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: January 21, 2000
LAREDO INVESTMENT CORP.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 77-0517964
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Suite 1450, 1075 West Georgia Street, Vancouver, British Columbia V6B 3C9
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(Address of principal executive offices)(Zip Code)
604-460-8440
-----------------
(Registrant's telephone number, including area code)
<PAGE>
Item 1. Changes in Control
On December 15, 1999, Shirley Bethurum, the Company's sole officer and director
appointed Lois Couston as a director of the Company and as President and Stella
Schreiner as Secretary and director. Immediately thereafter, Ms Bethurum
resigned all positions with the Company.
On January 21, 2000, the Company entered into an Acquisition Agreement with GFR
Nutritionals, Ltd., a British Columbia corporation, (GFR), Richard Pierce and
Lucretia Schanfarber (the GFR Majority Shareholders) to acquire their shares
representing 100% of the outstanding common stock of GFR in exchange for
19,000,000 shares of the Company's restricted common stock.
DESCRIPTION OF BUSINESS OF GFR
Business Development
GFR was incorporated in March 1997 as Helm Developments Ltd. In June 1998, the
Company formally changed its name to GFR Nutritionals Ltd.
Business operations began in October 1998 after acquiring manufacturing
equipment and arranging to manufacture nutritional supplements under a private
label contract.
GFR was 100% owned by the President and CEO, Richard Pierce from inception until
January 17, 2000, when a 10% interest was acquired by Lucretia Schanfarber.
On January 21, 2000, the Company entered into an Acquisition Agreement with GFR
Nutritionals, Ltd., a British Columbia corporation, (GFR), Richard Pierce and
Lucretia Schanfarber (the GFR Majority Shareholders) to acquire their shares
representing 100% of the outstanding common stock of GFR in exchange for
19,000,000 shares of the Company's restricted common stock.
NARRATIVE DESCRIPTION OF THE BUSINESS
GFR Nutritionals Ltd. is an established manufacturer of quality nutritional
supplement products. The Company operates a full service manufacturing facility
that produces natural-source nutritional, vitamin, mineral, herbal and sports
nutrition products which are sold on a private label basis to wholesale
distributors.
Nutritional supplements are being increasingly recognized by the medical and
scientific communities as an integral component of a healthy lifestyle. Much of
the growth in this industry is driven by six key factors:
-2-
<PAGE>
- - Positive publicity - For several years, medical journals and news reports
have widely and consistently publicized the positive effects of nutritional
supplements. Many of these reports focus on the correlation between
consumed nutrients and the reduced incidence of certain diseases. As a
result, the nutritional supplement industry has experienced greater
acceptance and popularity.
- - Increased research - The more the scientific community learns about the
human body, more is proved that an individual's diet and health are
undoubtedly connected. Government agencies, universities, and private
companies are increasing their sponsorship of research assessing the
benefits of nutritional supplements and herbs.
- - Favorable regulatory environment - The US Dietary Supplement Health and
Education Act (DSHEA) created a set of guidelines specific to the
supplement industry and established a regulatory environment which allows
responsible nutrition companies to thrive and allows the industry to
regulate itself with supervision by the FDA. Health Canada has followed
suit and defined Good Manufacturing Practices, with which compliance in the
industry is voluntary.
- - Mass market distribution - Nutritional supplements, including all-natural
products, vitamins, minerals and herbs, are increasingly sold in mass
volume retail stores. Due to this new market channel, millions of shoppers
are exposed to these products as they are introduced into the mainstream.
- - Ageing of the population - The largest demographic group in the history of
North America is now turning 50 years old. Over the next 15 years,
approximately 80 million more "baby boomers" will join this group of
individuals who are concerned with preserving their health and fitness,
directly increasing the demand for nutritional supplements.
- - Trend toward preventative care - The collective health consciousness of the
population that began over 20 years ago is gaining momentum and, along with
regular exercise, it embraces nutritional supplements.
According to the Nutrition Business Journal, the US nutrition industry, which
includes natural foods, dietary supplements, and natural personal care products,
has grown 14-16% annually over the past two years and is expected to sustain
double digit growth for the near future. The Nutrition Business Journal states
that the US nutrition industry generated $23.3 billion of consumer sales in
1997. Canadian sales tend to approximate 10% of the US market.
Principal Products: GFR currently manufactures 70 different products by
formulation and capsule size. Principal products that the Company manufactures
are:
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<PAGE>
- - Multiple vitamin/mineral product - 90/180 and 360 caps
- - Methyl sulfonyl methan ecaps or powder
- - Glucosamine sulfate
- - Devil's claw root extract St.
- - John's Wort extract
- - Kava Kava
- - Ginkgo Biloba leaf extract
- - Coenzyme Q10
- - Echinacea
- - L-Glutamine
- - Grapeseed extract
- - Vitamin C
- - Garlic
- - Ginseng
MARKETS: Established market channels for nutritional products within the
industry include distribution through health food retail stores, mass market
retail through department and grocery stores, multi-level marketing, mail order,
health practitioners, and the Internet.
Currently, the Company only manufactures nutritional supplements under private
label contracts with wholesale distributors. To date, one private label customer
has comprised 97% of the Company's sales.
The Company's primary goal is to achieve a level of annual revenues in excess of
$20 million by the fiscal year ended 2001 resulting from expanded marketing
efforts and vertical integration through acquisitions and expansion into new
markets. The Company is also pursing opportunities to market direct sales to
consumers through the Internet.
COMPETITION: The main competitors in the Canadian natural health product
industry are privately owned corporations. A couple of larger companies that
manufacture their products for retail distribution are Jamieson Laboratories and
Stanley Pharmaceuticals. There are also many companies which manufacture only
for private label sales. Many smaller manufacturers have their products sold
strictly in specialty health food and nutrition stores. NatraCeuticals Inc. is
the only publicly held natural health product company in Canada and had
approximately $23 million of sales in its 1998 fiscal year.
Natural health product manufacturing has significant cost barriers for new start
up companies. Start up costs include set up of manufacturing facilities through
purchase of equipment, acquiring skilled labor and research and implementation
of processes acceptable to government standards.
REGULATION: In both the US and Canada, the natural health products industry is
self regulating. In Canada, products are not required to be approved prior to
introduction to the market, however Health Canada has defined Good Manufacturing
Practices, with which compliance is voluntary. Health Canada has indicated that
stricter regulations for natural health products will be enacted in future
years.
-4-
<PAGE>
In 1996, US Congress enacted the Dietary Supplement Health and Education Act
(DSHEA) which included a set of guidelines specific to the supplement industry
and established a self regulatory environment for the industry.
EMPLOYEES: The Company currently has 15 employees. Executive management and
office administration personnel are comprised of 5 individuals. Operations
personnel is made up of 10 individuals, including the Quality Control Director
and Production Manager. Future employees will be hired as dictated by increases
in business volume.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
Plan of Operations
The Company is currently working on securing additional private label
manufacturing contracts. The key target for private label sales are wholesale
distributors of health food nutrition products. The Company is also pursuing
opportunities for direct sales to consumers through the Internet.
Liquidity and Capital Resources
The Company's working capital ratio was 0.72:1 as at December 31, 1998 and
improved to 0.86:1 by December 31, 1999. Key contributing factors for this
change were the increase in sales to Prairie Naturals Inc., a related party,
which comprised $240,000 of the $279,279 ending accounts receivable balance for
1999. Finished goods inventory balances at December 31, 1999 were minimal.
Generally, the Company has been shipping goods immediately upon completion. As
business volumes increase, finished goods inventory will be required to be kept
on hand.
Current liabilities include a $85,000 promissory note payable to a party related
to the shareholder, which bears interest at 12% annually. These funds are
repayable on demand however, the request for repayment occurring at this time is
not expected.
The Company has a small business loan outstanding with a balance of $204,848 as
at December 31, 1999. This loan bears interest at 10.15% over a 5 year term.
Only the principal portion of this loan that is repayable in the next fiscal
year has been included in the working capital calculations.
The Company anticipates acquiring an additional $300,000 of manufacturing
equipment in fiscal 2000 in order to meet demands for new private label sales.
Plant renovations costing $50,000 are also expected to be completed in fiscal
2000. These expenditures will be financed through private placement of shares.
Increased sales volumes will also necessitate hiring additional operations ,
sales and administrative personnel.
-5-
<PAGE>
Results of Operations
1999 1998
- -------------------------------------------------------------------------
Sales $2,423,456 $312,994
Cost of Sales 1,761,963 262,527
Gross Profit 661,493 50,467
Gross Profit Margin 27.3% 16.1%
Administrative Expenses 553,088 109,359
Administrative Expenses as a % of sales 22.8% 35.0%
- ------------------------------------------------------------------------
For the 12 months ended December 31, 1999, sales were $2.1 million higher than
1998 due to the fact that operations had only been started in October 1998. 96%
of 1999 sales (98% - 1998) were to Prairie Naturals Inc., a related party
wholesale distributor for which the Company manufactures private label products.
The Company has an verbal arrangement to manufacture, on an as-ordered basis,
private label products that Prairie Naturals Inc. distributes under the Prairie
Naturals Inc. name. The Company also has an exclusive written contract to
manufacture one product that Prairie Naturals Inc, distributes for a third party
private label.
1999 results are significantly different from 1998 due to 1999 being the first
full year of operations as well as the Company starting to realize economies of
scale on some production. Operating margins in 1999 were 27% of sales revenue,
11% higher than 1998. Cost of Sales includes the cost of raw materials used in
manufacturing, production labor costs and an applicable share of overhead
expenses. General and administrative expenses were 23% of sales in 1999, 11%
lower than 1998.
The Company anticipates realizing further economies of scale as production
volumes increase. Administrative expenses include advertising expenses which
will increase due to the Company's plan to expand marketing efforts.
Effect of Inflation
The Company does not anticipate any financial impact, whether beneficial or
detrimental, as a result of inflation.
PROPERTIES
GFR Nutritionals Ltd.'s operations are located in a building that is owned by
the Company's majority shareholder and his parents. The lease agreement is for a
two year term ending January 1, 2002. Under the terms of the lease agreement,
the monthly rent charge is $5,000 and the Company is responsible for paying the
property taxes, utility charges, and any costs of repair and maintenance. Any
repairs and maintenance expenses paid for by the landlords are required to be
reimbursed by the Company at cost plus 15%. The agreement includes a 2 year
renewal option. All other terms are consistent with those standard to lease
agreements.
Both the Company's administration office and manufacturing operations are
located in the same premises. The total square footage of the building is
10,000. The area used by manufacturing currently comprises 3,625 of that total.
In management's opinion, the space leased is sufficient to support operational
growth for the foreseeable future. Currently, production is only run on one
shift per day for five days each week. Production shifts can be increased to a
maximum of three shifts per day for seven days each week and still be
accommodated within the current space. The only potential requirement for
additional space could arise due to stock held on hand as business volumes
increase.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information gives effect to the issuance of the 19,000,000 to the
GFR Majority Shareholders upon closing of the Acquisition Agreement.
(a)(b) Security Ownership of Management and Certain Beneficial Owners holding
five percent or greater of the 29,000,000 shares of common stock
outstanding as of date of Closing of the Acquisition Agreement.
Title of Name and Address Amount and Nature % of
Class of Beneficial Owner of Beneficial Ownership Class
Common Richard Pierce 17,100,000 59.0%
President, CEO, Director
c/o Suite 1450, 1075 W. Georgia St.
Vancouver, British Columbia V6B 3C9
Lucretia Schanfarber 1,900,000 6.6%
Director
c/o Suite 1450, 1075 W. Georgia St.
Vancouver, British Columbia V6B 3C9
Marc Casavant 0 0%
Chief Financial Officer
All officers and Directors 19,000,000 55.6%
as a Group (3 persons)
(1) c/o Suite 1450, 1075 W. Georgia St. Vancouver, British Columbia V6B 3C9
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<PAGE>
BUSINESS EXPERIENCE OF MANAGEMENT
Richard Pierce, President and CEO
Mr. Pierce is the President and Chief Executive Officer of GFR Nutritionals Ltd.
In his role he oversees all aspects of operations, administration and financing
of the Company.
Mr. Pierce has almost 15 years experience in the natural health industry. From
1997 to 1998, prior to founding GFR Nutritionals Ltd., Mr. Pierce worked as a
Business Development Coordinator for Integrated Equity Management. He was
involved in marketing bridge financing arrangements to private corporations. For
one year spanning 1996 and 1997, Mr. Pierce worked as an Industry Consultant for
Natraceuticals Inc.. He specialized in the development and marketing of new
sports nutrition products.
For ten years prior to joining Natraceuticals Inc, Mr. Pierce founded and acted
as President and CEO of NHF (Nutrion Health and Fitness Inc.). This company
researched, designed, formulated, manufactured and marketed four sports
nutrition product lines throughout Canada.
In 1983, Mr. Pierce founded Natural Health Products and acted as President and
CEO. Natural Health Products designed, formulated, manufactured and marketed the
first sports nutrition line in Atlantic Canada.
Marc Casavant, Chief Financial Officer
Mr. Casavant joined the Company as Chief Financial Officer in April 2000. From
March 1998 to April 2000, he was Vice President of Operations for Basic Sports
Nutrition, Surrey, British Columbia. During 1996 to March 1998 Mr. Casavant
served as Plant Manager for Nu-Life Nutrition, Maple Ridge, British Columbia.
During 1995 through 1997 he was Controller of Nutrion Health & Fitness, Maple
Ridge, British Columbia. During 1993 to 1995, Mr. Casavant was Controller of
Majestic Marketing Ltd., White Rock, British Columbia. From 1989 to 1993, he was
the Senior Accountant for Ebco Industries, Ltd., in Richmond, British Columbia.
Mr. Casavant obtained a Business Administration Diploma in 1985 from Okanagan
College, Kellowna, British Columbia.
Lucretia Schanfarber, Director
Ms Schanfarber has served as Vice President of Sales and Marketing of GFR
Nutritionals since inception. She has over 25 years of marketing experience in
all sectors of the Natural Health Products Industry. She is the host and writer
of the Healthy Stuff with Lucretia Radio Show and the host and writer of Health
Experts On Call Radio Show of CFUN 1410 AM Vancouver, British Columbia. She is
also a contributing editor to the Encyclopedia of Natural Healing published by
Alive Books in 1998 and is a regular contributing writer to Alive Magazine and
Healthy Living Guide Magazine. From 1993 to 1996, Ms Schanfarber served as
National Director of Sales and Marketing of Nutrion Health and Fitness, Maple
Ridge, British Columbia.
-7-
<PAGE>
EXECUTIVE COMPENSATION
The Company's President and CEO did not receive any compensation in 1998. For
the 12 months ended December 31, 1999, the President and CEO received $152,000
in compensation.
Mr. Pierce is the Company's only officer at the current time and holds the
positions of President and Secretary.
Item 2. Acquisition or Disposition of Assets
Upon closing of the Acquisition Agreement, the Company owns 100% of the common
stock of GFR. GFR is a manufacturer of dietary supplements and vitamins which
are privately labeled and sold to wholesalers who retail the products . GFR
manufactures its products at a 10,000 square foot facility near Vancouver,
British Columbia and has approximately ten full time employees engaged in
production.
Item 7. Financial Statements and Exhibits.
(a) Audited Financial Statements of Laredo Investment Inc.
(b) Audited Financial Statements of GFR Nutritionals, Ltd.
(c) Pro Forma Financial Information giving effect to the acquisition.
(d) Exhibits
10.1 Acquisition Agreement
-8-
<PAGE>
CONTENTS
Page
Independent Auditor's Report...........................................F - 1
Balance Sheets
December 31, 1999and 1998............................................F - 2
Statements of Operations for the
Years Ended December 31, 1999 and 1998...............................F - 3
Statement of Stockholders' Equity
Since December 18, 1996 (inception) to December 31, 1999..............F - 4
Statements of Cash Flows for the
Years Ended December 31, 1999 and 1998...............................F - 5
Notes to Financial Statements..........................................F - 6
-9-
<PAGE>
((LETTERHEAD))
RH
- --------------------------------------------------------------------------------
ROBISON, HILL & CO. Certified Public Accountants
A Professional Corporation BRENT M. DAVIES, CPA
DAVID O. SEAL, CPA
W. DALE WESTENSKOW, CPA
BARRY D. LOVELESS, CPA
----------------------------
W. LAMONTE ROBISON, CPA
E. MORTON HILL, CPA
INDEPENDENT AUDITOR'S REPORT
Laredo Investment Corp.
(A Development Stage Company)
We have audited the accompanying balance sheets of Laredo Investment
Corp. (a development stage company) as of December 31, 1999 and 1998, and the
related statements of operations and cash flows for the two years ended December
31, 1999 and the statement of stockholders' equity from December 18, 1996
(inception) to December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Laredo Investment
Corp. (a development stage company) as of December 31, 1999 and 1998, and the
results of its operations and its cash flows for the two years ended December
31, 1999 in conformity with generally accepted accounting principles.
Respectfully submitted
/s/ Robison, Hill & Co.
-----------------------
Certified Public Accountants
Salt Lake City, Utah
February 25, 2000
Members of American Institute of Certified Public Accountants
Members of the Private companies Practice Section
1366 East Murray-Holladay Road, Sale Lake City, UT 84117-5050
Telephone 801/272-8045 Facsimile 801/277-9942
F-1
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Development Stage Company)
-----------------------------
BALANCE SHEETS
--------------
December 31,
---------------------------------------
1999 1998
------------------- -------------------
Assets: $ - $ -
=================== ===================
Liabilities - Accounts Payable $1,350 $200
------------------- -------------------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 15,000,000 shares at
December 31, 1999 and 1998 15,000 15,000
Paid-In Capital (12,515) (14,000)
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (2,635) -
------------------- -------------------
Total Stockholders' Equity (1,350) (200)
------------------- -------------------
Total Liabilities and
Stockholders' Equity $ - $ -
=================== ===================
The accompanying notes are an integral part of these financial statements.
F-2
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Development Stage Company)
-----------------------------
STATEMENTS OF OPERATIONS
------------------------
<TABLE>
<CAPTION>
Cumulative
since
July 9, 1999
For the year ended Inception of
December 31, development
---------------------------------- stage
1999 1998
-------------- ------------------- -------------------
<S> <C> <C> <C>
Revenues: $ - $ - $ -
Expenses: 2,635 100 2,635
-------------- ------------------- -------------------
Net Loss $(2,635) $ (100) $ (2,635)
============== =================== ===================
Basic & Diluted loss per share $ - $ -
============== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Development Stage Company)
-----------------------------
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
SINCE DECEMBER 18, 1996 (INCEPTION) TO DECEMBER 31, 1999
--------------------------------------------------------
<TABLE>
<CAPTION>
Cumulative
Since
July 9, 1999
Inception of
Common Stock Paid-In Retained Development
Shares Par Value Capital Deficit Stage
--------------- -------------- ------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Balance at December 18, 1996 (inception)
- $ - $ - $ - $ -
Net Loss - - - (1,000) -
--------------- -------------- ------------- -------------- ------------------
Balance at December 31, 1996
As originally reported - - - (1,000) -
January 6, 1997 Issuance of Stock
for Services and payment of
Accounts payable 1,000 1,000 - - -
Retroactive adjustment for 1,000
to 1 stock split May 6, 1999 999,000 - - - -
--------------- -------------- ------------- -------------- ------------------
Restated balance January 1, 1997 1,000,000 1,000 - (1,000) -
Net Loss - - - (100) -
--------------- -------------- ------------- -------------- ------------------
Balance at December 31, 1997 1,000,000 1,000 - (1,100) -
Net Loss - - - (100) -
--------------- -------------- ------------- -------------- ------------------
Balance at December 31, 1998
As originally reported 1,000,000 1,000 - (1,200) -
November 15, 1999 shares canceled (400,000) (400) 400 - -
Retroactive adjustment for 25 to 1
stock split November 15, 1999 14,400,000 14,400 (14,400) - -
--------------- -------------- ------------- -------------- ------------------
Restated balance January 1, 1999 15,000,000 15,000 (14,000) (1,200) -
Capital contributed by shareholder - - 1,485 - -
Net Loss - - - - (2,635)
--------------- -------------- ------------- -------------- ------------------
Balance at December 31, 1999 15,000,000 $15,000 $(12,515) $(1,200) $(2,635)
=============== ============== ============= ============== ==================
</TABLE>
The accompanying notes are an integral part of these financial statemen
F-4
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Developement Stage Company)
------------------------------
STATEMENT OF CASH FLOWS
-----------------------
<TABLE>
<CAPTION>
Cumulative
Since
July 9, 1999
For the years ended Inception of
December 31, Development
---------------------------- Stage
1999 1998
------------- --------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $(2,635) $(100) $(2,635)
Increase in Accounts Payable 1,150 100 1,150
------------- --------------- ------------------
Net Cash Used in operating activities (1,485) - (1,485)
------------- --------------- ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by investing activities - - -
------------- --------------- ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Capital contributed by shareholder 1,485 - 1,485
------------- --------------- ------------------
Net cash provided by Financing Activities 1,485 - 1,485
------------- --------------- ------------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
------------- --------------- ------------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
============= =============== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $250 $ - $250
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
None
The accompanying notes are an integral part of these financial statements.
F-5
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
------------------------------------------
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- --------------------------------------------------------------------
This summary of accounting policies for Laredo Investment Corp. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Organization and Basis of Presentation
- --------------------------------------
The Company was incorporated under the laws of the State of Nevada on
December 18, 1996. The Company ceased all operating activities during the period
from December 18, 1996 to July 9, 1999 and was considered dormant. On July 9,
1999, the Company obtained a Certificate of renewal from the State of Nevada.
Since July 9, 1999, the Company is in the development stage, and has not
commenced planned principal operations.
Nature of Business
- ------------------
The company has no products or services as of December 31, 1999. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company
Cash and Cash Equivalents
- -------------------------
For purposes 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 to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
- --------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-6
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
------------------------------------------
(Continued)
-----------
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
- --------------
The reconciliations of the numerators and denominators of the basic loss
per share computations are as follows:
Per-Share
Income Shares Amount
(Numerator) (Denominator)
For the year ended December 31, 1999
------------------------------------
BASIC LOSS PER SHARE
Loss to common shareholders $(2,635) 15,000,000 $ -
========== ============ ==========
For the year ended December 31, 1998
------------------------------------
BASIC LOSS PER SHARE
Loss to common shareholders $(100) 15,000,000 $ -
========== =========== =========
The effect of outstanding common stock equivalents would be anti-dilutive
for December 31, 1999 and 1998 and are thus not considered.
NOTE 2 - INCOME TAXES
- ---------------------
As of December 31, 1999, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $3,500 that may be offset
against future taxable income through 2014. Current tax laws limit the amount of
loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.
F-7
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<PAGE>
LAREDO INVESTMENT CORP.
-----------------------
(A Development Stage Company)
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
------------------------------------------
(Continued)
-----------
NOTE 3 - DEVELOPMENT STAGE COMPANY
- ----------------------------------
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
- --------------------
As of December 31, 1999 all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the company for the use of these
facilities and there are no commitments for future use of the facilities.
NOTE 5 - STOCK SPLIT
- --------------------
On May 6, 1999 the Board of Directors authorized a 1,000 to 1 stock split,
changed the authorized number of shares to 100,000,000 shares and the par value
to $.001 for the Company's common stock. As a result of the split, 999,000
shares were issued. All references in the accompanying financial statements to
the number of common shares and per-share amounts for 1998 and 1997 have been
restated to reflect the stock split.
On November 15, 1999 the majority shareholder returned 400,000 shares to
the Company. On the same day the Company's Board of Directors authorized a 25 to
1 stock split of the remaining 600,000 shares of the Company's $.001 par value
common stock. As a result of the split, 14,400,000 shares were issued, and
Paid-In Capital was reduced by $14,400.
All references in the accompanying financial statements to the number of
common shares and per-share amounts for 1999 and 1998 have been restated to
reflect the stock split.
NOTE 6 - SUBSEQUENT EVENTS
- --------------------------
On January 21, 2000, the Company entered into an Acquisition Agreement with
GFR Nutritionals, Ltd., a British Columbia corporation, (GFR), Richard Pierce
and Lucretia Schanfarber (the GFR Majority Shareholders) to acquire their shares
representing 100% of the outstanding common stock of GFR in exchange for
19,000,000 newly issued shares of the Company's restricted common stock.
F-8
-17-
<PAGE>
GFR NUTRITIONALS LTD.
Financial Statements
Years ended December 31, 1999 and 1998
Independent Auditors' Report 1
Financial Statements
Balance Sheet 2
Statement of Earnings 3
Statement of Retained Earnings 4
Statement of Cash Flows 5
Notes 6
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<PAGE>
((LETTERHEAD))
KPMG
KPMG LLP
Chartered Accountants Telephone (604) 527-3600
400-625 Agnes Street Telefax (604) 527-3636
New Westminster BC www.kpmg.ca
Canada V3M 5Y4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
We have audited the accompanying balance sheets of GFR Nutritionals Ltd. as at
December 31, 1999 and 1998 date and the statements of earnings, retained
earnings and cash flows for the year ended December 31, 1999 and the period from
commencement of operations on July 1, 1998 to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1999 and
December 31, 1998 and the results of its operations and its cash flows for the
year ended December 31, 1999 and the period ended December 31, 1998 in
accordance with generally accepted accounting principles in the United States.
/s/ KPMG LLP
- ------------
Chartered Accountants
New Westminster, Canada
February 29, 2000
1
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GFR NUTRITIONALS LTD.
Balance Sheet
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
- ---------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Current assets:
Accounts receivable $ 279,279 $ 92,431
Inventory (note 2) 203,311 222,617
Prepaid expenses 1,245 1,154
- ---------------------------------------------------------------------------------------
483,835 316,202
Fixed assets (note 3) 288,660 274,429
Deferred income taxes - 11,854
- ---------------------------------------------------------------------------------------
$ 772,495 $ 602,485
=======================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 48,419 $ 48,852
Accounts payable and accrued liabilities 387,867 242,635
Promissory note (note 5) 92,175 125,000
Current portion of long-term debt (note 6) 29,736 19,258
- ---------------------------------------------------------------------------------------
558,197 435,745
Long-term debt (note 6) 175,112 213,777
Deferred income taxes 390 -
Shareholders' equity:
Share capital (note 7) 1 1
Retained earnings (deficit) 38,795 (47,038)
- ---------------------------------------------------------------------------------------
38,796 (47,037)
- ---------------------------------------------------------------------------------------
$ 772,495 $ 602,485
=======================================================================================
</TABLE>
Commitments (note 9)
Subsequent events (note 10)
See accompanying notes to financial statements.
On behalf of the Board:
/s/ Richard Pierce, Director /s/ Lucretia Schanfarber, Director
- ------------------ ------------------------
2
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GFR NUTRITIONALS LTD.
Statement of Earnings
- --------------------------------------------------------------------------
Period from date of
commencement
of operations on
Year ended July 1, 1998 to
December 31, December 31,
1999 1998
- --------------------------------------------------------------------------
Sales $ 2,423,456 $ 312,994
Cost of sales 1,761,963 262,527
- --------------------------------------------------------------------------
661,493 50,467
Expenses:
Advertising 6,122 627
Amortization 33,382 8,631
Automobile and travel 17,286 4,241
Equipment leases 980 1,513
Insurance 4,421 825
Interest 32,269 13,457
Management fee (note 4) 152,000 -
Marketing 15,000 -
Office and general 21,408 4,197
Professional fees 75,736 3,135
Rent 52,580 29,644
Repairs and maintenance 18,515 14,152
Telephone 9,125 3,498
Utilities 9,426 3,114
Wages and benefits 104,838 22,325
- --------------------------------------------------------------------------
553,088 109,359
- --------------------------------------------------------------------------
Earnings (loss) before income taxes 108,405 (58,892)
Income taxes:
Current 10,328 -
Deferred (reduction) 12,244 (11,854)
- --------------------------------------------------------------------------
22,572 (11,854)
- --------------------------------------------------------------------------
Net earnings (loss) $ 85,833 $ (47,038)
==========================================================================
See accompanying notes to financial statements
3
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GFR NUTRITIONALS LTD.
Statement of Retained Earnings
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from date of
commencement
of operations on
Year ended July 1, 1998 to
December 31, December 31,
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Deficit, beginning of period $ 47,038 $ -
Net earnings (loss) 85,833 (47,038)
- -----------------------------------------------------------------------------------
Retained earnings (deficit), end of period $ 38,795 $ (47,038)
===================================================================================
</TABLE>
See accompanying notes to financial statements.
4
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GFR NUTRITIONALS LTD.
Statement of Cash Flows
<TABLE>
<CAPTION>
Period from date of
commencement
of operations on
Year ended July 1, 1998 to
December 31, December 31,
1999 1998
- -----------------------------------------------------------------------------------------------------
Cash provided by (used in):
Operations:
<S> <C> <C>
Net earnings (loss) $ 85,833 $ (47,038)
Items not involving cash:
Amortization 33,382 8,631
Deferred income tax expense 12,244 (11,854)
Change in non-cash operating working capital:
Increase in accounts receivable (186,848) (92,431)
(Increase) decrease in inventory 19,306 (222,617)
Increase in accounts payable and accrued liabilities 145,232 242,635
Increase in prepaid expenses (91) (1,154)
- -----------------------------------------------------------------------------------------------------
109,058 (123,828)
Financing:
Increase (decrease) in promissory note (32,825) 125,000
Increase (decrease) in long-term debt (28,187) 233,035
Issue of share capital - 1
Increase (decrease) in bank indebtedness (433) 48,852
- -----------------------------------------------------------------------------------------------------
(61,445) 406,888
Investments:
Purchase of fixed assets (47,613) (283,060)
- -----------------------------------------------------------------------------------------------------
Change in cash - -
Cash, beginning of period - -
- -----------------------------------------------------------------------------------------------------
Cash, end of period $ - $ -
=====================================================================================================
Supplementary information:
Interest paid during the period $ 25,094 $ 13,457
=====================================================================================================
</TABLE>
5
See accompanying notes to financial statements.
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GFR NUTRITIONALS INC.
Notes to Financial Statements
Years ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
GFR Nutritionals Ltd. (the "Company") is incorporated in the province of
British Columbia, Canada. The Company specializes in formulating, blending,
encapsulating and packing nutritional products. The Company's operations
are located in the province of British Columbia, Canada.
1. Significant accounting policies:
(a) Inventories:
Raw materials inventory is stated at a lower of weighted average cost
and replacement value. Inventories of work in progress is stated at the
lower of weighted average cost and net realizable value.
(b) Fixed assets:
Fixed assets are stated at cost. Amortization is calculated on a
straight-line basis over the estimated useful lives of the assets as
follows:
-----------------------------------------------------------------
Asset Rate
-----------------------------------------------------------------
Manufacturing equipment 10 years
Furniture and fixtures 5 years
Office equipment 5 years
Leasehold improvements Term of lease
Automobile 3 years
-----------------------------------------------------------------
(c) Revenue recognition:
Revenue is recognized from sales of product at the time of shipment to
customers.
(d) Income taxes:
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the deferred tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and for operating loss carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
When the recovery of deferred tax assets cannot be considered by
management to be more likely than not, a valuation allowance is
provided.
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GFR NUTRITIONALS INC.
Notes to Financial Statements
Years ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
Significant accounting policies (continued):
(e) Foreign currency translation:
The Company's primary functional currency is the Canadian dollar.
Monetary assets and liabilities resulting from transactions with
foreign suppliers and customers are translated at year-end exchange
rates while income and expense accounts are translated at average rates
in effect during the year. Gains and losses on translation are included
in income.
(f) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. Inventory:
1999 1998
-------------------------------------------------
Raw materials $ 155,016 $ 222,617
Work in process 48,295 -
-------------------------------------------------
$ 203,311 $ 222,617
=================================================
3. Fixed assets:
Accumulated Net book
1999 Cost amortization value
----------------------------------------------------------------------------
Manufacturing equipment $ 300,564 $ 34,576 $ 265,988
Furniture and fixtures 1,809 273 1,536
Office equipment 15,877 3,078 12,799
Leasehold improvements 5,118 3,071 2,047
Automobile 7,305 1,015 6,290
----------------------------------------------------------------------------
$ 330,673 $ 42,013 $ 288,660
============================================================================
7
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GFR NUTRITIONALS INC.
Notes to Financial Statements
Years ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
3. Fixed assets:
Accumulated Net book
1998 Cost amortization value
-------------------------------------------------------------------------
Manufacturing equipment $ 269,155 $ 6,729 $ 262,426
Office equipment 8,280 828 7,452
Furniture and fixtures 508 51 457
Leasehold improvements 5,118 1,024 4,094
-------------------------------------------------------------------------
$ 283,061 $ 8,632 $ 274,429
=========================================================================
4. Related party transactions:
During the year, the Company accrued $152,000 (1998 - $Nil) for management
fees and paid $60,000 (1998 - $29,300) for rent to the Company's major
shareholder. As at December 31, 1999, accounts payable includes $122,509
owing to the Company's major shareholders.
5. Promissory note:
------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------
Promissory note, repayable upon demand,
including interest at 12% $ 92,175 $ 125,000
========================================================================
6. Long-term debt:
-------------------------------------------------------------------------
1999 1998
-------------------------------------------------------------------------
TDBank Small Business loan, repayable
in monthly instalments of $3,972,
including interest at 10.15% (1998 - 9.15%),
maturing March 15, 2004, secured by certain
manufacturing equipment of the Company $ 204,848 $ 233,035
Less current portion of long-term debt 29,736 19,258
------------------------------------------------------------------------
$ 175,112 $ 213,777
========================================================================
8
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GFR NUTRITIONALS INC.
Notes to Financial Statements
Years ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
6. Long-term debt (continued):
Principal payments due on long-term debt for each of the five years
subsequent to December 31, 1999 and thereafter are as follows:
------------------------------------------------------------
Year ending:
2000 $ 29,736
2001 31,432
2002 34,775
2003 38,474
2004 70,431
-----------------------------------------------------------
7. Share capital:
-----------------------------------------------------------------------
1999 1998
-----------------------------------------------------------------------
Authorized:
100 common shares with no par value
Issued and outstanding:
1 common share $ 1 $ 1
-----------------------------------------------------------------------
8. Economic dependence:
During 1999, the Company sold approximately $2,337,140 or 96% of sales to
Prairie Naturals Inc. In 1998, sales to Prairie Naturals Inc. were $306,223
or 98% of the Company's sales. Future operations of the Company depend on
continuation of the manufacturing arrangement with Prairie Naturals Inc.
9. Commitments:
The Company has entered into a lease agreement for its manufacturing and
office facilities with the Company's major shareholder and other parties.
The rental charges are $60,000 per year plus property taxes. The lease
expires December 31, 2001.
9
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GFR NUTRITIONALS INC.
Notes to Financial Statements
Years ended December 31, 1999 and 1998
- --------------------------------------------------------------------------------
10. Subsequent events:
(a) On January 17,2000, the Company issued 99 shares of common stock at a
price of $.01 each.
(b) On January 21, 2000, the Company entered into a share exchange
agreement with Laredo Investment Corp. ("Laredo"). In exchange for
100% of the shares of the Company, shareholders of GFR Nutritionals
Ltd. will receive 66% of the common shares of Laredo. Laredo is
incorporated in the state of Nevada, and is registered with the
Securities and Exchange Commission. Laredo had never and will not on
the closing of this transaction, have ever conducted business, owned
assets, employed persons or incurred any liabilities other than
professional fees which are incurred in connection with this
transaction.
10
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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
On January 17, 2000 GFR Nutritionals Ltd. ("GFR") and Laredo Investment
Corp. ("Laredo") executed the Merger Agreement that provides for the reverse
Merger of GFR with and into Laredo. See "The Merger." The following unaudited
pro forma condensed combined financial statements are based on the December 31,
1999 historical consolidated financial statements of GFR and Laredo contained
elsewhere herein, giving effect to the transaction under the purchase method of
accounting, with Laredo treated as the acquiring entity for financial reporting
purposes. The unaudited pro forma condensed combined balance sheet presenting
the financial position of the Surviving Corporation assumes the purchase
occurred as of December 31, 1999. The unaudited pro forma condensed combined
statement of operations presents the results of operations of the Surviving
Corporation, assuming the merger was completed on January 1, 1999.
The unaudited pro forma condensed combined financial statements have
been prepared by management of GFR and Laredo based on the financial statements
included elsewhere herein. The pro forma adjustments include certain assumptions
and preliminary estimates as discussed in the accompanying notes and are subject
to change. These pro forma statements may not be indicative of the results that
actually would have occurred if the combination had been in effect on the dates
indicated or which may be obtained in the future. These pro forma financial
statements should be read in conjunction with the accompanying notes and the
historical financial information of both GFR and Laredo (including the notes
thereto) included in this Form 8-K Current Report. (See Item 7.
"Financial Statements and Exhibits.")
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<PAGE>
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
-------------------------------------------
December 31, 1999
-----------------
<TABLE>
<CAPTION>
GFR Laredo Pro Forma
Nutritionals Investment Pro Forma Combined
Ltd. Corp. Adjustments Balance
------------- ---------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets $333,217 $ - $ - $333,217
Fixed Assets (net) 198,800 - - 198,800
------------- ---------- ------------- -------------
Total Assets $532,017 $ - $ - $532,017
============= ========== ============= =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Bank Indebtedness 33,346 - - 33,346
Accounts Payable & Accrued Expenses 267,124 1,350 - 268,474
Promissory Notes 63,481 - - 63,481
Current Portion of Long-Term Debt 20,479 - - 20,479
-------------- ---------- ------------- -------------
Total Current Liabilities 384,430 1,350 - 385,780
Long-Term Debt 120,600 - - 120,600
Deferred Income Taxes 268 - - 268
-------------- ---------- ------------- -------------
Total Liabilities 505,298 1,350 - 506,648
-------------- ---------- ------------- -------------
Stockholders' Equity:
Common Stock 1 15,000 13,999 A 29,000
Additional Paid in Capital - (12,515) 12,719 A 204
Retained Earnings (Deficit) 26,718 (3,835) (26,718) A (3,835)
-------------- ---------- --------------- ------------
Total Stockholders' Equity (Deficit) 26,719 (1,350) - 25,369
-------------- ---------- --------------- ------------
Total Liabilities and Stockholders' Equity $532,017 $ - $ - $532,017
============== ========== =============== ============
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
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<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
--------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------
<TABLE>
<CAPTION>
GFR Laredo Pro Forma
Nutritionals Investment Pro Forma Combined
Ltd. Corp. Adjustments Balance
------------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Sales $1,669,034 $ - $ - $1,669,034
Cost of Sales 1,213,464 - - 1,213,464
------------------- ------------------- ------------------ ------------------
Gross Profit 455,570 - - 455,570
Expenses:
General & Administrative 358,688 2,635 - 361,323
Other Expense - Interest 22,224 - - 22,224
------------------- ------------------- ------------------ ------------------
Earnings (Loss) Before Income Taxes 74,658 (2,635) - 77,294
------------------- ------------------- ------------------ ------------------
Income Taxes:
Current 7,113 - - 7,113
Deferred 8,432 - - 8,432
Net Loss $59,113 $(2,635) - $56,478
=================== =================== ================== ==================
Loss per share $ 0.00 $ 0.00 $ (0.01)
=================== =================== ==================
Weighted average shares outstanding 19,000,000 10,000,000 29,000,000
=================== =================== ==================
</TABLE>
See accompanying notes to unaudited pro forma condensed
combined financial statements.
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<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
- ---------------------------------------------------------
STATEMENTS
- ----------
(1) General
In the reverse merger, GFR will be merged with and into Laredo, with the shares
of outstanding GFR Common Stock converted into an aggregate of approximately
19,000,000 shares. Subsequent to the Merger, GFR will hold 19,000,000 shares or
approximately 66% of the New Common Stock outstanding subsequent to the Merger,
subject to certain adjustments. Immediately preceding the merger 5,000,000
shares of Laredo restricted Common Stock held by officers with be canceled in
accordance with the merger agreement. Each remaining share of Laredo Stock
issued and outstanding prior to the Effective Time will be converted into one
share of New Common Stock for an aggregate of 10,000,000 shares of New Common
Stock or approximately 44% of the New Common Stock outstanding subsequent to the
Merger.
(2) Pro Forma Adjustments
The adjustments to the accompanying unaudited pro forma condensed
combined balance sheet as of December 31, 1999, are described below:
(A) Record merger by converting Laredo Common stock and GFR Stock to
newly issued shares of New Common Stock, par value $0.001 per share.
The adjustments to the accompanying unaudited pro forma condensed
combined statements of operations are described below:
There are no anticipated adjustments to the statements of operations as
a result of the merger.
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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, thereunto duly authorized.
LAREDO INVESTMENT CORP.
Dated: April 28, 2000
/s/ RICHARD PIERCE
- -------------------
Richard Pierce, President
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<PAGE>
Exhibit 10.1
ACQUISTION AGREEMENT
AGREEMENT dated January 21, 2000 by between and among LAREDO INVESMENTS CORP., a
company incorporated under the laws of the state of Nevada (hereinafter referred
to as "Laredo") and having an address for service at 1800 E. Sahara Avenue,
Suite 104, Las Vegas, Nevada 89104, GFR Nutritionals Ltd., a company
incorporated under the laws of the Province of British Columbia (hereinafter
referred to as the "Company"'), having an address for service at service at
Suite 1450 - 1075 West Georgia Street Vancouver, BC, V6E 3C9, and those certain
parties listed on Exhibit A attached hereto, each of whom is a stockholder of
the Company (individually referred to as a "Seller" and collectively referred to
as the "Sellers").
WHEREAS, the Sellers own a total of 100 common shares with no par value of the
Company (the "Company Shares") which constitute ONE HUNDRED (100%) percent of
the issued and outstanding common shares of the Company; and
WHEREAS, the Sellers desire to sell and Laredo desires to purchase ONE HUNDRED
(100%) percent of the Company Shares;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:
1. Purchases and Sale
Each Seller hereby agrees to sell, transfer, assign and convey to Laredo and
Laredo hereby agrees to purchase and acquire from the Sellers the Company Shares
constituting ONE HUNDRED (100%) percent of the issued and outstanding share
capital of the Company, solely in exchange for voting common stock of Laredo as
set forth in Section 2 hereof.
2. Purchase Price
The aggregate purchase price to be paid by Laredo to the Sellers for the Company
Shares shall be 19,000.000 voting common shares with no par value (the "Laredo
Shares") of Laredo, based on an exchange ratio of one share of the Company for
190,000 Laredo Shares at a deemed value of US$0.01 per Laredo Share.
3. Closing
(a) The Closing for the acquisition of the stock purchase contemplated
hereunder pursuant to this Agreement (the "Closing") shall be held at the
office of Wilson Danderfer Banno & Mitchell on January 28,2000 at suite
1450, 1075 West Georgia Street, Vancouver, British Columbia, Canada V6E
3C9, or at such other date and time agreed to by the parties in writing on
two days written notice.
(b) At the Closing, Laredo will notify its transfer agent to deliver to each of
the Sellers a certificate of the Laredo Shares evidencing his ownership
thereof in accordance with the amounts specified in Exhibit "A" attached
hereto, free and clear of any liens or
1
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<PAGE>
Encumbrances of any kind, which certificate shall contain the restrictive
legend specified in Section 19 hereof, and each of the Sellers will deliver
to Laredo a certificate evidencing all of the Company shares owned by him
together with a stock power, endorsed in blank.
4. Warranties and Representations of the Company and Sellers
In order to induce Laredo to enter into the Agreement and to complete the
transaction contemplated hereby, the Company and each of the Sellers warrants
and represents to Laredo as of the date hereof and as of the Closing that to the
best of their knowledge:
(a) Organization and Standing. The Company is a corporation duly organized,
validly existing and in good standing under the Laws of the Providence of
British Columbia, is qualified to do business in British Columbia, to the
extent required by the laws of such Providence. Attached hereto as Exhibit
"B-1" is a true and correct copy of the Company's Certificate of
Incorporation and Articles and all amendments thereto. No changes thereto
will e made in any of the documents described in Exhibit "B " before
Closing.
(b) Capitalization. As of the date hereof, the Company's entire authorized
equity capital consists of 100 common shares with no par value, of which
100 common shares are or will be issued and outstanding as of the Closing.
As of he Closing, there will be no other voting or equity securities
authorized or issued, nor any authorized or issued securities convertible
into voting stock, and no outstanding subscriptions, warrants, calls,
options, rights, commitments or agreements by which the Company or each
Seller is bound, calling for the issuance of any additional common shares
or any other voting or equity security of the Company. All of the Company
shares have been duly authorized, are validly issued and are fully paid and
non-assessable, have no pre-emptive rights, and were issued in conformity
with any applicable Federal and Provincial securities laws. The 100 issued
and outstanding Company shares constitute ONE HUNDRED (100%) percent of the
equity capital of the Company, which includes ONE HUNDRED (100%) percent of
voting power, right to receive dividends, when and if declared and paid,
and the right to receive the proceeds of liquidations attributable to
common stock, if any.
(c) Ownership of the Company Shares. As of the date hereof, the Sellers are the
sole owners of the Company Shares, free and clear of all liens and
encumbrances. The Company is not a reporting issuer in British Columbia or
in any other jurisdiction and accordingly the transfer of shares is
restricted pursuant to the Articles of the Company and all applicable
securities laws in British Columbia.
(d) Taxes. The Company has filed all Federal, provincial and local income or
other tax returns and reports that it is required to file with all
governmental agencies, wherever situate, and has paid or accrued will not
have a Material Adverse Effect on the Company. Such returns have been
prepared in accordance with the applicable material tax laws, rules and
regulations thereunder to which the Company is subject and the Company has
delivered a true and complete copy of all such tax returns to Laredo.
2
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<PAGE>
(e) No Pending Actions. To the best knowledge of the Company there are no
material legal actions, lawsuits, proceedings or investigations, wither
administrative or judicial, pending or threatened, against or affecting the
Company, or against the Company's Officers or Directors arising out of the
operations of the Company that are reasonably likely to have a Material
Adverse Effect on the Company. Neither the Company nor any Seller is
subject to any order, writ, judgment, injunction, decree, determination or
award of any court, arbitrator or administrative, governmental or
regulatory authority or body.
(f) Ownership of Assets. Except as set forth in Exhibit "C", the Company has
good marketable title, without any liens or encumbrances of any nature
whatever, to all of the following, if any: Its assets, properties and
rights of every type and description, including, without limitation, all
cash on hand and in banks, certificates of deposit, stocks, bonds and other
securities, good will, customer lists, real estate and interests therein
and improvements thereto, machinery, equipment, vehicles, notes and
accounts receivable, fixtures, rights under agreements and leases, all
rights and claims under insurance policies, rights in receivables, books
and records and all other property and rights of every kind and nature
owned or held by the Company as of this date, and will continue to hold
such title on the completion of the transactions contemplated by the
Agreement; not, except in the ordinary course of its business, has the
Company disposed of any such asset since the date of the most recent
balance sheet described in the Company's financial statements.
(g) No Interest in Suppliers, Customers, Landlords or Competitors. Neither any
Seller nor any member of his family has any interest of any nature whatever
in any supplier, customer, landlord or competitor of the Company except as
set forth in Exhibit "D" hereto and excepting shareholders not exceeding 5%
in publicly traded companies.
(h) No Debt Owed by the Company to Sellers. Except as set forth in Exhibit "E",
the Company does not owe any money, securities, or property to any Seller
or any member of his family or to any company controlled by such a person,
directly or indirectly.
(i) Corporate Records. All of the Company's books and records, including
without limitation its books of account, corporate records, minute book,
stock certificate books and other records of the Company are up-to-date,
complete and reflect accurately and fairly the conduct of its business in
all material respects since its date of incorporation. All material
reports, returned and statements currently required to be filed by the
Company, with respect to the business and operations of the Company, with
any governmental agency have been filed or valid extensions have been
obtained in accordance with normal procedures, and all governmental
reporting requirements have been complied with.
(j) Validity of the Agreement. All corporate and other proceedings required to
be taken by the Seller and by the Company in order to enter into and to
carry out this Agreement have been duly and properly taken. This Agreement
has been duly executed by each Seller and by the Company, and constitutes
the valid and binding obligation of each of them, except to the extent
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
other laws relating to or effecting generally he enforcement of creditors
rights. The execution and delivery of the Agreement will not result, or
with the passage of time or notice, will not
3
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<PAGE>
result, in the breach of any of the terms or conditions of, or constitute a
default under or violate the Company's Certificate of Incorporation or Articles,
or any material agreement, lease, mortgage, bond indenture, license or other
material document or undertaking oral or written, to which the Company or the
Sellers are a party or are bound, not will such execution and delivery violate
any order, writ , injunction, decree, law, rule or regulation of any court,
regulatory agency or other governmental body to which the Company or any Seller
is a party or is bound; and there are no restrictions which would prevent the
Company from conducting its business after the Closing as a wholly-owned
subsidiary of the Company.
(k) Enforceability of the Agreement. This Agreement and the Exhibits hereto
which are incorporated herein and made a part hereof, when duly executed
and delivered, will be the legal, valid and binding obligations of the
Company enforceable according to their terms, except to the extent limited
by applicable bankruptcy, reorganization, insolvency, moratorium or other
laws relating to or effecting generally the enforcement of creditors
rights, and that at the Closing, Laredo will have acquired title in and to
the Company Shares free and clear of all claims, liens and encumbrances.
(l) Access to Books and Records. Laredo will have full and free access to the
Company's books during the course of this transaction prior to Closing,
during regular business hours.
(m) Significant Agreements. The Company is not and will not at Closing be bound
by any of the following, other than where already disclosed elsewhere in
this Agreement, unless specifically listed in Exhibit "F" hereto:
(i) employment, advisory or consulting;
(ii) any plan providing for employee benefits of any nature;
(iii) any lease with respect to any property or equipment;
(iv) any contract or commitment for any future expenditure in excess of
$5,000;
There are no representations and warranties provided by the Company or the
Sellers except as set forth above.
5. Warranties and Representations of Laredo
In order to induce the Sellers and the Company to enter into this Agreement and
to complete the transaction contemplated hereby, Laredo warrants and represents
to the Company and each Seller that:
(a) Organization and Standing. Laredo is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and
has full power and authority to own and operate assets, properties and
business. Attached hereto as Exhibit "G" is a true and correct copy of
Laredo Certificate of Incorporation, By-Laws and all amendments
4
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<PAGE>
thereof. No changes thereto will be made in any of the documents described
in Exhibit "G" at or before the Closing.
(b) Capitalization
(i) As of the date hereof, Laredo's entire authorized equity capital
consists of 100,000,000 shares of common stock with a par value of
$0.01 (the "Common Stock"), of which 9,750,000 Shares are currently
issued and outstanding. All of such Laredo's Common Stock issued and
outstanding at the Closing have been duly authorized, validly issued
and are fully paid and non-accessible, have not preemptive rights and
were issued in compliance with all Federal and state securities laws.
The relative rights and preferences of Laredo's equity securities are
set forth in Laredo's Certificate of Incorporation and Laredo's
By-Laws and nay amendments thereto. There are no other voting or
equity securities convertible into voting stock, and no outstanding
subscriptions, warrants, call, options, rights, commitments or
agreements by which Laredo is bound, calling for the issuance of any
additional shares of common stock or any other voting or equity
security.
(ii) The By-Laws of Laredo provide that a simple majority of the shares
voting at a stockholders' meeting at which a quorum is present may
elect all of the directors of Laredo. Cumulative voting is not
provided for by the By-Laws or Certificates of Incorporation of
Laredo.
(c) Ownership of Laredo Shares. By Laredo's issuance of the Laredo shares to
the Sellers pursuant to this Agreement, each Seller will at the Closing
thereby acquire good, absolute marketable title thereto, free and clear of
all liens, encumbrances, Regulation 144 and control block restrictions of
any nature whatsoever, except that such Laredo shares will not have been
registered under the 1933 Act and accordingly certain hold periods may be
applicable in the United States.
(d) No Business. Laredo has never and will not on the Closing have ever
conducted business, owned assets, employed persons or incurred any
liabilities other than professional fees which are incurred in connection
with this transaction and will be limited to $2,000, or have been accounted
for in the Financial Statements of Laredo.
(e) Significant Agreements. Laredo is not and will not at Closing be bound by
any of the following, other than where already disclosed in any other
exhibit, unless specifically listed in Exhibit "H" hereto:
(i) employment, advisory or consulting contract and has not employees;
(ii) any plan providing for employee benefits of any nature;
(iii) any lease with respect to any property or equipment;
(iv) any contract or commitment for any future expenditure in excess of
$1,000;
5
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<PAGE>
(v) any contract or commitment pursuant to which it has assumed,
guaranteed, endorsed, or otherwise become liable for any obligation of
any other person, firm or organization;
(vi) any contract, agreement, understanding, commitment or arrangement,
other than in the normal course of business, not fully discloses or
set forth in the Agreement or in Laredo's Financial Statements; or
(vii)any agreement with any person relating to the dividend, purchase or
sale of securities, that has not been settled by the delivery or
payment of securities when due, and which remains unsettled upon the
sate of the execution and delivery of this Agreement.
(f) Taxes. Laredo has filed all federal, state and local income or other tax
returns and reports that is required to file with all governmental
agencies, whenever situate, and has paid all taxes as shown on such
returns. All of such returns have been prepared in accordance with the
applicable tax laws and rules and regulations thereunder to which Laredo is
subject. To Laredo's knowledge, there is no audit or threat of any audit of
any tax return for any period, and Laredo knows of no basis for the
assertion of any additional taxes of any king.
(g) Absence of Liabilities. At and as of the Closing Date, Laredo will have no
liabilities of any kind or nature, fixed or contingent, except for (I) the
costs, including legal and accounting fees and other expenses, in
connection with this transaction, for which Laredo agrees to be solely
responsible and to pay in full at or before Closing.
(h) No Pending Actions: Securities Issuance. There are no material legal
actions, lawsuits, proceedings or investigations, either administrative or
judicial, pending or threatened, against or affecting Laredo, or against
any of Laredo's officers or directors and arising out of their operation of
Laredo that are reasonably likely to have a Material Adverse Effect on
Laredo and Laredo has not violated any securities law, ordinance or
regulation of any kind whatever, including, but not limited to the 1933
Act, the 1934 Act, the rules and regulations of the SEC, or the securities
laws and regulations of any U.S. state or Canadian province. Laredo is not
subject to any order, writ, judgement, injunction, decree, determination or
aware of any court, arbitration or administrative, governmental or
regulatory authority or body. All of Laredo's common stock issued and
outstanding at the Closing will heave been issued in compliance with all
Federal and state securities laws. Laredo is not an investment company as
defined in the securities laws.
(i) Corporate Records. All of Laredo's books and records, including without
limitation, its books of account, corporate records, minute book, stock
certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects
since its date of incorporation. All of said books and records will be
delivered to Laredo's new directors at the Closing.
(j) No Misleading Statements or Omissions. Neither this Agreement nor any
financial
6
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<PAGE>
statement, exhibit, schedule or document attached hereto or presented to
the Company or the Sellers in connection herewith contains any materially
misleading statement, or omits any fact or statement necessary to make the
other statements or facts herein set forth not materially misleading.
(k) Validity of Agreement. All corporate and other proceedings required to be
taken by Laredo in order to enter into and to carry out this Agreement have
been duly and properly taken. This Agreement has been duly executed by
Laredo and constitutes a valid, binding and enforceable obligation of
Laredo, except to the extent limited by applicable bankruptcy
reorganization, insolvency, moratorium or other laws relating to or
effecting generally the enforcement of creditors rights. The execution and
delivery of this Agreement will not result, or, with the passage of time or
notice, will not result, in the breach of any of the terms or conditions
of, or constitute a default under or violate Laredo's Certificate of
Incorporation or By-Laws, or any agreement, lease, mortgage, bond,
indenture, license or other document or undertaking, oral or written, to
which Laredo is a party or is bound or may be affected, nor will such
execution, delivery and carrying out violate any order, writ, injunction,
decree, law, rule or regulation of any court, regulatory agency or other
governmental body.
(l) Enforceability of the Agreement. When duly executed and delivered, this
Agreement and the Exhibits hereto which are incorporated herein and made a
part hereof are legal, valid, and enforceable obligations of Laredo
according to its terms, except to the extent limited by applicable
bankruptcy reorganization, insolvency, moratorium or other laws relating to
or effecting generally the enforcement of creditors rights, and that at the
time of such execution and delivery, the Sellers will have acquired good
marketable title in and to the Laredo Shares acquired pursuant hereto, free
and clear of all liens and encumbrances.
(m) Access to Books and Records. The Company and the Sellers will have full and
free access during regular business hours and on reasonable prior notice to
Laredo's books and records during the course of this transaction prior to
and at the Closing.
(n) Laredo's Financial Statements. At lease 5 days before Closing, Laredo will
provide the Company and the Sellers with its audited financial statements
for the eight months ended August 31, 1999 and for the years ended December
31, 1998 and 1997 together with unaudited management prepared financial
statement for the year ended December 31, 1999 (the "Laredo Financial
Statements"). The Laredo Financial Statements and the notes thereto are
true, complete and accurate and fairly present the consolidated assets,
liabilities and financial condition of Laredo as at the dates thereof, in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved. Laredo does not have any
liabilities or obligations of any nature (absolute, accrued, contingent or
otherwise) which are not fully reflected in the Laredo Financial Statements
or otherwise disclosed in this Agreement.
(o) Laredo's Financial Condition. At the Closing, and after consummation of all
of the transactions contemplated hereby, Laredo will have no material
assets or liabilities
7
-40-
<PAGE>
(p) Directors' and Stockholder Approval. Promptly upon the execution and
delivery of this Agreement, but in any event, on or before the Closing,
Laredo's Board of Directors, and its shareholders, if required, by meeting
or consent, will have approved this Agreement, and all matter set forth
herein as conditions precedent to the consummation by the Sellers of the
Closing hereunder.
(q) Consents. Except as described in Section 9 hereof, no consent of any person
is necessary to the consummation of the transaction contemplated hereby.
(r) No Brokers. No broker, finder or investment broker is entitled to any
brokerage, finder's or other fee or commission in connection with any of
the transactions contemplated by this Agreement.
6. Survival of Terms
All of the terms and condition of this Agreement, together with the warranties,
representations and covenants contained herein or in any instrument or document
delivered to or to be delivered pursuant to this Agreement, shall survive the
execution of this Agreement and the Closing, notwithstanding any investigation
heretofore or hereafter made by or on behalf of any party hereto; provided,
however, that (a) the agreements and covenants set forth in this Agreement shall
survive and continue until all obligations set forth therein shall have been
performed and satisfied; and (b) all representations and warranties shall
survive and continue for a period of 12 months from the Closing Date unless
within such 12 month period, except for claims, notice of which is given in
writing within such 12 month period by Laredo or the Vendors as the case may be,
to the other specifying the nature of the claim and quantifying the amount.
7. The Laredo Shares and the Company Shares
All of the Laredo Shares and the Company Shares shall be validly issued, fully
paid and non-accessible shares of Laredo's and the Company's respective Common
Stock, with full voting rights, dividend rights, and right to receive the
proceeds of liquidation, if any, as set forth in the respective Certificates of
Incorporation.
8. Conditions Precedent to Closing by the Sellers
Each and every obligation of Laredo under this Agreement to be performed on or
before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by the
Sellers:
(a) Representations and Warranties True. The representations and warranties of
Laredo contained in this Agreement and in all certificates and other
documents delivered and to be delivered by Laredo to the Sellers pursuant
hereto or in connection with the transactions contemplated hereby shall be
in all material respects true and accurate as of the date when
8
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<PAGE>
Made and at and as of the closing as though such representations and warranties
were made at and as of such date;
(b) Performance: Laredo shall have performed and complied with all agreements,
obligations and conditions required by this Agreement to be performed or
complied with by it on or prior to the Closing;
(c) Board Of Director and Shareholder Approval. Laredo's Board of Directors
and, if required by law, its shareholders shall have approved the
transactions contemplated by this Agreement, including the Reorganization,
in the manner required by applicable state law;
(d) No Governmental Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any governmental body or other person or
legal or administrative proceeding shall have been instituted or threatened
which challenges the validity or legality of the transactions contemplated
hereby;
(e) Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement by Laredo, and all documents
incident thereto, shall be reasonably satisfactory to the Sellers and their
counsel, and the Sellers shall have received a true, correct and complete
copy of all such documents as the Sellers or their counsel may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith;
(f) Certificates/Statutory Declarations. Laredo shall have furnished the
Sellers with such certificates/statutory declarations of its officers to
evidence the compliance with the conditions set forth in this Agreement as
may be reasonably requested by the Sellers.
9. Conditions Precedent to Closing by Laredo
Each and every obligation of the Sellers and the Company under this Agreement to
be performed on or before the Closing shall be subject to the satisfaction, on
or before the Closing, of each of the following conditions, unless waived in
writing by Laredo:
(a) Representations and Warranties True. The representations and warranties of
Sellers and the company contained in this agreement and in all certificates
and other documents delivered and to be delivered by the Sellers and the
Company to Laredo pursuant hereto or in connection with the transactions
contemplated hereby shall be in all material respects true, complete and
accurate as of the date when made and at and as of the Closing as though
such representations and warranties were made at and as of such date;
(b) Performance. The Seller and the Company shall have performed and complied
with all agreements, obligations and conditions required by this Agreement
to be performed or complied with by them on or prior to the Closing;
(c) Shareholder Approval. The Sellers shall have executed and delivered this
Agreement;
9
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<PAGE>
(d) No Governmental Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any governmental body or other person or
legal or administrative proceeding shall have been instituted or threatened
which challenges the validity or legality of the transactions contemplated
hereby;
(e) Proceedings. All proceedings to be taken in connection with the
transactions contemplated by this Agreement by the Sellers and the company,
and all documents incident thereto, shall be reasonably satisfactory to
Laredo and its counsel, and Laredo shall have received a true, correct and
complete copy of all such documents as Laredo or its counsel may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceeding in connection therewith.
(f) Certificates/Statutory Declarations. The Sellers shall have furnished
Laredo with such certificates/statutory declarations to evidence the
compliance with the conditions set forth in this Section 9 as may be
reasonably requested by Laredo;
(g) No Material Adverse Effect. There shall have been no Material Adverse
Effect with respect to the Company and Laredo shall have received a
certificate of the Company and the Sellers to such as effect, signed by a
duly authorized officer of the Company and by the Sellers.
10. Termination
This Agreement may be terminated at any time before or at Closing by:
(a) The mutual agreement of the parties;
(b) Any party if:
(i) any provision of this Agreement applicable to a party shall be
materially untrue or fail to be accomplished;
(ii) any legal proceeding shall have been instituted or shall be imminently
threatening to delay, restrain or prevent the consummation of this
Agreement or any material component thereof.
Upon the termination of this Agreement for any reason, in accordance with the
terms and conditions set forth in this Section, each said party shall bear all
of its own costs and expenses and no party shall be liable to the other.
11. Post Closing Items.
(a) Upon the Closing the current directors and officers will resign and Richard
Pierce, Rosemary Hatt and a third party to be nominated by Richard Pierce
at or before Closing will be appointed directors and officers of Laredo.
(b) Within 10 days after the Closing, Laredo shall file with the Securities and
Exchange
10
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<PAGE>
Commission and any state security regulatory authority such forms as are
required under applicable Federal an state securities laws in connection
with the transactions contemplated under this Agreement.
12. Entire Agreement: Waiver of Breach
This Agreement constitutes the entire agreement between the parties and
supersedes any prior agreement or understanding among them in respect of the
subject matter hereof, a nd there are no other agreements, written or oral, nor
may the Agreement be modified except in writing and executed by all of the
parties hereto; and no waiver of any breach or condition of this Agreement shall
be deemed to have occurred unless such waiver is in writing, signed by the party
against whom enforcement is sought, and no waiver shall be claimed to be a
waiver of any subsequent breach or condition of a like or different nature.
13. No Third Party Beneficiaries
The provisions of this Agreement are for the exclusive benefit of the parties
who are signatories hereto and their permitted successors and assigns, and no
third party shall be a beneficiary or have any rights by virture of this
Agreement.
14. Assignment: Binding Effect
This Agreement, including both its obligations and benefits, shall inure to the
benefit of, and be binding on the respective permitted assigns, transferees,
successors and heirs of the parties. This Agreement may not be assigned or
transferred in whole or in part by any party without the prior written consent
of all other parties.
15. Material Adverse Effect
As used in this Agreement, "Material Adverse Effect" with respect to a party
means any change in or effect on, the business conducted by such party that is,
or is reasonably likely to be materially advise to (i) the business result of
operations, prospectus or conditions (financial or otherwise) of such party and
its subsidiaries, taken as a whole, or (ii) the assets and properties used or
useful in the conduct of the business of such party and its Subsidiaries, taken
as a whole.
16. Governing Law
This Agreement shall be governed by and construed in accordance with the
internal laws of the Province of British Columbia, determined without regard to
its conflicts of law principles. All parties hereto (i) agree that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted only in a federal or state court in Province of British Columbia,
(ii) waive any objection which they may now or hereafter have to the laying of
the venue of any such suite, action or proceeding, and (iii) irrevocably submit
to the exclusive jurisdiction of such federal or state court in the Province of
British Columbia in any such suite, action or proceeding, bus such consent shall
not constitute a general appearance or be available to any other person who is
not a party to this Agreement.
11
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<PAGE>
17. Counterparts
This Agreement may be executed in duplicate facsimile counterparts, each of
which shall be deemed an original and together shall constitute one and the same
binding Agreement, with one counterpart being delivered to each party hereto.
18. Severability
If any provision of the Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.
19. Restrictive Legend
Each certificate representing shares of Laredo Common Stock being issued to the
Sellers shall bear the following legend in addition to such other restrictive
legends as may be required by law or as mutually agreed by all parties hereto:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any state securities laws, and no sale or transfer
thereof may be effected without an effective registration
statement or an opinion of counsel of the holder, satisfactory to
Laredo Investments Corp., that such registration is not required
under the Act and any applicable state securities laws", and
"Control Block" will be stamped on the certificates.
20. Number and Gender
Wherever from the context it appears appropriate, each term stated in either the
singular or the plural shall include the singular and the plural, and pronouns
state in either the masculine, the feminine or the neuter gender shall include
the masculine, feminine and neuter.
12
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<PAGE>
21. Expenses: Transfer Taxes, Etc.
Whether or not the transaction contemplated by this Agreement shall be
consummated, each party agrees that all fees and expenses incurred by each of
them in connection with this agreement shall be borne by each of them
respectively, and no party shall be liable for the expenses of any other party
hereunder.
IN WITNESS WHEREOF, the parties hereto have set their hands and deals as of the
date and year above first written.
LAREDO INVESTMENTS CORP., By its Authorized Signatory:
/S/ Lois E. Couston
- -------------------
Print Name: Lisa E. Couston
GFR NUTRITIONALS LTD.
By its Authorized Signatory:
/s/ Richard Pierce
- ------------------
Print Name: Richard Pierce
SELLERS:
WITNESS:
/s/ Lucretia Schanfarber /s/ Elise Chang
- ------------------------ ---------------
Lucretia Schanfarber Elise Chang
/s/ Richard Pierce /s/ Elise Chang
- ------------------ ---------------
Richard Pierce Elise Chang
13
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<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
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<CURRENT-LIABILITIES> 1,350
<BONDS> 0
0
0
<COMMON> 15,000
<OTHER-SE> (12,515)
<TOTAL-LIABILITY-AND-EQUITY> 0
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