DIVERSIFIED INDUSTRIES INC /UT/, 10SB12G, 1999-09-03

DIVERSIFIED INDUSTRIES INC /UT/
10SB12G, 1999-09-03

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<PAGE> 1

As filed with the Securities and Exchange Commission on September 3, 1999
SEC File No.
-------------------
==============================================================================

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-SB

GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS

Under Section 12(b) or (g) of the Securities Exchange Act of 1934

DIVERSIFIED INDUSTRIES, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)

Utah 87-0284731
- - - - - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

175 Main Street, Suite 1240, Salt Lake City, Utah 84111
-------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

Issuer's telephone number: (801) 961-7333
--------------

Securities to be registered under Section 12(b) of the Act:

Title of each class Name of each exchange on which
to be so registered each class is to be registered

N/A N/A
--- ---
Securities to be registered under Section 12(g) of the Act:

Common Stock, par value $0.01 per share
------------------------------------------
(Title of Class)

==============================================================================

<PAGE>
<PAGE> 2

DIVERSIFIED INDUSTRIES, INC.

FORM 10-SB

TABLE OF CONTENTS

PART 1 Page

Item 1. Description of Business ..................................... 3

Item 2. Management's Discussion and Analysis or Plan of Operation ... 10

Item 3. Description of Property...................................... 12

Item 4. Security Ownership of Certain Beneficial Owners
and Management.............................................. 12

Item 5. Directors, Executive Officers, Promoters
and Control Persons......................................... 13

Item 6. Executive Compensation....................................... 14

Item 7. Certain Relationships and Related Transactions............... 15

Item 8. Description of Securities.................................... 16

PART II

Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters................. 17

Item 2. Legal Proceedings............................................ 19

Item 3. Changes in and Disagreements with Accountants................ 19

Item 4. Recent Sales of Unregistered Securities...................... 19

Item 5. Indemnification of Directors and Officers.................... 21

PART F/S

Financial Statements......................................... 22

PART III

Item 1. Index to exhibits............................................ 22

Item 2. Signatures................................................... 32

<PAGE>
<PAGE> 3
PART I

ITEM 1. DESCRIPTION OF BUSINESS

Corporate History - Past Business Activities
- - - - - --------------------------------------------

Diversified Industries, Inc. (hereinafter the "Registrant" or the
"Company"), was incorporated in the state of Utah on April 17, 1970 , under
the name Silver Exploration, Inc., for the purpose of exploring, mining, and
purchasing minerals, metals and ores of all kinds. The Registrant was
originally authorized to issue up to 10,000,000 shares of common stock, par
value $0.01 per share. On June 4, 1970, the Company's Articles of
Incorporation were amended to increase the authorized capital from 10,000,000
shares of common stock to 25,000,000 shares of common stock. Thereafter the
Company offered shares of its Common Stock to public investors residing in the
state of Utah pursuant to a securities laws of the state of Utah, Registration
File No. 23704-21 [Effective August 4, 1970].

The Registrant was the operator of certain oil producing properties in
which fractional interests were owned by the Registrant and other prior to
discontinuing operations in 1996. In October 1996, the Registrant conveyed
all of its assets (approximately $105,000 at June 30, 1996) to a former
officer and director of the Registrant, in exchange for cancellation of a note
payable to that officer and director (approximately $268,000 at June 30, 1996)
and assumption of all of the Registrant's liabilities.

In October, 1996, former officers, directors, and principal shareholders
agreed to sell 6,000,000 shares of the then 24,992,831 shares issued and
outstanding to Patricia D. Hamilton ("Hamilton") and Sandra J. Schwartz
("Schwartz"), the principal shareholders of Diversified Glass & Mirror, a
Texas corporation ("DG&M"). In connection with the sale of the 6,000,000
shares, the former officers and directors of the Registrant called a special
meeting to shareholders to (1) change the name of the Registrant from Silver
Exploration, Inc. to Diversified Industries, Inc.; (2) increase the number of
authorized shares of the Registrant from 25,000,000 shares to 100,000,000
shares, having a par value of $0.01 per share; (3) effective a 20-for-1
reverse split of the issued and outstanding shares. Hamilton and Schwartz then
purchase from the Registrant 1,000,000 post-split shares of restricted common
stock for $10,000 cash. As a result of the 20-for-1 reverse split and the
issuance of the 1,000,000 shares of restricted common stock the Registrant's
issued outstanding shares were reduced to approximately 2,249,689 shares.

Articles of Amendment to the Registrant's Articles of Incorporation
effecting the name change and increase in authorized share capitalization were
filed with the state of Utah on December 3, 1996.

In April 1997, the Registrant called a special meeting of shareholders to
authorize and approve the an Acquisition Agreement entered into between the
Registrant and DG&M that provided for (1) a 1-for-5 reverse split of all the
issued and outstanding shares of the Registrant's Common Stock, so that the
Registrant's shareholders received one share of the Registrant's Common Stock
for each five shares held; and (2) all the shares of DG&M Common Stock were
exchanged for 3,000,000 shares of the Registrant's post-split Common Stock, so
that after giving effect to the share exchange, the holders of DG&M Common
Stock owned a controlling interest in the issued and outstanding Common Stock
of the Registrant.

<PAGE> 4

On March 25, 1997, the Registrant formed Diversified Merger Subsidiary, a
Utah corporation ("Diversified Merger Sub") as a wholly owed subsidiary for
the purpose of acquiring DG&M, pursuant to the terms of the Acquisition
Agreement On April 18, 1997, Diversified Merger Sub was merged with and into
DG&M, with DG&M being the surviving corporation and the Registrant being the
sole shareholder of DG&M. Certificate/Articles of Merger relating to the
acquisition of DG&M where filed with the office of the Secretary of State of
the State of Texas on April 18, 1997, and thereafter filed with the office of
the Secretary of State of the State of Utah on April 23, 1997.

Effective June 15, 1997, the acquisition transaction with DG&M was
rescinded and the 3,000,000 shares of the Registrant's common stock issued to
the DG&M shareholders were canceled and returned to authorized but unissued
shares. During the fiscal year 1998, the Registrant's management developed a
plan to begin developing and marketing multi-family housing projects designed,
planned and targeted towards the growing Hispanic population in the Houston,
Texas area. In June 1997, the Registrant acquired a 25 unit apartment complex
in Pasadena, Texas (the "Sue Cille Apartments") for the purpose of
rehabilitating the property for resale as condominiums. In addition, in
October 1997, the Registrant acquired an additional 43 units that were part of
the same apartment complex. The Registrant was unable to obtain the various
zoning variances necessary to commence with the rehabilitation project and
subsequent disposed of the properties in December 1998. The Registrant
currently has no assets, no liabilities no other business operations.

Hamilton and Schwartz sold their controlling interest in the Registrant
to Equity Asset Management, LLC, an entity control by Elliott N. Taylor, a
current officer and director of the Registrant. In connection with the sale of
their controlling interest, Hamilton and Schwartz resigned as officers and
directors and Mr. Taylor was appointed President and Director.

Current Business Activities
- - - - - ----------------------------

The Registrant should be considered a "shell" company and its business
purpose is to locate and consummated a merger or acquisition with a private
entity. The purposed business activities described herein classify the
Registrant as a "blank check" company. Therefore, the Registrant faces all
the risks interest in any new business, together with those risks specifically
inherent in the search for an acquisition of business opportunities.

Since the change in control the Registrant has make settlements with
creditors in order to reduce the Registrant's liabilities so that the
Registrant can seek potential business acquisition or opportunities to enter
in an effort to recommence business operations. The Registrant does not
propose to restrict its search for a business opportunity to any particular
industry or geographical area and may, therefore, engage in essentially any
business in any industry. The Registrant has unrestricted discretion in
seeking and participating in a business opportunity, subject to the
availability of such opportunities, economic conditions, and other factors.

The selection of a business opportunity in which to participate is
complex and risky. Additionally, as the Registrant has only limited resources,
it may be difficult to find good opportunities. There can be no assurance
that the Registrant will be able to identify and acquire any business
opportunity which will ultimately prove to be beneficial to the Registrant and
its shareholders. The Registrant will select any potential business
opportunity based on management's business judgment.
<PAGE> 5

The activities of the Registrant are subject to several significant risks
which arise primarily as a result of the fact that the Registrant has no
specific business and may acquire or participate in a business opportunity
based on the decision of management which potentially could act without the
consent, vote, or approval of the Registrant's shareholders. The risks faced
by the Registrant are further increased as a result of its lack of resources
and its inability to provide a prospective business opportunity with
significant capital. Because of the Registrant's current status having no
assets and no recent operating history, in the event the Registrant does
successfully acquire or merge with an operating business opportunity, it is
likely that the Registrant's present shareholders will experience substantial
dilution and there will be a probable change in control of the Registrant.

The Registrant is voluntarily filing its registration statement on Form
10SB in order to make information concerning itself more readily available to
the public. Management believes that being a reporting company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), could
provide a prospective merger or acquisition candidate with additional
information concerning the Registrant. In addition, management believes that
this might make the Registrant more attractive to an operating business
opportunity as a potential business combination candidate. As a result of
filing its registration statement, the Registrant is obligated to file with
the Securities and Exchange Commission certain interim and periodic reports
including an annual report containing audited financial statements. The
Registrant intends to continue to voluntarily file these periodic reports
under the Exchange Act even if its obligation to file such reports is
suspended under applicable provisions of the Exchange Act.

Any target acquisition or merger candidate of the Registrant will become
subject to the same reporting requirements as the Registrant upon consummation
of any such business combination. Thus, in the event that the Registrant
successfully completes an acquisition or merger with another operating
business, the resulting combined business must provide audited financial
statements for at least the two most recent fiscal years or, in the event that
the combined operating business has been in business less than two years,
audited financial statements will be required from the period of inception of
the target acquisition or merger candidate.

Sources of Business Opportunities
- - - - - ---------------------------------

The Registrant intends to use various sources in its search for potential
business opportunities including its officers and directors, consultants,
special advisors, securities broker-dealers, venture capitalists, members of
the financial community and others who may present management with unsolicited
proposals. Because of the Registrant's lack of capital, it may not be able to
retain on a fee basis professional firms specializing in business acquisitions
and reorganizations. Rather, the Registrant will most likely have to rely on
outside sources, not otherwise associated with the Registrant, that will
accept their compensation only after the Registrant has finalized a successful
acquisition or merger. To date, the Registrant has not engaged nor entered
into any discussions, negotiations, agreements nor understandings regarding
retention of any consultant to assist the Registrant in its search for
business opportunities, nor is management presently in a position to actively
seek or retain any prospective consultants for these purposes.

<PAGE>
<PAGE> 6

The Registrant does not intend to restrict its search to any specific
kind of industry or business. The Registrant may investigate and ultimately
acquire a venture that is in its preliminary or development stage, is already
in operation, or in various stages of its corporate existence and development.
Management cannot predict at this time the status or nature of any venture in
which the Registrant may participate. A potential venture might need
additional capital or merely desire to have its shares publicly traded. The
most likely scenario for a possible business arrangement would involve the
acquisition of, or merger with, an operating business that does not need
additional capital, but which merely desires to establish a public trading
market for its shares. Management believes that the Registrant could provide a
potential public vehicle for a private entity interested in becoming a
publicly held corporation without the time and expense typically associated
with an initial public offering.

Evaluation
- - - - - ----------

Once the Registrant has identified a particular entity as a potential
acquisition or merger candidate, management will seek to determine whether
acquisition or merger is warranted or whether further investigation is
necessary. Such determination will generally be based on management's
knowledge and experience, or with the assistance of outside advisors and
consultants evaluating the preliminary information available to them.
Management may elect to engage outside independent consultants to perform
preliminary analysis of potential business opportunities. However, because of
the Registrant's lack of capital it may not have the necessary funds for a
complete and exhaustive investigation of any particular opportunity.

In evaluating such potential business opportunities, the Registrant will
consider, to the extent relevant to the specific opportunity, several factors
including potential benefits to the Registrant and its shareholders; working
capital, financial requirements and availability of additional financing;
history of operation, if any; nature of present and expected competition;
quality and experience of management; need for further research, development
or exploration; potential for growth and expansion; potential for profits; and
other factors deemed relevant to the specific opportunity.

Because the Registrant has not located or identified any specific
business opportunity as of the date hereof, there are certain unidentified
risks that cannot be adequately expressed prior to the identification of a
specific business opportunity. There can be no assurance following
consummation of any acquisition or merger that the business venture will
develop into a going concern or, if the business is already operating, that it
will continue to operate successfully. Many of the potential business
opportunities available to the Registrant may involve new and untested
products, processes or market strategies which may not ultimately prove
successful.

Form of Potential Acquisition or Merger
- - - - - ---------------------------------------

Presently, the Registrant cannot predict the manner in which it might
participate in a prospective business opportunity. Each separate potential
opportunity will be reviewed and, upon the basis of that review, a suitable
legal structure or method of participation will be chosen. The particular
manner in which the Registrant participates in a specific business opportunity
will depend upon the nature of that opportunity, the respective needs and
<PAGE> 7

desires of the Registrant and management of the opportunity, and the relative
negotiating strength of the parties involved. Actual participation in a
business venture may take the form of an asset purchase, lease, joint venture,
license, partnership, stock purchase, reorganization, merger or consolidation.
The Registrant may act directly or indirectly through an interest in a
partnership, corporation, or other form of organization, however, the
Registrant does not intend to participate in opportunities through the
purchase of minority stock positions.

Because of the Registrant's inactive status and its concomitant lack of
assets or relevant operating history, it is likely that any potential merger
or acquisition with another operating business will require substantial
dilution of the Registrant's existing shareholders. There will probably be a
change in control of the Registrant, with the incoming owners of the targeted
merger or acquisition candidate taking over control of the Registrant.
Management has not established any guidelines as to the amount of control it
will offer to prospective business opportunity candidates, since this issue
will depend to a large degree on the economic strength and desirability of
each candidate, and corresponding relative bargaining power of the parties.
However, management will endeavor to negotiate the best possible terms for the
benefit of the Registrant's shareholders as the case arises.

Management does not have any plans to borrow funds to compensate any
persons, consultants, promoters, or affiliates in conjunction with its efforts
to find and acquire or merge with another business opportunity. Management
does not have any plans to borrow funds to pay compensation to any prospective
business opportunity, or shareholders, management, creditors, or other
potential parties to the acquisition or merger. In either case, it is
unlikely that the Registrant would be able to borrow significant funds for
such purposes from any conventional lending sources. In all probability, a
public sale of the Registrant's securities would also be unfeasible, and
management does not contemplate any form of new public offering at this time.

There are no arrangements, agreements or understandings between
nonmanagement shareholders and management under which nonmanagement
shareholders may directly or indirectly participate in or influence the
management of the Company's affairs. There are no arrangements, agreements or
understandings under which nonmanagement shareholders will exercise their
voting rights to continue to elect the current directors to the Company's
Board of Directors.

In the event of a successful acquisition or merger, a finder's fee, in
the form of cash or securities of the Registrant, may be paid to persons
instrumental in facilitating the transaction. The Registrant has not
established any criteria or limits for the determination of a finder's fee,
although most likely an appropriate finder's fee will be negotiated between
the parties, including the potential business opportunity candidate, based
upon economic considerations and reasonable value as estimated and mutually
agreed at that time. A finder's fee would only be payable upon completion of
the proposed acquisition or merger in the normal case, and management does not
contemplate any other arrangement at this time. Management has not actively
undertaken a search for, nor retention of, any finder's fee arrangement with
any person. It is possible that a potential merger or acquisition candidate
would have its own finder's fee arrangement, or other similar business
brokerage or investment banking arrangement, whereupon the terms may be
governed by a preexisting contract; in such case, the Registrant may be
limited in its ability to affect the terms of compensation, but most likely
the terms would be disclosed and subject to approval pursuant to submission of
the proposed transaction to a vote of the Registrant's shareholders.

<PAGE> 8

Management cannot predict any other terms of a finder's fee arrangement
at this time. It would be unlikely that a finder's fee payable to an
affiliate of the Registrant would be proposed because of the potential
conflict of interest issues. If such a fee arrangement was proposed,
independent management and directors would negotiate the best terms available
to the Registrant so as not to compromise the fiduciary duties of the
affiliate in the proposed transaction, and the Registrant would require that
the proposed arrangement would be submitted to the shareholders for prior
ratification in an appropriate manner.

Management does not contemplate that the Registrant would acquire or
merge with a business entity in which any affiliates of the Registrant have an
interest and no present potential for such a merger or acquisition exists.
Any such related party transaction, however remote, would be submitted for
approval by an independent quorum of the Board of Directors and the proposed
transaction would be submitted to the shareholders for prior ratification in
an appropriate manner. If such an opportunity arose, however, the Registrant
would not seek to obtain an independent appraisal of the value of the business
or company with which the related party transaction was contemplated. In that
circumstance, management's ability to effectively evaluate such a non-arms
length transaction might be compromised, and any remedy available to
dissenting shareholders in such a transaction would most likely be
prohibitively expensive and time consuming. None of the Registrant's
managers, directors, or other affiliated parties have had any contact,
discussions, or other understandings regarding any particular business
opportunity at this time, regardless of any potential conflict of interest
issues. Accordingly, the potential conflict of interest is merely a remote
theoretical possibility at this time.

Rights of Shareholders
- - - - - ----------------------

It is presently anticipated by management that prior to consummating a
possible acquisition or merger, the Registrant will seek to have the
transaction ratified by shareholders in the appropriate manner. Most likely,
this would require a general or special shareholder's meeting called for such
purpose. Section 16-10a-704 of the Utah Revised Business Corporation Act
provides that any action which may be taken at any annual or special meeting
of the shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action
so taken, shall be signed by the holder of the outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon
were present and voted.

However, a shareholder's meeting is normally the most expeditious
procedure, wherein all shareholder's would be entitled to vote in person or by
proxy. Because following the effective date of this registration statement
the Registrant will be subject to Section 14 of the Exchange Act, the
Registrant intends to send notice to the shareholders requesting their
approval of the terms of the proposed transaction. In the notice of such a
shareholder's meeting and related information or proxy statement, the
Registrant will provide shareholders disclosure documentation concerning the
potential acquisition of merger candidate, including financial statements and
business information about the target as required under Section 14.

The Registrant has been, and continues to look for a merger or
acquisition candidate and has had discussion with and is performing due
diligence on several different businesses or companies regarding the
<PAGE> 9

possibility of an acquisition or merger. However, at this time, the
Registrant is continuing to perform due diligence and none of the discussions
have resulted in a contract or agreement with any of such businesses or
companies. Should any of these discussions develop into more than an
evaluation of those business opportunities, so that a contract between the
parties defining the terms for the merger or acquisition is required, the
Registrant will seek to have the appropriate ratified of the contract by
shareholders as discussed above.

Competition
- - - - - -----------

Because the Registrant has not identified any potential acquisition or
merger candidate, it is unable to evaluate the type and extent of its likely
competition. The Registrant is aware that there are several other public
companies with only nominal assets that are also searching for operating
businesses and other business opportunities as potential acquisition or merger
candidates. The Registrant will be in direct competition with these other
public companies in its search for business opportunities and, due to the
Registrant's lack of funds, it may be difficult to successfully compete with
these other companies.

Employees
- - - - - ---------

As of the date hereof, the Registrant does not have any employees and has
no plans for retaining employees until such time as the Registrant's business
warrants the expense, or until the Registrant successfully acquires or merges
with an operating business. The Registrant may find it necessary to hire
part-time clerical help on an as-needed basis.

Facilities
- - - - - ----------

The Registrant is currently using as its principal place of business the
business office its President and Director located in Salt Lake City, Utah.
The cost of the utilization of the office space is provided free of charge to
the Company. Although the Registrant has no written agreement and pays no
rent for the use of this facility, it is contemplated that at such future time
as an acquisition or merger transaction may be completed, the Registrant will
secure commercial office space from which it will conduct its business. Until
such an acquisition or merger, the Registrant lacks any basis for determining
the kinds of office space or other facilities necessary for its future
business. The Registrant has no current plans to secure such commercial
office space. It is also possible that a merger or acquisition candidate
would have adequate existing facilities upon completion of such a transaction,
and the Registrant's principal offices may be transferred to such existing
facilities.

Year 2000 Computer Problem
- - - - - --------------------------

The Year 2000, or Y2K problem concerns potential failure of certain
computer software to correctly process information because of the software's
inability to calculate dates. The Registrant has no operations or current
equipment which might be affected by the Year 2000 computer glitch. The
Registrant will make every effort to determine the Y2K preparedness of any
potential merger or acquisition candidate.
<PAGE> 10

Item 2. Management's Discussion and Analysis or Plan of Operation

Overview
- - - - - --------

The Registrant is considered a development stage company with no assets,
working capital and or income since 1996. The costs and expenses associated
with the preparation and filing of this registration statement and other
operations of the Registrant have been provided by a director and affiliate of
a principal shareholder, specifically Elliott N. Taylor, who's law firm has
been issued shares of the Registrant's restricted common stock as compensation
for legal services (see Item 4, Security Ownership of Certain Beneficial
Owners and Management). It is anticipated that the Registrant will require
only nominal capital to maintain its corporate viability and necessary funds
will most likely be provided by the Registrant's existing shareholders and/or
its officers and directors in the immediate future.

In the event that the Registrant does need to raise additional capital,
it would most likely have to rely on the private sale of its securities or
loans from its officers and directors. There are no agreements or
understandings between the Registrant and its officers and directors or
affiliates or lending institutions with respect to making any such loans nor
has the Registrant identified the criteria that it may use in determining
whether to seek such loans. Any funds borrowed by the Registrant through any
loan source would not be utilized by the Registrant to make payments to the
Registrant's promoters, management, or their affiliates or associates, except
for the reimbursement of expenses paid on behalf of the Registrant, upon
presentation to the company of appropriate invoices or other documentation
evidencing such payments.

Any private sale of securities would be limited to persons exempt under
the Commission's Regulation D or other rule or provision for exemption, if any
applies. However, no private sales are contemplated by the Registrant's
management at this time, and, there are no plans, proposals, arrangements or
understandings with respect to the sale or issuances of additional securities
by the Company prior to the location of an acquisition or merger candidate.
If a private sale of the Registrant's securities is deemed appropriate in the
future, management will endeavor to acquire funds on the best terms available
to the Registrant. However, there can be no assurance that the Registrant
will be able to obtain additional funding when and if needed, or that such
funding, if available, can be obtained on terms reasonable or acceptable to
the Registrant.

The Registrant's officers and directors have loaned the Registrant funds
from time to time through the issuance of convertible debentures, which
debentures have all been converted into restricted common stock of the
Registrant. The Registrant has no other financing means in place and unless
the Registrant is able to facilitate significant outside financing, will
continue to remain substantial doubt about the Registrant's ability to
continue as a going concern.

In the opinion of management, inflation has not and will not have a
material effect on the operations of the Registrant until such time as the
Registrant successfully completes an acquisition or merger. At that time,
management will evaluate the possible effects of inflation on the Registrant
as it relates to its business and operations following a successful
acquisition or merger.

<PAGE> 11

Forward-Looking Statements
- - - - - --------------------------
This Form 10-SB includes "forward-looking statements". All statements,
other than statements of historical facts, included or incorporated by
reference in this Form 10-SB which address activities, events or developments
which the Company expects or anticipates will or may occur in the future,
including such things as future capital expenditures (including the amount and
nature thereof), business strategy, expansion and growth of the Company's
business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses
made by the Company in light of its experience and its perception of
historical trends, current conditions and expected future developments as well
as other factors it believes are appropriate in the circumstances. However,
whether actual results or developments will conform with the Company's
expectations and predictions is subject to a number of risks and
uncertainties, general economic market and business conditions; the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company; changes in laws or regulation; and other factors, most of which are
beyond the control of the Company. Consequently, all of the forward-looking
statements made in this Form 10-SB are qualified by these cautionary
statements and there can be no assurance that the actual results or
developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected consequence to or
effects on the Company or its business or operations.

Plan of Operation
- - - - - -----------------
During the next twelve months, the Registrant's officers and directors
will contact business brokers, consultants, and other business professionals
in an effort to actively seek out and investigate possible business
opportunities with the intent to acquire or merge with one or more business
ventures. In its search for business opportunities, management will follow the
procedures outlined in Item 1 above. Because the Registrant lacks funds, it
may be necessary for the officers and directors to either advance funds to the
Registrant or to accrue expenses until such time as a successful business
consolidation can be made. Management intends to hold expenses to a minimum
and to obtain services on a contingency basis when possible. The Registrant's
management will not receive compensation for services provided to the Company.
However, if the Registrant engages outside advisors or consultants in its
search for business opportunities, it may be necessary for the Registrant to
attempt to raise additional funds to pay for such services. As of the date
hereof, the Registrant has not made any arrangements or definitive agreements
to use outside advisors or consultants or to raise any capital.

In the event the Registrant does need to raise capital most likely the
only method available to the Registrant would be the private sale of its
securities or loans from management. It is unlikely that the Registrant could
make a public sale of securities or be able to borrow any significant sum from
either a commercial or private lender other than management. There can be no
assurance that the Registrant will be able to obtain additional funding when
and if needed, or that such funding, if available, can be obtained on terms
acceptable to the Registrant.

The Registrant does not intend to use any employees, with the possible
exception of part-time clerical assistance on an as-needed basis. Outside
advisors or consultants will be used only if they can be obtained for minimal

<PAGE> 12

cost or on a deferred payment basis. Management is confident that it will be
able to operate in this manner and to continue its search for business
opportunities during the next twelve months.

ITEM 3. Description of Property

The Registrant does not own or control any material property.

ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables sets forth the number of shares of the Registrant's
Common Stock, par value $0.01, held by each person who is believed to be
the beneficial owner of 5% or more of the 3,463,659 shares of the Registrant's
common stock outstanding at August 25, 1999, and the names and number of
shares held by each of the Registrant's officers and directors and by all
officers and directors as a group.

Title of Name and Address Amount and Nature of Percent
Class Of Beneficial Owner Beneficial Ownership(1) of Class
- - - - - -------- ------------------- --------------------- --------
Common Taylor and Associates, Inc. 332,000 Direct 9.59
3090 E. 3300 S., #400
Salt Lake City, UT 84109

Common Equity Asset Mgmt., LLC 1,476,436 Direct 42.63
3090 E. 3300 S. #400
Salt Lake City, UT 84109

Common Maven Properties, Ltd. 240,000 Direct 6.93
175 S. Main Street, #1240
Salt Lake City, UT 84111

Officers, Directors and Nominees
- - - - - --------------------------------
Common Frank Gillen, President
and Director 240,000 Indirect (2) 6.93

Common Elliott N. Taylor,
Secretary and Director 1,808,436 Indirect (3) 52.21
---------- ------
All Officers, Directors, and
Nominees as a Group (2 Persons) 2,084,436 Indirect 59.14
========== ======

(1) Unless otherwise indicated each person has sole investment and sole voting
power over the listed shares.

(2) Represents shares beneficially owned by Maven Properties, Ltd., of which
Mr. Gillen is the controlling principal.

(3) Represents shares beneficially owned by Taylor and Associates, Inc. and
Equity Asset Management, LLC, entities of which Mr. Taylor is the controlling
principal.

<PAGE>
<PAGE> 13

ITEM 5. Directors, Executive Officers, Promoters and Control Persons

The names of the Registrant's executive officers and directors and the
positions held by each of them are set forth below:

Name Position Since
- - - - - ---- -------- -----

Frank Gillen President and Director August 1999
Elliott N. Taylor Secretary/Treasurer and Director February 1998

The term of office of each director is one year and until his successor
is elected at the Registrant's annual shareholders' meeting and is qualified,
subject to removal by the shareholders. The term of office for each officer
is for one year and until a successor is elected at the annual meeting of the
board of directors and is qualified, subject to removal by the board of
directors.

There are no agreements or understandings for any officer or director to
resign at the request of another person and none of the officers and directors
are acting on behalf of or will act at the direction of another person. The
officers and directors of the Company are considered to be the only promoters
of the Company.

Biographical Information

Set forth below is certain biographical information with respect to each
of the Registrant's officers and directors.

Frank Gillen, age 30, is currently the president of Maven Properties, Ltd.
("Maven"), Salt Lake City, Utah, a business consulting firm. From 1991 to June
1999, Mr. Gillen was employed as a registered representative by Alpine
Securities Corporation ("Alpine"), Salt Lake City, Utah, a registered broker-
dealer. While at Alpine, Mr. Gillen headed several private placements and
public underwritings for companies. Mr. Gillen also acted as one of Alpine's
designated traders and covered market making activities for several public
companies. Mr. Gillen also serves as a director of Faraday Financial, Inc.,
Salt Lake City, Utah, a "shell" company with no operations.

Elliott N. Taylor, age 41, has been licensed to practice law in the state of
Utah since 1987. He has been the senior partner of Taylor and Associates,
Inc., a Salt Lake City law firm, since June 1993. During the course of his
practice Mr. Taylor has represent many public and private companies and he has
had substantial experience as either an officer and/or director of several
non-profit, private and public corporations.

<PAGE>
<PAGE> 14

ITEM 6. EXECUTIVE COMPENSATION

The Registrant has not had a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or directors.
Except as noted below, the Registrant has not paid any salaries or other
compensation to its officers or directors during the years ended June 30,
1999, 1998 and 1997. Further, the Registrant has not entered into an
employment agreement with any of its officers, directors or any other persons
and no such agreements are anticipated in the immediate future. It is intended
that the Registrant's current directors will not be compensated for services
provided to the Company until such time as an acquisition or merger can be
accomplished. As of the date hereof, no person has accrued any compensation
from the Registrant, other than converting funds advanced to the Company into
shares of Common Stock of the Company or accepting shares of the Common Stock
of the Company as reimbursement for funds advanced or expenses paid on behalf
of the Company.

The payment of compensation to officers and directors and/or the
repayment of loans to officers, directors, affiliates or lending institutions
will not be a condition that any target company must agree to as a terms for
completing an acquisition or merger.

The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Registrant's last three completed
fiscal years to the Registrant's principal executive officer(s) and any other
executive officers that received compensation in excess of $100,000 during
such period (as determined at June 30, 1999, the end of the Registrant's last
completed fiscal year):

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Other Restricted
Name and Annual Stock Options LTIP All other
Principal Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- - - - - ------------------ ---- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Elliott N. Taylor 1999 $ -0- -0- -0- -0- -0- -0- -0-
President 1998 $ -0- -0- -0- -0- -0- -0- -0-

Patricia D. Hamilton 1998 $ -0- -0- -0- -0- -0- -0- -0-
President 1997 $ -0- -0- -0- -0- -0- -0- -0-

Dennis Stettler 1997 $ -0- -0- -0- -0- -0- -0- -0-
President
</TABLE>

Options/SAR Grants in Last Fiscal Year

None.

Bonuses and Deferred Compensation

None.

Compensation Pursuant to Plans

None.
<PAGE> 15

Pension Table

Not Applicable.

Other Compensation

None.

ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Currently, the Registrant's President serves as an officer and director
of another "shell" entity that utilize the same business address as the
Registrant. The Registrant's president intends to continue such activities in
the future. If a specific business opportunity should become available,
conflicts of interest may arise in the selection between the Registrant and
the other venture. Since no policy has been formulated for the resolution of
such potential conflict, any conflict which arises will be settled on a case-
by-case basis, and there is no guarantee that such a conflict, unless
satisfactorily settled, will not result in the Registrant's inability to
participate in any particular venture. The Registrant will be heavily
dependent on its officers and directors for the successful implementation of
its business plan which is to seek out acquisition candidates. Officers and
directors are not required to devote any specified amount or percentage of
their business time to the Registrant's affairs, and to the extent that they
spend time, it will be only a minimum amount seeking out acquisition
candidates and performing necessary administrative paperwork. Management
anticipates that should an acceptable acquisition be completed, present
management will resign and new management will assume control.

In June 1997, the Registrant issued 125,000 shares to Taylor and
Associates, Inc., as payment for legal services provided to the Registrant in
connection with a private placement. At the time the services were provided,
Taylor and Associates, Inc. was not affiliated with the Registrant and the
shares were valued at $0.10 per share, the same as the offering price to the
purchasers in the offering.

Between October 1997 and June 1998 the Registrant sold $169,100 in
convertible debentures to Equity Asset Management, an existing shareholder and
entity controlled by Elliott N. Taylor, an affiliate of the Registrant. The
conversion rate at for the debentures was one share of the Registrant's common
stock for each $0.25 in face amount of the debenture. The conversion rate was
negotiated between the debenture holder and the then management of the
Registrant, prior to the debenture holder becoming an affiliate of the
Registrant. In June 1998, the debenture holder converted an aggregate of
$179,609 in principal and accrued interest under the debentures to 718,436
shares of the Registrant's restricted common stock.

In June 1998, the Registrant issued 100,251 shares of its restricted
common stock to former officers and directors of the Registrant as
compensation for services the individuals had provided to the Registrant prior
to the issuance. The issuance of the shares was valued at $0.250 per share
for a total value of $25,063. 72,751 shares of the 100,251 shares issued were
issued to Taylor and Associates, Inc., as payment for legal services provided
to the Registrant during the fiscal year.

<PAGE>
<PAGE> 16

On December 1, 1998, the Registrant sold the Sue Cille Apartments to
Hamilton in exchange for a promissory note in the face amount of $25,000, with
interest at 10% per annum. The note was payable in eight (8) quarterly
payment of $3,486.68 beginning March 1, 1999 and continuing until December 1,
2000. Thereafter, the Registrant assigned the promissory note to Taylor and
Associates in full and complete satisfaction for all fees due and payable to
it through December 31, 1998. Due to the relationship between Elliott Taylor,
the then president of the Registrant and Taylor and Associates, the terms of
this transaction cannot be deemed to be the result of arms-length
negotiations.

ITEM 8. DESCRIPTION OF SECURITIES

General
- - - - - -------

The Registrant is authorized to issue one hundred million (100,000,000)
shares of common stock, par value $0.01 per share (the "Common Stock"). There
are 3,463,659 shares of Common Stock issued and outstanding as of August 25,
1999.

The holders of Common Stock are entitled to one vote per share on each
matter submitted to a vote at any meeting of shareholders. Shares of Common
Stock do not carry cumulative voting rights and, therefore, a majority of the
shares of outstanding Common Stock will be able to elect the entire board of
directors and, if they do so, minority shareholders would not be able to elect
any persons to the board of directors. The Registrant's bylaws provide that a
majority of the issued and outstanding shares of the Registrant constitutes a
quorum for shareholders' meetings, except with respect to certain matters for
which a greater percentage quorum is required by statute or the bylaws.

Shareholders of the Registrant have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock is
not subject to redemption, call or assessment, and carries no subscription or
conversion rights. In the event of liquidation of the Registrant, the shares
of Common Stock are entitled to share equally in corporate assets after
satisfaction of all liabilities.

Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally
available for the payment of dividends. The Registrant seeks growth and
expansion of its business through the reinvestment of profits, if any, and
does not anticipate that it will pay dividends in the foreseeable future.

Penny Stock
- - - - - -----------

The Company's common stock is considered a "penny stock." The Securities
and Exchange Commission regulations generally define a penny stock to be an
equity security that has a market price of less than $5.00 per share, subject
to certain exceptions. Such exceptions include any equity security listed on
NASDAQ or national securities exchange and any equity security issued by an
issuer that has (i) net tangible assets of at least $2,000,000, if such issuer
has been in continuous operation for three years, (ii) net tangible assets of
at least $5,000,000, if such issuer has been in continuous operation for less
than three years, or (iii) average annual revenue of at least $6,000,000, if
such issuer has been in continuous operation for less than three years.

<PAGE> 17

Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risks associated therewith. The
impact of the regulations applicable to penny stocks on the Company's
securities is to reduce the market liquidity of the Company's securities by
limiting the ability of broker/dealers to trade the Company's securities and
the ability of purchasers of the Company's securities to sell their securities
in the secondary market. The low price of the Company's Common Stock also has
a negative effect on the amount and percentage of transaction costs paid by
individual shareholders and the potential ability of the Company to raise
additional capital by issuing additional shares. The primary reasons for
these effects include the internal policies of certain institutional investors
that prohibit the purchase of low-priced stocks, the fact that many brokerage
houses do not permit low-priced stocks to be used as collateral for margin
accounts or to be purchased on margin and certain brokerage house policies and
practices that tend to discourage individual brokers from dealing in low-
priced stocks.

In addition, since broker's commissions on low-priced stocks represent a
higher percentage of the stock price than commissions on higher pried stocks,
the current low share price of the Common Stock results in individual
shareholders paying transaction costs that are a higher percentage o their
total share value than would be the case if the Company's share price were
substantially higher.

PART II

ITEM 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters

Market Price of the Company's Common Stock and Dividends
- - - - - --------------------------------------------------------

The following table sets forth, for the respective periods indicated,
the prices of the Company's Common Stock in the over the counter market as
reported by a market maker on the NASD'S OTC Bulletin Board. Such over the
counter market quotations are based on inter-dealer bid prices, without
markup, markdown or commission, and may not necessarily represent actual
transactions. At August 25, 1999, the bid and ask quotations for the
Company's Common Stock as quoted on the OTC Bulletin Board were $0.38 and
$0.185 respectively.
Bid Quotation
-------------
Fiscal Year 1997 High Bid Low Bid
- - - - - ---------------- -------- -------

Quarter ended 9/30/96 N/A N/A
Quarter ended 12/31/96 N/A N/A
Quarter ended 3/31/97 N/A N/A
Quarter ended 6/30/97 N/A N/A

Fiscal Year 1998 High Bid Low Bid
- - - - - ---------------- -------- -------

Quarter ended 9/30/97 N/A N/A
Quarter ended 12/31/97 $0.75 $0.50
Quarter ended 3/31/98 $1.25 $1.00
Quarter ended 6/30/98 $1.25 $1.00

<PAGE> 18

Fiscal Year 1999 High Bid* Low Bid*
- - - - - ---------------- -------- -------

Quarter ended 9/30/98 $0.75 $0.50
Quarter ended 12/31/98 $0.50 $0.25
Quarter ended 3/31/99 $0.25 $0.125
Quarter ended 6/30/99 $0.25 $0.125

To the best knowledge of management of the Company, prior to November
1997, there was no reported bid or ask prices for the Company's Common Stock
and there was no trading of the Company's Common Stock during it fiscal years
ended June 30, 1997.

The number of shareholders of record of the Company's Common Stock as of
August 25, 1999, was approximately 1,895.

The Company has not paid any cash dividends to date and does not
anticipate paying dividends in the foreseeable future.

No member of management or any other shareholder of the Company has
executed or provided the Company with any type of "lock-up" letter relating to
or restricting their ability to sell their shares prior to such time as the
Company has successfully consummated a merger or acquisition and the Company
is no longer considered to be a "blank check" company.

OTCBB Eligibility Rules
- - - - - -----------------------

The Registrant's common stock is quoted on the NASD's OTC Bulletin Board
under the symbol "DIVU". Effective July 1, 1999, all companies that began
quotation on the OTCBB prior to January 4, 1999 are being reviewed to
determine compliance status with respect to the OTCBB's eligibility rules.
The Registrant's proposed phase in date as published under the NASD's Phase-in
schedule is November 1999. The NASD will begin its evaluation 60 calendar
days prior to the Registrant's scheduled phase-in date. To be compliant with
the NASD's eligibility rule, a company must be (1) registered with the SEC
under section 13 or 15(d) of the Exchange Act, and current in its required
filings. To be current, a company must have filed its latest required annual
filing and any subsequent quarterly filings. In the alternative, a company
may be deemed compliant, if it has filed a Form 10 or Form 10SB and has
cleared all comments by the SEC.

Companies that have filed with the SEC are given a grace period of 30
calendars. The grace period begins on the date the symbol change notification
appears on the OTCBB Daily List. If the NASD has no information that the
company is compliant, it will append the company's symbol with a fifth
character "E". Symbol changes will appear on the OTCBB Daily List and will be
reflected in the company's trading symbol 4 days from the date the notice
appears on the OTCBB Daily List.

For those companies that file with the SEC and are non-compliant with the
filing requirement, symbol changes will appear on the OTCBB Daily List 30
calendar days prior to the company's scheduled phase-in date. Once the NASD
has received notification that a delinquent issuer is compliant with the
filing requirements, the fifth character "E" will be removed from the
companies symbol. The symbol change will be completed two business days
following publication on the OTCBB Daily List.

<PAGE> 19

If the NASD has no information that the company is compliant, upon
expiration of the grace period (i.e., on the scheduled phase-in date), the
company's security will be removed from the OTCBB. Deletions will appear on
the OTCBB Daily List and will become effective 2 days from the date the notice
appears on the OTCBB Daily List.

The Registrant believes that its registration statement on Form 10SB has
been filed with the SEC in sufficient time avoid possible delisting from the
OTCBB, however, no assurance can be given that the Registrant can meet the
OTCBB eligibility requirements prior to the Registrant's phase-in date or the
expiration of the 30-day grace period immediately thereafter.

Blue Sky Considerations
- - - - - -----------------------

Any future transfer or resale of the Registrant's common stock in
secondary markets will be subject, in addition to Federal securities laws, to
the "Blue Sky" laws of each state in which such transfer or resale occurs.
Because the Registrant's business activities are considered to be those of a
"blank check, blind pool", "dormant" or "shell" company, it is possible that
shareholders of the Registrant residing in states the limit or prohibit the
use of exemptions for resale of securities of "blank check, blind pool",
"dormant" or "shell" companies may not be able to resell their shares of the
Registrant's common stock until such time as the Registrant has completed a
merger or acquisition and/or the appropriate resale exemption becomes
available. Certain states, including Connecticut, Idaho, Washington, Indiana,
Minnesota, Oregon, South Dakota, and Utah limit or prohibit the use of their
transactional exemption to "blind-pool, blank check", "dormant" or "shell"
companies. Therefore shareholders of the Registrant residing in those states
will be prohibited from reselling their shares until such time as an exemption
for resale is available or the shareholder is no longer subject to the laws of
the applicable jurisdiction. The Registrant's transfer agent has been
instructed to reject any transfers from those states, until the transfer agent
has been provided with an opinion of counsel that the shares have been
registered or that an appropriate exemption is available.

ITEM 2. LEGAL PROCEEDINGS

The Company is not a party to any pending legal proceedings and no such
action by or against it, to the best of its knowledge, has been threatened.

ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

The Registrant has not changed nor had any disagreements with its
independent certified accountants.

ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES

In October 1996, the Registrant sold 1,000,000 shares of restricted
common stock (pre 5-for-1 reverse split) to former controlling shareholders
for $10,000 cash. The shares were issued in reliance on the exemption from the
registration requirements provided by Section 4(2) of the Securities Act of
1933, as amended (the "Act").

In April 1997, the Registrant acquired all the shares of DG&M Common
Stock in exchanged for 3,000,000 shares of the Registrant's Common Stock to
the principal shareholders of DG&M. The shares were issued in reliance on the
exemption from the registration requirements provided by Section 4(2) of the

<PAGE> 20

Act. Each of the DG&M shareholders were provided with such information
necessary to establish that such shareholders were financially sophisticated
so as to be deemed "accredited investors" as that term is defined under
Section 2(a)(15)of the Act. Effective June 15, 1997, the acquisition
transaction with DG&M was rescinded and the 3,000,000 shares of the
Registrant's common stock issued to the DG&M shareholders were canceled and
returned to authorized but unissued shares.

In June 1997, the Registrant issued 1,625,000 shares to its than officers
and directors for services provided to the Registrant valued at $0.10 per
share. The shares were issued in reliance on the exemption from the
registration requirements provided by Section 4(2) of the Act. 125,000 shares
of the 1,625,000 shares were issued to Taylor and Associates, Inc., as payment
for legal services provided to the Registrant in connection with the offering
to accredited investors described below.

In May through June 1997, the Registrant sold 520,000 shares of its
restricted common stock to a limited number of accredited investors, all of
whom executed suitability and investment letters stating that they were
accredited investors, at an offering price of $0.10 per share for gross
offering proceeds of $52,000. The sale of shares was made pursuant to an
exemption from registration and the prospectus delivery requirements of the
Act set forth in Regulation D, Rule 506.

In June 1998, the Registrant issued 100,251 shares of its restricted
common stock to former officers and directors of the Registrant as
compensation for services the individuals had provided to the Registrant prior
to the issuance. The shares were issued in reliance on the exemption from
the registration requirements provided by Section 4(2) of the Act. The
issuance of the shares was valued at $0.250 per share for a total value of
$25,063. 72,751 shares of the 100,251 shares issued were issued to Taylor and
Associates, Inc., as payment for legal services provided to the Registrant
during the fiscal year.

Between October 1997 and June 1998 the Registrant sold $169,100 in
convertible debentures to Equity Asset Management, an existing shareholder and
entity controlled by Elliott N. Taylor, an affiliate of the Registrant. The
shares were issued in reliance on the exemption from the registration
requirements provided by Section 4(2) of the Act. The conversion rate at for
the debentures was one share of the Registrant's common stock for each $0.25
in face amount of the debenture. The conversion rate was negotiated between
the debenture holder and the Registrant, prior to the debenture holder
becoming an affiliate of the Registrant. In June 1998, the debenture holder
converted an aggregate of $179,609 in principal and accrued interest under the
debentures to 718,436 shares of the Registrant's restricted common stock.

Also, in June 1998, an unaffiliated note holder was issued 50,000 shares
of the Registrant's restricted common stock in settlement of a $25,000
promissory note between the note holder and the Registrant. The settlement
price of $0.50 per share was determined by arms-length negotiations between
the Registrant and the note holder. The shares were issued in reliance on the
exemption from the registration requirements provided by Section 4(2) of the
Act.

<PAGE>
<PAGE> 21

ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Sections 16-10a-901 through 909 of the Utah Revised Business Corporation Act
provides in relevant parts as follows:

(1) A corporation shall have power to indemnify any person 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 (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or on
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
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
reasonable cause to believe that his conduct was unlawful.

(2) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the feet that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only
to the extent that the court in which such action or suit was brought shall
determine on application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in 1) or (2) of this subsection, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.

(4) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
a person.
<PAGE> 22

The foregoing discussion of indemnification merely summarizes certain
aspects of indemnification provisions and is limited by reference to the above
discussed sections of the Utah Revised Business Corporation Act.

The Registrant's certificate of incorporation and bylaws provide that the
Registrant "may indemnify" to the full extent of its power to do so, all
directors, officers, employees, and/or agents. It is anticipated that the
Registrant will indemnify its officers and directors to the full extent
permitted by the above-quoted statute.

Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act may be permitted to officers and directors of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant
is aware that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

PART F/S

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's balance sheet as of June 30, 1999, and the related
statements of operations, stockholders' equity and cash flows for the years
ended June 30, 1999 and 1998 and from inception of the development stage on
November 1, 1996 through June 30, 1999, have been examined to the extent
indicated in their report by Jones, Jensen & Company, certified public
accountants, and have been prepared in accordance with generally accepted
accounting principles and are attached hereto and incorporated herein by this
reference.

<PAGE>
<PAGE> 23

Jones, Jensen & Company, LLC
Certified Public Accountants and Consultants
50 South Main Street, Suite 1450
Salt Lake City, Utah 84144
Telephone (801) 328-4408
Facsimile (801) 328-4461

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Diversified Industries, Inc.
(A Development Stage Company)
Salt Lake City, Utah

We have audited the accompanying balance sheet of Diversified Industries, Inc.
(a development stage company) as of June 30, 1999, and the related statements
of operations, stockholders' equity (deficit), and cash flows for the years
ended June 30, 1999 and 1998 and from inception of the development stage on
November 1, 1996 through June 30, 1999. 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 consolidated
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 Diversified Industries, Inc.
as of June 30, 1999, and the results of their operations and their cash flows
and for the years ended June 30, 1999 and 1998 and from inception of the
development stage on November 1, 1996 through June 30, 1999 in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 4 to the financial
statements, the Company's significant losses raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 4. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.

Jones, Jensen & Company
Salt Lake City, Utah
September 2, 1999
<PAGE>
<PAGE> 24
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Balance Sheet

ASSETS
June 30,
1999
----------
CURRENT ASSETS

Cash $ -
----------
Total Current Assets -
----------
TOTAL ASSETS $ -
==========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable $ -
----------
Total Current Liabilities -
----------
STOCKHOLDERS' EQUITY

Common stock, $0.01 par value, 100,000,000 shares
authorized, 3,463,659 shares issued and outstanding 34,637
Additional paid-in capital 1,061,294
Deficit accumulated prior to November 1, 1996 (654,259)
Deficit accumulated during the development stage
(from November 1, 1996) (441,672)
----------
Total Stockholders' Equity -
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -
==========

The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE> 25
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Operations

From
Inception of
Development
Stage on
For the Years Ended November 1,
June 30, 1996 Through
------------------------ June 30,
1999 1998 1999
----------- ----------- ------------
REVENUES $ - $ - $ -
----------- ----------- ------------
EXPENSES

Depreciation 725 1,305 2,030
General and administrative 24,400 180,097 402,852
----------- ----------- ------------
Total Expenses 28,125 181,402 404,882
----------- ----------- ------------
LOSS BEFORE OTHER INCOME (EXPENSE) (28,125) (181,402) (404,882)
----------- ----------- ------------
OTHER INCOME (EXPENSE)

Interest expense - (13,259) (13,259)
Loss on sale of asset (27,781) - (27,781)
Other income - 4,250 4,250
----------- ----------- ------------
LOSS BEFORE PROVISION FOR INCOME TAXES (27,781) (9,009) (36,790)
----------- ----------- ------------
INCOME TAX (EXPENSES) - - -
----------- ----------- ------------
NET LOSS $ (55,906) $ (190,411) $ (441,672)
=========== =========== ============

BASIC LOSS PER SHARE $ (0.02) $ (0.07)
=========== ===========

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 3,463,659 2,597,352
=========== ===========

The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE> 26
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity

<TABLE>
<CAPTION>
Additional Stock
Common Stock Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1996 (inception
of the development stage) 449,972 $ 4,500 $ 659,759 $ - $ (654,259)

Common stock issued for services
valued at $0.10 per share 1,625,000 16,250 146,250 - -

Common stock issued for cash at
$0.10 per share 520,000 5,200 46,800 (1,000) -

Stock offering costs - - (12,500) - -

Net loss from inception of the
development stage on November 1,
1996 through June 30, 1997 - - - - (195,355)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1997 2,594,972 25,950 840,309 (1,000) (849,614)

Cash received on stock subscription
receivable - - - 1,000 -

Common stock issued for services
valued at $0.25 per share 100,251 1,003 24,060 - -

Common stock issued for the
conversion of debentures at
$0.25 per share 718,436 7,184 172,425 - -

Common stock issued for the
conversion of a note payable
at $0.50 per share 50,000 500 24,500 - -

Net loss for the year ended
June 30, 1998 - - - - (190,411)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1998 3,463,659 34,637 1,061,294 - (1,040,025)

Net loss for the year ended
June 30, 1999 - - - - (55,906)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1999 3,463,659 $ 34,637 $ 1,061,294 $ - $ (1,095,931)
============ ============ ============ ============ ============

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE> 27
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Cash Flows

Net loss $ (55,906) $ (190,411) $ (441,672)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 725 1,305 2,030
Loss from sale of assets 27,781 - 27,781
Stock issued for services - 25,063 187,563
Changes in assets and liability accounts:
(Increase) decrease in prepaid - - 2,533
(Increase) decrease in other assets - - 5,867
(Increase) decrease in deposits - 2,430 -
(Increase) decrease in accounts payable (1,850) (920) -
(Increase) decrease in accrued expenses (1,500) 11,759 10,259
----------- ----------- ------------
Net Cash Used by Operating Activities (30,750) (150,774) (205,639)
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES

Sale of property 25,000 - 25,000
Purchase of property - (41,701) (54,811)
----------- ----------- ------------
Net Cash Provided (Used) by
Investing Activities 25,000 (41,701) (29,811)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES

Decrease in stock subscription
receivable - 1,000 -
Proceeds from issuance of common stock - - 52,000
Stock offering costs - - (12,500)
Proceeds from convertible debentures - 169,350 169,350
Proceeds from notes payable - 25,000 25,000
----------- ----------- ------------
Net Cash Provided by
Financing Activities $ - $ 195,350 $ 233,850
----------- ----------- ------------

The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE> 28
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)

From
Inception of
Development
Stage on
For the Years Ended November 1,
June 30, 1996 Through
------------------------ June 30,
1999 1998 1999
----------- ----------- ------------

NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ (5,750) $ 2,875 $ (1,600)

CASH AT BEGINNING OF YEAR 5,750 2,875 1,600
----------- ----------- ------------
CASH AT END OF YEAR $ - $ 5,750 $ -
=========== =========== ============

SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION

CASH PAID FOR:

Income taxes $ - $ - $ -
Interest $ 1,000 $ 1,500 $ 2,500

NON-CASH FINANCING ACTIVITIES:

Common stock issued for accrued
interest $ - $ 10,259 $ 10,259
Common stock issued for the
conversion of debentures $ - $ 169,350 $ 169,350
Common stock issued for the
conversion of a note payable $ - $ 25,000 $ 25,000
Common stock issued for services
rendered $ - $ 25,063 $ 187,563

The accompanying notes are an integral part of these financial statements.

<PAGE>
<PAGE> 29
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1999 and 1998

NOTES 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Organization

Diversified Industries, Inc. (the "Company") was incorporated under the laws
of the state of Utah on April 17, 1970 under the name Silver Exploration, Inc.
The Company was the operator of certain oil producing property in which
fractional interests were owned by the Company and others. In October 1996,
the Company discontinued its operations and entered into the development stage
effective November 1, 1996. The Company changed its name to Diversified
Industries, Inc. on October 15, 1996. The Company now intends to locate a
business opportunity with which to acquire or merge.

On April 11, 1997, the Company completed an Agreement and Plan of
Reorganization (Agreement) whereby Diversified Industries, Inc. issued
3,000,000 shares of its common stock in exchange for all of the outstanding
common stock of Diversified Glass and Mirror, Inc. Effective June 15, 1997,
the Agreement was terminated by both parties by rescinding and unwinding the
acquisition. As a result of the termination, the 3,000,000 shares were
returned to the Company and canceled.

b. Accounting Method

The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a June 30 year end.

c. Cash and Cash Equivalents

Cash equivalents include short-term, highly liquid investments with maturities
of three months or less at the time of acquisition.

d. Basic Loss Per Common Share

Basic loss per common share has been calculated based on the weighted average
number of common shares of common stock outstanding during the period.

e. Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

NOTES 2 - COMMON STOCK

On April 11, 1997, the Company effected a reverse stock split on a 1-for-5
basis. The accompanying financial statements have been retroactively restated
to reflect this stock split for all periods presented.

During the period ended June 30, 1997, the Company issued 1,625,000 shares of
its common stock in exchange for services rendered valued at $162,500 or $0.10
per share. The Company also issued 520,000 shares of its common stock as part

<PAGE> 30
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1999 and 1998

NOTE 2 - COMMON STOCK (Continued)

of an offering for $52,000 or $0.10 per share. Costs relating to this
offering amounted to $12,500.

During the year ended June 30, 1998, the Company issued 100,251 shares of its
common stock in exchange for services rendered valued at $25,063 or $0.25 per
share. In addition, the Company issued 718,436 shares of its common stock to
convert its debentures and accompanying accrued interest of $179,609.
Finally, the Company converted a $25,000 note payable into stock by issuing
50,000 shares of its common stock.

NOTE 3 - INCOME TAXES

Through June 30, 1999, the Company had net operating loss (NOL) carryforwards
of approximately $1,095,000. This NOL may be carried forward to offset
taxable income through the year 2014. No tax benefit has been reported in the
financial statements because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the potential tax
benefits of the net operating loss carryforwards are offset by a valuation
allowance of the same amount.

NOTE 4 - RELATED PARTY TRANSACTIONS

In June 1997, the Company issued 125,000 shares to Taylor and Associates,
Inc., as payment for legal services provided in connection with a private
placement. At the time the services were provided, Taylor and Associates,
Inc. was not affiliated with the Company and the shares were valued at $0.10
per share, the same as the offering price to the purchasers in the offering.

Between October 1997 and June 1998 the Company sold $169,100 in convertible
debentures to Equity Asset Management, an existing shareholder and entity
controlled by Elliott N. Taylor, an affiliate of the Company. The conversion
rate at for the debentures was one share of the Company's common stock for
each $0.25 in face amount of the debenture. The conversion rate was
negotiated between the debenture holder and the then management of the
Company, prior to the debenture holder becoming an affiliate of the Company.
In June 1998, the debenture holder converted an aggregate of $179,609 in
principal and accrued interest under the debentures to 718,436 shares of the
Company's restricted common stock.

In June 1998, the Company issued 100,251 shares of its restricted common stock
to former officers and directors of the Company as compensation for services.
The issuance of the shares was valued at $0.25 per share for a total value of
$25,063. 72,751 shares of the 100,251 shares issued were issued to Taylor and
Associates, Inc., as payment for legal services provided during the fiscal
year.

On December 1, 1998, the Company sold the Sue Cille Apartments to an
individual in exchange for a promissory note in the face amount of $25,000,
with interest at 10% per annum. Thereafter, the Company assigned the
promissory note to Taylor and Associates in full and complete satisfaction for
all fees due and payable through December 31, 1998. Due to the relationship
between Elliott Taylor, the then president of the Company and Taylor and
<PAGE> 31
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1999 and 1998

NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)

Associates, the terms of this transaction cannot be deemed to be the result of
arms-length negotiations.

NOTE 5 - GOING CONCERN

The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not significant cash or other material
assets, nor does it have an established source of revenues sufficient to cover
its operating costs and to allow it to continue as a going concern. Management
believes that the Company will need nominal working capital to maintain its
corporate viability. In the event the Company needs to raise additional
working capital the Company would most likely have to sell its securities or
obtain loans from its officers and directors until such time as the Company
successfully completes an acquisition or merger of an ongoing business
operation.

<PAGE>
<PAGE> 32
PART III

ITEM 1. INDEX TO EXHIBITS

Copies of the following documents are included as exhibits to this Form
10SB pursuant to Item 601 of Regulation SB.

Exhibit No. SEC Ref. No. Title of Document
- - - - - ----------- ------------ -----------------
3(i) 3.01 Articles of Incorporation and Amendments thereto

3(ii) 3.02 Bylaws

4 4.01 Specimen Stock Certificate

10 10.01 Assignment of Promissory Note, Promissory Note,
Irrevocable Agreement for the Sale and Purchase
of Real Property

27 27 Financial Data Schedule

ITEM 2. SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

DIVERSIFIED INDUSTRIES, INC.
[Registrant]

Dated: September 3, 1999 By:/S/Frank Gillen, President and
Director

<PAGE> 1
Exhibit No. 3.01 - Articles of Incorporation and Amendments

DIVERSIFIED INDUSTRIES, INC.
(A Utah Corporation)
CORPORATE INFORMATION STATEMENT

O7-01-119 (REV. 2/77)
STATE OF UTAH
EXECUTIVE DEPARTMENT

I, DAVID S. MONSON, LT GOVERNOR/SECRETARY OF STATE OF THE STATE OF UTAH, DO
HEREBY CERTIFY THAT the attached is a full, true and correct copy of the
Articles of Incorporation of SILVER EXPLORATION, INC. and all amendments
thereto filed with this office on April 17, 1970.

AS APPEARS OF RECORD IN MY OFFICE.

File# 051925

IN WITNESS WHEREOF, I have
hereunto set my hand and affixed the
Great Seal of the State of Utah at Salt
Lake City, this 3rd day of
May A.D. 1982.

<PAGE> 2

ARTICLES OF INCORPORATION
OF
SILVER EXPLORATION, INC.

We, the undersigned natural persons of the age of twenty one years or
more, acting as incorporators of a corporation under the Utah Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation:

FIRST

The name of the corporation is: SILVER EXPLORATION, INC.

SECOND

This corporation shall exist in perpetuity unless it is otherwise
terminated by law, or by the voluntary action of the stockholders.

THIRD
The purpose or purposes which the corporation is ,authorized to pursue
are:

(a) To explore for minerals, metals and ores of all kinds in any state,
territory of country and to mine and mill all such minerals, metals and ores.

(b) To purchase or otherwise acquire, hold, manage, operate, sell or
otherwise dispose of any mineral lands or the products thereof in any state,
territory or country.

(c) To do all other things in any way related to the general business
of exploring for, developing and mining any mineral lands and the products
thereof.

(d) To own, buy, sell, borrow, pledge, hypothecate, mortgage, deal in,
manufacture, distribute, wholesale. retail, improve, develop and market all
kinds of property both real and personal.

(e) To own real and personal property and to buy, sell, rent, lease and
otherwise dispose of the same as necessary or convenient to the carrying on of
said business.

(f) To borrow and loan money and to make and give notes and evidences
of indebtedness, and to secure the same by mortgaging its property or
otherwise, and to receive notes and mortgages both real and personal to secure
claims owing to it or otherwise.

(g) To enter into joint ventures with any other corporations,
associations, co-partnerships, persons or trustees for engaging in, holding or
financing any business.

(i) To exercise all other powers given to corporations by the Utah
Business Corporation Act.
<PAGE> 3

FOURTH

The aggregate number of shares which the corporation shall have authority
to issue is Ten Trillion (10,000,000) shares of common stock of a par value of
ONE CENT ($0.01) per share.

FIFTH

This corporation shall not commence business until consideration of the
value of at least $1,000.00 has been received by the Corporation for the
issuance of shares.

SIXTH

The holders of the common stock shall be entitled to purchase ratably,
according to their respective holdings, any shares of common stock of the
corporation issued or sold for cash.

SEVENTH

Provisions of the Articles of Incorporation for the regulation of the
internal affairs of the corporation are:

(a) The general management of this corporation shall rest with the
Board of Directors and such Board of Directors shall consist of not less than
three in number. Tile Board of Directors is, and shall be, authorized to
transact the business and exercise the corporate powers of the corporation.

To be qualified, a Director need not have standing in his own name upon
the books of the corporation, any shares of capital stock.

In furtherance and not in limitation of the powers conferred by Statute,
the Board of Directors is expressly authorized:

To make alter amend and/or repeal the By-Laws of the corporation.

To authorize and cause to be executed mortgages and liens upon the real
and personal property of the corporation.

To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.

By resolution passed by a majority of the whole Board to designate one or
more committees, such committees to consist of two or more of the directors of
the corporation, which,, to the extent provided in the resolution or in the
By-Laws of the corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business affairs of the
corporation, any may authorize the seal of the corporation to be affixed to
all papers which may require it. Such committee or committees shall have such
name or names as may be stated in the By-Laws of the corporation or as may be
determined from time to time by resolution adopted by the Board of Directors.

When and as authorized by tile affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, or when authorized by the

<PAGE> 4

written consent of the holders of a majority of the voting stock issued and
outstanding, to sell, lease, or exchange all of tile property and assets of
the corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may be in whole or
in part shares of stock in, and/or other securities of, any other corporation
or corporations, as its Board of Directors shall deem expedient and for the
best interests of the corporation.

(b) Meetings of the Board of Directors, for the transaction of any
business of the corporation, may be held at its principal place of business in
the State of Utah, or at such other places outside of this state or elsewhere
within the State, other than its principal place of business, as the Directors
may, by Resolution or By-Laws determine.

The Board of Directors may establish stated meetings, to be held in
Ogden, Utah, Or elsewhere, at such times and at, such places as it may
determine, and after due notice to each member of the Board of Directors, of
the establishment of the time and place of such stated meetings, no further
notice need be given of such meetings.

Two-thirds of the members of the Board of Directors shall constitute a
quorum, and such quorum, by majority vote, is authorized to transact the
business and exercise the corporate powers of the corporation.

A resolution in writing and signed by all of the members of the Board of
Directors shall be and constitute action by the Board of Directors to the
effect, therein expressed, with the same force and effect as though such
Resolution had been adopted at a duly convened meeting, and it shall be the
duty of the Secretary to record each such Resolution in the minutes of the
Incorporation under the proper date.

(c) Meetings of stockholders may be held outside the State of Utah, if
the By-Laws so provide. The books of the corporation may be kept outside the
State of Utah at such place or places as may be designated from time to time
by the Board of Directors or in the By-Laws of the corporation.

Elections of directors need not be by ballot unless the By-Laws of the
corporation so provide. Additional directors may be elected by the
shareholders.

At least a majority of the outstanding shares of capital stock of the
corporation entitled to vote represented in person or by proxy shall
constitute a quorum at a meeting of shareholders. Such quorum, by majority
vote, is authorized to transact the business and exercise the powers herein
reserved to and ordinarily exercised by shareholders.

(d) The corporation, by resolution of its Board of Directors, shall
have the right to purchase and own its own shares ,of stock.

(e) The private property of the stockholders shall not be subject to
the payment of the corporate debts to any extent whatsoever.

(f) The corporation may enter into any kind of contract or agreement,
cooperative, or profit-sharing plan, with its officers or employees, that the
directors may deem advantageous or expedient, or otherwise, to reward or pay
persons for their services, as tile directors may deem fit.

(g) The Board of Directors of the corporation may from time to time

<PAGE> 5

declare, and the corporation may pay dividends oil its outstanding shares in
cash, property or its own shares.

(h) No contract or transaction entered into by the corporation shall be
affected by the fact that a director or officer of the corporation was
personally interested in it, if at the meeting of the Board of Directors,
making, authorizing or confirming such contract or transaction, the interested
director discloses his interest therein and such contract or transaction is
adopted or ratified by a majority of the quorum of directors present.

(i) A memorandum in writing unanimously agreed to and signed by the
owners of all of the issued and outstanding shares of stock of the corporation
shall be and constitute action by the shareholders to the effect therein
expressed with the same force and effect as though such matter had been
adopted at a duly convened annual or special meeting of the shareholders. It
shall be the duty of the secretary of the corporation to record such
memorandum in the minutes of the corporation under the proper date the same as
if the matter had been effected at a meeting of the shareholders.

EIGHT

The place of the general business of this corporation shall be at Ogden,
County of Weber, State of Utah, and branch places of business may be
established at other places in the State of Utah or elsewhere in this or any
other county as the directors may from time to time provide.

The address of the corporation's initial registered office is 3040
Washington Blvd., Ogden, Utah, and the name of the corporation's initial
registered agent at that address is Dennis R. Stettler.

NINTH

The initial Board of Directors of the corporation shall consist of three
persons whose Frames and addresses are as follows, and who shall serve until
the first annual meeting of shareholders, or until their successors shall be
elected and qualified:

Robert G. Johnson, 1066 Edgewood Drive, Ogden, Utah
Dennis R. Stettler, 890 Wood Street, Ogden, Utah
Thomas F. Miller,, Box 267, Oakley, Idaho

TENTH

The name and address of each incorporator is as follows:

Robert G. Johnson, 1066 Edgewood Drive Ogden, Utah
Dennis R. Stettlerl 890 Wood Street, Ogden, Utah
E. Phyllis Johnson, 1066 Edgewood Drive, Ogd;.@n, Utah

DATED: April 2, 1970.

//signature/Robert G. Johnson
//signature/Dennis R. Stettler
//signature/E. Phyllis Johnson

<PAGE> 6

STATE OF UTAH )
: SS.
COUNTY OF WEBER )

I, ____________________ a Notary Public hereby certify THAT on the ____ day of
April, 1970 personally appeared before me ROBERT G. JOHNSON, DENNIS R.
STETTLER and E. PHYLLIS JOHNSON who being by me first duly sworn severally
declared that they are the persons who signed the foregoing document as
incorporators, and that the statements herein contained are true.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this ______ day of
April, 1970.

Notary Public
Residing in Ogden, Utah

My Commission Expires:
May 24, 1972

<PAGE>
<PAGE> 7
ARTICLES OF AMENDMENT
OF
SILVER EXPLORATION, INC.

Pursuant to the provisions-of Section 16-10-57 of the Utah Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:

On the 18th day of May, 1970, a meeting of the shareholders of Silver
Exploration, Inc., was held. At this meeting, and after the giving of notice
that such would be considered, an amendment to the Articles of Incorporation was
considered and adopted by the shareholders.

Paragraph Fourth of the Articles of Incorporation was amended by increasing
the number of authorized shares of stock from ten million to twenty-five million
shares having a par value of one cent per share. Paragraph Fourth, its amended,
now reads as follows:

FOURTH

The aggregate number of shares which the corporation shall have authority
to issue is Twenty-five Million (25,000,000) shares of common stock of a par
value of ONE CENT ($0.01) per share.

On the date of the meeting of shareholders and the consideration of this
proposed amendment there were 2,000 shares of common stock outstanding. All of
these outstanding shares of common stock were entitled to vote on the proposed
amendment to the Articles of Incorporation.

2,000 Number of shares outstanding.

2,000 Number of shares represented at the meeting, either in person or by
proxy.

2,000 Number of shares voted in favor of the proposed amendment.

0 Number of shares voted against the proposed amendment.

SIGNED AND DATED this 18th day of May, 1970.

//signature/President
//signature/Secretaty

STATE OF UTAH )
: SS.
COUNTY OF SALT LAKE )

I, Philip C. Pugsley, a Notary Public, hereby certify that on the 18th day
of May, 1970, personally appeared before me Robert C. Johnson, who being by me
first duly sworn, declared that he is one of the persons who signed the
foregoing document and that the statements therein contained are true.

IN WITNESS WHEREOF, I have hereunto set my hand and seal this 18th day of
May, 1970.

Notary Public
Residing in Salt Lake County,
State of Utah
My Commission Expires: May 24, 1972
<PAGE> 8
ARTICLES OF AMENDMENT
FOR SILVER EXPLORATION, INC.

Pursuant to the provisions of Section 16-10-57 of the Utah Revised Business
Corporation Act, the undersigned, corporation adopts the following Articles of
Amendment to its Articles of Incorporation and any previous amendments thereto:

On the 15th day of October, 1996, a meeting of the shareholders of Silver
Exploration, Inc., was held. At this meeting, and after giving notice that such
would be considered, an amendment to the Articles of Incorporation was
considered and adopted by the Shareholders as follows:

(a) That the name of the Corporation shall be changed from Silver
Exploration, Inc., to Diversified Industries, Inc.

(b) Paragraph Fourth of the Articles of Incorporation and subsequent
Articles of Amendment were further amended by increasing the number of
authorized share of stock from twenty five million (5,000,000) to one hundred
million (l00,000,000) shares having a par value of one cent (.01) per share.
Paragraph "Fourth" as now Amended, reads as follows:

FOURTH

The aggregate number of share which the Corporation shall have authority to
issue is one hundred million (l00,000,000) shares of common stock of par value
of one cent (.01) per share.

On the date of the meeting of Shareholders and the consideration of this
proposed amendment there were 24,992,831 shares of common stock outstanding.
All of these outstanding shares of common stock were entitled to vote on the
proposed amendment to the Articles of Incorporation and previous Articles of
Amendment.

24,992,831 Number of shares outstanding.

15,978,551 Number of shares represented at the meeting, either in person or
by proxy.

15,804,131 Number of shares voting FOR the proposed Amendments:

15,969,851 a. To change the name of the Corporation from Silver Exploration,
Inc. to Diversified Industries, Inc.

15,932,301 b. To increase the number of authorized shares of stock from
25,000,000 to 100,000,000 State of having a par value of one cent
(.0l) per share.

SIGNED AND DATED this, 15th day of October 1996.

//signature/President
//signature/Secretary

<PAGE> 1
Exhibit 3.02
BYLAWS
OF
SILVER EXPLORATION, INC.

ARTICLE I
OFFICES
-------
Section I. Offices
- - - - - ------------------
The principal office of the Corporation shall be at 3040 Washington,
Blvd., Ogden, Weber County, State of Utah. The Corporation may have. such
other offices within or without the State of Utah as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.

ARTICLE II.
STOCKHOLDERS' MEETINGS
----------------------
Section 1. Place
- - - - - ----------------
The place of stockholders' meetings shall be the principal office of the
Corporation unless some other place either within or without the State Utah
shall be determined and designated from time to time by the Board of
Directors.

Section 2. Annual Meeting
- - - - - -------------------------
The annual meeting of the stockholders of the Corporation for the
election of directors to succeed those whose terms expire, and for the
transaction of such other business as may properly come before the meeting
shall be held each year on the third Tuesday in June, beginning in the year
1972. If the annual meeting of the, stockholders be not held, or if held and
directors shall not have been elected for any reason, then the election of
directors may be held at any meeting of stockholders thereafter called
pursuant to these Bylaws and the laws of Utah.

Section 3. Special Meetings
- - - - - ---------------------------
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of thirty
percent (30%) or more of all the shares entitled to vote at such meeting, by
the. giving of notice in writing as hereinafter described.

Section 4: Voting
- - - - - -----------------
At all meetings of stockholders, voting may be by voice vote; but any
qualified voter may demand a stock vote, whereupon such vote shall be taken by
ballot and the Secretary shall record the name of the stockholder voting, the
number of shares voted, and if such vote, shall be by proxy, the name of the
proxy holder. Voting may be in person or by proxy appointed in writing,
manually signed by the stockholder or his duly authorized attorney-in-fact.
No proxy shall be. valid after eleven (11) months from the date of its
execution, unless otherwise provided therein.

Each stockholder shall have such rights to vote as the Articles of
Incorporation provide for each share of stock registered in his name on the
books of the Corporation, except where the transfer books of the Corporation
shall have been closed or a date shall have been fixed as a record date not to

<PAGE> 2

exceed, in any case, fifty (50) days preceding the meeting, for the
determination of stockholders entitled to vote. The Secretary of the
Corporation shall make, at least five (5) 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 period of
five (5) days prior to such meeting, shall be kept on file at the principal
office of the Corporation and shall be subject to inspection by any
stockholder at any time during ususal business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole time of the
meeting. Cumulative voting is denied.

Section 5. Order of Business
- - - - - ----------------------------
The order of business at any meeting of stockholders shall be as follows:

1. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and
the existence or lack of a quorum.
5. Reading of minutes of last previous meetings and disposal of any
unapproved minutes.
6. Reports of officers.
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10. New business.
11. Adjournment.
12. To the extent that these By-Laws do not apply, Roberts' Rules of
Order shall prevail.

Section 6. Notice
- - - - - -----------------
Written or printed notice stating the place, day, and hour 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) nor more than
fifty (50) days before the date of the meeting, either personally or by mail,
by or at the direction of the President, the Secretary, or the officer or
persons calling the meeting, to each stockholder of record entitled to vote at
such meeting, except that if the authorized capital stock is to be increased,
at least thirty (30) days' notice shall be given. If mailed, such notice
shall be, given to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the, stock
transfer books of the Corporation, with postage thereon prepaid.

Section 7. Quorum
- - - - - -----------------
A Quorum at any annual or special meeting shall consist of the represen-

tation in person or by proxy of twenty-five, per cent (25%) in number of
shares of the outstanding capital stock of the Corporation entitled to vote at
such meeting. A majority of those shares present and voting at any such
meeting shall constitute an act of the shareholders. In the event a quorum be
not present, the, meeting may be adjourned by those present for a period not
to exceed ninety (90) days at any one adjournment and no further notice, of
the meeting or its adjournment shall be required.

<PAGE> 3

Section 8. Action by Shareholders Without a Meeting
- - - - - ---------------------------------------------------
Any action required to be or which may be taken at a meeting of the
shareholders of the Corporation may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.

ARTICLE III.
BOARD OF DIRECTORS

Section 1. Organization and Powers
- - - - - ----------------------------------
The Board of Directors shall constitute the policy-making or legislative
authority of the Corporation. Management of all the affairs, property, and
business of the Corporation shall be vested in the Board of Directors, which
shall consist of not less than three (3) nor more than nine (9) members, who
shall be elected at the annual meeting of stockholders by a plurality vote for
a term of one (1) year, and shall hold office, until their successors are
elected and qualified. Directors need not be stockholders. Directors shall
have all powers with respect to the management, control, and determination of
policies of the Corporation that are not limited by these By-Laws, the
Articles of Incorporation, or the statues of the State of Utah, and the
enumeration of any power shall not be considered a limitation thereof.

Section 2. Vacancies
- - - - - --------------------
Any vacancy in the Board of Directors, however caused or created, shall
be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board The directors so elected to fill
vacancies shall hold office for the unexpired term and until their successors
are elected and qualified.

Section 3. Regular Meetings
- - - - - ---------------------------
A regular meeting of the Board of Directors shall be held, without other
notice than this Bylaw, immediately after and at the same, place as the annual
meeting of stockholders or any special meeting of stockholders at which a
director or directors shall have, been elected. The Board of Directors may
provide by resolution the time and place, either within or without the State
of Utah, for the holding of additional, regular meetings without other notice
than such resolution.

Section 4. Special Meetings
- - - - - ---------------------------
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution
of the Board of Directors for such purpose, at any time on call of the
President or of any other member of the Board, or may be held at any time and
place without notice, by unanimous written consent of all the members, or with
the presence and participation of all members at such meeting. A resolution
in writing signed by all the directors shall be as valid and effectual as if
it had been passed at a meeting of the directors duly called, constituted and
held.

Section 5. Notices
- - - - - ------------------
Notices of both regular and special meetings, save when held by
unanimous consent or participation, shall be mailed by the. Secretary to each

<PAGE> 4

member of the Board not less than two (3) days before any such meeting and
notices of special meetings may state the purposes thereof. No failure or
irregularity of notice of any regular meeting shall invalidate such meeting or
any proceeding thereat.

Section 6. Quorum and Manner of Acting
- - - - - --------------------------------------
A quorum for any meeting of the Board of Directors shall be a majority of
the Board of Directors as them constituted Any act of the majority of
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors as then constituted. Any action of such majority,
although not at a regularly called meeting, and the record thereof, if
assented to in writing by all of the other members of the Board, shall always
be as valid and effective in all respects as if otherwise duly taken by the
Board of Directors.

Section 7. Executive Committee
- - - - - ------------------------------
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee,
which committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of
the Corporation; but the designation of such committee, and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.

Section 9. Order of Business
- - - - - ----------------------------
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meting by the Board, shall be
as follows:

1. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these Bylaws do not apply, Roberts' Rules of
Order shall prevail.

Section 10. Remuneration
- - - - - -------------------------
No stated salary shall be paid to directors for their services as such,
but, by resolution of the Board of Directors, a fixed sum and Expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board. Members of special or standing committees may be
allowed like compensation for attending meetings. Nothing herein contained
shall be construed to preclude any director from receiving compensation for
serving the Corporation in any other capacity, subject to such resolutions of
the Board of Directors as may then govern receipt of such compensation.

ARTICLE IV
OFFICERS

Section 1. Titles
- - - - - -----------------
The officers of the Corporation shall consist of a President, one or more
Vice-Presidents, a Secretary, and a Treasurer, the last two of which offices

<PAGE> 5

may be combined and held by one person, who shall be elected for one (1) year
by the directors at their first meting following the annual meeting of
stockholders. Such officers shall hold office until their successors are
elected and qualified. The Board of Directors may appoint one of the members
of the Board of Directors or an outside individual as Chairman of the Board
and from tire to time such subordinate officers as it deems desirable.
Subordinate officers shall serve during such terms as may be fixed by the
Board, and such offices may be terminated at any time by the Board at a duly
held meeting. Any Director, except the President, may hold any two (2)
offices simultaneously.

Section 2. President
- - - - - --------------------
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of
the directors. He shall be generally vested with the power of the chief
executive officer of the Corporation and shall countersign all certificates,
contracts, and other instruments of the Corporation as authorized by the Board
of Directors or required by law. He shall make reports to the, Board of
Directors and stockholders and shall perform such other duties and services as
may be required of him from time to time by the Board of Directors.

Section 3. Vice-president
- - - - - -------------------------
The Vice-President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties
and shall have such other duties as the Board of Directors shall authorize or
direct.

Section 4. Secretary
- - - - - --------------------
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account, together with the corporate seal. He
shall make such reports and perform such other duties as may be consistent
with his office or as may be required of him from time to time by the, Board
of Directors.

Section 5. Treasurer
- - - - - --------------------
The Treasurer shall have custody of all monies and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all monies, securities, and other valuable effects of the
Corporation in such banks and depositories as the Board of Directors may
designated and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may he
required of him by the President or the Board of Directors from time to time
and shall otherwise perform such duties as may be required of him by the Board
of Directors.

The Board of Directors may require the Treasurer to give a bond,
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall either be a corporate
bond or may be a personal bond and shall be in such amount as appropriate
resolution or resolutions of the Board of Directors may require.
<PAGE> 6

Section 6. Appointment of Assistant Secretary
- - - - - ---------------------------------------------
The Board shall have the power to appoint an Assistant Secretary who
shall be empowered to sign for the Secretary and to obligate the Corporation
in accordance with an appropriate resolution or resolutions of the Board of
Directors.

Section 7. Vacancies or Absences
- - - - - --------------------------------
If a vacancy in any office arises in any manner, the directors then in
office may choose, by a majority vote, a successor to hold office for the
unexpired term of the officer. If any officer shall be absent or unable for
any reason to perform his duties, the Board of Directors, to the extent not
otherwise inconsistent with these. Bylaws, may direct that the duties of such
officer during such absence or inability shall be performed by such other
officer or subordinate officer as seems advisable to the Board.

Section 8. Compensation
- - - - - -----------------------
No officer shall receive any salary or compensation for his services
unless and until the Board of Directors authorizes and fixes the amount and
terms of such salary or compensation.

ARTICLE V
STOCK

Section 1. Certificate of Shares
- - - - - --------------------------------
Each holder of stock of the Corporation shall be entitled to a stock
certificate signed by the President or Vice-President and also by the
Secretary or an assistant secretary of the Corporation. The certificates of
shares shall be in such form, not inconsistent with the Certificate of
Incorporation or Articles of Incorporation, as shall be prepared or approved
by the Board of Directors. All certificates shall be consecutively numbered.
Each certificate shall state upon its face that the Corporation is organized
under the laws of this state; the name of the person to whom issued; the
number and class of shares; and the designation of the series, if any, which
such certificate represents; the par value of each share represented by the
certificate, or a statement that the shares are, without par value. The name
of the person owning the shares represented thereby, with the number of such
shares and the date of issue, shall be entered on the Corporation's books, and
no certificate shall be valid unless it be signed by the President or Vice
President and by the Secretary or an assistant secretary of the Corporation.
The seal of the Corporation affixed to stock certificates may be, a facsimile.
The signatures of officers as above described on any such certificate may be a
facsimile if the certificate is countersigned by a transfer agent, or
registered by a registrar, other than the Corporation itself or an employee of
the Corporation.

Section 2. New Certificates
- - - - - ---------------------------
All certificates surrendered to the Corporation shall be canceled and no
new certificate shall be issued, except to evidence transfer of stock from the
unissued stock or treasury of the Corporation, or, in the case of a lost
certificate, except upon posting a bond of indemnity in such form and with
such surety or sureties and for such amount as shall be satisfactory to the,
directors and upon producing by affidavit or otherwise such evidence of loss
or destruction as the Board may require, until the former certificates for the
same number of shares have been surrendered and canceled.

<PAGE> 7

Section 3. Transfer of Shares
- - - - - -----------------------------
Shares in the capital stock of the Corporation shall be transferred only
on the books of the Corporation by the holder thereof in person, or by his
attorney, upon surrender and cancellation of certificates for a like number of
shares. The delivery of a certificate of stock of this Corporation to a bona
fide purchased or pledgee for value, together with a written transfer of the
same or a written power of attorney to sell, assign, and transfer the same,
signed by the owner of the certificate, shall be a sufficient delivery to
transfer the title against all persons except the Corporation. No transfer of
stock shall be, valid against the Corporation until it shall have been
registered upon the books of the Corporation.

Section 4. Closing of Transfer Books or Provisions for Record Date
- - - - - ------------------------------------------------------------------
The stock transfer books may be closed by the Board of Directors for a
period not exceeding fifty (50) days prior to any meeting of the stockholders
or prior to the payment of dividends; or the Board of Directors may fix in
advance a day not more than fifty (50) days prior to the holding of any such
meeting of stockholders or payment of dividends as the day as of which
stockholders entitled to notice of and to vote at such meeting or to payment
of dividends, as the case may be, shall be determined; and only stockholders
of record on such day shall be entitled to notice or to vote at such meeting,
or to receive dividends, as the case may be.

Section 5. Regulations
- - - - - ----------------------
The Board of Directors shall have power and authority to make all such
rules and regulations as they deem expedient concerning the issue, transfer,
and registration of certificates for shares of the capital stock of the
Corporation. The Board of Directors may appoint a Transfer Agent and a
Registrar and may require all stock certificates to bear the signature of such
Transfer Agent or such Registrar.

Section 6. Restrictions on Stock
- - - - - --------------------------------
The Board of Directors may restrict any stock issued by giving the
Corporation or any stockholder "first right of refusal to purchase" to stock,
by making the stock redeemable or by restricting the transfer of the stock,
under such terms and in such manner as the directors may deem necessary and as
are not inconsistent with the Articles of Incorporation or the laws of the
State of Utah. Any stock so restricted must carry a stamped legend setting
out the restriction or conspicuously noting the restriction and stating where
it may be found in the records of the Corporation.

ARTICLE VI
DIVIDENDS AND FINANCES

Section 1. Dividends
- - - - - --------------------
Dividends may be declared by the directors and paid out of any funds
legally available therefor under the applicable state and federal laws, as may
be deemed advisable from time to time by the Board of Directors of the,
corporation. Before declaring any dividends, the Board of Directors may set
aside out of net profits or earned or other surplus such sums as the Board may
think proper as a reserve fund to meet contingencies or for other purposes
deemed proper and to the best interests of the Corporation.

<PAGE> 8

Section 2. Monies
- - - - - -----------------
The monies, securities, and other valuable effects of the Corporation
shall be deposited in the name of the Corporation in such banks or trust
companies as the Board of Directors shall designate and shall be drawn out or
removed only as may be authorized by the Board of Directors from time to time.

Section 3. Fiscal Year
- - - - - ----------------------
Unless and until the, Board of Directors by resolution shall determine
otherwise, the fiscal year shall begin on the 1st day of July and end on the
30th day of June and the first fiscal period shall end June 30, 1972.

ARTICLE VII.
SEAL

The Board of Directors shall provide a corporate seal which shall be in
the form of a circle and shall have inscribed thereon the name of the
Corporation and the words "SEAL, Utah," and shall be entrusted in the care of
the Secretary or such other officer of the Corporation as the Board of
Directors shall designated.

ARTICLE, VIII
NOTICES

Section 1. REQUIREMENTS
- - - - - -----------------------
Whenever a notice Shall be required by the statutes of the State of Utah
or by these Bylaws, such notice may be given in writing by depositing the same
in the United States mails in postpaid, sealed envelope addressed to the
person for whom such notice is intended to his or her home or other address,
as the same shall appear on the books of the Corporation. The time of mailing
shall be deemed to be the time of giving such notice. A waiver of any notice
in writing, signed by a stockholder director, or officer, whether before, at,
or after the time stated in such waiver for holding a meeting, shall be deemed
the equivalent of duly giving such notice.

Section 2. Presence
- - - - - -------------------
The presence of any officer at a meeting, or the presence of any
stockholder or director at a meeting, unless such presence is for the sole
purpose of objecting to the holding of such meeting on the around that it is
not duly held or convened, shall in all events be considered a waiver of
notice thereof; and failure to vote thereat shall not defeat the effectiveness
of such waiver.

Section 3. Ratification
- - - - - -----------------------
The ratification or approval in writing of the minutes of any meeting of
officers, stockholders, or directors shall have the same force and effect as
if the ratifying or approving officer, director, or stockholder were present
in person at said meeting.

ARTICLE IX
AMENDMENTS

These Bylaws may be altered, amended, or repeated by the Board of
Directors by resolution of a majority of the Board. Notice of any such
amendment shall be mailed to the shareholders within thirty (30) days.

<PAGE> 9

ARTICLE X
INDEMNIFICATION

The Corporation shall indemnify any and all of its directors or officers,
employees, agents, consultants, attorneys, or accountants, or former directors
or officers, employees, agents, consultants, attorneys, or accountants, or any
person who may have- served at its request as a director or officer of another
corporation in which this Corporation owns shares of capital stock or of which
it is a creditor and the personal representatives of all such persons, against
expenses actually and necessarily incurred in connection with the defense of
any action, suit, or proceeding in which they, or any of them, were made
parties, or a party, by reason of being or having been directors or officers
or directors or officer of the Corporation, or of such other corporation,
except in relation to matters as to which any such director or officer or
person shall have been adjudged in such action, suit, or proceeding to be
liable for negligence or misconduct in the performance of any duty owed to the
Corporation. Such indemnification shall not be deemed exclusive of any other
rights to which those indemnified may be entitled, independently, of this
Article X, by law, under any By-Law agreement, vote of stockholders, or
otherwise.

CERTIFICATE

I do hereby certify that I was Secretary of the meeting of stockholders
duly called and held on the ___________ day of _____________, 19____ and I do
hereby certify that the above and foregoing Bylaws were duly adopted as the
By-Laws of said Corporation at such meeting.

____________________________________
/S/Signature/Secretary

Exhibit 4.01
INCORPORATED IN THE STATE OF UTAH

No XXXXX DIVERSIFIED INDUSTRIES, INC. XXXXXX

PAR VALUE 100,000,000 SHARES AUTHORIZED NON-ASSESSIBLE
$.01 PER SHARE CUSIP NO. 255 266 207

This Certifies that VOID
is the owner of

fully paid and non-assessable Shares of the Common Stock of

DIVERSIFIED INDUSTRIES, INC.

transferable only on the books of the Corporation by the holder
hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.

In Witness Whereof, the said corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal
to be hereunto affixed this _____ day of __________ A.D. 19___.

SHARES NO VALID UNTIL COUNTERSIGNED
BY TRANSFER AGENT

_____________________________________ _____________________
Transfer Agent Authorized Signature President

Colonial Stock Transfer _____________________
455 East 400 South #100 Secretary
Salt Lake City, UT 84111

<PAGE> 1
Exhibit 10.01

ASSIGNMENT OF PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned hereby irrevocably sells, assigns,
and transfers to TAYLOR AND ASSOCIATES, INC., Attorneys and Counselors at Law,
a Utah corporation, all right, title, and interest in and to the attached
Promissory Note dated December 1, 1998, executed by JOHN H. HAMILTON, JR., as
Maker, in favor of DIVERSIFIED INDUSTRIES, INC., a Utah corporation, as
Holder, the money due and to become due thereon with interest, and all rights
accrued or to accrue under said Promissory Note.

DATED THIS THIRTY-FIRST DAY OF DECEMBER, 1998

BY: DIVERSIFIED INDUSTRIES, INC.

/S/Elliott N. Taylor, President

<PAGE>
<PAGE> 2
PROMISSORY NOTE

$25,000.00 DATE: December 1, 1998

FOR VALUE RECEIVED, JOHN H. HAMILTON, JR. ("Maker"), with offices at 6125
West Sam Houston Parkway North, Suite 206, Houston, Texas 77041, promises to
pay to DIVERSIFIED INDUSTRIES, INC., a Utah corporation (the "Holder"), the
principal amount of Twenty-Five Thousand Dollars ($25,000.00) with interest at
ten percent (10%) per annum on the unpaid principal balance.

1. Payment and Term. Payment of the principal amount and accrued
interest is due and payable in eight (8) equal quarterly payments of Three
Thousand Four Hundred Eighty-six Dollars and Sixty-eight Cents ($3,486.68)
beginning March 1, 1999 and continuing until December 1, 2000 (per the
amortization schedule attached hereto as Schedule A). Payment shall be made
in lawful money of the United States to the Holder at 3090 East 3300 South,
Suite 400, Salt Lake City, Utah 84109 or such other address as the Holder of
this Note may from time to time designate.

2. Prepayment. Prepayment in whole or in part at any time and from time
to time of the obligations under this Note may be made without penalty.

3. Events of Default. Upon the occurrence or during the continuance of
any one or more of the events hereinafter enumerated, Holder may forthwith or
at any time thereafter during the continuance of any such event, by notice in
writing to Maker, declare the unpaid balance of the principal and all interest
then accrued on the Note to be immediately due and payable, and the principal
and accrued interest shall become immediately due and payable without
presentation, demand, protest, notice of protest, or other notice of dishonor,
all of which are hereby expressly waived by Maker, such events being as
follows:

(a) Default in the payment of the principal and interest of the Note or
any portion thereof when the same shall become due and payable, unless cured
within ten (10) days after notice thereof by Holder or the holder of such Note
to Maker;

(b) Maker shall file a voluntary petition in bankruptcy or a voluntary
petition seeking reorganization, or shall file an answer admitting the
jurisdiction of the court and any material allegations of an involuntary
petition filed pursuant to any act of Congress relating to bankruptcy or to
any act purporting to be amendatory thereof, or shall be adjudicated bankrupt,
or shall make an assignment for the benefit of creditors, or shall apply for
or consent to the appointment of any receiver or trustee for Maker, or of all
or any substantial portion of its property, or Maker shall make an assignment
to an agent authorized to liquidate any substantial part of its assets; or

(c) An order shall be entered pursuant to any act of Congress relating
to bankruptcy or to any act purporting to be amendatory thereof approving an
involuntary petition seeking reorganization of Maker, or an order of any court
shall be entered appointing any receiver or trustee of or for Maker, or any
receiver or trustee of all or any substantial portion of the property of
Maker, or a writ or warrant of attachment or any similar process shall be
issued by any court against all or any substantial portion of the property of
Maker, and such order approving a petition seeking reorganization or
appointing a receiver or trustee is not vacated or stayed, or such writ,
warrant of attachment, or similar process is not released or bonded within 60
days after its entry or levy.

<PAGE> 3

4. Waivers and Assent to Extension, Indulgence, or Release. Maker
hereby waives presentment, demand, notice, protest, notice of protest, or
enforcement of this Note, assents to any extensions or postponements of the
time of payment or any other indulgence and to the addition or release of any
other party or person primarily or secondarily liable. None of the rights and
remedies of the Holder hereunder are to be waived or affected by failure or
delay to exercise them. All remedies conferred on Holder under this Note
shall be cumulative and none is exclusive. Such remedies may be exercised
currently or consecutively at Holder's option.

5. Attorneys' Fees. If this Note is placed with an attorney for
collection, or if suit be instituted for collection, or if any other remedy
permitted by law is pursued by Holder, because of any default in the terms and
conditions herein, then in such event, the undersigned agrees to pay
reasonable attorneys' fees, costs, and other expenses incurred by Holder in so
doing.

6. Construction and Governing Law. This Note shall be governed by and
construed in accordance with the laws of the state of Utah.

MAKER:

/S/John H. Hamilton, Jr.

<PAGE>
<PAGE> 4

IRREVOCABLE AGREEMENT FOR THE SALE AND PURCHASE OF REAL PROPERTY

This Agreement for the Sale and Purchase of Real Property, (hereinafter,
the "Agreement"), is made and entered into by and between Diversified
Industries, Inc., a Utah corporation, (hereinafter, the "Seller"), and John H.
Hamilton, Jr., (hereinafter, the "Buyer") (Buyer and Seller hereinafter
referred to together or collectively as the "Parties"), based on the
following:

AGREEMENT

In consideration of the mutual representations set forth below and the
mutual benefits to be derived by the Parties from the sale and purchase of the
subject real property, it is understood and agreed by the Parties as follow:

Article I: The Property.

A. Seller agrees to sell and Buyer agrees to purchase irrevocably from
Seller, (hereinafter, the "Sale and Purchase"), on the terms and conditions
herein contained, certain improved real property located in Harris County, TX,
and described more particularly on Exhibit "A: attached hereto and hereby
incorporated herein by reference (hereinafter referred to as the "Property").

Article II: Purchase Price and Payment.

A. Buyer agrees to pay for the Property the Purchase Price of Twenty-Five
Thousand Dollars ($25,000.00 U.S.), hereinafter the "Purchase Price."

B. The Purchase Price for the Property shall be paid by Buyer as follows:

(i) See attached Schedule A.

(ii) The first quarterly installment is due and payable to the Seller at
3090 East 3300 South, Suite 400, Salt Lake City, Utah, 84109, on or by March
1, 1999, which first payment is for the first quarterly installment covering
the months December 1998, January 1999, and February 1999.

C. Buyer represents that Buyer has a sufficient stream of income so as to be
able to close this Sale and Purchase in accordance with this Agreement.

D. The payment obligation of Buyer hereunder shall be evidence by a
promissory note of even date herewith (hereinafter, the "Promissory Note")
executed by Buyer in favor of Seller.

Article III: Closing

A. The Sale and Purchase shall be Closed on or by December 10th, 1998, in
Harris County, TX (hereinafter, the "Closing"). Closing means and shall occur
when (a) Seller and Buyer have signed and delivered to each other all
documents required by this Agreement and by applicable law; and (b) the
Warranty Deed has been recorded transferring title to the Property to the
Buyer. Seller and Buyer each represent that each will deposit with each other
all documents and monies required to complete this Sale and Purchase in
accordance with this Agreement.

Article IV: Good Faith Negotiation.

A. By signing this Agreement, the Parties expressly represent that they have,
individually and collectively, negotiated and agreed upon the Purchase Price
and the other terms and conditions of the Sale and Purchase in good faith.
<PAGE> 5

Article V: Possession and Risk Assumption.

A. Seller has heretofore delivered possession of the Property to Buyer and
the Buyer assumed full responsibility for the Property on November 30th, 1998,
in accordance with a Quit-Claim deed executed by Seller in favor of Buyer and
dated November 30th, 1998.

Article VI: Conveyance of the Property to Buyer by Warranty Deed and
Condition of the Title to the Property and Issuance of Title Insurance.

A. Seller shall convey the Property to Buyer by way of a Warranty Deed.
Buyer shall provide title insurance at Buyer's expense if Buyer so desires.
Otherwise, Buyer agrees to purchase and receive title to the Property "as is"
and hereby acknowledges that Seller has not made, nor will make, any
representations whatsoever as to the condition of the title to the Property.
Buyer acknowledges that Buyer has satisfied itself as to any inquiries the
Buyer may desire to make regarding the Property or the condition of the
title to the Property. Title to the Property shall vest in John H.
Hamilton, Jr.

Article VII: Physical Condition of the Property.

A. Buyer expressly purchases the Property subject to Buyer's own physical
inspection of the Property and subject to all of the latent and patent
material and other defects of the Property. Buyer acknowledges that Buyer
has had ample opportunity to inspect the Property and has inspected the
Property and purchases the Property without reservation whatsoever.
Consequently, Buyer hereby waives Buyer's rights, if any, to have, hold, and
inspect any Seller provided report or other disclosure document covering the
Property before the execution of this Agreement and the Closing.

B. Anything to the contrary notwithstanding, the Parties hereby agree to
contract for the Sale and Purchase of the Property in an "as is" condition
and Buyer hereby expressly agrees to receive and accept the Property as
is and all potential liability associated therewith. Buyer acknowledges that
Buyer has satisfied itself as to any inquires the Buyer may desire to make
regarding the Property or the condition of the Property. Buyer expressly
represents that Buyer is not relying whatsoever on disclosures or
representations or any other statements made by Seller regarding the
condition of the Property but is purchasing the Property based on Buyer's
assessment and acceptance of the condition, state, history, use, and value of
the Property.

Article VIII: No Hazardous Substances or Environmental Warranties.

A. Seller expressly makes no warranties or representations whatsoever
regarding hazardous or toxic substances upon the Property and regarding the
environmental condition of the Property. Buyer hereby expressly acknowledges
that Buyer is purchasing and receiving the Property "as is." Seller shall not
be responsible under any circumstances for the cost of removal from the
Property of any "Hazardous Substances," as such term is defined by
applicable federal, state, or local law, (hereinafter, "Hazardous Substances")
or any other type of environmental compliance whatsoever.

B. Buyer irrevocably agrees and hereby indemnifies, defends, and holds the
Seller harmless from and against any and all costs directly or indirectly
arising out of or resulting from the presence or release of any Hazardous
Substances or toxic materials on the Property at or prior to the Closing.

This indemnity shall survive the Closing.
<PAGE> 6

Article IX: Legal Capacity and Authority.

A. Seller and Buyer, respectively, each represent and warrant that each has
the legal capacity and proper authority to enter into and be bound by this
Agreement and its terms under all applicable laws and any ancillary individual
obligations or arrangements.

Article X: Attorney's Fees.

A. The prevailing party shall be entitled to recover attorney's fees and
costs in any action for breach of this Agreement or to enforce any rights
under this Agreement.

Article XI: No Real Estate Sales Commission.

A. No real estate sales commission shall be payable to anyone as a result of
this Sale and Purchase.

Article XII: Compliance with the Residential Lead-Based Paint Hazard Reduction
Act.

A. Texas has adopted, and subsequently amended, its own version of the
Residential Lead Based Paint Hazard Reduction Act (hereinafter, the "L-B
Act"). It appears that the L-B Act applies to this Sale and Purchase.
Consequently, the applicable disclosures of the L-B Act are set forth herein
in the attached Exhibit "B" which Exhibit "B" is hereby incorporated by
reference herein.

Buyer, having read and fully understanding the contents and purposes of
Exhibit "B" hereby waives (1) Buyer's right and time to inspect for lead-based
paint; (2) Buyer's right to receive from Seller the pamphlet entitled "Protect
Your Family from Lead in Your Home;" and (3) Buyer's right to void this Sale
and Purchase on account of a lead-based paint objection; and agrees to
purchase the Property "as-is" and consummate this Agreement notwithstanding
the potential presence of lead-based paint on, in, upon, or around the
Property by promptly completing this Sale and Purchase and forever releases
and agrees to indemnify and hold harmless Seller from any liability whatsoever
on account of or in connection with the presence, or potential presence, of
lead-based paint on, in, upon, or around the Property.

Article XIII: Agreement to Correct.

A. In the event that any of the documents, exhibits, etc., as prepared should
require modification in order to comply with applicable law or otherwise,
Seller and Buyer jointly and severally agree to cooperate with each other
and/or Seller's counsel to perfect any and all documents. Said corrections are
not solely limited to clerical errors.

Article XIV: General Property Tax Agreement.

A. In connection with the General Property Taxes applicable to the Property,
Seller is not paying nor crediting to Buyer any amount whatsoever on, for, or
otherwise for General Property taxes and Buyer hereby purchases the Property
subject to any and all Taxes, liens, encumbrances, etc., with no contribution
from Seller and no liability to Seller whatsoever. Buyer acknowledges this
Agreement as a final and full settlement of General Property Taxes covering
the Property and agrees to pay said taxes as same become due.

<PAGE>
<PAGE> 7

B. It is further understood by and between Seller and Buyer that nothing has
been paid to the County Treasurer/Assessor or retained in any way for payment
of accrued General Property Taxes as same become payable in 1998, but that it
is the sole responsibility of the Buyer to insure payment of same.

Article XV: General Provisions.

A. Notices: Unless otherwise provided herein, any notice, tender, or delivery
to be given hereunder by either party to the other may be effected by personal
delivery in writing, by facsimile transmission where receipt of same is
acknowledged by the intended recipient, or by registered or certified mail,
postage prepaid, return receipt requested, and shall be deemed communicated as
of mailing. Mailed notices shall be addressed as set forth below, but each
party may change his address by written notice in accordance with this
paragraph.

Seller:
Diversified Industries, Inc.
3090 East 3300 South
Suite 400
Salt Lake City, UT 84109

Buyer:
John H. Hamilton, Jr.
6125 West Sam Houston Parkway North
Suite 206
Houston TX 77041

B. Organization of Agreement: This Agreement shall be construed as a whole
and in accordance with its fair meaning. Organization is for convenience and
shall not be used in construing meaning.

C. Prior Agreements: This Agreement constitutes the entire understanding and
agreement between Seller and Buyer with respect to the subject matter hereof
and supersedes and replaces any and all prior agreements and understandings
pertaining thereto. No other agreement(s), statement(s), or promise(s) now or
in the future made by or to any party or by or to any employee, officer, or
agent of any party are binding and are hereby expressly excluded herefrom.

D. Amendment of Agreement: This Agreement cannot be amended or modified
except by a written agreement signed by both Seller and Buyer.

E. Construction and Governing Law: This Sale and Purchase and this Agreement
and its terms shall be governed by and construed in accordance with the laws
of the State of Texas, and not the laws pertaining to choice or conflict of
laws.

F. Facsimile Transmission: Facsimile transmission of any signed original
document, and retransmission of any signed facsimile transmission, shall be
the same as delivery of an original. At the request of any party hereto, the
Parties will confirm facsimile transmitted signatures by signing an original
document.

G. Assignment: Buyer's rights under this Agreement may not be assigned.

H. Severability: If any provision of this Agreement, or the application
thereof, shall, for any reason and to any extent, be invalid or unenforceable,
the remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby, but rather shall be
enforced to the maximum extent permissible under applicable law.

<PAGE> 8

I. Agreement Binding: This agreement shall be binding upon the parties hereto
and upon their heirs, personal representatives, administrators, successors,
and assigns, and the parties hereto agree for themselves and their heirs,
personal representatives, administrators, successors, and assigns, to execute
any and all instruments in writing which are or may become necessary or proper
to carry out the purpose and intent of this Agreement.

J. Titles and Subtitles: Titles of the articles, paragraphs, and the
subparagraphs are placed herein for convenient reference only and shall not to
any extent have the effect of modifying, amending, or changing the express
terms and provisions of the Partnership Agreement.

K. Words and Gender or Number: As used herein, unless the context clearly
indicates the contrary, the singular number shall include the plural, the
plural the singular, and the use of any gender shall be applicable to all
genders.

L. Validity: If any portions of this Agreement shall be held invalid or
inoperative, then, insofar as it is reasonable and possible,

(a) the remainder of this Agreement shall be considered valid and operative,
and

(b) Effect shall be given to the intent manifested by the portion held
invalid or inoperative.

IN WITNESS WHEREOF, the Seller and Buyer, each warranting respectively
that each has the right and authority to sign below and so bind itself, have
caused this Agreement to be executed as of the First day of December, 1998, to
be legally bound by its terms, and to be effective as of such date.

SELLER:
By:/S/Elliott N. Taylor, President

Diversified Industries, Inc.

BUYER:

/S/John H. Hamilton, Jr.

<PAGE>
<PAGE> 9

Exhibit A
Page 1

DESCRIPTION

A 1.507 acre tract out of the T. Earle A-18, of Harris County, Texas, known as
Sue Cille Apartments, being further described by metes and bounds hereto
attached:

TRACT I:

A parcel of land containing 0.2755 acres out of a 2 acre tract conveyed to
Laurel B. McNay, Jr., by deed dated October 4, 1950, and recorded in Volume
2317, Page 613, Deed Records of Harris County, Texas, being located in the
Thos. Earle Survey, Abstract No. 18, in Harris County, Texas, also being a
portion of the 0.2755 acre tract of land out of said Survey, described in a
Deed from Tom Hearne, et ux, Lucille Hearne, to Delta Realty Corporation,
dated December 11, 1961, and recorded in Volume 4577, Page 151, Deed Records
of Harris County, Texas, said 0.2755 acre tract more fully described by metes
and bounds as follows, to-wt:

BEGINNING at a point which is North 89 deg. 42 min. 24 sec. East 465.54 feet
along the North line of the Houston Lighting and Power Company 150 foot right-
of-way, and North 00 deg. 27 min. 36 sec. West 38.55 feet from the Southeast
corner of Red Bluff Terrace Section No. 6, and the Southwest corner of the
Thomas Earle Survey, A-18;

THENCE continuing North 00 deg. 27 min. 36 sec. West, 120 feet along the West
line of South Avenue 100 foot right-of-way, to a point for corner, said point
being the intersection of Fleming Drive, 60 feet in width right-of-way and
South Avenue 100 foot right-of-way;

THENCE South 89 deg. 42 min. 24 sec. West 100 feet along the South line of
Fleming Drive, 60 foot right-of-way, to a point for corner;

THENCE South 00 deg. 27 min. 36 sec. East, 120 feet parallel to and 100 feet
from the West line of South Avenue, 100 foot right-of-way to a point for
corner;

THENCE North 89 deg. 42 min. 24 sec. East 100 feet, parallel to and 120 feet
from the South line of Fleming Drive 60 foot right-of-way to the PLACE OF
BEGINNING.
<PAGE>
<PAGE> 10

Exhibit A
Page 2

DESCRIPTION

TRACT II:

A parcel of land containing 0.4798 acres of a 2 acre tract conveyed to Laurel
E. McNay, Jr., by Ara Verne E. McNay by deed dated October 4, 1950 , and
recorded in Volume 2317, Page 613 of the Harris County Deed Records being
located in the Thos. Earle Survey, A-18, Pasadena, Harris County, Texas, and
being more particularly described by metes and bounds as follows, to-wit:

BEGINNING at a point in the North line of Houston Lighting and Power Company
150 foot right-of-way, said point being, North 89 deg. 42 min. 24 sec. East,
257.77 feet from the Southeast corner of Red Bluff Terrace, Section 6, and the
Southwest corner of the Thos. Earle Survey, A-18;

THENCE continuing North 89 deg. 42 min. 24 sec. East, 207.77 feet to a point
for corner in the West line of South Avenue, 100 foot right-of-way;

THENCE North 00 deg. 27 min. 36 sec. West, 38.55 feet along the West line of
South Avenue 100 foot right-of-way, to a point for corner;

THENCE South 89 deg. 42 min. 24 sec. West 100 feet along a line 120.00 feet
parallel to and South of Flamborough Drive, 60 foot right-of-way;

THENCE North 00 deg. 27 min. 36 sec. West 120.00 feet along a line 100.00 feet
West of and parallel to South Avenue 100 foot right-of-way, to a point for
corner in the south right-of-way line of Flamborough Drive, 60 foot right-of-
way;

THENCE South 89 deg. 42 min. 24 sec. West 107.24 feet along the South line of
Flamborough Drive 60 foot right-of-way, to a point for corner;

THENCE South 00 deg. 16 min.06 sec. East 158.56 feet to the PLACE OF
BEGINNING.

<PAGE>
<PAGE> 11

Exhibit A
Page 3

DESCRIPTION

TRACT III:

All that certain tract or parcel of land in the Thomas earl Survey, Abstract
No. 18, in the City of Pasadena, Harris county, Texas, being out of and a part
of that certain 4 acres tract of land conveyed by Illa May Jones, et al, to
Ara Verne E. McNay by Deed dated July 7, 1948, recorded in Volume 1794, Page
238, of the Deed Records of Harris County, Texas, and being more particularly
described by metes and bounds as follows, to-wit:

BEGINNING at a point in the South line of said 4 acre tract above referred to
which point is located 207.6 feet West of the point of intersection of the
west line of South Avenue, based on a width of 100 feet with the North line of
the Houston Lighting and Power company a 150 foot right-of-way; said point of
intersection being the Southeast corner of said 4 acre tract;

THENCE West along the North line of said Houston Lighting and Power Company
right-of-way a distance of 205.5 feet to a point for corner in the east line
of the Phillips Petroleum Company tract of land;

THENCE North along said Phillips tract a distance of 158.55 feet to a point
for corner in the South line of a 30 foot right-of-way conveyed to the city of
Pasadena by Deed dated January 28, 1958;

THENCE East along the South line of said right-of-way a distance of 205.5 feet
to a point for corner;

THENCE South 158.55 feet to the PLACE OF BEGINNING, and being the same tract
of land described in Deed dated December 15, 1958, from Laurel E. McNay, Jr.
to South Avenue Baptist Church, recorded in Volume 3612, Page 460 of the Deed
Records of Harris County, Texas, and further described in a Deed from South
Avenue Baptist Church of Pasadena, Texas, as religious corporation to Tom
Hearne dated November 30, 1962, filed for record on January 31, 1963, in the
Office of the County Clerk of Harris County, Texas, under County Clerk's File
No. 634883B.
<PAGE>
<PAGE> 12

Schedule A

Loan Amortization Results Thu Nov 12 10:28:17 1998

Principal Payment APR Total Interest Total Loan Value
- - - - - ---------- -------- ------- -------------- ----------------
$25,000.00 $3486.68 10.000% $2893.44 $27,893.44

Amortization Table

Pmt No. Principal Interest Balance
- - - - - ------- ---------- -------- -----------
1 $ 2,861.68 $ 635.00 $ 22,138.32
2 2,933.22 553.46 19,205.10
3 3,006.55 480.13 16,198.55
4 3,081.72 404.96 13,116.83
5 3,158.76 327.92 9,958.07
6 3,237.73 248.95 6,720.34
7 3,318.67 168.01 3,401.67
8 3,401.64 85.04 0.03
<PAGE>
<PAGE> 13

EXHIBIT "B"

LEAD WARNING STATEMENT

1. You have an absolute legal right to inspect the Property for lead paint
hazards before being bound by the Agreement to purchase the Property. You may,
however, shorten such period of time for making such inspection, or waive it
all together. This Agreement is contingent upon the results of your
inspection.

2. Seller has no actual or specific knowledge of the use or existence of
lead-based paint in, on, or about the Property, but cannot guarantee that
lead-based paints have not been used in, on, or about the Property.

3. You are entitled to receive from Seller a copy of a pamphlet entitled
"Protect Your Family from Lead in Your Home." The pamphlet, published by the
federal Environmental Protection Agency, discusses various lead hazards.
Seller believes that Illinois has not yet developed an informational brochure
or disclosure form.

Every purchaser of any interest in residential real property on which a
residential dwelling was built prior to 1978 is notified that such property
may present exposure to lead from lead-based paint that may place young
children at risk of developing lead poisoning. Lead poisoning in young
children may produce permanent neurological damage, including learning
disabilities, reduced intelligence quotient, behavioral problems, and impaired
memory. Lead poisoning also poses a particular risk to pregnant women. The
seller of any interest in residential real property is required to provide the
buyer with any information on lead-based paint hazards from risk assessments
or inspections in the seller's possession and notify the buyer of any known
lead based paint hazards. A risk assessment or inspection for possible
lead-based paint hazards is recommended prior to purchase.

<ARTICLE> 5

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0
0
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