 Months Ended March 31, 1997, the 2 Years Ended December 31, 1996 and 1995,
and the Period from December 8, 1986 (Date of Inception) Through December 31,
1994
<CAPTION>
Period from
Dec. 22, 1986
(Inception)
Through
1997 1996 1995 Dec. 31, 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net (deficit) $( 4,236) $ 0 $ 0 $( 106,050)
Adjustments to reconcile
net income to net
cash provided by operating
activities:
Depreciation 11,751
Issuance of stock 4,236 65,000
NET CASH USED BY
OPERATING ACTIVITIES 0 (29,299)
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of fixed assets (11,751)
CASH FLOWS FROM FINANCING
ACTIVITIES
Sales of common and preferred stock
stock for cash 367,503
Less: costs of issuance (326,453)
NET CASH FROM FINANCING
ACTIVITIES 41,050
NET INCREASE IN CASH 0 0
CASH AT BEGINNING OF PERIOD 0 0 0 0
CASH AT END OF PERIOD 0 0 0 0
SUPPLEMENTAL DISCLOSURE
Noncash financing activities
Issuance of stock for merger with
Environmental Pyrogenics Services, Inc. $ 65,000
Issuance of 420,000 shares common stock
in exchange for services rendered 420
Capital contribution of corporate
expenses paid by stockholders $ 4,236
</TABLE>
See notes to financial statements.
<TABLE>
ENVIRONMENTAL PYROGENICS, INC.
(A Development Stage Company)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
3 Months Ended March 31, 1997, the 2 Years Ended December 31, 1996
and 1995, and the Period from December 8, 1986 (Date of Inception) Through
December 31, 1994
<CAPTION>
Preferred Stock Common Stock Paid in Retained
Shares Amount Shares Amount Capital (Deficit) Totals
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance in connection
with merger with
Environmental
Pyrogenics Services,
Inc., 1987 200,000 $50,000 6,000,000$6,000 $ 9,000 $65,000
Issuance of stock for
cash, 1987 734,167 183,542 1,468,334 1,468 182,073 367,083
Less: costs of issuance 0
Net loss, 1986 - 1988 - - - - (39,935)(39,935)
Balances, April 30,
1988 as previously
reported 934,167 233,542 7,888,334 7,468 191,073 (39,935)392,148
Prior period adjustment - - - - (326,453) (326,453)
Balances, April 30,
1988 as restated 934,167 233,542 7,888,334 7,468(135,380)(39,935) 65,695
Issuance of stock
for services, 1988 420,000 420 420
Corporate expenses
paid by stockholders,
March, 1997 4,236 4,236
Write off of
intangibles acquired
in 1988 merger (65,000)(65,000)
Net loss, May, 1988
- - December, 1994 (1,115) (1,115)
Net loss, 1994 -
March 31, 1997 (4,236)
Balances,
March 31, 1997 934,167 233,542 7,888,334 7,888(131,144)(110,286) 0
</TABLE>
See notes to financial statements.
ENVIRONMENTAL PYROGENICS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DEVELOPMENT STAGE OPERATIONS
The Company was incorporated December 8, 1986, in the state of Nevada. In
1987, the Company completed a reverse merger as follows:
Environmental Pyrogenics Services, Inc.: This entity attempted the
business of industrial and oil field waste disposal. 200,000 shares of
preferred stock and 6,000,000 shares of common stock was issued in connection
with this acquisition. This transaction was valued at $65,000.
The Company registered a public stock offering with the state of Nevada in
1987. $367,083 gross cash proceeds was raised, with $326,453 spent on the
public offering and related financing efforts. Net proceeds of $40,630 was
spent on operating activities.
The Company has been inactive since 1989. There are no liabilities, judgments
or pending legal actions. Subsequent debt forgiveness amounted to $32,060,
which offset additional losses incurred since May 1, 1988.
In March, 1997 certain shareholders of the Company paid certain registration,
legal and accounting expenses of the Company.
NOTE 2 - PRIOR PERIOD ADJUSTMENT
The Company erroneously recorded its costs of equity securities sales as an
intangible asset in its financial statements as of April 30, 1988. The correct
treatment is to record these costs as a reduction of paid-in capital.
<PAGE>
EXHIBIT D
EXCEPTIONS TO EPI FINANCIAL STATEMENTS
None.
<PAGE>
EXHIBIT E
VERSATECH MANUFACTURING, INC.
FINANCIAL STATEMENTS
<PAGE>
<TABLE>
VERSATECH MANUFACTURING, INC.
Pro-Forma Balance Sheet
<CAPTION>
10/31/97
<S> <C>
ASSETS
Current Assets:
Cash 176,572
Accounts Receivable, Trade 281,149
Notes Receivable Northport 3,507
Accts. Receivable-TTM 60,335
Due from loving, S.A. (1,510)
Prepaids 2,863
Raw Material Inventory 101,836
finished Goods Inventory 182,114
Total Current Assets 796,866
Property & Equipment
Building Improvements -
Machinery & Equipment 382,702
Furniture & Fixtures 17,470
Less Acc Dep (26,685)
Total Property & Equipment 373,487
TOTAL ASSETS 1,170,353
LIABILITIES
Current Liabilities
Accounts Payable 196,387
Advances From Fairfax 8,475
Accrued Liabilities 7,614
Total Current Liabilities 212,476
Long Term Debt
Leases Payable
N/P Gecamex 400,000
N/P Bob Michelini 39,502
N/P Associates 17,747
Total Long Term Debt 457,349
Equity
Common Stock 101,000
Additional paid in capital 502,981
Net income-Year to Date (103,453)
Total Equity 500,528
Total Liabilities And Equity 1,170,353
</TABLE>
Prepared By Management
EXHIBIT F
EXCEPTIONS TO VERSATECH FINANCIAL STATEMENTS
None.
<PAGE>
EXHIBIT G
Environmental Pyrogenics, Inc.
5444 Westhiemer, Suite 2000
Houston, Texas 77056
Re: Exchange of shares of Versatech Manufacturing, Inc., a Texas
corporation ("Versatech"), for shares of Environmental Pyrogenics,
Inc., a Nevada corporation ("EPI" or the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Versatech, the other stockholders of
Versatech and EPI, I acknowledge that I have approved this exchange; that I am
aware of all of the terms and conditions of the Plan; that I have received and
personally reviewed a copy of the Plan and any and all material documents
regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and the Plan and related exhibits. I represent and
warrant that no director or executive officer of the Company or any associate
of either has solicited this exchange; that I am an "accredited investor" as
that term is known under the Rules and Regulations of the Securities and
Exchange Commission (see Exhibit "A" hereto); and/or, I represent and warrant
that I have sufficient knowledge and experience to understand the nature of
the exchange and am fully capable of bearing the economic risk of the loss of
my entire cost basis.
I further understand that immediately prior to the completion of the
Plan, EPI had little, if any assets, of any measurable value, and that in
actuality, the completion of the Plan and the exchange of my shares of
Versatech for shares of EPI results in a decrease in the actual percentage of
ownership that my shares of Versatech represented in Versatech prior to the
completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and
accounting firms for the Company.
I also understand that I must bear the economic risk of ownership of
any of the EPI shares, options or warrants for a long period of time, the
minimum of which will be one (1) year, as these shares are "unregistered"
shares and may not be sold unless any subsequent offer or sale is registered
with the United States Securities and Exchange Commission or otherwise exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein and
those in the personal questionnaire (if applicable) I provided to Versatech
for use by EPI as they are made to induce you to issue me the shares of EPI
under the Plan, and I further represent (of my personal knowledge or by virtue
of my reliance on one or more personal representatives), and agree as follows,
to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and know
that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company shall
reflect that I have requested the Company not to effect any transfer of any
stock certificate representing any of the shares being acquired unless I shall
first have obtained an opinion of legal counsel to the effect that the shares
may be sold in accordance with applicable laws, rules and regulations, and I
understand that any opinion must be from legal counsel satisfactory to the
Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged for
shares of the Company are "risk capital," and I am fully capable of bearing
the economic risks attendant to this investment, without qualification; and
8. I also understand that without approval of counsel for EPI, all
shares of EPI to be issued and delivered to me in exchange for my shares of
Versatech shall be represented by one certificate only and which such
certificate shall be imprinted with the following legend or a reasonable
facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented by this
certificate have not been registered under the Securities Act of
1933, as amended, and may not be sold or otherwise transferred
unless compliance with the registration provisions of such Act has
been made or unless availability of an exemption from such
registration provisions has been established, or unless sold
pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be accompanied
by a letter signed by the requesting stockholder setting forth all relevant
facts relating to the request. EPI will attempt to accommodate any
stockholders' request where EPI views the request is made for valid business
or personal reasons so long as in the sole discretion of EPI, the granting of
the request will not facilitate a "public" distribution of unregistered shares
of EPI.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
________________________________________________________
(Name(s) and Number of Shares)
________________________________________________________
(Address)
________________________________________________________
(City, State and Zip Code)
If joint tenancy with full rights of survivorship is desired, put
the initials JTRS after your names.
Dated this ________ day of __________________________, 1997.
Very truly yours,
/s/Robert T. Michelini
/s/Thomas R. Michelini
__________________________________
<PAGE>
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Environmental Pyrogenics, Inc., a
Nevada corporation ("EPI"), represents and warrants the following as required
by the Agreement and Plan of Reorganization (the "Plan") between EPI and
Versatech Manufacturing, Inc., a Texas corporation ("Versatech"), and the
stockholders of Versatech (the "Versatech Stockholders"), to-wit:
1. That he is the President of EPI and has been authorized and
empowered by its Board of Directors to execute and deliver this Certificate to
Versatech and the Versatech Stockholders;
2. Based upon his personal knowledge, information, belief and
opinions of counsel for EPI regarding the Plan:
(i) All representations and warranties of EPI contained within
the Plan are true and correct;
(ii) EPI has complied with all terms and provisions required of
it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of EPI as set forth in its financial
statements for the period ended March 31, 1997, and the
years ended December 31, 1996 and 1995, except as set
forth in Exhibit D to the Plan.
ENVIRONMENTAL PYROGENICS, INC.
By_/s/William A. Silvey, Jr._____
William A. Silvey, Jr., President
<PAGE>
EXHIBIT I
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Versatech Manufacturing, Inc., a
Texas corporation ("Versatech"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between
Versatech, its stockholders (the "Versatech Stockholders") and Environmental
Pyrogenics, Inc., a Nevada corporation ("EPI"), to-wit:
1. That he is the President of Versatech and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to EPI;
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of Versatech contained
within the Plan are true and correct;
(ii) Versatech has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Versatech as set forth in its
Balance Sheet dated October 31, 1997, except as set forth
in Exhibit E to the Plan.
VERSATECH, INC.
By/s/Robert Michelini
Robert Michelini, President
OFFER TO PURCHASR
NORTHPORT INDUSTREES, INC.
c/o P. 0. Box 1227
Spur 239 and Adlerete Road
Del Rio, Texas
78840
DATE: AUGUST 14,1998
TO: MATT BAUMGARTNER
KARL JOH GUMMIWARENFABRIK GmbH
GECAMCO INTERNATIONAL INC.
GECAMCO ASSOCIATES INC.
JEAN MICHELINI
(individually, a "Shareholder" and, collectively, the
"Shareholders")
NORTHPORT INDUSTRIES, INC. (the "Purchaser") seeks to acquire all of the
shares in the capital stock of JOH RUBBER INC. (the "Corporation"), upon the
following terms:
1. The Purchaser offers to purchase from each of the Shareholders all,
but not less than all of their respective shares in the capital stock of the
Corporation (the '?urchased Shares"), currently held by the Shareholders.
2. The purchase price (the "Purchaseprice) shall be paid at Closing by
the issuance of 193,767 restricted Common shares in the capital stock of the
Purchaser (with attributes as contained in Schedule "A" attached hereto (the
"Northport Shares")) to each of the Shareholders in an apportionment based on
the Shareholders' respective ownership of the Purchased Shares as set out in
section 3, and based on a share price equal to the arithmetical average of the
closing price of the Northport Shares on the NASDAQ Exchange on each of the
five (5) trading days preceding the second day preceding the Closing (the
"Market Value" (the current fisted value of the Northport Shares on the NASDAQ
Exchange, as of the above date being US$6.00 per share).
3. The Purchase Price shall be apportioned to the Purchased Shares as
follows:
(a) for each Special share of the Corporation, the equivalent
amount of Northport Shares calculated using the Market Value on the basis
of each Special share of the Corporation having a value of CAN$1.00 Dollar for
each share; and
(b) the remainder of the Northport Shares, to be divided
equally amongst each of the Common shares of the Corporation.
4. This Offer is open for acceptance by at least a majority of the
Shareholders for a period of ton (10) days from the date hereof, failing,
which this Offer shall be automatically withdrawn by the Purchaser without
further obligation of the parties to consummate the transactions. In the event
that this Offer is accepted by a majority of the Shareholders (the "Control
Shareholders") and not all of the Shareholders, then the Control Shareholders
shall immediately initiate the provisions of the unanimous shareholders
agreement between the Shareholders dated as of the 3 1 st day of March, 1992
(the "Shareholders Agreement") by causing the Corporation to offer the Control
Shareholders' shares to the other Shareholders pursuant to section 5.3 of the
Shareholders Agreement and by invoking the provisions of section 5.6(b) of the
Shareholders Agreement to cause the other Shareholders to sell their shares
pursuant to this Offer. In the event that the Control Shareholders fail to
initiate the provisions of the Shareholders Agreement within ten (10) days of
acceptance of this offer, or in the event that the other Shareholders purchase
the shares of the Control Shareholders pursuant to section 5.3 of the
Shareholders Agreement, then this offer shall be automatically withdrawn by
the Purchaser without further obligation of the parties to consummate the
transactions.
5. The Purchaser's obligation to consummate the transactions contemplated
pursuant to the provisions of this Offer is subject to the satisfaction, prior
to or at the Closing, of each of the following conditions:
(a) the Shareholders shall have performed, complied with and
fulfilled all of the provisions of Shareholders Agreement with respect to the
sale of the Purchased Shares;
(b) each of the representations and warranties of Shareholders
contained in this Offer shall be true and correct in all respects at and as of
the Closing with the same force and effect as if made at and as of the day of
Closing;
(c) the Shareholders shall have performed, complied with and
fulfilled or caused the Corporation to perform, comply with and fulfill, all
of the covenants, agreements, obligations and conditions required by this
Offer to be performed, complied with or fulfilled by Shareholders or the
Corporation prior to or at the Closing;
(d) the consurnmation of the transactions will result in the
Purchaser acquiring all of, and not less than all of, the shares in the
capital of the Corporation;
(e) neither Shareholders nor the Corporation shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction
which would impose material limitations on the ability of Purchaser to
exercise full rights of ownership of the Purchased Shares or the assets of the
Corporation and no action, suit, proceeding, or investigation shall be pending
or, to the best knowledge of Shareholders and the Corporation, threatened
which, in the opinion of counsel to Purchaser, is reasonably likely to result
in any such order, decree or injunction; and
(f) Shareholders and the Corporation shall have obtained all
consents and authorizations of governmental authorities and other third
parties required to effect the transactions contemplated by this Offer.
6. The Shareholders, jointly and severally covenant, represent and
warrant to the Purchaser as follows:
(a) the Shareholders have the authority to transfer the Purchased
Shares;
(b) the Purchased Shares are now and will be, at the time of Closing,
beneficially owned by the Shareholders with a good and marketable title, free
and clear of all liens, charges, security interests, adverse claims, pledges
and other encumbrances whatsoever;
(c) the Corporation is a corporation duly organized, validly
existing, and in good standing under the laws of the Province of Ontario, and
holds all licenses, registrations, authorizations and qualifications in
connection therewith;
(d) the Corporation does not directly or indirectly own any equity or
similar interest in any corporation, partnership, joint venture or other
business association or entity other than Gecamex Technologies Inc., in which
corporation, the Corporation is the beneficial owner of 289,203 Common shares
and which shares of Gecamex Technologies Inc., the Corporation shall continue
to own, unencumbered as at the Closing;
(e) the Corporation has prepared and filed or will prepare and file
on time with all appropriate governmental authorities all tax returns and
other documents that are required to be filed in respect of any taxes for all
fiscal periods ending on or prior to the Closing and all returns or other
documents which have been filed are correct and complete in all material
respects;
(f) the Corporation has paid, in full, all taxes due and payable with
respect to fiscal periods ending before the Closing, including all
installments due and payable in respect of taxes for its current year;
(g) there are no actions, suits, causes of action, disputes, claims,
investigations, or legal, grievance, arbitration, administrative or other
proceedings in progress, pending or, to the best knowledge of Shareholders,
threatened by or against Shareholders or the Corporation, or with respect to
the consummation of the transactions contemplated by this Offer;
(h) the Corporation is not a party to any of the following:
(i) any indenture, mortgage, note, guaranty, letter of credit,
installment obligation, agreement, or other instrument relating to the
borrowing of money or the guaranteeing of any obligation, including any
obligation for the borrowing of money;
(ii) any agreements, commitments and other arrangements, to which
the Corporation is a party, other than the Shareholders Agreement;
(i) the Corporation has been operated in the ordinary course and the
Corporation has not:
(i) sold or in any way transferred or otherwise disposed of
any of its assets or property;
(ii) incurred any obligation or liability, absolute, accrued,
contingent, or otherwise, whether due or to become due;
(iii) made or suffered any material adverse change in its
financial condition or its assets;
(iv) mortgaged, pledged or subjected to hen, charge, security
interest, or any other encumbrance or restriction any of its assets;
(v) sold, transferred or disposed of any of its assets;
(vi) declared, set aside or paid any dividend or other
distributions, payments or other transfers of any cash or other property;
(j) the Corporation owns all of the assets purported to be owned by it
free and clear of all mortgages, hens, pledges, charges, security interests,
encumbrances, easements, encroachments, rights of third parties, or other
interests of any kind or character;
(k) no person, firm or corporation has now or will have at the time
of Closing any agreement or option or right or privilege capable of becoming
an agreement or option from the Shareholders or the Corporation in respect of
the Purchased Shares;
(l) the Shareholders are now and shall be, at the time of Closing,
not non-residents within the meaning of the Income Tax Act (Canada) or,
alternatively, the Shareholders shall each comply with the provisions of
Section 116 of the Income Tax Act (Canada) by providing a certificate pursuant
to such section to the Purchaser on the closing; and
(m) that following the Closing of the transaction herein
contemplated, the Shareholders will have no finther claims against the
Corporation and shall have provided a release to the Purchaser in the form of
the release attached as Schedule "B".
7. The representations and warranties of the Shareholders contained in this
Offer or contained in any closing document given pursuant hereto shall not
merge on the Closing, shall survive the completion of the transaction and
shall continue in full force and effect.
8. The closing of the transactions herein contained (the "Closing") shall be
completed at the offices of the solicitors for the Purchaser, within thirty
(30) days of the acceptance (or deemed acceptance by the terms of the
Shareholders Agreement) of this Offer by all of the Shareholders, or such date
as the individual Shareholders and the Purchaser may agree.
9. At or before the Closing, the Shareholders shall deliver to tLe Purchaser
the following:
(a) share certificates, documents or titles or other evidence of
ownership representing the Purchased Shares duly endorsed for transfer and
such executed transfer documents necessary to convey title of the Purchased
Shares to the Purchaser.
(b) resignations of each of the directors and officers of the
Corporation;
(c) releases from each of the Shareholders for any claims any of them
have against the Corporation, in a form of the release attached hereto as
Schedule "B"
10. At or before the Closing, the Purchaser shall deliver to the Shareholders
the shares in the capital stock of the Purchaser representing the payment of
the Purchase Price as required herein.
11. Time shall be of the essence of this Offer.
12. This Offer, once accepted, shall be binding upon and shall enure to the
benefit of the parties hereto and their respective successors and lawful
assigns except that none of the parties hereto may assign this Offer or any of
their rights or obligations hereunder unless the prior written consent of the
other party hereto is first obtained.
13. The Purchaser and each of the Shareholders shall each bear their
respective costs and expenses.
14. This Offer and its acceptance may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one and the same instrument. A facsimile signature shall be
accepted as an original execution hereon.
NORTHPORT INDUSTRIES, INC.
Per:/s/Robert Michelli
I have authority to bind the
Corporation.
THE UNDERSIGNED accept the above Offer as of the date hereinafter
provided.
Dated this day of 1998.
/s/Matt Baumgartner
Dated this day of 1998.
KARL JOHN GUMMIWARENFABRIK
GmbH
Per:
I have authority to bind the
Corporation.
Dated this day of 1998.
GECAMCO INTERNATIONAL INC.
Per:
I have authority to bind the
Corporation.
Dated this day of ,1998.
GECAMCO ASSOCIATES INC.
Per: Matt Baumgartner
I have auth to bind the Corporation.
Dated this day of 1998.
JEAN MICHELINI
SCHEDULE "B"
RELEASE
TO: NORTHPORT INDUSTRIES, INC.
IN CONSIDERATION of the sum of One Dollar ($1.00) now paid by you to the
undersigned, (the receipt and sufficiency of which is hereby acimowledged by
the undersigned) and of other good and valuable consideration, the undersigned
hereby releases and forever discharges you from all actions, causes of action,
debts, contracts, claims and demands whatsoever which the undersigned,
howsoever now has or hereinafter can, shall or may have, for any cause, matter
or thing whatsoever existing up to the date of execution hereof, and in
particular, without in any way limiting the generality of the foregoing, in
respect of any and all claims arising as a result of the undersigned being a
shareholder of JOH RUBBER INC.
This Release shall not apply to any matters arising as an obligation to
the Vendors pursuant to the Agreement between you and the undersigned in
respect to the purchase of shares in JOH RUBBER INC.
This Release shall enure to the benefit of your heirs, executors,
administrators and assigns, and shall be binding upon each of the undersigned,
their respective heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF this Release has been executed this day of 1998.
SIGNED, SEALED AND DEIJVERED in the presence of.
COMPENSATION AGREEMENT
William A. Silvey, Jr., W. Scott Thompson, Roger N. Schmidt, Esq.
and Leonard W. Burningham, Esq., agree to accept 135,000, 135,000, 90,000 and
90,000 shares, respectively, of the one mill ($0.001) par value common stock
of Environmental Pyrogenics, Inc., a Nevada corporation (the "Company"), as
partial consideration for services rendered regarding the Agreement and Plan
of Reorganization between the Company and Versatech Manufacturing, Inc., a
Texas corporation.
Date: 12/22/97. /s/William A. Silvey, Jr.
William A. Silvey, Jr.
Date: 12/22/97. /s/W. Scott Thompson
W. Scott Thompson
Date: 12/22/97. /s/Roger N. Schmidt Esq.
Roger N. Schmidt Esq.
Date: 12/22/97. /s/Leonard W. Burningham
Leonard W. Burningham, Esq.
February 12, 1998
Robert Michellini
Northport Industries, Inc.
P. O. Box 1227
Spur 239 and Alderete Lane
Del Rio, Texas 78841
Re: Engagement Letter respecting the preparation and
filing of a 10-SB Registration Statement for Northport
Industries, Inc., a Nevada corporation (the "Company")
Dear Mr. Michellini:
The following outlines my engagement respecting the above
referenced matter.
I will undertake to prepare this Registration Statement for $7,500
and 7,500 shares of the Company to be issued under Rule 701 of the Securities
and Exchange Commission. These services will include responses to all
comments of the Securities and Exchange Commission, and the preparation of any
related consents, minutes and similar documents required or necessary for this
filing.
Required costs which also must be paid include copy costs
(outside, at $0.045 per page, inside, $0.125 per page); facsimile charges at
$0.85 for local and $1.25 for long distance (I will pay the telephone
charges); scanning of any documents for EDGAR filings, at $3 per page; and
Federal Express and other courier fees at cost. Filing fees will also be the
responsibility of the Company, though the contemplated filings with the
Securities and Exchange Commission do not need to be accompanied by a fee.
I anticipate that a draft of this Registration Statement can be
completed within ten days.
I have your "due diligence" information delivered to be in
connection with the completion or your recent reorganization; however, I would
appreciate it if you would complete the enclosed questionnaire I use for
annual reports on Form 10-KSB; this information would be most helpful.
If you have any questions, please contact me at your convenience.
Thank you very much.
Yours very sincerely,
/s/Leonard W. Burningham
Leonard W. Burningham
LWB
ACCEPTED:
/S/Robert Michellini
____________________________
Robert Michellini, President
cc. Thomas C. Pritchard, Esq.
1111 Bagby Street, #2450
Houston, Texas 77002
William A. Silvey, Jr.
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