As filed with the Securities and Exchange Commission on June 29, 2000
Commission File No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NUMBER ONE
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12 (b) OR (g) OF THE SECURITIES ACT OF 1934
ABCO INDUSTRIES, INC.
(Name of small business issuer in its charter)
NEVADA 88-0439767
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 NORTH WORTH, SUITE 110, MIDLAND, TEXAS 79701
(Address of principal executive office) (Zip Code)
Registrant's telephone number: (915)-682-2882
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.001
Preferred Stock, par value $.001
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
Prior to February 8th, 2000, the Company had not engaged in any business other
than organizational matters.
ABCO Industries, Inc. (formally GECKO ASSOCIATES, INC.) A development company
and a Nevada corporation .("The Company") was incorporated on May 9th, 1996 and
was formed specifically to be a "clean public shell " for the purpose of either
merging with or acquiring an operating company with assets and some operating
some operating history. On October 15th, 1999 the Company's name changed to ABCO
Industries, Inc.
On May 23rd, 1996, the Company issued 20,000 shares of it's par value common
stock.
On October 15th, 1999 the State of Nevada approved the Company's restated
Articles of Incorporation, which increased it's capitalization from 25,000
common shares of no par value stock to 50,000,000 common shared of $.001 par
value and added 1,000,00 preferred shares with $.001 as its par value.
On October 15th, 1999, the Company amended its Articles of Incorporation by
changing its name to ABCO Industries, Inc. and forward split it's common stock
50:1, thus increasing the number of outstanding common shares from 20,000 shares
to 1,000,000 shares.
On February 8th, 2000 the Board of Directors resolved to accept an agreement for
the exchange of common stock for assets between ABCO Industries, Inc., a Nevada
Corporation and the Shareholders of ABC Well Services CO., Inc. a Texas
Corporation
They also resolved to issue to shareholders of ABC Well Services Co., Inc
9,000,000 shares of common stock of ABCO Industries, Inc. $0.001 par value from
its treasury so as the amount of shares then issued would be equal to 90% of the
combined total of 10,000,000 outstanding shares in exchange for 100% of the
issued and outstanding shares of ABC Well Services CO., Inc. such that ABC Well
Services CO., Inc. shall become wholly owned subsidiary of ABCO Industries, Inc.
2
<PAGE>
BUSINESS OF THE COMPANY
ABCO is in the oil well plugging and service industry. The Company is growing
and expanding through new business in a booming industry with corporate
acquisitions and mergers. These acquisitions will permit the Company to increase
its area of operation while diversifying the Company's source of revenue. The
following oil field services are among the Company's expertise:
A. Oilfield Pipe Sales, Testing, Rethreading and Salvaging
B. Well Plugging & cementing
C. Well Remediation & Completion Services
D. Lease Salvaging
E. Well Operations and Acquisitions
ABCO's profitability will be enhanced by the expected increase in the price of
domestic oil in the years Ahead, now at a record high since the Gulf War. Added
revenues will be generated through the ownership of producing Wells and our
ability to serve them internally.
The DOE's Toris (Tertiary Oil Information Study) projects that there are over 28
Billion barrels of recoverable US oil reserves in over 3,000 fields in 13 basins
threatened by near term plugging and abandonment. More than 40% of these Wells
to be plugged are located in Texas, ABCO's initial operating target area.
The petroleum industry in Texas has a high concentration of small independent
oil operators, most of whom do not have a sufficient number of Wells or
production volume to afford the equipment necessary to service their Wells.
These small operators are now hiring or contracting with independent service
companies to work on their production, thus eroding their profitability to the
extent that their survival is doubtful. The number of service Companies in the
area has subsequently thinned and because they do not own production, they are
also faced with financial difficulties. ABCO will capitalize on this situation
by owning the equipment needed to service and/or plug Wells.
3
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
Plan of Operations and Acquisitions
The Company was organized for the purpose of creating a corporate vehicle
to seek, investigate and, if such investigation warrants, acquire an interest in
one or more business opportunities presented to it by persons or firms who or
which desire to seek perceived advantages of a publicity held corporation. On
February 8th, 2000 the Company (ABCO Industries, Inc.) acquired ABC Well
Services Co., Inc., (a Texas corporation) as a wholly owned subsidiary of ABCO
Industries In., in an exchange of Common Stock, Sub Curia. The primary activity
of the Company is the oil field service business. The executive offices of the
company are located at 125 North Fort Worth, Suite 110, Midland, Midland Texas
79701. Its telephone number is (915) 682-2882. Of the 50,000,000 shares of the
ABCO's Common Stock, 1,000,000 are currently freely tradable under the Rule 144k
exemption promulgated under the Securities Act of 1933. See Item 8 "Description
of Securities."
ABCO will further enhance its position in the oil community by demonstrating its
efficient operation of the existing company and exploiting the advantageous
relationship that is available by combining a retail pipe facility with the
source of used pipe and equipment from the plugging operations. The Company may
further expand by the possible acquisitions of synergistic companies.
The Company presently maintains adequate cash flows for continued operations.
The Company may require additional funds if an appropriate acquisition candidate
is identified.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the industry
standards. Such fees are customarily between 1% and 5% of the size of the
transaction, based upon a sliding scale of the amount involved. Such fees are
typically in the range of 5% on a $1,000,000 transaction ratably down to 1% in a
$4,000,000 transaction. Management has adopted a policy that such a finder's fee
or real estate brokerage fee could, in certain circumstances, be paid to any
employee, officer, director or 5% shareholder of the Company, if such person
plays a material role in bringing in a transaction to the Company.
The oil well plugging and service activity is currently functioning
with expertise in the area of oilfield tubular, plugging and cementing, well
completion, well remediation, work-over and secondary production recovery. ABCO
expects to further enhance its position in the oil community by demonstrating
its efficient operation of the existing company and exploiting the advantageous
relationships that is available by combining a Retail Pipe Facility with the
same source of used pipe and equipment from the plugging operation. The Board of
Directors is currently under negotiation for the acquisition of four other
synergistic companies.
4
<PAGE>
SUMMARY SOLUTIONS
Between the years 1970 and 1980 Texas became a mecca for oil and gad well drill
dollars and investors found a home for "tax sheltered" profits. Thousands of
Wells were drilled and completed and prematurely abandoned as surface and
sub-surface equipment failures developed. Today these Wells are both an enormous
problem and incredible opportunity.
Between the years 1970 and 1980 Texas became a mecca for oil and gas well
drilling dollars and Investors found a home for "tax sheltered" profits.
Thousands of Wells were drilled and completed and prematurely abandoned as
surface and sub-surface equipment failures developed. Today these Wells are both
as enormous problem and as incredible opportunity.
The Wells that must be plugged present a very attractive opportunity or ABCO.
ABCO is positioned to become a major factor in helping to alleviate the state's
problems and be well positioned to capitalize on an opportunity to both produce
oil from formerly unproductive Wells and to plug those Wells that are a menace
to the environment.
VISION
ABCO envisions a steady increase in opportunity and in growth as the inevitable
depletion in the resource continues. The need for technical expertise, equipment
in plugging Wells and land use recovery will become greater and more valuable
each year.
New technological advances in oil and gas recovery are being introduced
regularly. Many of the recent developments are applicable to our services. Given
an adequate acquisition budget our company will be well positioned, with
substantial reserves, to take advantage of these technologies, as they become
available.
ABCO is poised with a skilled executive and management team in place, to expand
rapidly to develop and service the marketplace.
The Company believes that as a result of the 1980's purging of the oilfield
service business (thousands of oilfield service units were scrapped of shipped
overseas) aggressive companies now in business will profit beyond expectation.
Progressive companies with the foresight and expertise to acquire, hold, develop
and nurture, as we plan to do now and in the future, will command admirable cash
flow and attractive stock prices.
5
<PAGE>
ABCO'S UNIQUE OPPORTUNITY
ABCO believes that the proliferation of well reworking and pluggings have opened
a window of opportunity which must not be ignored. Equipment must be acquired to
implement the intended project. Investors who recognize and understand the
magnitude of the financial rewards available to the company that exploits this
opportunity will be able to make the correct decision.
RATIONAL
Small lease owners cannot afford to continue to rework Wells with marginal
production. This coupled with the fact that Banks do not lend against marginal
production and used equipment, places the small produces in a precarious
position. If an owner does nothing , government regulatory agencies can force
him to plug the Wells. Many owners have abandoned Wells, leaving the problem to
be solved by the taxpayer, while others continue to hang on hoping to sell their
leases or obtain a loan using other collateral.
POTENTIAL
More than 65,000 marginal oil Wells are currently shut-in in Texas (over 220,000
in the United States).
In Texas they are being either plugged or abandoned at the rate of over 8,000
per year (16,000+) in the United States.
ABCO, utilizing its popular expertise:
A. Purchases, from small operators and producers, marginal Wells that were
formerly not considered.
B. Takes over, at no charge, many orphan Wells that the Texas Railroad
Commission (TRC) now holds in inventory.
C. Bids on Wells to be plugged and profitability does so.
D. Contracts with major oil companies and large independent ones to
alleviate their compliance problems with the TRC by either producing or
plugging their low production properties.
6
<PAGE>
CUSTOMER PROFILE
The targeted customers for our services include major and large independent oil
companies, small lease owners and operators and the Texas Railroad Commission (
a regulatory and environmental arm of The Texas State Government). The primary
reasons why most wells, Capable of continued production, and owned by the TRC
are abandoned are:
A. That, contrary to popular belief, most stripper Wells are owned
and/operated by small operators and not by major or large independent
oil companies. These small operators do not have a sufficient number of
Wells to support the costs associated with owning the equipment to
rework them. When sub-surface problems appear they are forced to use
contract service companies and the costs are prohibitive.
B. That, despite the fact that most small operators have contributed to an
unbelievable amount of loyalty and hard work to the oil business, and
are for the most part, very good businessmen, they continue to have to
fight a most difficult battle. They are typical understaffed and unable
to continue operating for any length of time, particularly when oil
prices are low.
C. That, there is an absence of available credit facilities to support
small producers and operators. Cash flow is sporadic when dealing with
old equipment and the uncertainties of the weather.
Together with an aging population of oilmen and a noticeable lack of interest by
the next generation of small operators, we have the reason for the proliferation
of wells for plugging. There are thousands of wells in our immediate working
area that fit the targeted ABCO profile. This window of opportunity is open now
for our company.
COMPETITION
There are very few major competitors who operate in our area of interest due to
the fact that the mentality of most oilmen is geared toward finding new
discoveries and producing Wells that are in primary production. There are
operators who operate stripper Wells as necessity, however the amount of work
and attention required to successfully operate these Wells is overwhelming to
most large and small companies. Plugging companies operating in this market are
limited and regionally localized. Cementing companies with plugging equipment do
not typically seek business aggressively but rather fill in down time with
plugging contracts. The TRC's plugging requirements are huge and the commission
has trouble finding local companies who can meet their criteria for equipment
and insurance. Although the TRC comprises only a minority of the plugging
permits issued, we feel strongly that this business should be pursued rather
than overlooked.
MARKET SHARE
ABCO will be the most attractive alternative to prospective clientele in West &
North Texas. Our ability to service the used pipe market, utilize advanced
remedial techniques and plug Wells efficiently and at reasonable cost will gain
ABCO the majority of the market in our operational area.
7
<PAGE>
MARKETING DISCUSSION
The ABCO marketing program must contain the following major elements to achieve
success:
o The ability to fully understand the problems associated with the market
place.
o The financing to afford ABCO the ability to react in order to
capitalize on changing.
o A research networking system incorporating governmental and private
sector information concerning applicable new innovative techniques
developing in our area of endeavor.
o Continuing efforts to seek out and train qualified and knowledgeable
people with a visionary attitude towards the future of the company.
Item 3. DESCRIPTION OF PROPERTY.
N/A
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information relating to the beneficial ownership
of Company common stock by those persons beneficially holding more than 5% of
the Company capital stock, by the Company's directors and executive officers,
and by all of the Company's directors as a group, as of June 9th, 2000.
(a) Security ownership of certain beneficial owners:
Class Name & Address No. of Shares Percent
----- -------------- ------------- -------
Common Stock Pete W. Harder 4,500,000 45%
Common Stock Permian Petroleum 4,500,000 45%
8
<PAGE>
(b) Security ownership of Management:
Class Name & Address No. of Shares Percent
----- -------------- ------------- -------
Common Stock Pete W. Harder 4,500,000 45%
Common Stock Permian Petroleum 4,500,000 45%
Item 5. Directors, Executive Officers, Promoters and Control Persons
Directors and Executive Officers.
The members of the Board of directors of the Company serve until the next annual
meeting of stockholders, or until their successors have been elected. The
officers serve at the pleasure of the Board of Directors.
(a) Names and ages of directors and executive officers:
Directors
---------
Name Age Birth Date
---- --- ----------
Pete W. Harder 46 5-21-54
Officers
--------
Pete W. Harder 46 5-21-54
Pete W. Harder 46 5-21-54
9
<PAGE>
(d) Positions and offices held:
Name Office
---- ------
Pete W. Harder Chairman of the Board
Pete W. Harder President
Pete W. Harder Secretary
Pete W. Harder Treasurer
(e) Term of office as director and period during which served:
Name Term Period
---- ---- ------
Pete W. Harder One Year February 28, 2000- to present
Item 5. Key Management:
Pete W. Harder is 46 years of age. He has served as President on ABC
Well Service and ABC Energy Companies, Inc. for 4 years. His duties as President
carry the responsibility of overseeing the entire field of operation and
supervising 30- 50 employees. Mr. Harder has answered to the Texas Railroad
Commission on each and every well that ABC Well and ABC Energy have plugged thus
far. Under his supervision there has hot been a Well that leaked or had to be
re- cemented. Mr. Harder has carried this responsibility for approximately 20
years. His personnel, equipment on the last evaluation by the Texas Railroad
Commission received a 99.0 rating one of the best in the industry. The Texas
Railroad Commission is asking for his services this date.
Mr. Harder has completed the following schools and received
certificates in these schools.
Certified Welder all materials
Certified Diesel Mechanic
Certified Auto Mechanic including automobiles, trucks, rigs, etc.
Certified Machinist
Transmission Specialist
Electrical System Specialist
Structural designs for Rigs, Cranes etc.
With the certification of the above schools dealing with heavy
equipment Mr. Harder has help the Corporation receive the 99.0 rating.
10
<PAGE>
Item 6. EXECUTIVE COMPENSATION
Pete W. Harder, COB/President/ Secretary/Treasurer Receives an annual
salary of $50,000.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Corporation was organized as "GECKO ASSOCIATES, INC." under the
laws of the state of Nevada on May 9th,1996.
On May 8, 1999, the company amended its Articles of Incorporation which
changed the Company's name to "ABCO Industries, Inc.", increased it's
capitalization to 50,000,000 shares of common stock, par value of $.001 and
1,000,000 shares of preferred stock with a par value of $.001. Furthermore the
Company forward split its issued common stock (50:1).
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
On February 8th , 2000, the Board of Directors of the Corporation
passed a resolution to accept an agreement for the exchange of common stock
between ABCO Industries, Inc., a Nevada Corporation and ABC Well Services Co.,
Inc., a Texas corporation. The Board of Directors also authorized the Transfer
Agent to issue to shareholders of ABC Well Services 9,000,000 shares of the
common stock of ABCO Industries, Inc., a Nevada corporation, $0.001 par value
from its treasury so as the amount of shares then issued would be equal to 90%
of the combined total of 10,000,000 outstanding shares, in exchange for the 100%
of the issued and outstanding shares of ABC Well Services, Inc. a Texas
corporation, such that Temecula Valley Inn, Inc. a Nevada corporation shall
become a wholly owned subsidiary of ABCO Industries, a Nevada corporation.
As of the date of this filing 10,000,000 shares of the common stock and
none of the preferred stock was outstanding.
Of the issued and outstanding common stock, 9,000,000 shares are held
either directly or beneficially by the Corporation's sole director, Pete W.
Harder and Permian Petroleum The remaining 1,000,000 shares of the issued and
outstanding common stock are held by 304 shareholders who are not affiliates of
the Corporation. As evidenced by the original certificates and corporate
minutes, these shares were originally issued November 15th, 1996.
Item 8. DECRIPTION OF SECURITIES
Each shareholder of Common stock, either in person or by proxy, may
cast one vote per share of Common stock held on all matters to be voted on. The
presence, in person or by proxy, of the holders of a majority of the total
number of shares entitled to vote constitutes a quorum for the transaction of
business. Assuming that a quorum is present, the affirmative vote of a majority
of the shares of the Company present in person or represented by proxy is
required. The company's articles do not provide for cumulative voting or
preemptive rights. There are no outstanding options or warrants of any kind for
the company's stock.
11
<PAGE>
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.
As of (DATE), there were 304 stockholders of record. No dividends have
been declared on the Company's stock, nor does the Company foresee any dividends
being declared in the near future.
Item 2. LEGAL PROCEEDINGS.
Not applicable.
Item 3. CHANGES IN AND DISSAGREEMENTS WITH ACCOUNTS ON ACCOUNTING.
Not applicable.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES.
There have been no sales of any securities.
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Company's By-laws pursuant to Nevada Statute 78.751 require
the Company to indemnify and advance expenses to any officer who incurs
liability or expense by reason of such person acting as director of the
Corporation, to the fullest extent allowed by Nevada Law. The corporation shall
indemnify any and all of its directors or officers or former directors or former
officers or any person who may have served at its request as director or officer
of another corporation in which it owns shares of capital stock or of which it
is a creditor against expenses actually and necessarily incurred by them in
connection with the defense of any action, suit or proceeding in which they, or
any of them, are made parties, or a party by reason of being or having been
directors or officers or a director or officer of the corporation, or such other
corporation, except, in relation to matters as to which any such director or
officer or former director or officer or person shall be adjudged in such
action, suit or proceeding to be liable for negligence or misconduct, in the
performance of duty. Such indemnification shall not be deemed exclusive of any
other rights to which those indemnified may be entitled, under By-law,
agreement, vote of stockholders or otherwise.
PART F/S
FINANCIAL STATEMENTS
The consolidated financial statements of the Company required to be included in
Part F/S are set forth below.
12
<PAGE>
Summary Income Statement
For the Month Ending March 31, 2000
Year-To-Date
$ %
----------------------
Operating) Income
Service Revenue
Plugging $247.826 38.47%
Well Service $258,368 40.11%
Hot Oil $11,614 1.80%
Equipment Sales $126,386 19.62%
----------------------
$644,194 100.00%
Cost of Sales
Cost of Sales - Salvaged Equipment $23,226 3.61%
Gross Profit $620,968 96.39%
Operating Expenses - Direct
Personnel Costs $167.649 26.02%
Field Expenses $122,133 18.96%
----------------------
Total Direct Operating Expenses $289,782 44.98%
Gross Margin from Operations $331,186 51.41%
Operating Expense - Indirect
Shop Personnel Cost $10,636 1.65%
Shop Expenses $4,950 0.77%
Total Indirect Operating Expense $15,586 2.42%
---------------------
Net Operating) Margin $315,600 48.99%
Selling. General 8 Admire Expenses
S, G&A Personnel Cost $27,871 4.33%
Other S, Expenses $64,925 10.08%
---------------------
Total S.GSA Expenses $92,796 14.41%
Net Operating income $222,804 34.58%
Non-Operating Income(Expense)
Interest Expense $2,505 0.52%
Total Other Income(Expense) $2,505 0.52%
Net Income Before Depreciation $220,299 34.06
Depreciation $48,771 7.57
---------------------
Net Income (Loss) $171,528 26.49%
1
<PAGE>
OMEGA PROPERTIES
Real Estate-Appraisal P.O. Box 807
FT. Davis, Texas 79734
(915) 426-2261
April 10, 2000
A.B.C. Well Service Company, Inc.
Attn: Pete W. Harder, President
P.O. Box 3251
Midland, Texas 79702
Re: Market Value Update of a restricted Report of a Complete Appraisal of
A.B.C Energy Company Dated November 17, 1997
Dear Mr. Harder:
As requested, I have reviewed the original Complete appraisal above referred
business, collected and analyzed current available data, and have provided you
herein with an updated estimate of the market value of the company as an ongoing
business concern. The assets of the subject business consists of real estate,
equipment and business were originally inspected and reviewed on various dates
in March and April, 2000. With the exception on the real estate located in
Glendive, Montana, all real and tangible assets comprising the subject are the
same as those set forth in the original appraisal report. Reference to the
original appraisal report for descriptions of the assets comprising the subject
is hereby made and those descriptions are incorporated herein. The date of this
report serves as the effective date of re-valuation.
As requested, this Market Value Update is presented in a Restricted Use Report
format with data analysis Presented to support an estimate of value. The
appraisal report meets the minimum appraisal standards set forth by the Uniform
Standards of Appraisal Practice (U.S.P.A.P.) of the Appraisal Foundation, Title
XI of F.I.R.R.E.A., and the Code of Professional ethics of the American Society
of farm Managers and Rural Appraisers. I have researched the market for current
comparable data and other pertinent information.
The following pages set forth the current market data and assumptions employed
in estimating a current value for the subject business. Based on the available
data, the indicated market value of the subject business as of April 10, 2000
is:
FIVE MILLION ONE HUNDRED FORTY-SEVEN THOUSAND DOLLARS
($5,147,000.00)
It has been a pleasure to prepare this report. If you have any questions
concerning the contents of this report, please feel free to call.
Respectfully submitted,
Karl F. Armstead ARA
TALCB Lic. #1322008-G Walter E. King
NMREAB Lic. # 111311-G Petroleum consultant
2
<PAGE>
Assumptions and Limiting Condition
1. LIMIT OF LIABILITY The liability of the appraiser and employees is limited to
the client and to the fee collected. Further, there is no accountability,
obligation, or liability to any third party. 1f this report is placed in the
hands of anyone other than the client, the client shall make such party aware of
all limiting conditions and assumptions of the assignment and related
discussions. The Appraiser assumes no responsibility for any costs incurred to
discover or correct any deficiencies of any type present in the property -
physically, financially, and legally.
2. COPIES & PUBLICATION, DISTRIBUTION, USE OF REPORT: Possession of this report
or any copy thereof not carry with it the right of publication, nor may it be
used for other than its intended use; the physical reports(s) remain the
property of the appraiser for the use of 'he client - the fee being for the
analytical services only.
The Bylaws and Regulations of the American Society of Farm Managers and
Rural Appraisers require each Member or Candidate to control the use and
distribution of each appraisal report signed by such Member or Candidate; except
as hereinafter provided, the client may distribute copies of this appraisal
report In its entirety to such third parties as he may select; however, selected
portions of this appraisal report shall not be given to third parties without
the prior written consent of the signatories of this appraisal report. Neither
all nor any part of this appraisal report shall be disseminated to the general
public communication without the prior written consent of appraiser. (See last
item in following list for client agreement/consent).
3. CONFIDENTIALITY Thin appraisal is to be used only is its entirety and no part
is to be used without the entire report. All conclusions and opinions concerning
the analysis set forth in the report were prepared by the Appraisers(s) whose
signatures(s) appear on the appraisal report, unless indicated a "Review
Appraiser." No change of any item in the report shall be made by anyone other
than the Appraiser. The Appraiser shall haven no responsibility If any such
unauthorized change is made.
The Appraiser may not divulge the material evaluation contents of the
report, analytical findings a conclusions, a give a copy of the report to anyone
other than the client or his designee as specified in writing except as may be
required by the American Society of Paten Managers and Rural Appraisers as they
may request in of ethics enforcement or by court of law or body with the power
of subpoena.
4. TRADE SECRETS: This appraisal was obtained &= Karl F. Armstead Appraiser and
Consultant, or related independent contractors and consists of "trade secrete
and commercial or financial information" which is privileged and confidential
and exempted from disclosure under 5 U.S.C. 552(b)(4) Notify the appraiser(s)
signing the report of any request to reproduce this appraisal in whole a part.
<PAGE>
5. INFORMATION USED: No responsibility is assumed far accuracy of the
information furnished by work of others, the client, his designee, a public
records. I am not liable for such information or the work possible
subcontractors, He advised that some of the people associated with the Appraiser
and possibly signing the report are independent contractors. The comparable data
relied upon this report has been confirmed with one or more: parties familiar
with the transaction o from affidavit or other sources thought reasonable, all
are considered appropriate for inclusion to the best of our factual judgment and
knowledge. An impractical and uneconomic expenditure or time would be required
in attempting to furnish unimpeachable verification in all instances
particularly as to engineering and market related information. It is suggested
that the client consider independent verification as a prerequisite to any
transaction involving sale New, or other significant commitment of funds for the
subject property.
6. TESTIMONY AND COMPLETION OF CONTRACT FOR APPRAISAL SERVICES: The contract fix
appraisal, consultation or analytical services is Wiled and the total foe
payable upon completion of the report. The appraiser (s) or those emitting in
preparation of the report will not be asked a required to give testimony in
court or hearing because of having me& the appraisal in Rill or in part, nor
engage in post appraisal consultation with client or third parties except under
separate and special arrangement and at additional foe. If testimony a
deposition is required because of subpoena, the client shall be responsible for
any additional time, fees, and charges, regardless of issuing party.
OMEGA PROPERTIES - 2
<PAGE>
7. EXHIBITS: The sketches and map in this are included to assist the render in
visualizing the property and arc not necessarily to scale. Various photos, if
included for the same purpose as of the date of the photos. Site plans are not
surveys unless shown from separate surveyor
8. LEGAL ENGINEERING FINANCIAL, STRUCTURAL, OR MECHANICAL, HIDDEN COMPONENTS,
SOIL: No responsibility is assumed For matters legal in character of nature nor
nature of surveyor of any architectural, structural, mechanical, or engineering
nature No opinion is rendered as to the title, which is presumed to be good and
merchantable. The property is appraised. as if free and clear unless otherwise
stated in particular parts of the report.
The legal description is assumed to be correct as used in this report as
furnished the client, his designee, or as derived by the appraiser. Please
note that no advice is given regarding mechanical equipment or structural
integrity or adequacy, nor soils and potential fix settlement, drainage (seek
assistance from qualified architect and/or engineer nor matte concerning legal
title status, and legal marketability (seek legal assistance The lender and
owner should inspect the property before any disbursement of funds; further, it
is likely that the lender or owner wish to require mechanical or structural
inspections by qualified and licensed contractor civil or structural engineer,
architect, or, other expert.
The appraiser has inspected as far as possible by observation the land and
improvements; however, it war not possible to personally observe conditions
beneath the soil or hidden structural components. We have not critically
inspected mechanical components in the improvements, end no arms are made to
these matters unless specifically stated and considered. In the report The value
estimate considers there being no such conditions that would cause the loss in
value. The land or the soil of the areas being appraised appears firm: however,
subsidence in the area is unknown The appraiser(s) do not warrant against this
condition or occurrence of problems arising from soil conditions.
The appraisal is based on there being no hidden, unapparent or apparent
conditions of the property site, submit, or structure or toxic materials which
would reader it mart or less valuable No responsibility to assumed for any such
conditions or for any expertise or engineering to discover them. All mechanical
components assumed to be in operable condition made status standard flow
properties of the subject type, cooling ventilating electrical, and plumbing
equipment are considered to be commensurate with the condition of the balance of
the improvements unless otherwise sassed. No Judgment may be made by us as to
adequacy of insulation or type of insulation or energy efficiency of the
improvements equipment which is assumed standard for subject age and type,
The Appraiser assumes no responsibility for any costs or consequences
arising due to the need a the lack of need for flood hazard insurance. An Agent
for The Federal Food Insurance Program should be contracted to determine the
actual need for Flood Heard Insurance.
9. LEGALITY OF USE: The appraisal is based on the premise that there is full
compliance with all applicable federal, suet and local environmental regulation
and laws unless otherwise stated In the report; further, that all applicable
zoning, building, and use regulations and restrictions of all types hive been
complied with unless otherwise stated in the report further, it is assumed that
all required licenses, consents permits or other legislative a administrative
authority by local state, federal and/or private entity or organization !lave
been or can be obtained err renewed for any considered in the value estimate.
10. COMPONENT VALUES: The distribution of the total valuation in this report
between land and improvements apply only under the eating program utilization
The separate valuations for land end building must not be used in conjunction
with any other appraisal and is invalid if so used.
11. INCLUSIONS: Furnishings and equipment and personal property as business
operations, except as specifically indicated and typically considered as a part
of real [illegible] disregarded with only the real acute being considered in the
value estimate unless otherwise stated: In carne property typos, business and
real estate interests and values are combined.
12. PROPOSED IMPROVEMENTS, CONDITIONED VALUE: improvements proposed if any, on
or
OMEGA PROPERTIES 3
<PAGE>
off-site, as well a any repairs required, are considered, for purposes of this
appraisal, to be completed in good and workmanlike manner according to
information submitted and/or considered by the appraisers. In calm of proposed
construction, the appraisal is subject to change upon inspection of property
ages construction is completed. This estimate of market value is as of the date
shown, as proposed, a if completed arid operating at levels shown and projected.
13. VALUE CHANGE & ALTERATION OF ESTIMATE 8Y APPRAISER(S): The estimated market
value, which is defined in the report, is subject to change with market movement
over time; value is highly related to exposure, time, promotional effort, terms,
motivation, and conditions surrounding the offering. The value estimate
considers the productivity and relative attractiveness of the property
physically sad economically in the marketplace as it contributes to as economic
or social need.
In crib of appraisals involving capitalization of income benefit the
estimate of market value err investments value or value is use a reflection of
such benefits and the appraiser's interpretation of income, yields, and other
factors derived from general and specific chant and market information. Such
estimates are reported as of a specific date; they era thus subject to change
since the maker and value ate naturally dynamic.
The "Estimate of Market Value" in the appraisal report is not based in
whole or in part upon the race, color, or notional origin of the present owners
or occupants of the properties in the vicinity of the property appraised.
14. CHANGE: Appraisal report and value estimates are subject to change if
physical, legal entity. err financing different than envisioned at the time of
writing this report became apparent at a later date.
15. MANAGEMENT OF THE PROPERTY: It is assumed that the property which is the
subject of this report will be under prudent and competent ownership said
management, neither inefficient nor super-efficient.
16. CONTINUING EDUCATION: The American Society of Farm Managers and Rural
Appraisers conducts a voluntary program of continuing education of its
designated member; ASFMRAS who meet the minimum standards of this program are
awarded periodic educational certification and, ARA'S signing the report are
currently certified under this program.
17. FEE: The fee for this appraisal or study is for the service rendered and not
for the time spent on the physical report or the physical report Itself. The
compensation (fee) for the preparation of this appraisal report has no relation
to the final values repeated.
18. CHANCES & MODIFICATIONS: The appraiser(s) reserve the right to alter
statements, analysis, conclusions of any value estimate in the appraisal if it
becomes known to the undersigned facts pertinent to the appraisal process which
were unknown to us/me at the time of report preparation.
19. MINERAL RIGHTS, NOISE, AND ENVIRONMENTAL CONCERNS: Mineral rights, noise,
and environmental factors have not been given segregated consideration except a
noted; they have boon treated wills the whole.
20. ACCEPTANCE OF, AND/OR USE OF THIS APPRAISAL REPORT BY THE CLIENT OR ANY
THIRD PARTY CONSTITUTES ACCEPTANCE OF THE ABOVE CONDITIONS.
OMEGA PROPERTIES 4
<PAGE>
Summery of Salient Facts and Conclusions
Type of Business: Petroleum Service
Location: Headquartered Midland, Texas
Intended Use of the Appraisal: Estimate of Market Value for Internal
Valuation Purposes
Intended User of the Appraisal: Mr. Pete Harder, President
Property Rights Appraised: 100 Percent Ownership Interest
Date of Valuations: April 10, 2000
Assets: Commercial Real Estate in Andrews,
Texas; equipment; rolling stock; and,
service contracts
Valuation
Summary Chart
Asset Value
----- -----
Real Estate $ 101,000
Equipment & Rolling Stock $3,600,000
Business Enterprise $1,446,000
Total $5,147,000
FIVE MILLION ONE HUNDRED FORTY-SEVEN THOUSAND DOLLARS
($5,147,000.00)
0MEGA PROPERTIES 5
<PAGE>
Purpose and Intended use of the Appraisal
The purpose and intended use of this Marker Value Update to the
Complete Appraisal dated November 17, 1997, is to estimate the market value of
the on-going business enterprise of A.B.C. energy Company, headquartered in
Midland, Midland County Texas, for the use in financial management and planning.
Any other use of this report is considered an unauthorized use.
The appraisal is prepared in a Restricted Use Report format.
Definition of Market Value
Market value may be defined as follows:
"The most probable price in terms of money which a property should bring in a
competitive and open market under all conditions requisite to a fair sale the
buyer and seller each acting prudently knowledgeably and assuming the price is
not affected by undue stimulus.
Implicit in this definition is the consummation of a sale a of a specified sale
and the passing of title from seller to buyer under conditions whereby:
1. buyer and seller are typically motivated.
2. both parties arc well informed a well advised each acting in
what they consider their own best interest.
3. a reasonable time is allowed for exposure in the open market.
4. payment is made in cash or its equivalent.
5. financing, if any, is on terms generally available in the
community at the specified date and typical for the property
type in its locale.
6. the price represents a normal consideration for the property
sold unaffected by special; financing amounts and/or term,
fines costs, and credits incurred by the transaction."
The above definition is Born Real Estate Appraisal Terminology, Fourth Printing,
AIREA, SREA:1982
Property Rights Appraised
The property, rights appraised are fee simple title ownership, which all rights
which may be lawfully owned, for the surface estate only. The property is
appraised as if free and clear and as if without liens or encumbrances. However,
since such rights in realty ere separate and divisible, thus rights easy be
encumbered from time to time.
Authorization and Intended User
Authorization to appraise the subject property was provided by Mr. Pete Harder,
President of A.B.C. Energy Company. Midland, Texas, who is also the intended
user. Any other user of this report is considered an unauthorized user.
OMEGA PROPERTIES 6
<PAGE>
Scope of the Appraisal
in the preparation of this report, the subject property was personally inspected
and the physical characteristics identified and analyzed employing information:
provided by the client, information available from public and private sources.
Based upon the physical characteristics composing the subject and social and
economic conditions, the highest and best use of the subject is determined.
Following the determination of the subject's highest and best use, market data
concerning the sale of similar properties located in the general area of the
subject property was researched. Research into the market sales for properties
in the area included interviews with buyers, sellers, real estate brokers, other
appraisers, as well as abstract and deed record starches.
For an additional indication of value, the coat approach to value was employed.
This appraisal approach involves basically the summation of land value, as if
the underlying real estate is absent of improvements and the depreciated value
of existing improvements. Land value, as though unimproved, Is based on
comparison of the subject's land area to market data pertaining to comparable
land. In estimating replacement coats new (RCN) of building improvements,
consideration ha' beet given to local construction cost estimates from builders
active in the area a by abstraction from market data far improved properties.
Three forms of depreciation are normally considered within the valuation
analysis: physical deterioration of the improvements; functional obsolescence
relating to layout design, configuration, materials, ex.; and, external
obsolescence relative to factors outside the property that would detrimentally
affect value. The amount of accrued depreciation is abstracted from the market
when applicable air estimated based upon observed condition and effective age
relative to total physical life.
As the subject is an on-going business enterprise, the income approach to value
estimation is employed. This is an appraisal technique employed to provide an
indication of value based an a relationship that exists between income
generation and market value. The value of this relationship is estimated based
upon a discounted wilt flow analysis of future earnings reduced to a present
value by employment of a discount rate.
Following completion the above analysis, the value indications obtained from
each appraisal technique and compared and analyzed for validity,
reasonableness, reliability and a determination is trade relative to the value
which is considered to most accurately reflect the market value of the subject.
The Appraisal Process
An appraisal is art estimate of value supported by employing proper appraisal
techniques. Making an appraisal is actually solving a problem, which is
generally the estimation of market value as of a given date.
The appraisal process involves the interpretation of the economic sociological,
physical and political forces that have an effect On a specific business. The
characteristics of each business are unique and differ in many respects.
Regardless of the nature of the business, the basic appraisal procedure is the
same. The process involves physical inspection, proper identification of the
assets comprising the tangible property, preliminary appraisal plan, data
collection and analysis, application of the three (3) approaches to value
determination, reconciliation of value estimates, and a final estimate of market
value. The three approaches employed in the appraisal process are the cost
approach, income or earnings approach and the direct sale comparison or market
data approach.
In the final analysis, a brief review and a "final look" into the analysis of
available data is considered. This is a process by which the appraiser evaluates
data; reconciles the facts and observations; and selects a value estimate which
most nearly represents what the typical, informed, prudent and rational
purchaser/investor would pay for the business under appraisement 1f it were
available for sale an the open market as of the valuation date.
OMEGA PROPERTIES 7
<PAGE>
Equipment and Rolling Stock
The assets of the subject comprised of equipment and rolling stock are identical
to that set teeth in the original report. None of these items have boast sold or
salvaged and no additional items have bears added to the inventory. Routine
maintenance and repairs have been executed and aside from normal depreciation
wear and tear resulting from typical work related activities, the equipment
appears to be in a physical and financial condition similar to that originally
documented. It is noted that Rigs Nos. 1, I and 6 have had me overhauls relative
to engines transmissions, tubing and swab lines. Additionally, these rigs have
been re-painted and handling tools upgraded
It is noted that since the original valuation, the 1998 down-turn in the oil and
gas industry has caused a consolidation of well service businesses. The
consolidation was an attempt by the major well service companies to acquire
competing companies that were in a financially distressed condition. Since that
time, the rebound of and gas prices has resulted in well servicing work being
performed by fewer firms in order to stabilize prices by limiting rig
availability. Several of the major well service companies possess inactive rigs
however, these rigs are not available for purchase unless the buyer executes a
non-competition agreement, declares that the purchased rig be placed in service
overseas. The result of this manipulation of the market is a substantial
increase fir the value of operational rigs similar to those possessed by the
subject business.
The following value estimates for the items of equipment and rolling, stock
assets of the object business were derived based upon market comparisons of the
selling prices of similar equipment the open market and/or value estimates oat
forth in the N.A.D.A. "Blue Book" for Motor Vehicles.
Work-over Rig Equipment
Rig No. Year/ Make Mast Size(Ft) Value
1 1981/ Cooper 108 $392,232
2 1982/Midway 108 362,790
3 1971/Brewster 100 292,710
4 1971/Brewster 100 293,120
5 1976/Franks 100 315,396
6 1965/Franks 100 296,752
7 1966/Cabot 100 295,191
8 1976/Franks 100 295,000
9 1978Franks 100 295,000
Total $2,838,191
OMEGA PROPERTIES 8
<PAGE>
Rolling
Stock
Unit No. Year/make Type Value
(New) INC Cement Tandam Axle twin screw $60,000
PSI Pump Truck
(New) Ford F.-600 Cement Bulk Truck $3,500
(New) 1979 Ford F-700 Wireline Truck $47,200
(New) Case 580-D Loader/backhoe $14,400
A-101 1984 Hillsboro 30' Gooseneck Trailer $ 6,336
A-102 1969/Freuhauf Bulk Trailer $16,980
A-103 1984/Arrow Triplex Mud Trailer $70,446
A-110 1996/Chevrolet Pick-upTruck $12,500
A-113 1979 Mack Truck $19,700
A-115 1981/White Cementer $118,000
A-117 1994/Ford Crew-cab P.U. $15,500
A-118 1993/Ford Crew-cab P.U. $13,000
A-119 1993/Ford Crew-cab P.U. $12,000
A-121 19941GMC 4X4 Crew-cab P.U. $16,500
A-122 1995/Dodge Super-cab P.U. $14,000
A-123 1979/GMC Truck $23,010
1984fFord 1-ton truck $3,500
19941Ford 1-ton P.U. 14,500
A-126 1996/Dodge a 1-ton P.U. 20,000
A-130 Western Star Truck 17 000
131 1997/ Chevrolet Z-71 4X4 17 500
33 1990/Frei tliner Truck 26 550
67 1990/Freightliner Truck 826,550
Total 588,672
OMEGA PROPERTIES 9
<PAGE>
Other Equipment
--------------------
Unit No. Year/Make T * Value
A-104 Cement Air Compressor $ 8,962
A-106 R. Foster Tongs $19,190
A-108 107-MZIOW illegible
A-11 1981 trailmobile Water tran $12,980
A-114 1966 Corbett Trailer $12,980
A-127 Cage Backhoe 530,680
A-129 J & L Bulk Trailer $13 980
A-116 (equipment trailer) $ 3,124
A t24 1980/Clark Low Boy Trailer $34,810
Lincoln Welding Machine illegible
Sh Made Trailer illegible
1981/Aztec Trailer $6,100
1981 Hobbe Trailer $4,800
1995/Gooseneck Trailer
Based upon the data act forth in the preceding charts the total estimated market
value of the equipment and galling stock assets of the company is:
THREE MILLION SIX HUNDRED THOUSAND DOLLARS
($3,600,000.00)
OMEGA PROPERTIES 10
<PAGE>
Income Analysis Business Enterprises
The business of the subject is the routine servicing and maintenance of
producing oil and 8" wilts; as well as the plugging and abandonment of
uneconomical oft and gas wells. The- subject's services era contracted far by
the owners/operators of the wells that are to be serviced a plugged. Set forth
below is a summary of the subject businesses income and expenses from the past
four (4) Years of operation. 'the income/expense data reflects the volatility of
the business under economic conditions controlled by the oil and gas industry;
however, the pod, two yaw have shown stability. Additionally, net income has
risen each [illegible] the company has controlled [illegible] the overall growth
rate is 34%; however, the annual growth rate ranges from 2 to 100%, further
reflecting the volatility of the Industry. The annual rate of growth is expected
to wry depending upon the economic conditions of the oil and gas markets and
influenced by consolidation of the oil Held service sector of the industry.
[CHART OMITTED ILLEGIBLE]
The following chart represents an estimated discounted cash Row analysis of the
subject's business over the next five (5) Years. This analysis utilizes the
past three years income and expenses as the basis for projections sail employs a
growth rats of 109'. per year a documented by the actual financial data
Estimated future net income, is reduced to present value utilizing a discount
rate of 10 patent. The reduced discount rate reflects the reduced business risk
resulting from the consolidation of the well servicing industry in 1998 and
1988.
[CHART OMITTED ILLEGIBLE]
OMEGA PROPERTIES 11
<PAGE>
Summary at Income Analysts
The income analysis is an appraisal technique estimating the value of the
subject's business enterprise bread upon the income potential. This analysis
news the subject floor an inventor's perspective wherein income is equated to
value based upon a reasonable anticipated return on investment
OMEGA PROPERTIES 12
<PAGE>
The subject's projected income stream over a five year period was reduced to
presort valor utilizing a 10 Percent discount rate. income and expense estimates
were derived from historical records furnished by the client.
The subject's net income compared to total asset value indicates an average raft
of return on assets of 11.35 [illegible] the next five (5) years, prior to
depreciation and interest expenses. This rate of return on asset value is
considered to be comparable to yields obtained from alternate cash investment
vehicles, especially when investment risk is taken into consideration. Passive
cash investment vehicles utilized with amounts comparable to the base of this
business, such as mutual funds, have been yielding 4 to 20 percent carom on
investment over the past two years.
As a result of the subject business estimated return on asset value over the
next flue years, a five (5) part is deemed appropriate in estimating the value
of the business enterprise when compared to returns from alternate investment
vehicles.
Based upon the analysis set forth, the indicated value of the subject's business
enterprise, as of April 10, 2000 is:
ONE MILLION FOUR HUNDRED FORTY-SIX THOUSAND DOLLARS
($1,446,000.00)
OMEGA PROPERTIES 13
<PAGE>
Summary of Valuation
The purpose of this appraisal is to estimate the market value of the assets of
ABC. Energy Company. The business is engaged in the service sector of the oil
and gas industry. The assets of the subject Is composed of real estate,
equipment, rolling stock and the business enterprise. The preceding report set
forth the tangible and intangible company assets and the component market
values.
Based upon the data end analysis presented in this report, the value of ABC.
Energy Company is set forth in the following chart.
Valuation Summary Chart
Asset ...............Value
Real Estate ..............$ 101,000
Equipment & RollinG Stock .............$3,600,000
Business Enterprise .............$1,446,000
Total .............$5,147,000
FIVE MILLION ONE HUNDRED FORTY-SEVEN THOUSAND DOLLARS
($5,147,000.00)
OMEGA PROPERTIES 14
<PAGE>
Certification
We certify that, to the best of our knowledge and belief,...
-the statements of fact contained in this report [illegible]
-this reported analysis, opinions, end conclusions, era limited only
fir. the reported assumptions and limiting conditions, and are our
personal, professional analysis, opinions, and conclusions;
-we have no present or prospective intent in the property that is the
subject of this report.
-we have no personal bias regarding the property that is the subject of
this report or to any parties involved
-our compensation is not contingent on an action or event resulting
from the analysis, opinions, or conclusions in, or the we of, this
report.
-our analysis, opinions, and conclusions were developed and this report
was prepared, in conformity with the requirments of the Uniform
Standards of Professional Appraisal Practice (U.S.P.A.P.) and the Code
of Professional Ethics of the American Society of Funs Managers Rural
Appraisers.
-the use of this report is subject to the requirements of the Texas
Appraisers License and Certification Board, the New Mexico Real Estate
Appraiser; Board and the American Society of Farm Managers and Aura)
Appraisers relating to review by their duly authorized repreentatives
I, Karl F. Armstead am currently certified under the voluntary
continuing education rules of the Texan Appraises License and
Certification Board. the New Mexico Real Estate Appraisers Board and
American Society of Farm Managers and Aural Appraisers.
-we have read a personal inspection of the property that is the
subject of this report. ; -based open the analysis, as set forth in the
preceding page, and upon my experience, the estimated Market Value of
said property, under the assumptions and conditions as stated as of
April 10, 2000. L:
FIVE MILLION ONE HUNDRED FORTY-SEVEN THOUSAND DOLLARS
($5,147,000.00)
April 10, 2000
Carl F. Armstead A.R.A.,
Certified General Real
Estate Appraiser
License No. 134,
New Mexico Certified General
Real Estate Appraiser
License No.11131 1-G
Walter E. King
OMEGA PROPERTIES 15
<PAGE>
Qualifications of Karl F. Armstead
Education
Graduate Catalina High School. Tucson, Arizona 1961
Bachelor of Science Degree in Range Management University of
Arizona
Graduate Studies University of Texas of the Permin Basin 1976
Technical Training
[Document illegible]
OMEGA PROPERTIES 16
<PAGE>
Representative
Clients
Abell-Hangar Foundation
Ameritrust
Bank One Texas N.A. - Trust Department
Bank One Arizona, N .A - Agribuisness Department
Boatman's Pint Interstate Bank of Oklahoma - Trust Department
Boatmen's Bank of TX. San Angelo, TX
Boldrick R Clifton - Attorney-at-Law
Brocken Lindemood - Attorney-at-Law
Bullock, Soon, Neisig R Owens - Attorney-at-Law
City National Bank - Colorado [illegible]
Cotton, Bledsoe, Tighe R Dawson- Attorney-at-Law
Del Rio Bask and Trust
Energas
Farm Services Agency (F.S.A., Fm.H.a.
Pasken Oil A Ranch Ltd.
Federal Land Bank of [illegible]
Finn National Bank of Dons Ana County, New Mexico
Fist National Bank of Precos, TX
First Presidio Bank First [illegible]
Port Davis State Bank
Noisy, Davis, Wren, Bristow A. Resner - Attorney-at-Law
Hinkle, Coot, Eaton Coffiels & Hensley - Attorneys-at-Law
Krasfur Gordon & Mat - Attorneys-at-Law
Lynch, Chappel & Alsup - Attorneys-at-Law
Slier* National Bank
Munce A Galatzan - Attorneys-at-Law
NationsBank of Texas. NA o Trust Real Department
Norwell Bank of New Mexico, Roswell, New Mexico
O'Daniel Farm and Ranch
Orxy Energy Company
Parker Ranchlands
Pittsburg National Bank - Trust Real Estate Department
Resolution Trust Corporation
Saunders Norval - Attorneys-at-Law
Security [illegible] Bank of Pecos, TX
Stubbman, McRae Sealy and Browder - Attorneys-at-law
Texas Commerce Bank
Pacific Land Trust
Texas National Bank - Midland, TX
Vast Ranches U.S. Department of Housing and Urban
Development
References -
Available Upon
Request
OMEGA PROPERTIES - 17
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT........................................1
ASSETS..............................................................2
LIABILITIES AND STOCKHOLDERS' EQUITY................................3
STATEMENT OF OPERATIONS.............................................4
STATEMENT OF STOCKHLDERS' EQUITY....................................5
STATEMENT OF CASH FLOWS.............................................6
NOTES TO FINANCIAL STATEMENTS.......................................7-8
<PAGE>
FORMERLY GECKO ASSOCIATES, INC.)
(A DEVELOPMENT STAGE Company
FINANCIAL STATEMENTS
October 31, 1999
December 31, 1999
December 31,1997
<PAGE>
BARRY L. FRIEDMAN, P.C
Certified Public Account
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
Board of Directors November 5, 1999
ABCO Industries, Inc.
Austin, Texas
INDEPENDENT AUDITORS' REPORT
I have audited the accompanying Balance Sheets of ABCO Industries,
Inc., (Formerly Gecko Associates, Inc.), (A Development Stage Company), as of
October 31, 1999, December 31, 1998, and December 31, 1997, and the related
statements of operations, stockholders' equity and cash flows-for period January
1, 1999, to October 31, 1999, and the two years ended December 31, 1998, and
December 31, 1997. These financial statements are the responsibility of-the
Company's management. My responsibility is to express. an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating ,the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of ABCO Industries,
Inc., (Formerly Gecko Associates, Inc.), (A Development Stage Company), as of
October 31, 1999, December 31, 1998, and December 31, 1997, and the results of
its operations and cash flows for the period January 1, 1999, to October 31,
1999, and the-two years ended December 31, 1998, and December 31, 1997, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note #3 to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about its ability to continue as a going concern.
Management's plan in regard to these matters are also described in Note #3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ Barry L. Friedman
------------------------
Barry L. Friedman
Certified Public Account
1
<PAGE>
ABCO INDUSTRIES, INC.
(FORMERLY GECKO ASSOCIATES, INC.)
( A Development Stage Company)
BALANCE SHEET
ASSETS
October December December
31, 1999 31, 1998 31, 1997
--------------------------------------
CURRENT ASSETS $ 0 $ 0 $ 0
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
OTHER ASSETS $ 0 $ 0 $ 0
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
TOTAL ASSETS $ 0 $ 0 $ 0
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
ABCO INDUSTRIES, INC.
(FORMERLY GECKO ASSOCIATES, INC.)
(A Development Stage Company)
BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
October December December
31, 1999 31, 1998 31,1997
---------------------------------
CURRENT LIABILITIES
Officers Advances (Note #6) $ 550 $ 0 $ 0
TOTAL CURRENT LIABILITIES $ 550 $ 0 $ 0
STOCKHOLDERS' EQUITY (Note #1)
Preferred stock, par -value,$.001
authorized 1,000,000 shares
issued and outstanding at
October 31, 1999-None $ 0
Common stock, no par value,
authorized 25,000 shares
issued and outstanding at
December 31, 1997-20, 000 shares $ 2,000
December 31, 1998-20, 000 shares $ 2,000
Common stock, par value $ .001
authorized 50,000,000 Shares
issued and oustanding at
October 31, 1999-1,000,000 shares 1,000 0 0
Additional paid in Capital 1,000
Deficit accumulated during
the developmental stage -2550 -2,000 -2,000
TOTAL STOCKHOLDERS' EQUITY $ 500 $ 0 $ 0
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $ 0 $ 0 $ 0
<PAGE>
<TABLE>
<CAPTION>
ABCO INDUSTRIES
(FROMERLY GECKO ASSOCIATES, INC.
STATEMENT OF OPERATIONS
Jan. 1, Year Year May9, 1996
1999 to ended ended (inception)
Oct. 31 Dec. 31 Dec. 31 to Oct. 31,
1999 1999 1999 1999
----------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME
Revenue $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------
EXPENSES
General, Selling
and Administrative $ 550 $ 0 $ 0 $ 2,550
----------------------------------------------------------
Total Expenses $ 550 $ 0 $ 0 $ 2,550
----------------------------------------------------------
Net Profit/ Loss (-) $ -550 $ 0 $ 0 -$2,550
----------------------------------------------------------
Net Profit/ Loss (-)
Per weighted
Share (Note #1) $ -.0006 $ NIL $ NIL $-.0026
----------------------------------------------------------
Weighted average
Number
Shares outstanding 1,000,000 1,000,000 1,000,000 1,000,000
----------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
ABCO INDUSTRIES, INC.
(FORMERLY GECKO ASSOCIATES, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Additional Accumu-
------------------- paid-in lated
Shares Amount Capital Deficit
-------- -------- ---------- -------
<S> <C> <C> <C> <C>
Balance,
December 31, 1996 20,000 $ 2,000 $ 0 -2,000
Net loss year ended
December 31, 1997 0
Balance,
December 31, 1997 20,000 $ 2,000 $ 0 $-2,000
Net loss year ended
December 31, 1998 0
Balance,
December 31, 1998 20,000 $ 2,000 $ 0 $-2,000
October 15, 1999
changed from no par
value to $ .001 -1, 980 +1,980
October 15, 1999
forward stock split
50:1 980,000 +980 -980
Net loss,
January 1, 1998 to
October 31, 1999 -550
Balance,
October 31, 1999 1,000,000 $ 1,000 $ 1,000 $2,550
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ABCO INDUSTRIES, INC.
(FORMERLY GECKO ASSOCIATES, INC.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Jan. 1, Year Year May 9, 1996
1999, to Ended Ended (inception)
Oct. 31, Dec. 31, Dec. 31, to Oct. 31,
1999 1998 1997 1999
-----------------------------------------------------
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Loss $ -550 $ 0 $ 0 $ -2,550
Adjustment to
reconcile net loss
to net cash
provided by operating
activities 0 0 0 0
Changes in assets and
liabilities
increase in current
Officers Advances +550 0 +550
Net cash used in
operating activities $ 0 $ 0 $ 0 $ -2,000
Cash Flows from
investing activities 0 0 0 0
Cash Flows from
Financing Activities
Issuance of common
stock for cash 0 0 0 +2,000
Net increase(decrease
in cash $ 0 $ 0 $ 0 $ 0
Cash,
beginning oz period 0 0 0 0
Cash,
end of period $ 0 $ 0 $ 0 $ 0
</TABLE>
Accompanying notes are an integral part of these financial statements.
5
<PAGE>
ABCO INDUSTRIES, INC
(FORMERLY GECKO ASSOCIATES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
October 31, 1998, December 31, 1998 and December 31, 1997
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized May 9, 1996, under the laws of the State of
Nevada, as Gecko Associates, Inc. On October 15, 1999, the Company's name
changed to ABCO, Industries, Inc. The company currently has no operations and,
in accordance with SFAS #7, is considered a development stage company.)
On May 23, 1996, the company issued, 20,000 shares of its no par value
common stock for $2, 000.00 cash.
On October 15, 1999, the State of Nevada approved the Company's
restated Articles of Incorporation, which increased its capitalization from
25,000 common shares of no par value stock to 50,000,000 common shares of $.001
par value and added 1,000,000 preferred shares, with $.001 as its par value.
On October 15, 1999, the Company forward split it's common stock 50:1,
thus increasing the number of outstanding common shares from 20, 000 shares to
1,000, 000 shares.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings per share is computed, using the weighted average
number of common shares outstanding
3. The Company has not yet adopted any policy regarding payment
of dividends. No dividends have been paid since inception.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which contemplates
the realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
6
<PAGE>
ABCO INDUSTRIES, INC.
(FORMERLY GECKO ASSOCIATES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS CONTINUED October 31,
1999, December 31, 2998, and December 31, 1997
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional
shares of common or preferred stock.
NOTE 5 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property.
Office services are provided without charge by a director. Such costs are
immaterial to the financial statements and, accordingly, have net been reflected
therein. The officers and directors of to Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may race a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 6 - OFFICERS ADVANCES
While the Company is seeking additional capital through merger with an
existing operating company, an officer of the Company has advanced funds on
behalf of the Company to pay for any costs incurred by it. These funds are
interest free.
7
<PAGE>
PART III
Item 1. INDEX TO EXHIBITS
Exhibit 1. Articles of Incorporation.
Exhibit 2. Amendment to Articles of Incorporation.
Exhibit 3. Bylaws.
Exhibit 4. Resolution of Board of Directors.
Exhibit 5. Agreement for the Exchange of Common Stock.
Exhibit 6. Affidavit of Wayne Gronquist
ITEM 2. Description of Exhibits.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Supreme Hospitality
-------------------
(Registrant)
Date: June 29, 2000 By: /s/ Pete W. Harder
----------------------------------
Pete W. Harder, President
<PAGE>
Exhibit 1. ARTICLES OF INCORPORATION STATE OF NEVADA
Secretary of State
Filed: May 9th, 1996
Name of Corporation: ABCO Industries, Inc.(Formerly GECKO Associates, Inc.)
Resident Agent: Nevada Corporate Services
1800 Sahara, Suite 107.
Las Vegas, NV., 89104
Number of Shares the corporation is authorized to issue:
50,000,000 Common
1,000,000 Preferred
Governing Board shall be styled as Directors.
Board of Directors shall consist of 1 member, Pete W. Harder
Signature of Incorporator;
Incorporator signing the articles:
/s/ Pete W. Harder
------------------
125 North Ft. Worth, Suite 110
Midland, Texas 79701
Exhibit 2. Amendment to Articles of Incorporation.
ARTICLE FIRST
That the total number of shares to be issued by the Corporation is Fifty Million
(50,000,000) Common with a par value of one hundredth of a cent ($0.0001) and
one million preferred with a par value of one hundredth of a cent ($0.0001).
/s/ Pete W. Harder
-------------------
Exhibit 3. Bylaws.
BYLAWS OF ABCO Industries, Inc. (Formerly GECKO Associates, Inc.)
(A Nevada Corporation)
Exhibit 4. Resolution of Board of Directors
Exhibit 5. Agreement for the Exchange of Common Stock.
Exhibit 6. Affidavit of Wayne Gronquist.
14
<PAGE>
EXHIBIT 1
ARTICLES OF INCORPORATION
OF
GECKO ASSOCIATES INC.
Know all men by these presents:
That we the Undersigned, have this day voluntarily associated ourselves together
for the purpose forming a corporation under and pursuant to the provisions of
Nevada Revised Statutes 78.010 To Nevada Revised Statutes 78.090 inclusive, as
amended, and certify that;
ARTICLE I
The name of this corporation is Gecko Associates, Inc. the name and post office
address of the incorporator signing the Articles of Incorporation is: Richard D.
Fritzler 1800 E. Sahara Suite 107 La: Vegas, Nevada 89104. The name and address
of the First member of the First Board of Directors is: Richard D. Fritzler 1800
E. Sahara Suite 10, Las Vegas, Nevada 89104.
ARTICLE II
The Resident Agent of this corporation in Nevada shall be Nevada Corporate
Services located at 1800 E. Sahara, Suite 107, Las Vegas, Clark County, Nevada,
89104. Offices for the transaction of any business of the Corporation, and where
meetings of the Board of Directors and of Stockholders may be held, may be
established and maintained in any other part of the State of Nevada, or in any
other state, territory or possession of the United States of America, or in any
foreign country as the Board of Directors may, from time to time determine.
<PAGE>
ARTICLE III The nature of the business and the objects and purpose proposed to
be transacted promoted or carried on by the Corporation is to conduct any lawful
activity in accordance with the Lawss of the State of Nevada and the United
States of America including but not limited to tile following:
1) Shall have the rights privileges and powers as may be conferred upon
a corporation buy any exiting law.
2) May at any time exercise such rights, privileges and powers, when
not inconsistent with the purposes and objects for which this corporation is
organized.
3) This corporation shall have perpetual existence.
4) To sue or be sued in any Court of Law.
5) To make contracts.
6) To hold. purchase and convey real and personal estate and to
mortgage or lease and such real and personal estate with its franchises. The
power to hold real and personal estate :hall include the power to take the same
by device or bequest in this state, or in any other state. territory or country.
7) To appoint such officers and agents as the affairs of the
Corporation shall require, and to allow them suitable compensation.
8) To make By-Laws not inconsistent with the Constitution or Laws of
the United States. or of the State of Nevada, for the management, regulation and
government of its affairs and property, the transfer of its stock, the
transaction of its business, and the calling and holding of meetings of its
Stockholders.
9) To wind up and dissolve itself, or be wound up and dissolved,
according to existing law.
<PAGE>
10) To adopt or use a common seal or stamp and alter the same at
pleasure. The a use of a seal or stamp by the Corporation on any corporate
document is not necessary. The Corporation may use a seal or stamp if it
desires, but such use or nonuse shall affect the legality of the document
11) To borrow money and contract debts when necessary for the
transaction of its business, or for the exercise of its corporate rights,
privileges or franchises or for any other lawful purpose of its incorporation;
to issue bonds, promissory notes, bills of exchange, debentures, and other
obligations and evidences of indebtedness, payable at a specific time or times,
or payable upon the happening of a specified event or events, whether secured by
mortgage pledge or other security, or unsecured, for money borrowed, or in
payment for property purchased, or acquired, or for any other lawful object.
12) To guarantee purchase, hold, take, obtain receive, subscribe for,
own, use, dispose of, sell, exchange, lease, lend assign mortgage, pledge, or
otherwise acquire, transfer or deal in or with bonds or obligations of, or
shares, securities or interests in or issued by, any person, government,
governmental agency or political subdivision of government, and to exercise all
the rights, powers and privileges of ownership of such an interest, including
the right to vote, if any.
13) To purchase, hold, sell and transfer shares of its own capital
stock, and use therefore its capital, capital surplus. surplus, or other
property or funds.
14) To conduct business, leave one or more offices, and hold, purchase,
mortgage and convey real and personal property in this state, and in any of the
several states, territories, possessions and dependencies of the United States,
the District of Columbia, and any foreign countries.
<PAGE>
15) To do everything necessary and proper for the accomplishment of the
objects enumerated in it, Articles of Incorporation or in any amendment thereof
or necessary or incidental to file the protection and benefit of the Corporation
and, in general, to carry on any lawful business necessary or incidental to the
attainment of the objects of the Corporation, whether or not the business is
similar in nature to the objects set forth in the Articles of Incorporation, or
in any amendment thereof.
16) To make donations for public welfare or for charitable, scientific
or educational purposes.
17) To enter into partnerships general or limited. or joint ventures,
in connection with any lawful activities.
ARTICLE IV
The capital stock of this corporation shall consist of twenty-five thousand
shares of common stock (25,000), without nominal or par value, all of which
stock shall be entitled to voting power. The Corporation may issue the shares of
stock for such consideration as may be fixed by the Board of Directors.
ARTICLE V
The members of the governing board of this corporation shall be styled
directors. The Board of Directors shall consist of at least one (I) person. The
number of directors of this corporation may, from time to time, be increased or
decreased by an amendment to the By-Laws in that regard and without the
necessity of amending the Articles of Incorporation. A majority of the Directors
in office, present at any meeting of the Board of Directors, duly called,
whether regular or special, shall always constitute a quorum for the transaction
of business, unless the By-Laws otherwise provide.
<PAGE>
ARTICLE VI
This corporation shall have a president a secretary a treasurer, and a resident
went, to he chosen by the Board of Directors, any person may hold two or more
offices.
ARTICLE VII
The capital stock of the Corporation, after tile fixed consideration thereof has
been paid or performed, shall not be subject to assessment, and the individual
Stockholders of this corporation shall not be individually liable for the debts
and liabilities of the Corporation, and the Articles of Incorporation shall
never he amended as to the aforesaid provisions.
ARTICLE VIII
The Board of Directors is expressly authorized: (subject to the By-Laws, if any,
adopted by the Stockholders)
1) To make, alter or amend the By-Laws of the Corporation.
2) To fix the amount in cash or otherwise. to be reserved working
capital.
3) To authorize and cause to be executed mortgages and liens upon the
property and franchises of the Corporation.
<PAGE>
4) To by resolution car resolutions passed by a majority o1 the whole
board designate one or more committees, each committee to consist of one or more
of the Directors of the Corporation, which , to the extent provided in the
resolution or resolutions or in the By-Laws of the Corporation, shall have and
may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and play have power to authorize the
seal of the Corporation to be affixed to all papers or. which the Corporation
desires to place a seal. Such committee or committees shall have such name or
names as play be stated in the By-Laws of the Corporation or as may be
determined from time to time by resolution adopted by tile Board of Directors.
5) To sell, lease or exchange all of Its property and assets. including
its goodwill and its corporate franchises, upon such terms and conditions as
tile board deems expedient and for the best interests of the Corporation, when
and as authorized by the affirmative vote of the Stockholders holding stock in
the Corporation entitling them to exercise at least a majority of the voting
power given at a Stockholders meeting called for that purpose.
ARTICLE IX
The Directors of this corporation need not be Stockholders.
ARTICLE X
In the absence of fraud no contract or other transaction of the Corporation
shall be affected by the fact that any of the Directors are in any way
interested in, or connected with any other party to such contract of
transaction, or are themselves, parties to such contract or transaction provided
that this interest in any such contractor transaction of any such director shall
at any time he fully disclosed or otherwise known to the Board of Directors, and
each and every person << ho may become a director of tile Corporation is hereby
relieved of any liability that might otherwise exist from contracting with the
Corporation for the benefit of himself or any Firm, association or corporation
in which lie may be in any way interested.
ARTICLE XI
No director or officer of the Corporation shall be personally liable to the
Corporation or any of it; Stockholders for damages for breach of fiduciary duty
as a director or officer involving any act or omission of any such director or
officer' provided, however, that the foregoing provision shall not eliminate or
limit the liability of a director or officer for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the Stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
<PAGE>
ARTICLE XII
Except to the extent of denied by Nevada Revised Statutes 78.265 Shareholders
shall have no preemptive right to acquire shares, treasury shares or securities
convertible into shares, of this corporation.
I, the undersigned, being the incorporator hereinbefore name for rite purpose of
forming a corporation pursuant to the general corporation law the State of
Nevada, do make and file these Articles of Incorporation, hereby declaring and
certifying that the fact; herein stated are true, and accordingly have hereunto
set my hand.
----------------------
State of Nevada
)
)ss
Clark County
)
On April 23, 1996 personally appeared before me, the undersigned, a Notary
Public, Richard Fritzler, known to me the person whose name is subscribed to the
foregoing document and acknowledged to me that he executed the same.
----------------------
Norary Public-State Of Nevada
COUNTY OF CLARK
My Com mission Expires
October 5, 1998
Notary Public.
<PAGE>
CERTIFICATE OF ACCEPTANCE OF APPOINMENT
BY RESIDENT AGENT
In the matter of Gecko Associates Inc.
Nevada - Corporate Services, address at:
1800 East Sahara Suite 107, City of Las Vegas, County of Clark, State
of Nevada, hereby accept appointment as Resident Agent of the
above-entitled corporation in accordance with N RS 78.090.
FURTHERMORE, that the principal office in this State is located at 1800
East Sahara suite 107, City of Las Vegas, County of Clark, State of
Nevada,
IN WITNESS WHEREOF, I have hereunto set my hand April 23. 1996.
--------------------------
For Nevada Corporate Services
RESIDENT AGENT
State Of Nevada )
) SS
County of Clark )
On April 23, 1996 personally appeared, before me the undersigned Notary
Public, Richard Fritzler, Known to me as the person whose name is
subscribed to the foregoing document, and acknowledged to me that he
executed the same.
Notary Public-
State Of Nevada
COUNTY OF CLARK
ALAN HERBERT RUSSELL,
My Commission Expires October 5, 1998
NRS 78.090 Except during any period of vacancy described in NRS 78.097,
every corporation shall have a resident agent, who may be either a
natural person or a corporation, resident or located in this state, in
charge of its principal office. The resident agent may be any bank or
banking corporation, or other corporation. located and doing business
in this state-The certificate of acceptance must be filed at the time
of the initial filing of the corporate papers.
<PAGE>
EXHIBIT 2
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(after issuance of stock)
OCTOBER 1999
GECKO ASSOCIATES, INC.
-----------------------
Name of Corporation
We the undersigned PRESIDENT and SECRETARY of GECKO ASSOCIATES,INC.
Do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held the 8th of October,1999. adapted a resolution to amend the
original Articles as follows:
Article #1 is hereby amended to read as follows:
The name of the corporation shall be ABCO INDUSTRIES, INC.
Article #4 is hereby amended to read as follows:
"The article stock of the corporation shall be Fifty Million (50,000,000) shares
of common Stock(par value $.001) and One Million (1,000,000) shares of Preferred
Stock (par value $.001)
The number of shares of the corporation outstanding and entitled to vote on as
amendment so the Articles of Incorporation on is 20,000 that the said changes
and amendment been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled 0o vote thereon.
----------------
WayneGronquist
President
-------------------------
Wayne Gronquist Secretary
State of Texas County of
On personally appeared before me, a Notary Public who acknowledged that he
executed the above instrument.
THOMAS GARRET
Notary PVC State Texas
<PAGE>
EXHIBIT 3
BYLAW'S OF
GECKO ASSOCIATES, INC.
A NEVADA CORPORATION
ARTICLE I STOCKHOLDERS MEETINGS
A) ANNUAL MEETINGS shall be held on or before the end of April of each
year, or at such other time as may be determined by the board of directors or
the president, for the purposes of electing directors. and transacting such
other business as may properly come before the meeting.
B) SPECIAL MEETINGS may be called at and? time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of a majority of the shares then
outstanding and entitled to vote.
C) WRITTEN NOTICE stating the time and place of the meeting. signed by
the President or the Secretary, shall be served either personally or by mail,
not less than ten (10) nor more than sixty 60) days before the meeting, upon
each Stockholder entitled to vote Said notice shall state the purpose for which
the meeting is called. no other business may be transacted at said meeting,
unless by unanimous consent of all Stockholders present, either in person or by
proxy.
D) PLACE of all meetings shall be at the principal office of the
Corporation, or at such other places as the Board of Directors of the President
may designate.
E) A quorum necessary for the transaction of business at a
Stockholder's meeting shall be a majority the stock issued and outstanding,
either in person or by proxy if a quorum is not present the Stockholders present
may adjourn to a future time. and notice of the future time must he served' as
provided in Article I. C), if a quorum is present they may adjourn from day to
day. without notice.
F) VOTING: Each stockholder shall have one vote for each share of Stock
registered 111 Ills name 011 tile books of tile Corporation, a majority vote
shall authorize any Corporate action. except the election of the Directors, who
shah he elected by a plurality of the votes cast.
G) PROXY: At any meeting of the stock? holders any stockholder play he
represented and vote by a proxy, appointed in writing and signed. No proxy shall
be valid after the expiration of six (6 months from date of its execution unless
the person executing it specifies the length of time it is to continue in force
which in no case shall exceed seven (7) years from Its execution
H) CONSENT: Any action, except election of Directors, which may be
taken without a vote of stockholders at a meeting may at a taken without a
meeting if authorized by a written consent of shareholders holding at least a
majority of the voting power.
<PAGE>
ARTICLE II BOARD OF DIRECTORS
A)OFFICE: At least one person chosen annually by the stockholders shall
constitute the Board of Directors. Additional Directors may be appointed by the
Board of Directors. The Director's term shall be for one year, and Directors may
be re?elected for successive annual terms.
B) DUTIES: The Board of Directors shall be responsible for the control
and management of the affairs. property and interests of Corporation and may
exercise cell powers of the Corporation, except as :Ire in the Articles of
Incorporation or by statute expressly conferred upon or reserved to the
stockholder.
C) MEETINGS: Regular meetings of the Board of Directors shall be field
immediately following the annual meeting of the stockholders, at the place of
the annual meeting of the stockholders, or at such other time and place as the
Board of Directors shall by resolution establish. Notice of any regular meeting
shall not be required, unless the Board of Directors shall change the time or
place of the regular meeting notice must be given to each Director who was not
present at the meeting at which change was made. Special meetings may be called
by the President or by one of the Directors at such time and place specified in
the notice or waiver of notice thereof. The notice of special meeting shall be
mailed to each Director at least live (5) days before the meeting day, or if the
notice is delivered personally, by telegram or telephone then the notice must be
delivered the day before the meeting. Special meetings may be called without
notice, provided a written waiver of notice is executed by a majority of the
Board of Directors.
D) CHAIRMAN: At all meetings of the Board of Directors, the Chairman
shall preside. If there is no Chairman one shall be chosen by the Directors.
E) QUORUM A majority of the Board of Directors shall constitute a
quorum.
F) VACANCIES: Any vacancy in the Board of Directors, unless the vacancy
was caused by stockholder removal of a Director shall be filled for the
unexpired term by a majority vote of the remaining Directors, though less than a
quorum at any regular or special meeting of the Board of Directors called for
that purpose.
G) A RESOLUTION in writing signed by a majority of the Board of
Director, shall constitute action by the Board, with the same force and effect
as though such resolution had been passed at a duly convened meeting. The
Secretary shall record each resolution in the minute book.
H) COMMITTEES May be appointed by a majority of the Board of Directors
from its number, by resolution, with such powers and authority to manage the
business as granted by the resolution.
I) SALARIES of the Corporate Officers shall be determined by the Board
of Directors.
<PAGE>
ARTICLE III OFFICERS
TITLE: This Corporation shall have a president, secretary, treasurer,
and such other officers as may be necessary any two or more offices may be held
by the same person. The officers shall be appointed by the Board of Directors at
the regular annual meeting of the Board.
B) DUTIES:
THE PRESIDENT SHALL:
1) Be the chief executive officer of the Corporation.
2) Preside at all meetings of the Directors and the Stockholders.
3) Sign or countersign all certificates. contracts and other
instruments of the Corporation as authorized by the Board of Directors
and shall perform all such other incidental duties.
THE SECRETARY SHALL:
1) have charge of the corporate hooks, responsible to make the
necessary report, to the Stockholders and the Board of Directors.
2) prepare and disseminate notices, waivers consents, proxies anti
other material necessary for all meetings.
3) file the sixty (60) day list of officers, directors, name of the
resident agent and the filing fee to the Secretary of State.
4) file the designation of resident agent in the office of the County
Clerk in which the principal office of the Corporation in Nevada is
located.
5) file the annual list of officers. directors and designation of
resident agent along with the filing fee.
6) be the custodian of the certified articles of incorporation, bylaws
and amendments thereto.
7) supply to the Resident Agent or Principal Corporate Nevada 0ffice
the name of the custodian of file stock ledger or duplicate suck
ledger, along with the complete Post Office address of the custodian
where such stock ledger or duplicate stock ledger is kept.
THE TREASURER SHALL:
1) Have the custody of all monies and securities of the Corporation and
shall keep regular books of account.
2) Perform all duties incidental to his office as directed of him by
the Board of Directors and the President.
ARTICLE IV STOCK
A) The certificates representing shard of the Corporations stock ,shall
he in such form as shall he adopted by the Board of Directors. numbered and
registered ire the order issued. The certificates shall bear tile following: the
holders name, the number of, shares of stock, the signature either of the
Chairman of the Board of Directors or the President, and either the Secretary or
Treasurer.
B) No certificate shall be issued until the full ;mount of
consideration has been paid, except as otherwise provided by law.
C) Each share of stock shall entitle the holder to on vote.
ARTICLE V DIVIDENDS
DIVIDENDS may be declared and paid Out of any funds available as often. In such
amounts as the Board of Directors may determine, except as limited by law.
ARTICLE VI FISCAL YEAR
THE FISCAL YEAR of (the Corporation shall be determined by the Board of
Directors.
ARTICLE VII INDEMNIFICATION
PURSUANT TO N.R.S. 78.751 any person who is a Director, Officer, Employee, or
Agent of this Corporation, who becomes a party to an action is entitled to
indemnification against expenses including attorney fees, judgments, fines and
amounts paid in settlement, if he acted in good faith and he reasoned his
conduct or action to be in the best interest of the Corporation.
ARTICLE VIII AMENDMENTS
A) STOCKHOLDERS shall have the authority to amend or repeal all the
bylaws of the Corporation and enact new by-laws, by affirmative vote of the
majority of the outstanding shares of stock entitled to vote.
B) THE BOARD OF DIRECTORS shall have the authority to amend, repeal, or
adopt new bylaws of the Corporation, but shall not alter or repeal any bylaws
adopted by the stockholders of the Corporation.
<PAGE>
EXHIBIT 4
RESOLUTION OF THE BOARD OF DIRECTORS
OF
ABCO INDUSTRIES, INC.
A Nevada
Corporation
TIME AND LOCATION
A special meeting of the Board of Directors was called by President Wayne
Gronquist on February 8, 2000. The meeting was called and conducted by Wayne
Gronquit, as provided by the bylaws.
DIRECTORS PRESENT
Wayne Gronquist, the sole Director, was present and his presence constituted a
quorum of the Board of Directors.
CALL TO ORDER
President Wayne Gronquist called the meeting to order for the purpose of
adopting a resolution.
RESOLUTION ADOPTED
After discussion the Board unanimously adopted the following resolution:
RESOLVED that the President be and hereby is authorized to do the
following:
a) Accept an agreement for the exchange of common stock for
assets Between ABCO Industries Inc., a Nevada Corporation
and the Shareholders o ABC Well Services CO. Inc., a Texas
Corporation.
b) Authorize the Transfer Agent to issue to shareholders of
ABC Well Services CO., Inc., 9,000,000 shares of common
stock of ABC Industries Inc., $0.001 par value from its
treasury so as the amount of shares then issued would be
equal to 90% of the combined total of 10,000,000 outstanding
shares in exchange for 100% of the issued and outstanding
shares of ABC Well Services CO. Inc shall become a wholly
owned subsidiary of ABCO Industries, Inc.
<PAGE>
ADJOURMENT
There being no further business to come before the meeting, upon motion duly
made and unanimously carried, the meeting was adjourned.
CERTIFICATE OF SECRETARY
I hereby certify that the foregoing minutes of the Special Meeting of the Board
of directors of ABCO Industries, Inc. constitute a true and correct copy of the
minutes of that meeting.
IN WITNESS HEREOF, I have hereunto subscribed my name and affixed the seal
of the Corporation the 8th day of February 2000.
----------------------------------------
Wayne Gronquist, President and Secretary
<PAGE>
EXHIBIT 5
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT NOR REGISTERED UNER ANYSTATE
SECURITIES LAW AND ARE RESTRICTED AS THAT TERM IS DEFINED IN RULE 144 UNDER
THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED SALE: SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION-UNDER THE 1933 ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY AGREEMENT FOR THE EXCHANGE OF COMMON STOCK FOR ASSETS
AGREEMENT made February 8th, 2000 by and between ABCO Industries, Inc. a
Nevada corporation (the "ISSUER") and the Shareholders of ABC Well Services CO.
Inc. a Texas Corporation.
In consideration of the mutual promises, covenants, and representations
contained herein, and other good and valuable consideration.
THE PARTIES HERETO AGREE AS FOLLOWS:
1. EXCHANGE OF SECURITIES. The ISSUER has 1,000,000 shares outstanding.
Subject to the terms and conditions of this Agreement, the ISSUER agrees to
issue to SHAREHOLDERS of ABC Well Services CO. Inc. (Exhibit A SHAREHOLDERS
LIST) 9,000,000 shares of the common stock of ISSUER $0.001 par value from its
treasury so the amount of shares then issued would be equate to 90% of the
combined total of 10,000,000 outstanding shares (the "Shares ") in exchange for
$5,255,000.00 of accrued assets subject to its $2,440,000 attached debt all
owned and controlled by the ABC Well Services CO. Inc., (See attached Exhibit H
"ASSETS AND DEBT').
2. REPRESENTATIONS AND WARRANTIES. Issuer represents and warrants to ABC
Well Services CO., Inc. the following
i. Organization. ISSUER is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. and
has all necessary corporate powers to own properties and can on a business,
and is duly qualified to do business and is in good standing in the State
of Nevada. All actions taken by the directors and shareholders of ISSUER
have been valid and in accordance with the laws of the Suite of Nevada.
ii. Capital. The authorized capital stock of ISSUER consists of
50,000,000 shares of common stock. $O.0001 par value, of which a 1,000,000
are issued and outstanding and 1,000,000 preferred shares at no par value.
All of the outstanding shares were fully paid and non assessable, free of
liens, encumbrances, options, restrictions and legal or equitable rights of
others not a party to this Agreement. At closing there will be no
outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating ISSUER to issue
or to transfer from treasury any additional shares of its capital stock.
A11 of the shareholders of ISSUER have valid title to such shares and
acquired their shares in a lawful transaction and in accordance with the
laws of the State of Nevada. After closing the new issued and outstanding
will be 10,000,000.
iii. Financial Statements. Annexed hereto as Exhibit B to this
Agreement are the audited financial statements of ISSUER as of November 5,
1999. The financial statements have been prepared in accordance with
generally accepted accounting principles consistently followed by ISSUER
throughout the periods indicated and fairly present the financial position
of ISSUER as of the date of the balance sheet in the financial statements
and the results of its operations for the periods indicated.
iv. Absence of Chances. Since the date of the financial statements,
there has not been any change in the financial condition or operations
of ISSUER except changes in the ordinary course of business which
changes have not in the aggregate been materially adverse.
<PAGE>
v. Assets and Liabilities. ISSUER does not have any debt, liability,
or obligation or nature, whether accrued, absolute, contingent, or
otherwise and whether due or to become due, that is not reflected on
the ISSUERS' financial statement. ISSUER is not aware of any pending,
threatened or asserted claims, lawsuits or contingencies involving
ISSUER or its common clock. There is no dispute of any kind between
ISSUER and any third party, and no such dispute will exist at the
closing of this Agreement. ISSUER has no asscts. At closing ISSUER
will be free from any and all liabilities, liens, claims and/or
commitments and will continue to have no assets.
vi. Ability to Contract Out Obligations. ISSUER has the right power
and authority to enter into and perform its obligations under this
Agreement. The execution and delivery of this Agreement by ISSUER and
the performance by ISSUER of its obligations hereunder will not cause,
constitute with or result in (a) a breach or violation or any of the
provisions of or constitute a default under any license, indenture,
mortgage, charter, instrument, articles of incorporation, by-laws, or
other agreement or instrument to which ISSUER or its shareholders are
a party or by which they may be bound, nor will the consent or
authorizations of any party other than those hereto be required. (b)
an event that would cause ISSUER to be liable to any party. or (c) an
event that would result in the creation or imposition or any lien,
charge or encumbrance on any asset of ISSUER or upon the securities of
ISSUER to be acquired by SHAREHOLDERS.
vii. Full Disclosure. None of the representations and warranties made
by the ISSUER or in any certificate or memorandum furnished or to be
furnished by the ISSUER contains or will contain any untrue statement
of a material fact or omit any material fact the omission of which
would be misleading.
viii. Contracts and Leases. ISSUER is not currently carying on any
business and is not a party to any contract agreement or lease. No
person holds a power of attorney from ISSUER.
ix. Compliance with Laws. ISSUER has complied with and is not in
violation of any federal, state, or local statute, law and/or
regulation pertaining to ISSUER. ISSUER has complied with all federal
and state securities laws in connection with the issuance, sale and
distribution of its securities.
x. Litigation. ISSUER is not and has not been a party to any suit,
action, arbitration or legal, admistrative or other proceeding, or
pending governmental investigation. To the best knowledge of the
ISSUER, there is no basis for any such action or proceeding and no
such action or proceeding is threatened against ISSUER and ISSUER is
not subject to or in default with respect to any order, writ,
injunction, or decree of any federal, state, local or foreign court,
department agency or instrumentality.
xi. Conduct of Business Prior to the closing. ISSUER shall conduct its
business in the normal course, and shall not (1) sell, pledge or
assign it's assets (2) amend its Articles of Incorporation or By-laws,
(3) declare dividends redeem or sell stock or other securities, (4)
incur am liabilities, (5) acquire or dispose of any assets enter into
any contract guarantee obligations of any third part or (6) enter into
any other transaction.
xii Documents. All minutes, consents or other documents pertaining to
ISSUER to be delivered at closing shall be valid and in accordance
with the laws of the State of Nevada
xiii Title. The Shares to be issued to ABC Well Services CO. Inc. will
be, at closing, free and clear of all liens, security interests,
pledges, charges, and claims of any kind. None of such Shares are ,or
will be subject to any voting trust or agreement. No person holds or
has the right to receive any proxy or similar instrument with respect
to such shares, except as provided in this Agreement. the ISSUER is
not a party to any agreement which offers or grants to any person the
right to purchase or acquire any of the securities to be issued to ABC
Well Services CO., Inc. There is no applicable local, state or federal
law, rule, regulation, or decree which would, as a result of the
issuance of the Shares to ABC Well Services CO., Inc. impair, restrict
or delay ABC Well Services CO., Inc. voting rights with respect to the
Shares.
<PAGE>
3. INVESTMENT INTENT ABC Well Services CO., Inc. agrees that the Shares being
issued pursuant to this Agreement may be sold, pledged, assigned, hyothecate or
otherwise transferred with or without consideration (a "Transfer"). Only
pursuant to an effective registration statement under the Act, or pursuant to an
exemption from registration under the Act the availability of which is to be
established to the satisfaction of ISSUER. ABC Well Services CO., Inc. agrees,
prior to am Transfer, to give written notice to ISSUER expressing his desire to
effect the transfer and describing the proposed transfer.
4. CLOSING. The closing of this transaction shall take place via telephone.
Unless the closing of this transaction takes place on or before five days from
the signing of this agreement then either party may terminate this Agreement
5. DOCUMENTS TO BE DELIVERED AT CLOSING.
By the ISSUER:
(1) Board of Directors Minutes authorizing the issuance of a
certificate(s) for ABCO Industries, Inc. Shares registered in the
names of the SHAREHOLDERS equal to their pro-rata holdings in the
PRIVATE COMPANY.
(2) The resignation of all officers of ISSUER.
(3) A Board of Directors resolution appointing such person as ABC
Well Services CO., Inc. designate as a directors of ISSUER.
(4) The resignation of all the directors of ISSUER- except that
of ABC Well Services CO., Inc. designee(s) dated subsequent to the
resolution described above.
(5) Audited financial statements of ISSUER which shall include a
balance sheet and statements of operations, stockholders equity and
cash flows for the twelve month period then ended.
(6) All of the business and corporate records of ISSUER,
including but not limited to correspondence, files, bank statements,
checkbooks, savings account books, minutes of shareholder and
directors meetings, financial statements shareholder listings stock
transfer records agreements and contracts.
6. REMEDIES.
Arbitration. Any controversy or claim arising out of, or relating
to this Agreement, or the making performance or interpretation thereof
shall be settled by arbitration in the state of Nevada in accordance
with the Rules of the American Arbitration Association then existing
and judgment on the arbitration award may be entered to any court
having jurisdiction over the subject matter of the controversy.
7. MISCELLANEOUS.
i. Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and
shall in no way be deemed to define, limit, or add to the meaning of
any provision of this Agreement.
ii. No oral Change. This Agreement and any provision hereof may
not be waived, changed, modified, or discharged orally, but only by an
agreement in writing signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought.
<PAGE>
iii. Non Waiver Except as otherwise expressly provided herein
waiver of any covenant condition, or provision of this Agreement shall
be deemed to have been made unless expressly in writing and signed by
the party against whom such waiver is charged and (1) the failure of
any party to insist in any one or more cases upon the performance of
any of the provisions, covenants, conditions of this Agreement or to
exercise any option herein contained shall not be construed as a
waiver or relinquishment for the future of any such provisions,
covenants, or conditions. (2) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of
the breach or failure of a covenant condition, or provision hereof
shall not be deemed a waiver of such breach or failure, and (3) no
waiver by any party of one breach by another party shall be construed
as a waiver with respect to any other subsequent breach.
iv. Time of Essence. Time is of the essence of this agreement and
of each and every provision hereof.
v. Entire Agreement This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
vi. Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
vii. Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be
deemed to have been duly given on the date of service if served
personally on the party to whom notice is to be given, or on the third
day after mailing if mailed to the party to whom notice is to be
given, by first class mail, registered or certified postage prepaid
and properly addressed And by fact as follows:
ISSUER: ABCO Industries, Inc. 816 Congress Avenue, Suite 1100, Austin, Texas
78701 Shareholders of ABC Well Services CO., Inc. , 125 N. Fort Worth, Midland,
Texas 79701
IN WITNESS WHERE OF the undersigned has executed this Agreement January 14,
2000.
SIGNED BY
Wayne Gronquist at Director and Resident
Shareholder of ABC Well Services CO.. Inc.
Name
ATTACHED EXHIBIT A "SHAREHOLDER LIST"
ATTACHED EXHIBIT B "ASSETS AND DEBT"
<PAGE>
EXHIBTI 6
THE STATE OF TEXAS
COUNTY OF TRAVIS
AFFIDAVIT
Before me, the undersigned authority on this date personally appeared Wayne
Gronquist known to me, who after by me being first duly sworn, deposed and said
as follows:
My name is Wayne Gronquist. I am over the age of eighteen years have personal
knowledge of the matters contained herein and am fully competent to make this
affidavit.
I am the president and sole director of ABCO Industries, Inc, a Nevada
corporation {the Corporations") The Corporation was organized and incorporated
under the laws of the state of Nevada on May 9, 1996 and has a current
authorized capitalization of 50,000,000 of common stock with a $0.001 per share
par value and 1,000,000 shares of preferred stock with the same par value.
As of December 1, 1999, 1,000,000 shares of thee common stock and none of the
preferred stock was outstanding.
Of the issued and outstanding common stock, 20,667 shares are held either
directly or beneficially by the Corporation's sole officer and director; Wayne
Gronquist. The remaining 979,333 shares of the issued and outstanding common
stock are held by 301 shareholders who are not affiliates of the Corporation.
On October 8, 1999 the Board of Directors of the Corporation a resolution
amending the Articles of Incorporation to increase the Corporation's.
capitalization to 50,000,000 and to forward-split the existing common stock on a
50:1 basis.
<PAGE>
Further, I certify that the List of Shareholders as well as all other corporate
dements delivered to Gary E. Parks, Attorney at Law, are true and correct copies
of such records as they exist on the Corporation's books.
I am not aware of any changes in the condition of the Corporation that have a
material effect on the foregoing representations.
I have made the foregoing representations in order to induce Gary D. Parks,
Attorney at Law to render an opinion concerning some of the foregoing matters. I
acknowledge that Gary E. Parks will rely on these representations and that but
for the making of these representations, his opinion would not be delivered.
Executed this 1st day of December 1999.
Wayne Gronquist
SUBSCRIBED AND SWORN to before me on this 1st day of December 1999.
The State of Texas
County of Travis
[graphic omitted]
THOMAS J GARRET
Notary Public in and for Texas
