SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 2, 2000
P.D.C. Innovative Industries, Inc.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-27157 65-0789306
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(Commission File Number) (IRS Employer Identification No.)
3701 NW 126th Ave., Corporate Park Bay 5
Coral Springs, Florida 33065
--------------------------------
(Address of principal executive offices) (Zip Code)
(954) 341-0092
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Registrant's telephone number, including area code
MAS Acquisition XIV Corp.
1710 E. Division Street
Evansville, Indiana 47711
(812) 479-7226
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(Former name, address, and telephone number)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
a) Pursuant to a Stock Exchange Agreement (the "Exchange Agreement") dated
as of March 2, 2000 between MRC Legal Services Corporation, a California
Corporation, which entity is the controlling shareholder of MAS Acquisition
XIV Corp. ("MAS XIV"), an Indiana corporation, and PDC Innovative
Industries, Inc., a Nevada corporation ("PDC" or the "Company"), approximately
96.8% (8,250,000 shares) of the outstanding shares of common stock of MAS
Acquisition XIV Corp. were exchanged for 1,500,000 shares of common stock of PDC
in a transaction in which PDC became the parent corporation of MAS XIV. In
conjunction with the Exchange Agreement, certain consultants to the Company were
issued an aggregate of 2,465,000 shares of the Company's common stock (the
"Consulting Agreement").
The Exchange Agreement was adopted by the unanimous consent of the Board of
Directors of MAS XIV on March 3, 2000. The Exchange Agreement was adopted by
the unanimous consent of the Board of Directors of PDC on March 3, 2000.
No approval of the shareholders of PDC or MAS XV is required under
applicable state corporate law.
Prior to the merger, MAS XIV had 8,519,800 shares of common stock
outstanding of which 8,250,000 shares were exchanged for 1,500,000 shares
of common stock of PDC. By virtue of the exchange, PDC acquired 96.8%
of the issued and outstanding common stock of MAS XIV.
Prior to the effectiveness of the Exchange Agreement, PDC had an
aggregate of 11,882,417 shares of common stock, par value $.001, issued and
outstanding.
Upon effectiveness of the acquisition, PDC had an aggregate of
13,382,417 shares of common stock outstanding.
The officers of PDC continue as officers of PDC subsequent to the
Exchange Agreement. See "Management" below. The officers, directors, and
by-laws of PDC will continue without change.
A copy of the Exchange Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
(b) The following table sets forth certain information regarding
beneficial ownership of the common stock of PDC as of March 3, 2000 (subsequent
to the issuance of 1,500,000 shares pursuant to the Exchange Agreement and
issuance of 2,465,000 shares pursuant to the Consulting Agreement) by:
o each person or entity known to own beneficially more than 5% of the common
stock or 5% of the preferred stock;
o each of PDC's directors;
o each of PDC's named executive officers; and
o all executive officers and directors of PDC as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- -------------------------------------- ----------------------- --------------------- -----------
Common Stock David Sowers
3701 NW 126th Ave.
Corporate Park, Bay 5
Coral Springs, Fl 33065 0 0.00%
- -------------------------------------- ----------------------- --------------------- -----------
Common Stock Sandra Sowers
3701 NW 126th Ave.
Corporate Park, Bay 5
Coral Springs, Fl 33065 2,200,000 13.88%
- -------------------------------------- ----------------------- --------------------- -----------
Common Stock Leroy Sowers
3701 NW 126th Ave.
Corporate Park, Bay 5
Coral Springs, Fl 33065 0 0.00%
- -------------------------------------- ----------------------- --------------------- -----------
Harold Harris
Common Stock 3701 NW 126th Ave.
Corporate Park, Bay 5
Coral Springs, Fl 33065 2,500 0.02%
- -------------------------------------- ----------------------- --------------------- -----------
Common Stock M. Richard Cutler
610 Newport Center Dr.
Suite 800
Newport Beach, CA 92660 1,552,750 9.80%
- -------------------------------------- ----------------------- --------------------- -----------
All Officers and Directors as a Group
(4 Persons) 2,202,500 13.90%
====================================== ======================= ===================== ===========
</TABLE>
(1) Reflects 300,000 shares held in the name of MRC Legal Services, LLC. Mr.
Cutler is the beneficial owner of MRC Legal Services, LLC.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) The consideration exchanged pursuant to the Exchange Agreement was
negotiated between the Shareholders and PDC.
In evaluating PDC as a candidate for the proposed acquisition, the
Shareholders used criteria such as the value of the assets of PDC, its present
stock price as set forth on the over-the-counter bulletin board, its current
business operations and anticipated operations, and PDC's business name and
reputation. The Shareholders determined that the consideration for the exchange
was reasonable.
(b) PDC intends to continue its historical businesses and proposed
businesses as set forth more fully immediately below.
1
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BUSINESS
P.D.C. Innovative Industries, Inc., ("PDC" or the "Company") was originally
incorporated in Nevada on September 7, 1994 as Kenneth C. Garcia, Inc. On
January 22, 1998, the Company merged with P.D.C. Innovative Industries, Inc., a
Florida corporation. Subsequent to the merger, the Company changed its name to
P.D.C. Innovative Industries, Inc. The Company's primary business consists of
the research, development, manufacture and/or distribution of innovative
products for the construction and healthcare industries, as well as for
household and general consumption.
The Company's current products consist of: the Hypo-Sterile 2000, a device
for sterilization of intrusive medical instruments; TriLevel, a series of
innovative levels for construction workers; Perfect Seal, an innovative
heat/cool air conserving door seal; Flush Mizer, a water saving valve for toilet
tanks; and the Mulching Blade, a high-efficiency blade for lawn-mowers. The
Company's primary markets consist of wholesalers in their respective industries.
Additionally, over the past several years, the principals of the Company have
secured or applied for patents for several inventions that are expected to form
the basis of up to twelve innovative products to be added to the Company's
product line. However, unforseen technical or market related problems may be
encountered and therefore, there can be no assurances that the Company will be
able to develop such products in the future.
HYPO-STERILE 2000: The Hypo-Sterile 2000 is a device used to dispose of
contaminated hypodermic syringes and other intrusive medical instruments at the
site of use. The device reduces, in an enclosed environment, the entire
instrument to small, sterile particles which can be disposed of as conventional
trash. This approach significantly reduces physical hazards to nurses or
phlebotomists after injections or draws, reduces bacterial growth within and
around of collection boxes and aerolization of infectious agents, limits risks
of injury or infection to waste-handling personnel, cuts costs of disposal,
including collection, handling, paperwork and specialized transport as well as
limits potential cross-contamination with the hospital, office and environment
due to handling and moving of contaminated waste. The Company will target
hospitals and larger health clinics, where higher volume usage justifies a
dedicated machine at each usage point. There are two additional designs of the
device that would be available for the smaller medical offices as well as a
larger batchmode version. The latter would be used where intermediate
collection boxes are still required. The unit would "digest" an entire
collection box, including the instruments contained therein. Management believes
that introduction of its Hypo-Sterile 2000 line of products will present a
substantial growth opportunity for the Company. Although aware of safety
protocols when dealing with contagious infectious illnesses, medical personnel
are still subjected to thousands of penetrations with intrusive instruments each
year with serious consequences of dealing with life-threatening conditions for
them and the large cost of ongoing treatment and testing for the facility of
employment. Despite stringent regulations by OSHA, JCAHO and others, the
problems persists mainly because used contaminants are not destroyed or
sterilized, but merely covered and stored, leaving the physical and biological
hazards undiminished during storage, collection and transport to a licensed
incinerator, usually off site. The HypoSterile 2000 line of products
effectively destroys both the injury and biological hazards at the site of use
which.
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The area of sterilized surgical products is also considered by Management to be
the most challenging sector within its product line. Both the production and
the sterilization of surgical products require significant resources and must
meet exacting FDA standards. The Company's founder, Chairman and CEO, Mr. Dave
Sowers, gained experience in launching of a new competitive product line during
his three-year tenure at BSD Enterprises, Inc, (see "MANAGEMENT"). However, the
sterilization products sector is highly competitive and is presently dominated
by Baxter International, Johnson & Johnson, Kimberly-Clark and other large
suppliers. The Company presently seeks to develop a niche market within the
sterilization product industry through its ability to "customize" products to
fit customers' special needs. Management believes that as a direct manufacturer,
the Company is well suited to develop this specialized marketing approach which
is generally more difficult for larger manufacturers.
THE TRILEVEL FAMILY: All TriLevel products are computer milled from Aircraft
Grade anodized aluminum (Grade: 6061). Using a sophisticated C & C milling
center, TriLevel products are machined to zero tolerance and undergo rigorous
quality control and assurance testing throughout the manufacturing and assembly
process. All TriLevel products come with a Limited Lifetime Guarantee against
manufacturing defects, corrosion, pitting and warping. The state-of-the-art
design of TriLevel leveling products is the result of more than 3 years'
intensive research and development. TriLevel currently offers five
zero-tolerance leveling products which are available in various sizes with
unique features and benefits.
The Pocket Pitch Dial Level (Patent Pending) has adjustable center level
dial and bulb. It is of 4" fixed length, 6 ounces weight, can be custom
engraved, available in a selection of colors with optional carrying pouch. This
pocket-sized, belt-attachable level offers the convenience of an integrated 360
degree rotating center level bulb & dial for use in limited space areas. Due to
this level's patent pending design, Management believes that this level's
zero-tolerance angle measurement (0-45 degrees) is more precise than any
competitive mechanical level currently marketed. In addition to standard level
applications for horizontal and vertical calibration, adjustment and leveling,
the Pocket Pitch Level is specifically designed to be uniquely valuable in all
situations where zero tolerance precision in variable degree leveling is
required, including roof pitch, plumbing pitch and other non-standard, variable
pitch angle measurement.
The Pocket Level (Patent Pending) has a fixed center level bulb, 4" fixed
length, 3 ounces weight, can be custom engraved and is available in selection of
colors with optional carrying pouch. Similar to the Pocket Pitch Level, this
level is also designed for easy transport and use in cramped, limited space
areas. Due to this level's patent pending design this level's zero-tolerance
angle measurement is more precise than any competitive mechanical level
currently marketed. This level is designed to be used in all situations where
horizontal leveling is desirable, including carpentry, glass work, cabinetry,
plumbing and framing applications where exact horizontal adjustment or
measurement is required,
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The 18" Dial Level (Patent Pending) has adjustable center level dial and
bulb, 18" collapsed length (extends to 24" arid .30"), 40 ounces of weight, can
be custom engraved, marketed in selection of colors and has available optional
carrying pouch. This level offers the convenience of an integrated 360 degrees
variable pitch (variable angle) rotating center level bulb and dial. The 18"
Dial Level adjusts to work area and takes place of three separate conventional
levels (18", 24" and 30" when fully extended). Due to this level's patent
pending design this level's zero-tolerance angle is more precise than any
competitive mechanical level currently marketed. In addition to standard level
applications for horizontal and vertical calibration, adjustment and leveling,
the 18" Dial Level can be expanded to fit the work area and is specifically
designed to be uniquely valuable in all situations where zero tolerance
precision in variable degree leveling (0-45 degrees) is required, including roof
pitch, plumbing pitch and other non-standard variable pitch angle measurements.
The 18" Standard Level (Patent Pending) has a fixed center level dial and
bulb, 18" collapsed length (extends to 24" and 30"), 26 ounces weight, can be
custom engraved, is available in selection of colors with optional carrying
pouch. Similar to the 18" Dial Level but without the variable angle rotating
center level and bulb this zero-tolerance level also adjusts to the work area
and takes place of three non-adjustable separate levels (18", 24" and 30" when
fully extended). Due to this level's patent pending design, Management believes
that this level's zero-tolerance angle measurement is more precise than any
competitive mechanical level currently marketed. In all situations where zero
tolerance precision is required for standard (non-variable) horizontal and
vertical calibration, adjustment and leveling, including flexible workspace
applications in carpentry, glass work, cabinetry, plumbing, framing and other
construction jobs, the 18" Standard Level is specifcally designed to be uniquely
valuable.
The Squaring Level is similar in appearance to a traditional framing
square. However this Squaring Level's 90 degree arms extend to 12" and can be
extended to 12"x18" and 18"x18" squaring levels on both ends, 45 degree squaring
level at arm joint. This level is weighs 32 ounces, can be custom engraved and
is available in selection of colors. In addition to providing zero tolerance 90
and 45 degree framing guidance, the Squaring Level can be used to provide
absolutely precise horizontal or vertical leveling with what Management
believes, is a greater degree of precision than any competitive mechanical level
currently marketed. The Squaring Level is specifically designed to be uniquely
valuable in any situation where zero tolerance 45 or 90 degree framing or
horizontal and vertical calibration, adjustment and leveling is desirable.
Applications include finished carpentry, glass and mirror work, cabinetry,
standard framing and other exacting construction jobs.
PERFECT SEAL: Perfect Seal is a seal which can be added to doors in any home or
office. It is not a door sweep, but rather a seal which does not touch the
flooring of the room until the door is closed tightly creating a perfect
airtight closing that keeps out insects, noise, cold or hot air. It is made with
a tongue and grove which makes it airtight. When the door equipped with the
Perfect Seal is closed, the seal comes down and the rubber adjoins the floor.
When the door is opened, the seal draws back up thus avoiding any friction with
or rubbing of the floor. Perfect Seal is made of Anodized Aluminum. It comes in
four different colors and is available in different lengths of 28", 32", 34" and
36".
FLOW MIZER: The Flow Mizer is designed to address the problem of water
conservation acute in many part of the United States and abroad. Flush Mizer is
a double flapper valve which universally fits most toilet tanks and saves
approximately 30% of tank water per flush of liquid waste. Since flushing
liquid waste accounts for major part of the usage of toilet facilities, the
Flush Mizer is designed in such a way that an up-motion of the handle provides
for water-saving liquid waste flush while a down-flush motion of the handle
provides for solid waste flush, maintaining full flush.
4
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MULCHING BLADE: The Mulching Blade is a product suitable for application with
both residential and commercial makes and models of lawn mowers. The Mulching
Blade is designed to basically disintegrate anything it comes in contact with,
such as twigs, branches, fruit, palm fronds, leaves, etc. This mulching leads
to the benefits of fertilizing the lawn and eliminating raking. The Mulching
Blades technology is very unique compared to conventional blades. The Mulching
Blade is 21" and has 12" of lifting surface to hold the grass inside and turn it
into fodder.
In addition to the products it manufactures directly, to a lesser extent,
the Company will also act as a distributor of related products manufactured by
others. These products will be sold as an ancillary part of the Company's
product line to provide its customers with a more complete selection of items.
SALES AND MARKETING.
The primary markets for the Company's Sterile Pro 2000 products are in the
health-care sector, divided essentially into three broad categories- (i)
hospitals; (ii) "alternative site" facilities (including surgical centers,
nursing homes, and elderly care facilities and clinics); and (iii) small medical
offices. Primary customer categories would be the single end-user, purchasing
associations or consortiums of various kinds - a dominant feature in the
hospital sector - and various federal, state and local goverment bodies (the
majority of whose purchases are open to competitive bidding). The primary
channels of distribution include medical supply distributors, dealers who
specialize in the medical and hospital markets and firms purchasing the
Company's products for resale under "private label" arrangements for other
suppliers and retailers. Primary sales and marketing techniques or strategies
include direct mailings, trade publication advertising, attendance at various
industry trade shows, bidding for government contracts when appropriate and
direct solicitation of prospective customers.
The primary markets for the Company's TirLevel, and Perfect Seal products
are wholesalers to construction and home-remodeling customers such as Home
Depot, Ace Hardware and smaller chain stores and individual wholesalers. Primary
customer categories would be the single end-user construction and home
remodeling companies as well as individuals. Primary sales and marketing
techniques will include direct sales visits, mailings and attendance at various
trade shows.
The primary markets for the Company's Flush Mizer and Mulching Blade
products will be manufacturers of respective appliances and machines. Primary
sales and marketing techniques or strategies include direct mailings, trade
publication advertising, attendance at various industry trade shows, bidding for
direct contracts with manufacturers when appropriate and direct solicitation of
prospective wholesale customers.
5
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EMPLOYEES
At present, the Company employs a total of 10 employees. As the Company
expands, it will require additional personnel, both skilled and unskilled.
Although the Company believes that the personnel it will require are readily
available at reasonable salary rates, no assurance can be given that it will be
able to attract the type and quantity of employees its operations will require,
further, even if such personnel are available, no assurance can be given that
they can be hired on terms favorable to the Company.
PRODUCTION FACILITIES.
The Company has entered into a business lease agreement with L.A.W.
Properties - Coral Springs LLC for office, lab and manufacturing space of
approximately 11,000 square feet at 3701 NW 126th Avenue, Corporate Park, Bay 5,
Coral Springs, FL. The Company has committed to a two-year lease with a base
rent of $5,300 per month with a cost of living adjustment over the term of the
lease. Consequently, the Company has committed to a minimum of $127,200 over the
two-year period under this lease.
GOVERNMENT REGULATION.
Some of the products marketed by the Company are subject to regulation as
medical devices by the Food And Drug Administration (the "FDA"), which has
comprehensive authority to regulate the development, production, distribution
and promotion of medical devices. The states and foreign countries where Company
products are sold may also impose additional regulatory requirements.
Pursuant to the federal Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, a medical device is ultimately classified by the FDA as
either a Class I, Class II or Class III device. Class I devices are subject to
general controls which are applicable to all devices. Such controls include
regulations regarding FDA inspection of facilities, "Good Manufacturing
Practices," labeling, maintenance of records and filings with the FDA. Class II
devices must meet general performance standards established by the FDA before
they can be marketed and must adhere to such standards once on the market. Class
III devices require individual pre-market approval by the FDA before they can be
marketed, which can involve extensive tests to prove safety and efcacy of the
device.
Each manufacturer of medical devices is required to register with the FDA
and also to file a "510(k) Notification" (the "Notification") before initially
marketing a new device intended for human use. The manufacturer may not market
such new device until 90 days following the filing of such Notification unless
the FDA permits an early marketing date. The FDA, prior to the expiration of the
90-day period, may notify the manufacturer that it objects to the marketing of
the proposed device and thereby may delay or preclude the manufacturer's ability
to market that device. The FDA may also require further data from, or testing
by, the manufacturer.
The FDA permits the marketing of some medical devices, subject to the
general controls under the Act, if the devices are "substantially equivalent" to
devices marketed in interstate commerce before May 28, 1976 (the effective date
of the Medical Device Amendment to the Act).
6
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Of the Company's present products, its proposed sterilization products may
fall within the Class III category, in which case the Company would have to file
a Pre-market Approval Application. Such application must be accompanied by
extensive literature references and preclinical and clinical testing data, The
FDA normally has 180 days to review a Pre-market Approval Application, during
which time an independent advisory committee evaluates the Application and
provide recommendations to the FDA. While the FDA has often responded to such
Applications within the allotted time, there are many instance where the reviews
have been more protracted, and a. number of devices have never been cleared for
marketing.
Any products distributed by the Company pursuant to the above authorizations are
subject to pervasive and continuing regulation by the FDA. All phases of the
manufacturing and distribution process are governed by FDA regulation and each
supplier of products to the Company must also have FDA approved products.
Products must be produced in registered establishments and be manufactured inn
accordance with "Good Manufacturing Practices." All such devices must be listed
periodically with the FDA as well. Labeling and promotional activities are
subject to scrutiny by the FDA and in certain instances by the Federal Trade
Commission. The export of devices is also regulated in certain instances.
The Mandatory Device Reporting ("MDR") regulation obligates the Company to
provide information to the FDA on injuries alleged to have been associated with
the use of a product or certain product failures which could cause injury. If
due to FDA inspections, MDR reports or other information, the FDA believes that
the Company is not in compliance with the law, the FDA can institute proceedings
to detain or seize products, enjoin future violations, or asses civil and/or
criminal penalties against the Company, its officers or employees. Any such
action could disrupt the Company's operations for an undetermined time.
As discussed above, in January 1992, OSHA issued comprehensive new federal
regulations aimed at establishing new protective standards to minimize
occupational exposure to various blood borne pathogens such Hepatitis and the
HIV virus associated with AIDS. OSHA determined, after a four year study of the
need for such regulations, that employees face a signifcant health risk as the
result of occupational exposure to blood and other potentially infectious
materials and concluded that this exposure can be minimized or eliminated using
a combination of work practice controls, personal protective clothing and
equipment, training and medical surveillance. Furthermore, there are 23 states
with their own OSHA-approved occupational safety and health plans which must now
adopt a comparable standard within six months or amend their existing standard
if it not at least as effective as the federal standard. These new regulations
are primarily aimed at the healthcare industry where, based upon published OSHA
findings, between 2 and 2.5 Million workers are presently at risk of infection.
From the Company's point of view, these new regulations, which make
mandatory in the healthcare industry the use of sterilization equipment of
nature comparable to the products manufactured by the Company, are expected to
have materially favorable impact upon the Company's sales during the foreseeable
future. Although no assurances can be given, based upon sales of the new OSHA
mandated products, management believes that the Company will continue to be a
beneficiary of the increase in demand for products of this type for the
foreseeable future.
7
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INSURANCE
Due to the decrease in the number of insurance carriers willing to provide
product liability insurance especially in the healthcare industry, product
liability insurance availability has been significantly reduced and premiums
have increased dramatically over recent years. At present, the Company maintains
no product liability insurance. Although the Company intends to obtain such
insurance coverage, there can be no assurance that the Company will be able to
obtain insurance at reasonable premiums that it can afford in the future. The
inability to obtain such insurance could have a materially adverse effect upon
the business, financial condition and future prospects of the Company. To date
there have not been any product liability claims against the Company.
LEGAL PROCEEDINGS
The Company knows of no substantial litigation pending, threatened or
contemplated, or unsatisfied judgments against it, or any substantial
proceedings in which the Company is a defendant. The Company also knows of no
legal action pending or threatened or judgments entered against any officers or
directors of the Company in their capacity as such.
MANAGEMENT
The following table sets forth the names and ages of the current directors
and executive officers of the Company, the principal offices and positions with
the Company held by each person and the date such person became a director or
executive officer of the Company. The directors and executive officers of the
Company as of the date of this report areas follows:
Name Age Position(s)
David Sowers 58 CEO & Director
Sandra Sowers 58 President, Secretary, Treasurer, & Director
Vernon Leroy Sowers 34 Vice-President
Harold Harris 68 Director
All directors hold office until the next annual meeting of stockholders and
until their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. The Company has not
compensated its directors for service on the Board of Directors or any committee
thereof, but directors are reimbursed for expenses incurred for attendance at
meetings of the Board of Directors and any committee of the Board of Directors.
Executive officers are appointed annually by the Board of Directors and each
executive officer serves at the discretion of the Board of Directors. The
Executive Committee of the Board of Directors, to the extent permitted under
Nevada lave, exercises all of. the power and authority of the Board of Directors
in the management of the business and affairs of the Company between meetings of
the Board of Directors. There is at present one vacancy on the Board of
Directors that the Company will fill at its proposed next shareholder's meeting,
Messrs. Dave Sowers and Sandra Sowers may be deemed "parents" and
"organizers" of the Company as those terms are defined in the Rules and
Regulations promulgated under the Securities Act of 1933, as amended Dave
Sowers and Sandra Sowers are husband and wife. Additionally, Vernon Leroy
Sowers is the son of Dave Sowers and Sandra Sowers. There are no other family
relationships between officers and directors.
8
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DAVID SOWERS, has served as Chief Executive Officer and Director since the
formation of P.D.C. He has extensive experience in the new product development
field with his own firms. From 1989 to 1993, Mr. Sowers was the founder and
Chief Executive Officer of the original operating company known BSD Enterprises,
Inc. BSD manufactured a product that was used to wash paint excess from all
types of industrial paint guns. This product washed and cleaned paint guns
automatically and meets the requirements of the EPA and OSHA From 1993 to 1995,
Mr. Sowers was the owner of Dave's Personal Touch Lawn Maintenance. Mr. Sowers
also was the owner and manager of Dave's 810 Body Shop from 1978 to 1991. He
was responsible for all sales, management and for repairs to automobiles &
trucks. David Sowers is the husband of Sandra Sowers and the father of Vernon
Leroy Sowers.
SANDRA SOWERS, currently serves as President, Secretary, Treasurer, and
Director. Mrs. Sowers Mrs. Sowers has served as Secretary, Treasurer, and
Director since the inception of the company and been involved with the original
new product development company, BSD Enterprises, Inc, in a similar capacity.
Sandra Sowers is the wife of David Sowers, and the mother of Vernon Leroy
Sowers.
VERNON LEROY SOWERS, currently serves as Executive Vice President. Mr.
Sower currently supervises the company's Sales Force & Manufacturing Plant. Mr.
Sowers held the position of Senior Sales Executive with BSD Enterprises, Inc.
and was a management executive at 810 Body Shop, Coconut Creek, Florida.
HAROLD HARRIS has served as a director of the Company since January 1999.
Between 1994 and 1996, Mr. Harris was the Vice President of Operations and
Administration for WJ Gallagher, a NASD Brokerage firm. From 1992 to 1994, Mr.
Harris was the Executive Operations Manager for Reynolds, Kendrick, Stratton,
Inc., NASD Brokerage firm. Mr. Harris received his Bachelor of Arts degree in
Statistics from the Colorado University in 1965 and an Associate of Arts degree
in Business Administration from the Finance Institute in New York, New York.
No director, officer, affiliate or promoter of the Company has, within the
past five years, filed any bankruptcy petition, been, convicted in or been the
subject of any pending criminal proceedings, or has been the subject or any
order, judgment, or decree involving the violation of any state or federal
securities laws.
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MARKET FOR PDC'S SECURITIES
PDC has been a non-reporting publicly traded company with certain of its
securities exempt from registration under the Securities Act of 1933 pursuant to
Rules 504 of Regulation D and Rule 144 of the General Rules and Regulations of
the Securities and Exchange Commission. PDC's common stock is currently traded
on the OTC Bulletin Board operated by Nasdaq under the symbol PDCIE. PDC has
not become or otherwise been a reporting company under the Securities Exchange
Act of 1934. The Nasdaq Stock Market has implemented a change in its rules
requiring all companies trading securities on the OTC Bulletin Board to become
reporting companies under the Securities Exchange Act of 1934. PDC is required
to become a reporting company by the close of business on May 8, 2000 or no
longer be listed on the OTC Bulletin Board. PDC effected the stock exchange
transaction with MAS XIV on March 2, 2000 and became a successor issuer thereto
in order to comply with the reporting company requirements implemented by the
over-the-counter bulletin board.
The following table sets forth the high and low prices for shares of our
common stock for the periods noted, as reported by the National Daily Quotation
Service and the OTC bulletin board maintained by Nasdaq. Quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may not
represent actual transactions. The Company's stock began trading on May 6, 1998
under the symbol PDCI.
BID PRICES
YEAR PERIOD HIGH LOW
2000 First Quarter 0.28 0.06
(through February 29, 2000)
1999 First Quarter 5.88 3.25
Second Quarter 3.44 1.10
Third Quarter 1.19 0.25
Fourth Quarter 0.53 0.11
The number of beneficial holders of record of the common stock of PDC as of
the close of business on February 29, 2000 was approximately 114. Many of the
shares are held in street name and consequently reflect numerous additional
beneficial owners.
DIVIDEND POLICY
We have never paid any cash dividends on our common stock and do not
anticipate paying any cash dividends on our common stock in the future.
Instead, we intend to retain future earnings, if any, to fund the development
and growth of our business.
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EXECUTIVE COMPENSATION
Summary Compensation Table
The Summary Compensation Table shows selected compensation information for
services rendered in all capacities for the fiscal years ended December 31, 1999
and 1998. Other than as set forth, no executive officer's salary and bonus
exceeded $100,000 in any of the applicable years. The following information
includes the dollar value of base salaries, bonus awards, the number of stock
options granted and selected other compensation, if any, whether paid or
deferred.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------- -----------------------
Awards Payouts
------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Awards Options Payouts Compensation
Principal Position Year ($) ($) ($) ($) SARs (#) ($) ($)
- ------------------ ------ ------- ----- ------------- ---------- ---------- ------ ------------
David Sowers 1999 -0- -0- -0- -0- -0- -0- -0-
(CEO)
1998 -0- -0- -0- -0- -0- -0- -0-
Sandra Sowers 1999 83,729 -0- -0- -0- -0- -0- -0-
(President,
Secretary, &
Treasurer)
1998 58,724 -0- -0- -0- -0- -0- -0-
Leory Soers 1999 35,868 -0- -0- -0- -0- -0- -0-
(Vice-President)
1998 25,599 -0- -0- -0- -0- -0- -0-
</TABLE>
RISK FACTORS
PRESENT OPERATIONS AT LOSS. The Company, organized in September, 1994 as
Kenneth C. Garcia, Inc., after its merger with P.D.C. Innovative Industries,
Inc. (organized in October 1997) had gross sales of $5,165.00 during the fiscal
year ended December 31, 1998, and no revenues for the fiscal year ended December
31, 1999, with net income (loss) of ($573,376.00) in fiscal 1998 as compared to
net income (loss) of ($424,987) in fiscal 1999. Essentially, the Company
currently operates at loss. There is no assurance, therefore, that the Company
will be able to generate profits in the future.
LIMITED PRODUCT LINE. The Company's present product line is concentrated in the
areas of sterilization devices for the healthcare industry, level devices for
construction industry as well as special blades for lawnmowers, door seals and
water-saving valves for toilet tanks. The Company's present product lines are
vulnerable to adverse developments affecting its product lines which could
reduce the present demand or significantly increase the Company's cost thereby
reducing profitability. Furthermore, the Company's product line is too
diversified leading to the risk of increased cost marketing a number of items to
different non-related consumer segments.
POTENTIAL IMPACT OF RISING COST OF RAW MATERIALS AND LABOR. The cost of raw
materials from which the Company's products are manufactured is subject to
abrupt arid significant change. In recent years the price of such material has
generally been increasing. Significant further increases in the cost of such
materials could dramatically increase the pricing of the Company's products and
adversely affect future revenues and profitability of such products. When mass
production of current arid new lines of products will ensue outsourcing to
foreign manufacturers will be used under assumption of lower labor cost there.
Such outsourcing may lead to the risk of rising of cost of the products in case
of unforeseen surges of costs of labor on respective foreign markets.
POTENTIAL ADVERSE IMPACT OF ENVIRONMENTAL CONCERNS UPON THE FUTURE MARKETABILITY
OF SOME OF THE COMPANY'S PRODUCTS. At present, sonic of the Company's present
line of products related to healthcare industry are manufactured with the use of
materials that are comprised of non-biodegradable plastic fibers. In recent
years concern has grown over the effects of such products on the environment due
to the country's growing solid waste disposal "crisis," the declining landfill
capacity in major metropolitan areas able to handle such products and the much
publicized hazards of "medical wastes." Although the degree to which such
products are responsible for the country's waste disposal related problems is
the subject of serious debate at the present time, should it become the
consensus that the cost and problems of disposal of such products outweighs
their benefits, such a development could have a materially adverse impact upon
the Company
11
<PAGE>
POTENTIAL IMPACT OF FDA AND GOVERNMENTAL REGULATION ON NEW PRODUCT DEVELOPMENT
FOR THE HEALTH CARE INDUSTRY. Some of the Company's products may be regulated
as medical devices by the federal Food and Drug Administration (the "FDA")
pursuant to the federal Food, Drug and Cosmetic Act (the "Cosmetic Act") and are
or may be subject to regulation by other federal and state governmental
agencies. The FDA has comprehensive authority to regulate the development,
production, distribution and promotion of medical devices. Furthermore, certain
states impose additional requirements on the distribution of medical devices.
The cost of complying with present and future regulations may be significant.
In addition, the regulatory approval process and attendant costs may delay or
prevent the marketing of products developed by the Company in the future. The
Mandatory Device Reporting ("MDR") regulation obligates the Company to provide
information to the FDA on injuries alleged to have been associated with the use
of a product or certain product failures which could cause injury. If the FDA
believes that the Company is not in compliance with the law, it can institute
proceedings to detain or seize products, enjoin future violations, or asses
civil and/or criminal penalties against the Company or its officers or
employees. Any such action by the FDA could result in a disruption of the
Company's operations for an undetermined time.
COMPETITION. The industries to which the Company plans to introduce the current
and future lines of products, such as for example, hospital supply and medical
products business are intensely competitive ones. At present, the Company
estimates that there are over 50 companies whose products compete with the
Company's. Many of the Company's competitors have far greater financial
resources, larger staff's, and more established market recognition in both the
domestic and international markets than the Company.
POTENTIAL IMPACT OF COST CONTAINMENT POLICIES AND VOLUME BUYING THROUGH
PURCHASING CONSORTIUMS IN THE HEALTHCARE INDUSTRY. The healthcare market
accounts for most of the demand for Sterile pro, one of the major items on the
Company's current product line, with hospitals accounting .for approximately
two-thirds of the demand for such product. The health care industry has been
typified in recent years by strict cost containment measures imposed by federal
and state governments, private insurers and other "third party" payors of
medical costs. In response to these pressures, virtually all segments of the
health care market have become extremely cost sensitive and in many cases
hospitals and other health care providers have become affiliated with purchasing
consortiums who are charged with obtaining large quantities of needed products
at the lowest possible cost. These factors in combination have had an adverse
impact upon smaller suppliers and manufacturers, such as the Company, who either
are unable to supply the large quantities sought by these purchasing consortiums
or who are unable to respond to the need for lower product pricing. The Company
believes that it will be able to meet the demand for large quantity orders.
Further, management believes that the dramatic increased demand for safety
oriented products, such as Sterile Pro offered by the Company, will also serve
to offset these factors. However, there can be no assurance that the Company
will be able to overcome the negative impact of these conditions in the health
care marketplace.
PRODUCT LIABILITY COSTS AND POSSIBILE UNAVAILABILITY OF INSURANCE. Providers
of medical-related products to hospitals and other health care institutions may
encounter liability for damages to patients in the event that their products
prove to be defective. Certain of the Company's products will be utilized in
medical and surgical procedures where the Company could be subject to claims for
such injuries resulting from the use of its products. At this time the Company
maintains no product liability insurance coverage which management believes is
adequate at this stage of development of the respective product line. However,
as a result of the continuing changes in insurance coverage and premiums, no
assurance can be given that the Company will be able to maintain product
liability insurance at a reasonable cost or that such insurance will be
available to the. Company in the future.
12
<PAGE>
RELIANCE UPON MANAGMENT. The Company is principally dependent upon the personal
efforts and abilities of Dave Sowers, Sandra Sowers, and Leroy Sowers, its
present operating officers. The loss of any of these individuals could have a
materially adverse effect upon the Company's ability to successfully carry ors
its business. If the Company were to lose the services of any of its key
personnel before a qualified replacement could be found, its business could be
adversely affected, Additionally, as the Company expands its present operations,
it will require the services of additional skilled personnel. There can be no
assurance that it can attract persons with the requisite skills and training to
meet future needs.
PENNY STOCK REFORM ACT. .In October 1990, Congress enacted the "Penny Stock
Reform Act of 1990" (the "'90 Act'') to counter fraudulent practices common in
penny stock transactions. Rule 3a51-1 of the Exchange Act defines a "penny
stock" as an equity security that is not, among other things: a) a reported
security (i.e., listed on certain national securities exchanges); b) a security
registered or approved for registration and traded on a national securities
exchange that meets certain guidelines, where the trade is effected through the
facilities of that national exchange; c) a security listed on the NASDAQ
National Market System; d) a security of an issuer that meets certain minimum
certified financial requirements ("net tangible assets" in excess of $2,000,000
(if the issuer has been continuously operating for more than three years) or
$5,000,000 (if the issuer has been continuously operating for less than three
years), or "average revenue" of at least $6,000,000 for the last three years);
or e) a security with a price of at least $5.00 per share for the transaction in
question or that has a bid quotation (as defined in the Rule) of at least $5.00
per share. Under Rule 3a51-1, the Company's Common Stock falls within the
definition of a "Penny stock." Pursuant to the 90 Act, brokers and/or dealers,
prior to effecting a transaction in a penny stock, are required to provide
investors with written disclosure documents containing information concerning
various aspects of the market for penny stocks as well as specific information
about the penny stock and the transaction involving tire purchase and sale of
that stock (e.g., price quotes and broker/dealer and associated person
compensation). Subsequent to the transaction, the broker is required to deliver
monthly or quarterly statements containing specific information about the penny
stock. Because the Company's Common Stock is at this time a penny stock, the
above discussed added disclosure requirements may negatively affect the ability
of investors in the Company's stock to sell their securities in the secondary
market, if any.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Upon execution of the Exchange Agreement and delivery of the PDC shares to
the shareholders of MAS XIV, pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, PDC became the successor
issuer to MAS XIV for reporting purposes under the Securities Exchange Act of
1934 and elected to report under the Act effective March 6, 2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
13
<PAGE>
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of PDC for the fiscal years ending December 31,
1999 and 1998 are included herein.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
P.D.C. Innovative Industries, Inc.
We have audited the accompanying balance sheets of P.D.C. Innovative Industries,
Inc. as of December 31, 1999 and December 31, 1998, and the related combined
statements of operations, shareholder's equity, and cash flows for the years
then ended. 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 combined 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 combined financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of P.D.C. Innovative
Industries, Inc. as of December 31, 1999 and December 31, 1998, and the results
of operations and cash flows for the years ended December 31, 1999 and December
31, 1998, in conformity with generally accepted accounting principles.
By:/s/Franklin & Nicholls, CPA's, L.L.C.
Franklin & Nicholls, CPA's, L.L.C.
Coral Springs, Florida
February 25, 2000
14
<PAGE>
<TABLE>
<CAPTION>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF
DECEMBER 31, 1999 AND 1998
<S> <C> <C>
DECEMBER 31 DECEMBER 31
1999 1998
ASSETS
CURRENT ASSETS
CASH IN BANK $ 113,787 $ 11,770
INVENTORY-WORK IN PROCESS 662,161 82,493
------------- -------------
TOTAL CURRENT ASSETS $ 775,948 $ 94,263
FIXED ASSETS (NOTE 4)
EQUIPMENT (NET OF ACCUMULATED DEPRECIATION) $ 1,030,583 $ 1,146,971
------------- -------------
TOTAL FIXED ASSETS $ 1,030,583 $ 1,146,971
OTHER ASSETS
PATENTS $ 3,000 $ 3,845
SETTLEMENT RECEIVABLE (NOTE 8) 58,500 0
ORGANIZATION COSTS 12,575 12,575
DEPOSITS & OTHER RECEIVABLES 3,257 0
------------- -------------
TOTAL OTHER ASSETS $ 77,332 $ 16,420
------------- -------------
TOTAL ASSETS $ 1,883,863 $ 1,257,654
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
DUE TO SHAREHOLDERS $ 50,887 $ 5,899
PAYROLL TAXES PAYABLE 71 0
CURRENT PORTION OF LONG-TERM DEBT 0 0
------------- -------------
TOTAL CURRENT LIABILITIES $ 50,958 $ 5,899
LONG-TERM DEBT, NET OF CURRENT PORTION (NOTE 5) 430,000 0
------------- -------------
TOTAL LIABILITIES $ 480,958 $ 5,899
STOCKHOLDER'S EQUITY (NOTE 6)
COMMON STOCK, $.001 PAR VALUE; 50,000,000 SHARES AUTHORIZED;
4,403,300 SHARES ISSUED AND OUTSTANDING $ 4,403 $ 13,568
PAID IN CAPITAL 2,438,209 1,852,907
ACCUMULATED DEFICIT (1,039,707) (614,720)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY $ 1,402,905 $ 1,251,755
------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,883,863 $ 1,257,654
============= =============
</TABLE>
The accompanying notes to the consolidated financial
statements are an integral part of these statements.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31 DECEMBER 31
1999 1998
REVENUE $ 0 $ 5,165
OPERATING EXPENSES
SALARIES AND RELATED TAXES $ 163,480 $ 192,263
PROFESSIONAL FEES & COMMISSIONS 120,331 69,427
TRAVEL & ENTERTAINMENT 33,302 0
ADMINISTRATIVE EXPENSE 23,285 48,347
AUTO EXPENSE 21,126 24,936
EQUIPMENT MAINTENANCE 20,233 23,246
RENT 13,249 48,596
DEPRECIATION 10,904 85,427
OTHER 19,077 86,299
------------- -------------
TOTAL OPERATING EXPENSES $ 424,987 $ 578,541
------------- -------------
NET INCOME / (LOSS) $ (424,987) $ (573,376)
============= =============
</TABLE>
The accompanying notes to the consolidated financial
statements are an integral part of these statements.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
SHARES CAPITAL RETAINED TOTAL
OF STOCK STOCK EARNINGS STOCKHOLDERS'
EQUITY
BALANCE - 1/1/97 1,000 $ 24,755 $ 24,755
COMMON STOCK ISSUED TO RELATED PARTIES
COMMON STOCK ISSUED TO UNRELATED PARTIES
NET INCOME / (LOSS) (41,344) (41,344)
------------ ----------- ------------ -----------
BALANCE - 12/31/97 1,000 $ 24,755 ($41,344) ($16,589)
COMMON STOCK RETIRED AT MERGER (1,000)
COMMON STOCK ISSUED TO RELATED PARTIES 5,587,500 39,500
COMMON STOCK ISSUED TO UNRELATED PARTIES 7,980,598 1,802,220 1,802,220
NET INCOME / (LOSS) (573,376) (573,376)
------------ ----------- ------------ -----------
BALANCE - 12/31/98 13,568,098 $1,866,475 ($614,720) $ 1,251,755
COMMON STOCK RESTATED FOR REVERSE STOCK SPLIT (13,141,396)
------------ ----------- ------------ -----------
SUB-TOTAL AFTER REVERSE STOCK SPLIT 426,702 $1,866,475 ($614,720) $ 1,251,755
COMMON STOCK ISSUED TO STERILE-PRO 2,000,000 0
COMMON STOCK ISSUED TO PRIME MANAGEMENT 300,000 233,100 233,100
COMMON STOCK ISSUED TO RETIRE DEBENTURES 383,993 50,000 50,000
COMMON STOCK ISSUED TO UNRELATED PARTIES 1,292,605 293,037 293,037
NET INCOME / (LOSS) (424,987) (424,987)
------------ ----------- ------------ -----------
BALANCE - 12/31/99 4,403,300 $2,442,612 ($1,039,707) $ 1,402,905
============ =========== ============= ===============
</TABLE>
The accompanying notes to the consolidated financial
statements are an integral part of these statements.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C> <C>
DECEMBER 31 DECEMBER 31
1999 1998
CASH FLOWS FROM OPERATION ACTIVITIES:
NET LOSS $ (424,987) $ (573,376)
ADJUSTMENTS TO NET LOSS FOR CASH PROVIDED THROUGH
DEPRECIATION EXPENSE IN INCOME STATEMENT 10,904 85,427
DEPRECIATION ALLOCATED TO INVENTORY-WORK IN PROCESS 163,845 0
------------- -------------
NET CASH PROVIDED IN OPERATING ACTIVITIES $ (250,238) $ (487,949)
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES $ (58,361) $ (1,227,815)
INVENTORY (579,668) (82,493)
SETTLEMENT RECEIVABLE (58,500) 0
PATENTS 845 (3,845)
DEPOSITS (3,257) 0
ORGANIZATION COSTS 0 (12,329)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES $ (698,941) $ (1,326,482)
CASH FLOWS FROM FINANCING ACTIVITIES
ISSUANCE OF COMMON STOCK $ 526,137 $ 1,841,720
ISSUANCE OF DEBENTURES 480,000 0
DECREASE IN PAYROLL TAXES (5,828) 5,899
DUE TO SHAREHOLDERS 50,887 0
LONG-TERM OBLIGATION 0 (23,020)
------------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 1,051,196 $ 1,824,599
------------- -------------
NET INCREASE / (DECREASE) IN CASH $ 102,017 $ 10,168
CASH, BEGINNING 11,770 1,602
------------- -------------
CASH, ENDING $ 113,787 $ 11,770
============= =============
</TABLE>
The accompanying notes to the consolidated financial
statements are an integral part of these statements.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF THE COMPANY
In the first quarter of 1998, the Company acquired Perfect Seal, Inc., TriLevel,
Inc., and J.D.S. Innovative Industries, Inc. The State of Florida will
administratively dissolve Perfect Seal, Inc. and J.D.S. Innovative Industries,
Inc., and the remaining corporation, TriLevel will remain as a whole owned
subsidiary of the Company.
In January 1998, the Board of Directors of Kenneth C. Garcia, Inc. and the
Company were merged. The surviving corporation is P.D.C. Innovative Industries,
Inc. The Company is incorporated in Nevada and is a home product designer,
manufacturer, and distributor of newly invented products. As of December 1999,
the Company has five new products that are in various stages of production.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
PRINCIPLES OF COMBINATION-The accompanying consolidated financial statements
includes the accounts of P.D.C. Innovative Industries, Inc. and its subsidiaries
(together, the Company). Significant intercompany balances and transactions have
been eliminated in the combination
PROPERTY AND EQUIPMENT- Property and equipment are stated at cost. Depreciation
is provided using the straight-line method over the estimated useful lives of
the related assets. Expenditures for major improvements and additions are
charged to asset accounts, while replacements, maintenance and repairs, which do
not extend the lives of the respective assets, are charged to expense as
incurred.
CASH AND CASH EQUIVALENTS- For the purpose of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.
INVENTORIES- Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method.
INTANGIBLE ASSETS- Intangible assets consist primarily of the excess of cost
over the net assets acquired relating to the acquisitions. The excess of cost
over net assets acquired (goodwill) is amortized over a 15-year period, using
the straight-line method.
IMPAIRMENT OF ASSETS- In accordance with the provisions of Statement of
Financial Accounting Standards No. 121 (SFAS 121), Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of, the Company's
policy is to evaluate whether there has been a permanent impairment in the value
of long-lived assets,
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
certain identifiable intangibles and goodwill when certain events have taken
place that indicate that the remaining balance may not be recoverable. When
factors indicate that the intangible assets should be evaluated for possible
impairment, the Company uses an estimate of related undiscounted cash flows.
Factors considered in the valuation include current operating results, trends
and anticipated undiscounted future cash flows. There have been no impairment
losses for the fiscal year ended December 31, 1999.
INCOME TAXES- The Company utilizes the guidance provided by Statement of
Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes.
Under the liability method specified by SFAS 109, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities as measured by the enacted tax
rates which will be in effect when these differences reverse. Deferred tax
expense is the result of changes in deferred tax assets and liabilities.
USE OF ESTIMATE- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts of assets, liabilities,
income and expense and disclosures of contingencies. Future events could alter
such estimates.
REVENUE RECOGNITION- Revenues are recognized for the Company when the
merchandise is shipped to the customer.
FAIR VALUE OF FINANCIAL INSTRUMENTS- The Company, in estimating its fair value
disclosures for financial instruments, uses the following methods and
assumptions:
Cash, Accounts Receivable, Accounts Payable and Accrued Expenses: The
carrying amounts reported in the balance sheet for cash, accounts receivable,
accounts payable and accrued expenses approximate their fair value due to their
relatively short maturity.
Long-Term Obligations: The fair value of the Company's fixed-rate long-term
obligations is estimated using discounted cash flow analyses, based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements. At December 31, 1999, the fair value of the Company's long-term
obligations approximated its carrying value.
Credit Line Payable: The carrying amount of the Company's credit line payable
approximates fair market value since the interest rate on these instruments
changes with market interest rates.
NOTE 3. PATENT COSTS
Patent Costs as of the date of these financial statements total $3,000.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. FURNITURE & EQUIPMENT
A summary of equipment as of December 31, 1999 and December 31, 1998 are as
follows:
Furniture $ 17,271 $ 19,107
Equipment 1,277,939 1,213,708
Total Furniture & Equipment $ 1,295,210 $ 1,232,815
Less: accumulated depreciation (264,627) ( 85,844)
Furniture and equipment, net $ 1,030,583 $ 1,146,971
Additions to Accumulated Depreciation for the year ended December 31, 1999 is
allocated as follows:
Depreciation expensed in Income Statement $ 10,904
Depreciation allocated to Inventory-Work
in Process 163,845
Total Addition to Accumulated Depreciation $ 174,749
NOTE 5. LONG-TERM DEBT
On September 6, 1999, the Company entered into a securities subscription
agreement in which the Company agreed to sell a series of debentures to BVII
Holdings, L.L.C. The debentures sold were titled P.D.C. Innovative Industries,
Inc. 8% Series A Senior Subordinated Convertible Redeemable Debentures, and the
total amount sold under this agreement was $480,000. No payments are to be made
prior to the maturity date. The maturity date of the debentures is September 6,
2001, at which time the full principal amount of $480,000 plus accrued interest,
calculated at 8% per annum, is fully due.
At the sole option of BVII Holdings, L.L.C., the holder may convert all or any
amount of the principal face amount of the debenture then outstanding into
freely tradeable shares of the Common Stock of the Company at a conversion price
for each share of Common Stock equal to 75% of the closing bid price of the
common stock for the trading day immediately preceding the date of conversion.
During the year ended December 31, 1999, debentures totaling $50,000 were
converted into 383,993 shares of the Common Stock of the Company. Subsequent to
December 31, 1999, and prior to February 29, 2000, all of the remaining
debentures were also converted into 7,095,791 shares of the Common Stock of the
Company. As of February 29, 2000, all of the debentures were fully retired, and
a total of 7,479,784 shares of the Common Stock of the Company were issued for
the retirement of those debentures.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. STOCKHOLDERS' STOCK TRANSACTIONS
The Company's common stock which was authorized as of December 31, 1997, was
1,000 shares at no par value, of which 1,000 shares were issued to and held by
two shareholders. After the merger with Kenneth C. Garcia, Inc., the authorized
shares are 50,000,000 with a $.001 par value.
On January 21, 1999, the Company engaged in a 40 to 1 reverse split of its
common stock. On that date, 17,068,098 shares of common stock were exchanged
for 426,702 shares. After the reverse split, the authorized shares remained
50,000,000, all with a $.001 par value.
On April 5, 1999, the Company entered into an agreement with Sterile-Pro,
Incorporated, in order to finish the prototype for Hypo Sterile 2000, the
sterilization container designed to effectively reduce infectious accidents from
injector devices and detoxify the remains of contaminated product from medical
industry treatment of patients with high profile diseases including AIDS,
Tuberculosis and Hepatitis. As part of the agreement, the Company received
500,000 shares (or 100%) of the common stock of Sterile-Pro, Incorporated and
Sterile-Pro, Incorporated received 2,000,000 shares of the common stock of the
Company.
The following is a summary listing of the shareholders of the Company as of
December 31, 1999:
Outstanding Amount
Shares Issued Contributed
----------------------------
Sterile-Pro, Incorporated 2,000,000 $ -0-
Prime Management 300,000 233,100
Issued for the retirement of Senior
Subordinated Debentures
(Note 5) 383,993 50,000
All other shareholders 1,719,307 2,159,512
----------------------------
Total Amount of Contribution 4,403,300 $ 2,442,612
============================
Capital Stock, at $.001 par value $ 4,403
Paid in Capital 2,438,209
Total Amount of Capital Stock and Paid in Capital $ 2,442,612
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. COMMON SHARE LOSS COMPUTATION
After merger, common share loss computation
Based on 4,403,300 shares $ ( .0965) per share
After merger and after full redemption of
Senior Debentures (Note 5), common share
loss computation
Based on 11,499,091 shares $ ( .0370) per share
NOTE 8. JUDGMENT SETTLEMENT
On November 17, 1999, the Company entered into a settlement agreement, which
settled a legal action brought by the Company against Power Media Group, Inc.
and other related parties. In the agreement, Power Media agreed to make payments
totaling $75,000 as follows: the first payment of $10,000 to be paid within five
days of the ratification of the agreement by the Court, and ten (10) subsequent
monthly payments of $6,500. The Company received the first payment of $10,000 on
December 3, 1999. The balance still to be received under the terms of the
settlement as of December 31, 1999, is $58,500.
NOTE 9. FINAL JUDGMENT OUTSTANDING
On July 8, 1999, the Court entered a Summary Final Judgment in favor of the
Company against Kahn Noonien Singh Management, L.L.C., a Florida corporation, in
the amount of $492,500 plus $56,496 in statutory interest plus reasonable
attorney fees. The judgment assessed by the Court against Kahn Noonien Singh
Management related to wrongful conversion of stock, breach of oral contract, and
fraud.
Legal counsel for the Company has filed discovery motions and is otherwise
engaged in attempting to locate any assets of Kahn Noonien Singh Management,
which would be available for payment of this judgment.
Due to the questionable collectibility of this judgment, the amount of the
judgment has not been reflected in the attached financial statements.
NOTE 10. LITIGATION
The Company is, from time to time, involved in litigation relating to claims
arising out of its operations in the ordinary course of business. There are no
claims that were outstanding as of December 31, 1999 that would have a material
adverse impact on its financial condition, results of operations, or cash flows.
<PAGE>
P.D.C. INNOVATIVE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. COMMITMENTS
The Company has entered into a business lease agreement with L.A.W. Properties -
Coral Springs L.C. for office and manufacturing space at 3701 NW 126th Avenue,
Coral Springs, FL. The Company has committed to a two-year lease with a base
rent of $5,300 per month with a cost of living adjustment over the term of the
lease. Consequently, the Company has committed to a minimum of $127,200 over the
two-year period under this lease agreement.
<PAGE>
ITEM 8. CHANGE IN FISCAL YEAR
PDC as the successor issuer has a fiscal year end of December 31 which
is the same as MAS XIV's fiscal year.
EXHIBITS
2.1. Stock Exchange Agreement between PDC Holdings, Inc. and certain MAS XIV
shareholders dated as of March 2, 2000.
2.2 Consulting Agreement
3.1 Articles
3.2 Articles of Amendment
3.3 Articles of Merger by and between Kenneth C. Garcia, Inc., a Nevada
corporation and P.D.C. Innovative Industries, Inc., a Florida
corporation.
3.4 Bylaws
23.1 Consent of Franklin & Nicholls, CPA's, LLC, certified public
accountants.
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.
PDC Innovative Industirs, Inc.
/s/ David Sowers
----------------------------------
Chief Executive Officer
Date: March 6, 2000
<PAGE>
STOCK EXCHANGE AGREEMENT
Agreement dated as of March 2, 2000 between PDC Innovative Industries,
Inc., a Nevada corporation ("PDCI"), on the one hand, and MRC Legal Services
Corporation ("MRC" or the "Shareholder"), on the other hand.
1. THE ACQUISITION.
1.1 Purchase and Sale Subject to the Terms and Conditions of this
Agreement. At the Closing to be held as provided in Section 2, PDCI shall sell
the PDCI Shares (defined below) to the Shareholder and the Shareholder shall
purchase the PDCI Shares from PDCI, free and clear of all Encumbrances other
than restrictions imposed by Federal and State securities laws.
1.2 Purchase Price. PDCI will exchange 1,500,000 shares of its
restricted common stock (the "PDCI Shares") for 8,250,000 shares of MAS
Acquisition XIV Corp. ("MAS XIV"), representing approximately 96.8% of the
issued and outstanding common shares of MAS XIV (the "MAS XIV Shares").
Immediately after the Closing, the Shareholder will cause MAS XIV to complete a
reverse stock split (the "Reverse Stock Split") previously approved by the
directors of MAS XIV which will result in the remaining 269,900 shares of MAS
XIV being cashed out by the Shareholder at no additional cost to PDCI.
Immediately subsequent to the Reverse Stock Split, PDCI shall be the sole
shareholder of MAS XIV with 1,000 shares issued and outstanding. The PDCI
Shares shall be issued and delivered to the Shareholder or assigns as set forth
in Exhibit "A" hereto.
2. THE CLOSING.
2.1 Place and Time. The closing of the sale and exchange of the PDCI
Shares for the MAS XIV Shares (the "Closing") shall take place at Cutler Law
Group, 610 Newport Center Drive, Suite 800, Newport Beach, CA 92660 no later
than the close of business (Orange County California time) on or before March 6,
2000 or at such other place, date and time as the parties may agree in writing.
2.2 Deliveries by the Shareholders. At the Closing, the Shareholder
shall deliver the following to PDCI:
a. Certificates representing the MAS XIV Shares, duly endorsed for transfer
to PDCI and accompanied by appropriate medallion guaranteed stock powers; the
Shareholder shall immediately change those certificates for, and to deliver to
PDCI at the Closing, a certificate representing the MAS XIV Shares registered in
the name of PDCI (without any legend or other reference to any Encumbrance other
than appropriate federal securities law limitations).
b. The documents contemplated by Section 3.
<PAGE>
c. All other documents, instruments and writings required by this Agreement
to be delivered by the Shareholder at the Closing and any other documents or
records relating to MAS XIV's business reasonably requested by PDCI in
connection with this Agreement.
2.3 Deliveries by PDCI. At the Closing, PDCI shall deliver the
following to the Shareholder:
a. The PDCI Shares for further delivery to the Shareholder or assigns as
contemplated by section 1.
b. The documents contemplated by Section 4.
c. All other documents, instruments and writings required by this Agreement
to be delivered by PDCI at the Closing.
3. CONDITIONS TO PDCI'S OBLIGATIONS.
The obligations of PDCI to effect the Closing shall be subject to the
satisfaction at or prior to the Closing of the following conditions, any one or
more of which may be waived by PDCI:
3.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits PDCI's
acquisition of the MAS XIV Shares or the PDCI Shares or that will require any
divestiture as a result of PDCI's acquisition of the MAS XIV Shares or that will
require all or any part of the business of PDCI to be held separate and no
litigation or proceedings seeking the issuance of such an injunction, order or
decree or seeking to impose substantial penalties on PDCI or MAS XIV if this
Agreement is consummated shall be pending.
3.2 Representations, Warranties and Agreements. (a) The
representations and warranties of the Shareholder set forth in this Agreement
shall be true and complete in all material respects as of the Closing Date as
though made at such time, and (b) the Shareholder shall have performed and
complied in all material respects with the agreements contained in this
Agreement required to be performed and complied with by it at or prior to the
Closing.
3.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of PDCI's acquisition of the MAS XIV Shares shall have been
obtained and shall be in full force and effect.
3.4 Resignations of Director. Effective on the Closing Date, all of
officers and directors shall have resigned as an officer, director and employee
of MAS XIV.
<PAGE>
4. CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS.
The obligations of the Shareholder to effect the Closing shall be subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Shareholder:
4.1 No Injunction. There shall not be in effect any injunction, order
or decree of a court of competent jurisdiction that prevents the consummation of
the transactions contemplated by this Agreement, that prohibits PDCI's
acquisition of the MAS XIV Shares or the Shareholder's acquisition of the PDCI
Shares or that will require any divestiture as a result of PDCI's acquisition of
the Shares or the Shareholder's acquisition of the PDCI Shares or that will
require all or any part of the business of PDCI or MAS XIV to be held separate
and no litigation or proceedings seeking the issuance of such an injunction,
order or decree or seeking to impose substantial penalties on PDCI or MAS XIV if
this Agreement is consummated shall be pending.
4.2 Representations, Warranties and Agreements. (a) The
representations and warranties of PDCI set forth in this Agreement shall be true
and complete in all material respects as of the Closing Date as though made at
such time, and (b) PDCI shall have performed and complied in all material
respects with the agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing.
4.3 Regulatory Approvals. All licenses, authorizations, consents,
orders and regulatory approvals of Governmental Bodies necessary for the
consummation of PDCI's acquisition of the MAS XIV Shares and the Shareholder's
acquisition of the PDCI Shares shall have been obtained and shall be in full
force and effect.
5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.
The Shareholder represents and warrants to PDCI that, to the Knowledge of
the Shareholder, and except as set forth in an MAS XIV Disclosure Letter:
5.1 Authorization. The Shareholder is a corporation duly organized,
validly existing and in good standing under the laws of the state of California.
This Agreement constitutes a valid and binding obligation of the Shareholder,
enforceable against it in accordance with its terms.
5.2 Capitalization. The authorized capital stock of MAS XIV consists
of 80,000,000 authorized shares of stock, par value $.001, and 20,000,000
preferred shares, par value $.001, of which 8,519,900 common shares are
presently issued and outstanding. No shares have been registered under state or
federal securities laws. As of the Closing Date there will not be outstanding
any warrants, options or other agreements on the part of MAS XIV obligating MAS
XIV to issue any additional shares of common or preferred stock or any of its
securities of any kind.
<PAGE>
5.3 Ownership of MAS XIV Shares. The delivery of certificates to PDCI
provided in Section 2.2 will result in PDCI's immediate acquisition of record
and beneficial ownership of the MAS XIV Shares, free and clear of all
Encumbrances subject to applicable State and Federal securities laws.
5.4 Consents and Approvals of Governmental Authorities. Except with
respect to applicable State and Federal securities laws, no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required to be made or obtained by MAS XIV or PDCI or any of its
Subsidiaries in connection with the execution, delivery and performance of this
Agreement by MAS XIV or the consummation of the sale of the MAS XIV Shares to
PDCI.
5.5 Financial Statements. MAS XIV has delivered to PDCI the
consolidated balance sheet of MAS XIV as at June 30, 1998 and June 30, 1999,
and statements of income and changes in financial position for the fiscal years
then ended and the period from inception to the period then ended, together with
the report thereon of MAS XIV's independent accountant (the "MAS XIV Financial
Statements"). The MAS XIV Financial Statements are accurate and complete in
accordance with generally accepted accounting principles. The independent
accountants for MAS XIV will furnish any and all work papers required by PDCI
and will sign any and all consents required to be signed to include the
financial statements of PDCI in any subsequent filing by PDCI.
5.6 Litigation. There is no action, suit, inquiry, proceeding or
investigation by or before any court or Governmental Body pending or threatened
in writing against or involving MAS XIV which is likely to have a material
adverse effect on the business or financial condition of MAS XIV, PDCI and any
of their Subsidiaries, taken as whole, or which would require a payment by MAS
XIV in excess of $2,000 in the aggregate or which questions or challenges the
validity of this Agreement. MAS XIV is not subject to any judgment, order or
decree that is likely to have a material adverse effect on the business or
financial condition of MAS XIV, PDCI or any of their Subsidiaries, taken as a
whole, or which would require a payment by MAS XIV in excess of $2,000 in the
aggregate.
5.7 Absence of Certain Changes. Since the date of the MAS XIV Financial
Statements, MAS XIV has not:
a. suffered the damage or destruction of any of its properties or assets
(whether or not covered by insurance) which is materially adverse to the
business or financial condition of MAS XIV or made any disposition of any of
its material properties or assets other than in the ordinary course of business;
b. made any change or amendment in its certificate of incorporation or
by-laws, or other governing instruments;
<PAGE>
c. issued or sold any Equity Securities or other securities, acquired,
directly or indirectly, by redemption or otherwise, any such Equity Securities,
reclassified, split-up or otherwise changed any such Equity Security, or granted
or entered into any options, warrants, calls or commitments of any kind with
respect thereto;
d. organized any new Subsidiary or acquired any Equity Securities of any
Person or any equity or ownership interest in any business;
e. borrowed any funds or incurred, or assumed or become subject to, whether
directly or by way of guarantee or otherwise, any obligation or liability with
respect to any such indebtedness for borrowed money;
f. paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than in the ordinary course
of business;
g. prepaid any material obligation having a maturity of more than 90 days
from the date such obligation was issued or incurred;
h. canceled any material debts or waived any material claims or rights,
except in the ordinary course of business;
i. disposed of or permitted to lapse any rights to the use of any material
patent or registered trademark or copyright or other intellectual property owned
or used by it;
j. granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any employee benefit plan);
k. purchased or entered into any contract or commitment to purchase any
material quantity of raw materials or supplies, or sold or entered into any
contract or commitment to sell any material quantity of property or assets,
except (i) normal contracts or commitments for the purchase of, and normal
purchases of, raw materials or supplies, made in the ordinary course business,
(ii) normal contracts or commitments for the sale of, and normal sales of,
inventory in the ordinary course of business, and (iii) other contracts,
commitments, purchases or sales in the ordinary course of business;
l. made any capital expenditures or additions to property, plant or
equipment or acquired any other property or assets (other than raw materials and
supplies) at a cost in excess of $100,000 in the aggregate;
m. written off or been required to write off any notes or accounts
receivable in an aggregate amount in excess of $2,000;
n. written down or been required to write down any inventory in an
aggregate amount in excess of $ 2,000;
<PAGE>
o. entered into any collective bargaining or union contract or agreement;
or
p. other than the ordinary course of business, incurred any liability
required by generally accepted accounting principles to be reflected on a
balance sheet and material to the business or financial condition of MAS XIV.
5.8 No Material Adverse Change. Since the date of the MAS XIV Financial
Statements, there has not been any material adverse change in the business or
financial condition of MAS XIV.
5.9 Brokers or Finders. Other than James Stubler, the Shareholder has
not employed any broker or finder or incurred any liability for any brokerage or
finder's fees or commissions or similar payments in connection with the sale of
the MAS XIV Shares to PDCI.
6. REPRESENTATIONS AND WARRANTIES OF PDCI.
PDCI represents and warrants to the Shareholder that, to the Knowledge of
PDCI (which limitation shall not apply to Section 6.3). Such representations
and warranties shall survive the Closing for a period of two years.
6.1 Organization of PDCI; Authorization. PDCI is a corporation duly
organized, validly existing and in good standing under the laws of Nevada with
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement have been duly authorized by all necessary corporate action of
PDCI and this Agreement constitutes a valid and binding obligation of PDCI;
enforceable against it in accordance with its terms.
6.2 Capitalization. The authorized capital stock of PDCI consists of
50,000,000 shares of common stock. As of the date of this Agreement, PDCI had
11,882,417 shares of common stock issued and outstanding, and no shares of
Preferred Stock issued and outstanding. As of the Closing Date, all of the
issued and outstanding shares of common stock of PDCI are validly issued, fully
paid and non-assessable. The Common Stock of PDCI is presently listed and
trading on the Nasdaq Over-the-Counter Bulletin Board under the symbol "PDCIE."
6.3 Ownership of PDCI Shares. The delivery of certificates to MAS XIV
provided in Section 2.3 will result in the Shareholder or assigns immediate
acquisition of record and beneficial ownership of the PDCI Shares, free and
clear of all Encumbrances other than as required by Federal and State securities
laws.
<PAGE>
6.4 No Conflict as to PDCI and Subsidiaries. Neither the execution and
delivery of this Agreement nor the consummation of the sale of the PDCI Shares
to the Shareholders will (a) violate any provision of the certificate of
incorporation or by-laws (or other governing instrument) of PDCI or any of its
Subsidiaries or (b) violate, or be in conflict with, or constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations
under, or cause the acceleration of the maturity of any debt or obligation
pursuant to, or result in the creation or imposition of any Encumbrance upon any
property or assets of PDCI or any of its Subsidiaries under, any material
agreement or commitment to which PDCI or any of its Subsidiaries is a party or
by which any of their respective property or assets is bound, or to which any of
the property or assets of PDCI or any of its Subsidiaries is subject, or (c)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or other Governmental Body applicable to PDCI or any of its
Subsidiaries except, in the case of violations, conflicts, defaults,
terminations, accelerations or Encumbrances described in clause (b) of this
Section 6.4, for such matters which are not likely to have a material adverse
effect on the business or financial condition of PDCI and its Subsidiaries,
taken as a whole.
6.5 Consents and Approvals of Governmental Authorities. No consent,
approval or authorization of, or declaration, filing or registration with, any
Governmental Body is required to be made or obtained by PDCI or any of either of
their Subsidiaries in connection with the execution, delivery and performance of
this Agreement by PDCI or the consummation of the sale of the PDCI Shares to the
Shareholders.
6.6 Other Consents. No consent of any Person is required to be obtained
by MAS XIV or PDCI to the execution, delivery and performance of this Agreement
or the consummation of the sale of the PDCI Shares to the Shareholders,
including, but not limited to, consents from parties to leases or other
agreements or commitments, except for any consent which the failure to obtain
would not be likely to have a material adverse effect on the business and
financial condition of MAS XIV or PDCI.
6.7 Financial Statements. Prior to closing, PDCI shall have delivered
to the Shareholder consolidated balance sheets of PDCI and its Subsidiaries as
at December 31, 1998 and September 30, 1999, and statements of income and
changes in financial position for each of the periods then ended, together with
the report thereon of PDCI's independent accountant (the "PDCI Financial
Statements"). Such PDCI Financial Statements and notes fairly present the
consolidated financial condition and results of operations of PDCI and its
Subsidiaries as at the respective dates thereof and for the periods therein
referred to, all in accordance with generally accepted United States accounting
principles consistently applied throughout the periods involved, except as set
forth in the notes thereto, and shall be utilizable in any SEC filing in
compliance with Rule 310 of Regulation S-B promulgated under the Securities Act.
6.8 Brokers or Finders. Other than M. Richard Cutler, Brian Lebrecht,
Vi Bui, James Stubler Samuel Eisenberg and Iwona Alami, PDCI has not employed
any broker or finder or incurred any liability for any brokerage or finder's
fees or commissions or similar payments in connection with the sale of the PDCI
Shares to the Shareholders.
<PAGE>
6.9 Purchase for Investment. PDCI is purchasing the MAS XIV Shares
solely for its own account for the purpose of investment and not with a view to,
or for sale in connection with, any distribution of any portion thereof in
violation of any applicable securities law.
7. Access and Reporting; Filings With Governmental Authorities; Other
Covenants.
7.1 Access Between the date of this Agreement and the Closing Date.
Each of the Shareholder and PDCI shall (a) give to the other and its authorized
representatives reasonable access to all plants, offices, warehouse and other
facilities and properties of MAS XIV or PDCI, as the case may be, and to its
books and records, (b) permit the other to make inspections thereof, and (c)
cause its officers and its advisors to furnish the other with such financial and
operating data and other information with respect to the business and properties
of such party and its Subsidiaries and to discuss with such and its authorized
representatives its affairs and those of its Subsidiaries, all as the other may
from time to time reasonably request.
7.2 Regulatory Matters. The Shareholder and PDCI shall (a) file with
applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the contemplated transaction
and (b) cooperate with each other as they may reasonably request in connection
with the foregoing.
8. CONDUCT OF MAS XIV'S BUSINESS PRIOR TO THE CLOSING. The Shareholder
shall use its best efforts to ensure the following:
8.1 Operation in Ordinary Course. Between the date of this Agreement
and the Closing Date, MAS XIV shall cause conduct its businesses in all material
respects in the ordinary course.
8.2 Business Organization. Between the date of this Agreement and the
Closing Date, MAS XIV shall (a) preserve substantially intact the business
organization of MAS XIV; and (b) preserve in all material respects the present
business relationships and good will of MAS XIV.
8.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, MAS XIV shall not cause or permit any amendment of its certificate
of incorporation or by-laws (or other governing instrument) and shall not:
a. issue, sell or otherwise dispose of any of its Equity Securities, or
create, sell or otherwise dispose of any options, rights, conversion rights or
other agreements or commitments of any kind relating to the issuance, sale or
disposition of any of its Equity Securities;
b. create or suffer to be created any Encumbrance thereon, or create, sell
or otherwise dispose of any options, rights, conversion rights or other
agreements or commitments of any kind relating to the sale or disposition of any
Equity Securities;
c. reclassify, split up or otherwise change any of its Equity Securities;
<PAGE>
d. be party to any merger, consolidation or other business combination;
e. sell, lease, license or otherwise dispose of any of its properties or
assets (including, but not limited to rights with respect to patents and
registered trademarks and copyrights or other proprietary rights), in an amount
which is material to the business or financial condition of MAS XIV except in
the ordinary course of business; or
f. organize any new Subsidiary or acquire any Equity Securities of any
Person or any equity or ownership interest in any business.
8.4 Other Restrictions. Between the date of this Agreement and the
Closing Date, MAS XIV shall not:
a. borrow any funds or otherwise become subject to, whether directly or by
way of guarantee or otherwise, any indebtedness for borrowed money;
b. create any material Encumbrance on any of its material properties or
assets;
c. increase in any manner the compensation of any director or officer or
increase in any manner the compensation of any class of employees;
d. create or materially modify any material bonus, deferred compensation,
pension, profit sharing, retirement, insurance, stock purchase, stock option, or
other fringe benefit plan, arrangement or practice or any other employee benefit
plan (as defined in section 3(3) of ERISA);
e. make any capital expenditure or acquire any property or assets;
f. enter into any agreement that materially restricts PDCI, MAS XIV or any
of their Subsidiaries from carrying on business;
g. pay, discharge or satisfy any material claim, liability or obligation,
absolute, accrued, contingent or otherwise, other than the payment, discharge or
satisfaction in the ordinary course of business of liabilities or obligations
reflected in the MAS XIV Financial Statements or incurred in the ordinary course
of business and consistent with past practice since the date of the MAS XIV
Financial Statements; or
h. cancel any material debts or waive any material claims or rights.
9. DEFINITIONS.
As used in this Agreement, the following terms have the meanings specified
or referred to in this Section 9.
9.1 "Business Day" C Any day that is not a Saturday or Sunday or a day
on which banks located in the City of New York are authorized or required to be
closed.
9.2 "Code" C The Internal Revenue Code of 1986, as amended.
9.3 "Encumbrances" C Any security interest, mortgage, lien, charge,
adverse claim or restriction of any kind, including, but not limited to, any
restriction on the use, voting, transfer, receipt of income or other exercise of
any attributes of ownership, other than a restriction on transfer arising under
Federal or state securities laws.
9.4 "Equity Securities" C See Rule 3aB11B1 under the Securities
Exchange Act of 1934.
9.5 "ERISA" C The Employee Retirement Income Security Act of 1974, as
amended.
<PAGE>
9.6 "Governmental Body" C Any domestic or foreign national, state or
municipal or other local government or multi-national body (including, but not
limited to, the European Economic Community), any subdivision, agency,
commission or authority thereof.
9.7 "Knowledge" C Actual knowledge, after reasonable investigation.
9.8 "Person" C Any individual, corporation, partnership, joint venture,
trust, association, unincorporated organization, other entity, or Governmental
Body.
9.9 "Subsidiary" C With respect to any Person, any corporation of which
securities having the power to elect a majority of that corporation's Board of
Directors (other than securities having that power only upon the happening of a
contingency that has not occurred) are held by such Person or one or more of its
Subsidiaries.
10. TERMINATION.
10.1 Termination. This Agreement may be terminated before the Closing
occurs only as follows:
a. By written agreement of the Shareholder and PDCI at any time.
b. By PDCI, by notice to the Shareholders at any time, if one or more of the
conditions specified in Section 3 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1) would otherwise occur or
if satisfaction of such a condition is or becomes impossible.
c. By the Shareholder, by notice to PDCI at any time, if one or more of the
conditions specified in Section 4 is not satisfied at the time at which the
Closing (as it may be deferred pursuant to Section 2.1), would otherwise occur
of if satisfaction of such a condition is or becomes impossible.
d. By either the Shareholders or PDCI, by notice to the other at any time
after March 6, 2000, if the transaction has not been completed.
10.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall terminate without any liability or further
obligation of any party to another.
13. NOTICES. All notices, consents, assignments and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given when (a) delivered by hand, (b) sent by telex or facsimile (with receipt
confirmed), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the delivery service (receipt requested), in each
case to the appropriate addresses, telex numbers and facsimile numbers set forth
below (or to such other addresses, telex numbers and facsimile numbers as a
party may designate as to itself by notice to the other parties).
(a) If to PDCI:
PDC Innovative Industries, Inc.
<PAGE>
3701 N.W. 126th Avenue, Bay 5
Coral Springs, FL 33065
Attn: Dave Sowers, CEO
Facsimile (954) 341-5361
(b) If to the Shareholder:
c/o Cutler Law Group
610 Newport Center Drive, Suite 800
Newport Beach, CA 92660
Facsimile No.: (949) 719-1988
Attention: M. Richard Cutler, Esq.
14. MISCELLANEOUS.
14.2 Expenses. Each party shall bear its own expenses incident to the
preparation, negotiation, execution and delivery of this Agreement and the
performance of its obligations hereunder.
14.3 Captions. The captions in this Agreement are for convenience of
reference only and shall not be given any effect in the interpretation of this
agreement.
14.4 No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14.5 Exclusive Agreement; Amendment. This Agreement supersedes all prior
agreements among the parties with respect to its subject matter with respect
thereto and cannot be changed or terminated orally.
14.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
14.7 Governing Law, Venue. This Agreement and (unless otherwise provided)
all amendments hereof and waivers and consents hereunder shall be governed by
the internal law of the State of California, without regard to the conflicts of
law principles thereof. Venue for any cause of action brought to enforce any
part of this Agreement shall be in Orange County, California.
14.8 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns,
provided that neither party may assign its rights hereunder without the consent
of the other, provided that, after the Closing, no consent of MAS XIV or the
Shareholder shall be needed in connection with any merger or consolidation of
PDCI with or into another entity.
<PAGE>
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective offi-cers, hereunto duly authorized, and
entered into as of the date first above written.
PDC INNOVATIVE INDUSTRIES, INC.
a Nevada corporation
/s/ Dave Sowers
____________________________________________________
By: Dave Sowers, CEO
MRC LEGAL SERVICES CORPORATION
/s/ M. Richard Cutler
____________________________________________________
By: M. Richard Cutler, President
<PAGE>
EXHIBIT A
MAS XIV SHAREHOLDER AND ASSIGNS
Shareholder PDCI Shares to be Issued
MRC Legal Services LLC 300,000
M. Gregory Cutler 50,000
Christopher R. Cutler 50,000
Nicholas Cutler 50,000
Brian A. Lebrecht 205,000
Vi Bui 153,750
MAS Capital Inc. 250,000
James Stubler 75,000
Samuel Eisenberg 150,000
TGR Ventures, Inc. 216,250
TOTAL 1,500,000
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of March 2, 2000 between PDC INNOVATIVE
INDUSTRIES, INC., a Nevada corporation, ("PDCI"), on the one hand, and M.
RICHARD CUTLER ("Cutler"), BRIAN A. LEBRECHT ("Lebrecht"), VI BUI ("Bui"),
JAMES STUBLER ("Stubler"), IWONA ALAMI ("Alami") and SAMUEL EISENBERG
("Eisenberg", and, together with Cutler, Lebrecht, Bui, Stubler and Alami, the
"Consultants"), on the other hand.
WHEREAS:
A. Consultants have agreed to render consulting services with regard to
the negotiation and completion of a stock exchange between PDCI and the majority
shareholder of MAS Acquisition XIV Corp., an Indiana corporation (the "MAS XIV
Shareholder").
B. In the event PDCI is able to complete the Stock Exchange with the
MAS XIV Shareholder, PDCI wishes to compensate Consultants for their consulting
services.
NOW THEREFORE, it is agreed:
1. Stock Compensation. PDCI shall pay and cause to be issued to the
Consultants a consulting fee of 2,465,000 shares of common stock of PDCI (the
"Shares") immediately upon the execution of a stock exchange agreement with the
MAS XIV Shareholder. Such shares shall be subject to registration by PDCI on
Form S-8 within 7 days of PDCI closing on the stock exchange agreement with the
MAS XIV Shareholder. The Consultants agree to prepare and file the S-8
Registration Statement at their sole expense. The parties agree that the value
of the Shares is equal to 50% of the closing bid price on the date of this
Agreement. The shares shall be issued as follows: 1,252,750 to Cutler, 273,000
to Lebrecht, 204,750 to Bui, 85,000 to Stubler, 615,500 to Eisenberg, and 25,000
to Alami.
2. Miscellaneous. This Agreement (i) shall be governed by the laws of
the State of California; (ii) may be executed in counterparts each of which
shall constitute an original; (iii) shall be binding upon the successors,
representatives, agents, officers and directors of the parties; and (iv) may not
be modified or changed except in a writing signed by all parties.
<PAGE>
This Consulting Agreement has been executed as of the date first above
written.
PDC INNOVATIVE INDUSTRIES, INC.
/S/ Dave Sowers
____________________________________________________
By: Dave Sowers, CEO
CONSULTANTS
/s/ M. Richard Cutler
____________________________________________________
M. Richard Cutler
/s/ Brian A. Lebrecht
____________________________________________________
Brian A. Lebrecht
/s/ Vi Bui
____________________________________________________
Vi Bui
/s/ James Stubler
____________________________________________________
James Stubler
/s/ Samuel Eisenberg
____________________________________________________
Samuel Eisenberg
/s/ Iwona Alami
____________________________________________________
Iwona Alami
[SECRETARY OF STATE OF THE
STATE OF NEVADA
FILESTAMP]
KENNETH C . GARCIA, INC.
A Nevada Corporation
ARTICLES OF INCORPORATION
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned has this day formed a corporation for the transaction
of business, and the promotion and conduct of the objects and purposes
hereinafter stated, under and pursuant to the laws of the State of Nevada.
I DO HEREBY CERTIFY:
1. NAME. The name of the corporation, which is hereinafter referred to
as "the corporation", is:
KENNETH C . GARCIA, INC.
2. REGISTERED OFFICE, The registered office of, the corporation and the
resident agent in charge thereof shall be:
Herman G, Herbig, Esq.
1470 Main Street
P. O. Box 1210
Gardnerville, Nevada 89410-1210.
Offices for the transaction of any business of the corporation and where
the meetings of the Board of Directors and of the shareholders may be held, and
where the books of the corporation may be kept, may be established and
maintained in any other part of the State of Nevada, or in any other state,
territory or possession of the United States of America, the District of
Columbia, or in any foreign country.
3. CAPITAL STOCK. The amount of the total, authorized capital (stock of
this corporation is 25,000 shares without nominal or par value. Each share of
stock shall have one (1) vote. Such stock may be issued from time to time
without action by the shareholders for such consideration as may be fixed from
time to time by the Board of Directors, and shares so issued, the full
consideration for which has been paid or delivered, shall be deemed the full
paid up stock, and the holder of such shares shall not be liable for any further
payment thereof. Said stock shall not be subject to assessment to pay the debts
of the corporation, and no paid-up stock and no stock issues as fully paid,
shall ever be assessed of assessable by the corporation.
4. PREEMPTIVE RIGHTS. The corporation elects to have preemptive rights.
5. DIRECTORS. The governing board of this corporation shall be known as
Directors, and the number of directors may from time to time be increased or
decreased in such a manner as shall be provided by the bylaws of this
corporation and the laws of the State of Nevada, The name and post office
address of the members of first board of directors, which shall be one director
in number, is as follows:
<PAGE>
KENNETH C. GARCIA
1153 Slate Road
Wellington, Nevada 89444
6. BOARD OF DIRECTORS. The Board of Directors shall have the power and
authority to make and alter, or amend, the bylaws, to fix the amount in cash or
otherwise to be reserved as working capital, and to authorize and cause to be
executed the mortgages and liens upon property and franchises of the
corporation.
The Board of Directors shall, from time to time, determine whether, and to
what extent, and at what times and places, and under what conditions and
regulations, the accounts and books of the corporation, or any of them, shall be
open to the inspection of the shareholders; and no shareholder shall have the
right to inspect any account, book or document of this corporation except as
conferred by the Statutes of Nevada, or authorized by the Directors or by
resolution of the shareholders.
No sale, conveyance, transfer, exchange or other disposition of all or
substantially all of the property and assets of this corporation shall be made
unless approved by the vote or written consent of the shareholders entitled to
exercise two-thirds (2/3) of the voting power of the corporation.
The shareholders and directors shall have the power to hold their meetings,
and keep the books, documents anti papers of the corporation outside of the
State of Nevada, and at such place as may from time to time be designated by the
bylaws or by resolution or the Board of Directors or shareholders, except as
otherwise required by the laws of the State of Nevada.
The corporation shall indemnify each present and future officer and
director of the corporation and each person who serves at the request of the
corporation as an officer or director of any other corporation, whether or not
such person is also an officer or director of the corporation, against all
costs, expenses and liabilities, including the amounts of judgments, amounts
paid in compromise settlements and amounts paid for services of counsel and
other related expenses, which may be incurred by or imposed on him or her in
connection with any claim, action, suit, proceeding, investigation or inquiry
hereafter made, instituted or threatened in which he or she may be involved as a
party or otherwise by reason of any past or future action taken or authorized
and approved by him or her or any omission to act as such officer or director,
at the time of the incurring car imposition of such costs, expenses, or
liabilities, except such costs, expenses ox liabilities as shall relate to
matters as to which he or she shall in such action, suit or proceeding, be
finally adjudged to be liable by reason of his or her negligence or willful
misconduct toward the corporation or such other corporation in the performance
of his duties as such officer or directorAs to whether or not a director or
officer was liable by reason of his or her negligence or willful misconduct
toward the corporation or such other corporation in the performance of his
duties as such officer or director, in the absence of such final adjudication of
the existence of liability, the Board of Directors and each officer and director
may conclusively rely upon an opinion of legal counsel selected by or in the
manner designated by the Board of Directors. The foregoing right of
indemnification shall not be exclusive of other rights to which any such officer
or director may be entitled as a matter of law or otherwise, and shall inure to
the benefit or the heirs, executors, administrators and assigns of each officer
or director.
<PAGE>
Authority is hereby granted to the shareholders of this corporation to vote
to change, from time to time, the authorized number of directors of this
corporation by a duly adopted amendment to the bylaws of this corporation.
7. INCORPORATOR. The name and post office address of the incorporator
signing these Articles of Incorporation is Herman G. Herbig, Post Office Box
1210, Gardnerville, Nevada 89410-1210.
THE UNDERSIGNED, being the original incorporator hereinbefore named, for
the purpose of forming a corporation to do business both within and without the
State of Nevada, and in pursuance of the general. corporation law of the State
of Nevada, does make and file this certificate, hereby declaring and certifying
that the facts hereinabove stated are true, and accordingly have hereunto set my
hand.
DATED AND DONE September 7, 1994.
/s/ Herman G. Herbig
HERMAN G. HERBIG
STATE OF NEVADA )
) ss
COUNTY OF DOUGLAS )
On September 7, 1994, before me, the undersigned Notary Public, duly
commissioned and sworn, personally appeared HERMAN G. HERBIG, known to me to be
the person whose name is subscribed to the within instrument, and who
acknowledged to me that he executed the same freely and voluntarily and for the
uses and purposes therein mentioned.
/s/ Leslie B. Glenn
NOTARY PUBLIC
[NOTARY STAMP]
[SECRETARY OF STATE OF THE
STATE OF NEVADA
FILESTAMP]
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(After issuance of Stock)
KENNETH C. GARCIA, INC. #13937-94
---------------------------------------------------
Name of Corporation
I, the undersigned, Godfrey Comrie, President or Vice President, and Aida
Carrasquillo, Secretary or Assistant Secretary, of KENNETH C. GARCIA, INC. do
hereby certify:
That the Board of Directors of said corporation at a meeting duly convened,
held on the 19th day of September, 1997 adopted a resolution to amend the
original articles as follows:
Article Three is hereby amended to read as follows:
CAPITAL STOCK. The amount of the total authorized capital stock of this
corporation is 50,000,000 shares with par value of $0.001 each. Each share of
stock shall have one (1) vote. Such stock may be issued form time to time with
out action by the shareholders for such consideration as may be fixed from time
to time by the Board of Directors, and share so issued, the full consideration
for which has been paid or delivered, shall be deemed the full paid up stock,
and the holder of such shares shall not be liable for any futher payment
thereof. Such stock shall not be subject to assessment to pay the debts of the
corporation, and no paid-up stock and no stock issued as fully paid, shall ever
be assessed as assesable by the Corporation.
The number of shares of the corporation outstanding and entitled to vote on
an amendment to the Articles of Incorporation is 25,000; that the said change(s)
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Godfrey Comrie
- ---------------------
President
[NOTARY SEAL]
ARTICLES OF MERGER
THESE ARTICLES OF MERGER (the "Articles"), dated as of January 22, 1998,
between KENNETH C. GARCIA, INC. a Nevada corporation ("Surviving
Corporation/GARCIA ") and P. D. C. INNOVATIVE INDUSTRIES, INC., a Florida
corporation ("PDCI"), the two corporations being herein sometimes collectively
called the "Constituent Corporations."
WITNESSETH:
WHEREAS, the Surviving Corporation is a corporation duly organized and
existing under the laws of the State of Nevada; and
WHEREAS, PDCI is a corporation duly organized and existing under the laws
of the State of Florida; and
WHEREAS, the Boards of Directors of the Constituent Corporations hereto
deem it desirable, upon the terms and subject to the conditions herein stated,
that PDCI be merged with and into the Surviving Corporation and that GARCIA be
the Surviving Corporation as outlined herein.
NOW THEREFORE, it is agreed as follows:
Section 1
Terms, and Conditions/Manner and Basis for Converting Shares
1.1 In accordance with the provisions of these Articles and the
requirements of applicable law, PDCI shall be merged with and into the Surviving
Corporation at the Effective Date (as defined in Section 2 hereof). GARCIA shall
be the Surviving Corporation, and the separate existence of PDCI shall cease at
the Effective Date. Consummation of the Merger shall be on the terms and subject
to the conditions set forth herein.
1.2 At the Effective Date, the Surviving Corporation shall continue its
corporate existence as a Nevada corporation and (i) it shall thereupon and
thereafter possess all rights, privileges, powers, franchises and property
(real, personal and mixed) of each of the Constituent Corporations; (ii) all
debts due to either of the Constituent Corporations, on whatever account, all
chooses in action and all other things belonging to either of the Constituent
Corporations shall be taken and deemed to be transferred to and shall be vested
in the Surviving Corporation by virtue of the Merger without further act or
deed; and (iii) all rights of creditors and all liens upon any property of any
of the Constituent Corporations shall be preserved unimpaired, limited in lien
to the property affected by such liens immediately prior to the Effective Date,
and all debts, liabilities and duties of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation.
1.3 At the Effective Date, (i) the Articles of Incorporation and the Bylaws
of the Surviving Corporation, as existing immediately prior to the Effective
Date, shall be and remain the Articles of Incorporation and Bylaws of the
Surviving Corporation; and (ii) the members of the Board of Directors of the
Surviving Corporation holding office immediately prior to the Effective Date
shall resign and be replaced pursuant to Section 1(b)(ii) of the Stock Exchange
and Merger Agreement.
1.4 On the Effective Date, (i) all issued and outstanding shares of capital
stock of PDCI shall be converted into 2,450,000 restricted shares of GARCIA
Common Stock, no par value, (the "Common Stock") which shall be fully paid and
non-assessable. In lieu of the issuance of any fractional shares, the shares of
GARCIA's Common Stock to which PDCI's shareholders are entitled shall be rounded
off to the next highest whole number. Until surrendered and exchanged as herein
provided, each outstanding certificate which, prior to the Effective Date,
represented an PDCI security shall be deemed for all corporate purposes to
evidence ownership of the appropriate number of shares of Common Stock, into
which the PDCI security (which, prior to such Effective Date, were represented
thereby) shall have been so converted.
1.5 Subject to Section 1.4 above, each holder of a stock certificate or
certificates representing outstanding shares of PDCI capital stock immediately
prior to the Effective Date of the Merger, shall upon surrender of such
certificate or certificates to GARCIA after the Effective Date, be entitled to
receive a stock certificate or certificates representing the appropriate number
of shares of GARCIA Common Stock as described in Section 1,4 above. Until
actually surrendered, each such PDCI certificate shall, by virtue of the Merger,
be deemed for all purposes to evidence ownership of the appropriate number of
shares of GARCIA Common Stock.
1.6 If any certificate representing a GARCIA security is to be issued in a
name other than that in which the certificate surrendered is registered, it
shall be a condition of such issuance that the certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such issuance shall either pay to GARCIA or its transfer agent
any transfer or other taxes required by reason of the issuance of certificates
representing a GARCIA security in a name other than that of the registered
holder of the certificate surrendered, or establish to the satisfaction of
GARCIA or its transfer agent that such tax has been paid or is not applicable.
SECTION 2
Effective Date
2.1 These Articles shall be submitted to the shareholders entitled to vote
thereon of PDCI as provided by the applicable laws of the State of Nevada. If
these Articles are duly adopted by the requisite consent or vote of such
shareholders and are not terminated as contemplated by Section 4, these
Articles, executed in accordance with the law of the State of Nevada shall be
filed with the Secretary of the State of Nevada.
2.2 The Merger shall become effective upon the filing with the Secretary of
State of the State of Nevada, herein sometimes referred to as the "Effective
Date."
SECTION 3
Covenant, and Agreements
3.1 Each of the Constituent Corporations hereby covenants to mutually
assist the other and to take all action reasonably necessary to accomplish and
effectuate the terms hereof.
3.2 The Constituent Corporations have entered into a Stock Exchange and
Merger Agreement, of which these Articles of Merger are a part, and said
Agreement has been approved, adopted, certified, executed and acknowledged by
each of the Constituent Corporations in accordance with Nevada law. Said
Agreement thereto is on file at the principal place of business of the Surviving
Corporation located at 4411 NW 105 Terrace, Coral Springs, Florida. A copy of
said Agreement will be furnished by the Surviving Corporation, on request and
without cost, to any shareholder of the Constituent Corporations.
SECTION 4
Amendment. Termination and Counterpart Signatures
4.1 At any time prior to the filing of these Articles with the Secretary of
State of the State of Nevada, these Articles may be amended by the Boards of
Directors of the Surviving Corporation and PDCI, to the extent permitted by
state law notwithstanding favorable action on the Merger by the shareholders of
either or both of the Constituent Corporations with respect to any of the terms
contained herein except the terms of conversion provided, for in Section 1.4
hereof.
4.2 At any time prior to the filing of these Articles with the Secretary of
State of the State of Nevada, these Articles may be terminated and abandoned by
the Board of Directors of either the Surviving Corporation or PDCI,
notwithstanding favorable action on the Merger by the shareholders of PDCI,
notwithstanding favorable action on the Merger by the shareholders of PDCI.
4.3 These Articles may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 5
Appointment of Agent for Service-of Process
5.1 Pursuant to applicable provisions of Nevada corporate law, since the
Surviving Corporation in the Merger is to be governed by the laws of the State
of Nevada, said Surviving Corporation does hereby agree that it may be served
with process in the State of Nevada in any proceeding for enforcement of any
obligation of the Surviving corporation of PDCI arising from this Merger,
including any suit or any other proceeding to enforce the rights of any
shareholders as determined in appraisal proceedings pursuant to the corporate
law of the State of Nevada, and does hereby irrevocably appoint the Secretary of
State of the State of Nevada as its agent to accept service of process in any
such suit or other proceedings and does hereby specify that the address to which
a copy of such process shall be made by the Secretary of State of the State of
Nevada is 5701 N. Pine Island Rd., Suite 3108, Tamarac, Florida 33321, care of
Florida Atlantic Stock Transfer, Inc.
IN WITNESS WHEREOF, the parties hereto have caused these Articles of Merger to
be executed by an executive officer of each of them pursuant to authority given
by their respective Boards of Directors.
Approved by its Board of Directors by written consent dated January 22,1998.
KENNETH C. GARCIA, INC. BY:- /s/ Aida Carrasquillo
Aida Carrasquillo/ Secretary
By /s/ Godfrey Comrie ATTEST: /s/ Signature Unkown
Godfrey Comrie, President
Approved by its Board of Directors and by its shareholders by written consent
dated January 22, 1998.
P. D. C. INNOVATIVE INDUSTRIES, INC.
By: /s/ Sandra Sowers ATTEST: /s/ Signature Unkown
Sandra Sowers, President
KENNETH C. Garcia, Inc.
A Nevada Corporation
B Y L A W S
ARTICLE I
OFFICES
1. Registered or Statutory Office, and Resident Agent. The registered or
statutory office of the corporation in the State or Nevada is located at 1470
Main Street, Gardnerville, Nevada; the registered, statutory or resident agent
of the corporation in charge of such office is HERMAN G. HERBIG, ATTORNEY AT
LAW.
2. Other Places of Business. Branch or subordinate offices or places of
business may be established at anY time bY the Board of Directors at any place
or places where the corporation is qualified to do business.
ARTICLE II
SHAREHOLDERS
1. Annual Meeting. The annual meeting of shareholders shall be held upon
not less than ten, nor more than fifty, days written notice of the time, place
and purposes at the meeting, at 11:00 o'clock A.M. on the 12 day the month of
September of each year, at the principal office of the corporation or at such
other time and place as shall be specified in the notice of meeting, in order to
elect directors and transact such other business as shall come before the
meeting, including the election of any officers as required by law. If that date
is a legal holiday, the meeting shall be held at the same hour on the next
succeeding business day.
2. Special. Meetings. A special meeting of shareholders may be called for
any purpose by the President or the Board of Directors, or as permitted by law.
A special meeting shall be held upon not less than ten, nor more than fifty,
days written notice of the time, place and purposes of the meeting.
<PAGE>
3. Action Without Meeting. The shareholders may act without a meeting if,
prior or subsequent to such action, each shareholder who would have been
entitled to vote upon such-action shall consent in writing to such action. Such
written consent or consents shall be filed in the minute book.
4. Quorum. The presence at a meeting in person or by proxy of the holders
of shares entitled to cast a majority (more than 50%) of all shares issued and
outstanding shall constitute a quorum.
5. Record Date. The record date for all meetings of shareholders shall be
as fixed by the Board of Directors or as provided by Statute.
ARTICLE III
BOARD of DIRECTORS
1. Number, and Term of Office. The Board of Directors shall consist of
three in number, or the number of shareholders, whichever shall be the least.
Each director shall be elected by the shareholders at each annual meeting and
shall hold office until the next annual meeting of shareholders and until that
director's successor shall have been elected and qualified.
2. Regular Meetings. A regular meeting of the Board shall be held without
notice immediately following and at the same place as the annual shareholders'
meeting for the purposes of electing officers and conducting such other business
as may come before the meeting. The Board, by resolution, may provide for
additional regular meetings which may be held without notice, except to members
not present at the time of the adoption of the resolution.
3. Special Meetings. A special meeting of the Board may be called at any
time by the President or by the Directors for any purpose. Such meeting shall be
held upon not less than five (5) days notice if given orally (either by
telephone or in person), or by telegraph, or upon not less than ten (l0) days
notice if given by depositing the notice in the United Slates Mail, postage
prepaid. Such notice shall specify the time, place and purposes of the meeting.
4. Action Without .Meeting. The Board may act without a meeting if, prior
to such action, each member of the Board shall consent in writing thereto. Such
consent or consents shall be fixed in the minute book.
5. Quorum. A majority of the entire Board shall constitute a quorum for
the transaction of business.
<PAGE>
6. Vacancies in Board of Directors. Vacancies in the Board, whether caused
by removal, death, mental or physical incapacitation or any other reason,
including vacancies caused by an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining Directors, even
though lees than a quorum of the Board, or by a sole remaining director.
ARTICLE IV
WAIVERS OF NOTICE
Any Notice required by these Bylaws, the Articles of Incorporation or the
law of the State of Nevada may be waived in writing by any person entitled to
notice. The waiver or waivers may be executed either before, at or after the
event with respect to which notice is waived. Each Director or shareholder
attending a meeting without protesting the lack of proper notice, prior to the
conclusion of the meeting, shall be deemed conclusively to have waived such
notice.
ARTICLE V
OFFICERS
1. Election. At its regular meeting following the annual meeting of
shareholders, the Board shall elect a President, a Treasurer, a Secretary and
such other officers as shall be elected by the shareholders. It may elect such
other officers, including one or more Vice Presidents, as it shall deem
necessary. One person may hold three or more offices, and one person may hold
the offices of President, Secretary and Treasurer at the same time.
2. Duties and Authority of President. The President shall be chief
executive officer of the Corporation. Subject only to the authority of the
Board, he shall have general charge and supervision over, and responsibility
for, the business and affairs o, the corporation. Unless otherwise directed by
the Board, all other officers shall be subject to the authority and supervision
of the President. The President may enter into and execute in the name of the
corporation, contracts or other instruments in the regular course of business or
contracts or other instruments not in the regular course of business which are
authorized, either generally or specifically, by the Board. He shall have the
general powers and duties of management usually vested in the office of
President of a corporation.
<PAGE>
3. Duties and Authority of Vice-President. The Vice president shall perform
such duties and have such authority as from time to time may be delegated to him
by the President or by the Board. In the event of the absence, death, inability
or refusal to act by the President, the Vice President shall perform the duties
and be vested with the authority of the President.
4. Duties and Authority of Treasurer, The Treasurer shall have the custody
of the funds and securities of the Corporation and shall keep or cause to be
kept regular books of account for the corporation. The Treasurer shall perform
such other duties and possess such other powers as are incident to that office
or as shall be assigned by the President or the Board.
5. Duties and Authority of Secretary. The Secretary shall cause notices of
all meetings to be served as prescribed in these Bylaws and shall keep, or cause
to be kept, the minutes of all meetings of the shareholders and the Board. The
Secretary shall perform such other duties and possess such other powers as axe
incident to that office or as are assigned by the President or the Board.
6. Removal of Officers. The Board may remove any officer oar agent of the
corporation if such action, in the judgment of the Board, is in the best
interest of the corporation. Appointment or election to a corporate office shall
not, of itself, establish or create contract rights.
7. Vacancies in Offices, The Board, in its absolute discretion, may fill
all vacancies in offices, regardless of the cause of such vacancies, for the
remainder of the terms of the offices.
ARTICLE VI
AMENDMENTS TO AND EFFECT OF BYLAWS
FISCAL YEAR; ISSUANCE OF STOCK
1. Force and Effect of Bylaws These Bylaws are subject to the
provisions of the law of the State of Nevada and the Corporation's Articles of
Incorporation, as it may be amended from time to time. If any provision in these
Bylaws is inconsistent with a provision in the laws o, the State of Nevada or
the Articles of Incorporation, the laws of the State of Nevada shall govern.
<PAGE>
2. Wherever in these Bylaws references are made to more than one
incorporator, director or shareholder, they shall, if this is a sole
incorporator, director, shareholder corporation, be construed to mean the
solitary person; and all provisions dealing with the quantum of majorities or
quorums shall be deemed to mean the action by the one person constituting the
corporation.
3. Amendments to Bylaws. These Bylaws may be altered, amended or repealed
by the shareholders or the Board. Any Bylaw adopted, amended or repealed by the
shareholders may be amended or repealed by the Board, unless the resolution of
the shareholders adopting such Bylaw expressly reserves to the shareholders the
right to amend or repeal it.
4. Fiscal Year. The fiscal year of the corporation shall begin on the
first day of January of each year
DATED: September 12, 1994
/s/ Signature Unknown
Secretary
CERTIFICATE OF SECRETARY
THIS IS TO CERTIFY that I am the duly elected and qualified Secretary of
this corporation for the meeting held on this date. The foregoing Bylaws,
constituting a true original copy were duly adopted as the Bylaws of said
corporation on this date by the Directors of said corporation. Said Bylaws have
not bean modified or rescinded and at the date of this Certificate are in full
force and effect.
IN WITNESS WHEREOF, I have hereunto set my hand.
DATED: September 12, 1994
/s/ Signature Unknown
Secretary
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors of P.D.C. Innovative Industries, Inc.
We hereby consent to the use in this Form 8-K of our report dated
February 16, 2000 relating to the financial statements of
P.D.C. Innovative Industries, Inc.
/S/ Franklin & Nicholls, CPA's., L.L.C.
- ----------------------------------------------------
FRANKLIN & NICHOLLS, CPA'S, L.L.C
Certified Public Accountants
March 6, 2000
