UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (Fee required) for the fiscal year ended August 31, 1997.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from to .
- -------------------------- -------------------------
Commission file number: 0-9476
FLEXWEIGHT CORPORATION
(Name of Small Business Issuer in Its Charter)
Kansas 48-0680109
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2133 East 9400 South, #151 Sandy, Utah 84093
(Address of Principal Executive Offices) (Zip Code)
(801) 944-0701
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name of each Exchange
Title of Each Class on Which Registered
None N/A
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.10 par value
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes ____ No XX
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
The issuer's total revenues for the year ended August 31, 1997, were $-0-.
The number of shares outstanding of the issuer's common stock ($.10 par
value), as of December 30, 1997 was 4,958,078.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES ______ NO XX
<PAGE>
TABLE OF CONTENTS
Page
PART I
Item 1. Description of Business.........................................1
Item 2. Description of Property.........................................2
Item 3. Legal Proceedings...............................................3
Item 4. Submission of Matters to a Vote of Security-Holders.............3
PART II
Item 5. Market for Common Equity and Related Stockholder Matters....... 4
Item 6. Management's Discussion and Analysis or Plan of Operation...... 4
Item 7. Financial Statements........................................... 5
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure............................................6
PART III
Item 9. Directors and Executive officers............................... 6
Item 10. Executive Compensation......................................... 7
Item 11. Security Ownership of Certain Beneficial Owners Management..... 8
Item 12. Certain Relationships and Transactions......................... 8
Item 13. Exhibits, List and Reports on Form 8-K......................... 9
Signatures ............................................. 10
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
Flexweight Corporation (the "Company") was originally incorporated
under the name Flexweight Drillpipe Company in 1958. From 1958 to late 1961, the
Company acted as a distributor of oil field equipment, representing several
manufacturers. In 1961, the Company commenced the manufacture of double-wall
drill pipes under its own name through patent rights acquired for the Flexweight
system. These patents expired in 1987.
The Company had been primarily in the business of manufacturing and
marketing Flexweight pipe, a double-wall flexible weight pipe used in oil field
drilling, and couplings, devices which join lengths of pipe in a pipeline
system. These products were manufactured and sold under the name Flexweight
Double-Wall Drill Pipe and Flexweight Perma Couplings, respectively. Each
product was subject to patent rights of the Company. These patents have since
expired. The Company also provided tool joint welding services, machine shop and
custom repair work including rebuilding drilling rigs and their components
principally in the State of Kansas.
On August 27, 1980, the Company completed an S-1 offering, resulting in
a public sale of 1,100,000 shares of common stock at $1.00 per share. The
Company retained $941,665.00 after offering expenses. A new plant building and
offices were completed in 1980 and leased to the Company. During these years,
the oil field supply business was expanding; however, in March 1982, the slow
down of drilling activity commenced, with active rig count in the United States
dropping from approximately 4,530 to a low of 950 by 1985. In Kansas, the rig
count dropped to around 35 from a high of over 250. In 1982, the Company
experienced its first loss after eight years of increasing profits and the
losses continued to increase through 1984 due to the drastically reduced demand
for its manufactured products and services.
Products were sold below cost to reduce inventory and generate funds in
an attempt to sustain operations and in hopes of a turnaround in the drilling
industry. This turnaround did not occur, and on March 11, 1985, the Company
filed for protection in the U.S. Bankruptcy Court for the District of Kansas
while formulating a reorganization plan. The secured creditors, namely banks,
demanded complete liquidation, sales of inventory, machines, tools and office
furniture. The sale was held on June 12, 1986. The secured creditors agreed to
cancel all debt not satisfied by the proceeds distribution of the liquidation
sale resulting in a $1,721,483.00 reduction of secured indebtedness.
Certain officers and directors of the Company purchased machines, tools
and inventory in the liquidation sale with plans to lease such assets to the
Company and then later exchange the assets for stock if the plan of
reorganization were to be approved by the courts. All transactions were
disclosed in the disclosure statement and reorganization plan as recorded on
June 26, 1987. The plan of reorganization was approved by the Bankruptcy Court
on February 16, 1988, almost 3 years from the date of filing Chapter 11. An 8-K
was filed in April 1989 with the Securities and Exchange Commission (" SEC"),
including all court documents, the August 31, 1988 unaudited financials and a
letter to shareholders.
Following the court's approval of the plan of reorganization, the
equipment, tools and inventory were exchanged for shares of the Company's Common
Stock, par value $0.10 ("Common Stock"). The amount of Common Stock exchanged
for debt by unsecured creditors as disclosed in the bankruptcy disclosure
statements totaled 1,781,000 shares. The additional issuance of shares increased
the Company's total shares outstanding to 3,901,962 shares outstanding as
compared to the 2,120,962 shares outstanding prior to Chapter 11 filing.
Following the approval of the plan, the Company's then president, Mr.
George Pace, continued to operate the Company on a limited basis with two to
three other employees. The expected drilling industry recovery did not
materialize and there were indications that the recovery would not transpire for
several more years, if ever. The Company began to investigate other types of
businesses including the manufacture of a cooker fueled by the incineration of
ordinary newspaper. However, these efforts failed to produce a significant
amount of revenue which could be used to decrease the Company's indebtedness.
<PAGE>
The Company began operating with one full-time employee and actively
pursued work orders with limited success. Unfortunately, the drilling industry
never resurfaced, and as time progressed, the Company accrued debt and incurred
further expenses for maintenance and repair.
Finally, on April 8, 1994, the Company's president, George Pace,
resigned and on November 15, 1994, Luann Pace was elected president for the
purpose of proceeding with the liquidation and sale of the machinery and
equipment of the Company. The authority granted to the president also included
authority to contact and negotiate an auction contract with an auction company
with the contract to be approved by the president and the secretary-treasurer.
Soon thereafter, the Company began liquidating assets in an attempt to meet
expenses necessary to sustain the corporation. After liquidation of all assets
of the corporation, Luann Pace resigned as the Company's President on December
4, 1995. Gerald Kathol was elected President to replace Louann Pace and the
Company became dormant soon thereafter.
In March 1996, the Company executed a Consulting Agreement (the
"Agreement") with A- Z Professional Consultants Inc. ("A-Z"), a Utah corporation
providing business and financial consulting services. Pursuant to the Agreement,
A-Z was to assist the Company in restructuring its capitalization and in finding
a suitable merger or acquisition candidate. In consideration for the assistance
of A-Z, the Company issued 878,504 shares of Common Stock, to A-Z and 97,612
shares of Common Stock, to Park Street Investments, ("PSI") a Utah corporation
who was also to assist the Company in restructuring its operations.
On April 3, 1996, Gerald Kathol, president and director of the Company,
resigned along with Lea Kathol, Treasurer and Clayton Morrison, Director. The
Board then appointed Steven Pollack as president and a director and BonnieJean
Tippetts, as secretary and a director. On August 10, 1996, Steven Pollack
resigned and the Company appointed Tammy Gehring as the Company's president and
a director. The new officers and directors were appointed to facilitate the
Company's efforts in becoming a fully reporting and current entity suitable for
merger or acquisition with or by another healthy organization.
On April 1, 1997, the Company executed a Mutual Agreement to Terminate
with A-Z which terminated the March 1, 1996 Consulting Agreement. On September
1, 1997, the Company executed a new Consulting Agreement, ("New Agreement") with
PSI, whose principal officer and sole director is Ken Kurtz, a control person of
the Company, (See Item 9. "Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act."). Pursuant to the
New Agreement, PSI was retained to provide financial consulting services,
marketing and public relations services on behalf of the Company to facilitate
the Company's plan to merge with or acquire another business entity. As
consideration for these services, the Company is obligated to issue up to 15% of
its outstanding shares to PSI upon PSI successfully locating a merger or
acquisition candidate and facilitating the Company's planned merger or
acquisition. PSI may be deemed to be a control person of the Company by virtue
of this contract or by virtue of the fact that Tammy Gehring, the Company's
president and a director is an employee of PSI. (See Item 9. "Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act.")
Business of Issuer
The Company is currently a developmental stage company actively seeking
to renew its operations and recover from its previous period of dormancy. The
Company does not currently produce any products or provide any services. The
Company has no employees, full or part time, aside from its officers and
directors. Through its New Agreement with PSI, the Company receives services
necessary to maintain its operations which are primarily focused on locating an
entity with which it can combine or acquire.
<PAGE>
<TABLE>
<CAPTION>
ITEM 2. DESCRIPTION OF PROPERTY
The Company does not own, directly, indirectly or partially, any
interest in any warehouses, offices, real estate or other properties.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters before its shareholders during
the year ended August 31, 1997 and has not submitted any matters to its
shareholders since a special meeting of the shareholders was held on March 8,
1990. At time of that meeting there were 3,901,962 shares of common stock, par
value $.10 outstanding ("Common Stock") . Shareholders present represented a
quorum of 2,703,750 votes. Shareholders were asked to vote on the following
items:
(1) Ratify the Board of Directors' decisions during and following the
period of time the Company was in Chapter 11 and reorganization to
date.
(2) Increase the authorized shares of Common Stock from 5,000,000 to
10,000,000 at $.10 par value.
(3) Elect members to the Board of Directors for a term of one year ending
at the next annual meeting of shareholders namely; Gerald J. Kathol as
chairman of the board of directors, George A. Pace as president and
director, Lea A. Kathol as treasurer and director, Dick Smith as
director and Clayton A. Morrison as director.
(4) Confirm the selection of Allen, Gibbs & Houlik as the Company's
auditors.
(5) Approve a bonus of $65,000 each for Gerald J. Kathol and George A.
Pace to be paid in four equal annual installments after such time the
Company's net worth from profits is equal or greater than $500,000 in
recognition of their past years of service to the Company while in
bankruptcy proceeding, and for other considerations as described in
the proxy statement.
Results were as follows:
- ------------------------------------------------------------------------------- ------------- ----------- -----------
Item For Against Abstain
- ------------------------------------------------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C>
(1) Ratify the Board of Director's decisions during and following the period 2,703,750 0 0
of time the Company was in Chapter 11 and reorganization to date.
- ------------------------------------------------------------------------------- ------------- ----------- -----------
(2) Increase the authorized shares of Common Stock from 5,000,000 to 2,596,020 14,600 93,130
10,000,000 at $0.10 par value.
- ------------------------------------------------------------------------------- ------------- ----------- -----------
(3) Elect members to the Board of Directors for a term of one year. 2,703,750 0 0
- ------------------------------------------------------------------------------- ------------- ----------- -----------
(4) Confirm the selection of Allen, Gibbs & Houlik as the Company's auditors. 2,703,750 0 0
- ------------------------------------------------------------------------------- ------------- ----------- -----------
(5) Approve a bonus of $65,000.00 each for Gerald Kathol and George Pace. 2,523,020 50,250 130,480
- ------------------------------------------------------------------------------- ------------- ----------- -----------
</TABLE>
Though Company records indicate that these items were approved by the
majority of shareholders, the Company's operations significantly declined soon
thereafter. As a result, the increase of authorized shares never materialized.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company is currently traded through the NASDAQ
OTC Bulletin Board under the symbol FXWA, although very limited trading has
occurred over the past several years.
The table set forth below lists the range of high and low bids of the
Company's Common Stock for each quarter over the last two fiscal years. The
prices in the table reflect inter-dealer prices, without retail markup, markdown
or commission and may not represent actual transactions.
Calendar Year Quarter High Low
1996 First .015 .01
Second .015 .01
Third .015 .01
Fourth .015 .01
1997 First .015 .01
Second .015 .01
Third .015 .01
Fourth .015 .01
As of December 2, 1997, there were 683 holders of record of the
Company's Common Stock. The Company has not declared any cash dividends for the
last two fiscal years. The Company does not anticipate declaring any cash
dividends in the near future. There are no restrictions that limit the Company's
ability to pay dividends, other than those generally imposed by applicable state
law. The future payment of dividends, if any, on the Common Stock is within the
discretion of the board of directors and will depend on the Company's earnings,
capital requirements, financial condition, and other relevant factors.
The Company does not anticipate the payment of future dividends.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has not had revenues from operations in either of the last
two fiscal years.
Plan of Operations
The Company is currently a developmental stage company actively seeking
to recover from its significant decline in operations and subsequent period of
dormancy. The Company's plan of operations for 1998 centers around its quest to
find a suitable merger or acquisition target which it can acquire or with which
to combine. Although the Company is seeking to effect a merger or acquisition,
there can be no assurances that it will be able to do so, or if a combination is
achieved, that it will be profitable, worthwhile or sustainable. The Company
does not produce any goods or provide any services. The Company has no
employees, full or part-time, aside from its officers and directors.
The Company executed a Consulting Agreement on March 1, 1996, with A-Z
Professional Consultants, a Utah corporation pursuant to which A-Z agreed to
provide the Company with certain business support to maintain its operations and
recruit potential merger or acquisition candidates. The Company issued an
aggregate of 976,116 shares of its Common Stock as compensation for services
rendered pursuant to the Agreement and granted A-Z a beneficial ownership of
17.7% of the Company's issued and outstanding Common Stock. The Agreement was
later terminated on April 7, 1997, through a Mutual Agreement to Terminate.
<PAGE>
On July 1, 1997, the Company executed a New Consulting Agreement, ("New
Agreement") with Park Street Investments, a Utah corporation whose sole officer
and director is Ken Kurtz. Pursuant to the terms of the New Agreement, PSI will
provide consulting services including: restructuring the Company's capital
formation; prospecting for and negotiating with merger or acquisition
candidates; maintaining the Company's corporate records; and assisting in the
preparation of various corporate correspondence. As compensation for the
described services, the Company is obligated to issue up to 15% of the Company's
total issued and outstanding Common Stock to PSI upon PSI successfully locating
a merger or acquisition candidate and facilitating the Company's planned merger
or acquisition.
In an attempt to prepare the Company for a successful merger or
acquisition with another business entity, the Company agreed to settle its debt
obligation to Barton County, Kansas. The original amount of debt claimed by
Barton County against the Company is $223,255. Such debt was incurred by the
Company during 1985 and 1986 and is related to personal property tax
liabilities. On November 26, 1997, the Company executed a Settlement Agreement
with Barton County, Kansas pursuant to which the Company is obligated to pay
$12,500 to Barton County within 90 days of the date of the Agreement. Upon
Barton County's receipt of such payment from the Company, the County will
release any and all liens held against the Company.
Presently, the Company is unable to satisfy its cash requirements
without the services provided by PSI who has agreed to provide the Company with
services necessary to sustain the day to day operations of the Company in
exchange for the receipt of a quantity of shares Common Stock equal to up to 15%
of the total shares outstanding upon the Company's successful completion of a
merger or acquisition. It is likely that if the Company locates a merger or
acquisition candidate, the Company will be required to issue a substantial
number of shares of its Common Stock to facilitate the planned merger or
acquisition. It is expected that such an issuance of shares will substantially
dilute the Company's current shareholder's interest. Further, no assurances
exist that the Company will successfully locate a merger or acquisition
candidate with which it can combine or that if a candidate is located that the
planned merger or acquisition will be profitable, worthwhile or sustainable.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended August 31,
1997 are attached hereto as pages F-1 through F-9.
(THIS SPACE LEFT INTENTIONALLY BLANK )
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Flexweight Corporation
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheet of Flexweight Corporation (a
development stage company) as of August 31, 1997 and the related statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
August 31, 1997 and 1996 and from inception on November 26, 1962 through August
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of Flexweight Corporation (a
development stage company) as of August 31, 1997 and the results of its
operations and its cash flows for the years ended August 31, 1997 and 1996 and
from its inception on November 26, 1962 through August 31, 1997 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company and has no
operating capital which raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in Note 2. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Jones, Jensen & Company
November 11, 1997
<PAGE>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
August 31, 1997
<PAGE>
C O N T E N T S
Independent Auditors' Report ................................................. 3
Balance Sheet ............................................................ 4
Statements of Operations ..................................................... 5
Statements of Stockholders' Equity (Deficit) ................................. 6
Statements of Cash Flows ..................................................... 7
Notes to the Financial Statements ............................................ 8
<PAGE>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Balance Sheet
ASSETS
August 31,
1997
CURRENT ASSETS
Cash .......................................................... $ --
-----------
Total Current Assets ....................................... --
TOTAL ASSETS ............................................... $ --
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable .............................................. $ 10,133
Taxes payable (Note 5) ........................................ 223,255
-----------
Total Current Liabilities .................................. 233,388
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock: 5,000,000 shares authorized
of $0.10 par value, 4,958,078 shares issued
and outstanding .............................................. 495,808
Additional paid-in capital .................................... 1,040,508
Deficit accumulated during the development stage .............. (1,769,704)
-----------
Total Stockholders' Equity (Deficit) ............................ (233,388)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) .......... $ --
===========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Statements of Operations
From
Inception on
November 26,
For the Years Ended 1962 Through
August 31, August 31,
1997 1996 1997
--------------- --------------- ------------
REVENUES .......................... $ -- $ -- $ --
LOSS FROM DISCONTINUED
OPERATIONS (NOTE 3) .............. (8,000) (97,612) (2,048,687)
GAIN FROM DISPOSITION OF
DISCONTINUED OPERATIONS (Note 3) . -- 278,983 278,983
----------- ----------- -----------
NET INCOME (LOSS) ................. $ (8,000) $ 181,371 $(1,769,704)
=========== =========== ===========
NET INCOME (LOSS) PER
SHARE OF COMMON STOCK ............ $ (0.00) $ .05
=========== ===========
The accompanying notes are an integral part of these financial statements
5
<PAGE>
<TABLE>
<CAPTION>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
At inception on November 26, 1962 ..................... -- $ -- $ -- $ --
Common stock issued for cash
at approximately $0.55 per share ..................... 2,120,500 212,050 946,395 --
Common stock issued for reorganization
at approximately $0.14 per share ..................... 1,781,462 178,146 71,906 --
Sale of treasury stock ................................ -- -- 22,207 --
Net loss from inception on November
26, 1962 to August 31, 1995 ......................... -- -- -- (1,943,075)
----------- ----------- ----------- -----------
Balance, August 31, 1995 .............................. 3,901,962 390,196 1,040,508 (1,943,075)
Common stock issued for consulting
fee at $0.10 per share ............................... 976,116 97,612 -- --
Net income for the year ended
August 31, 1996 ...................................... -- -- -- 181,371
----------- ----------- ----------- -----------
Balance, August 31, 1996 .............................. 4,878,078 487,808 1,040,508 (1,761,704)
Common stock issued for consulting
fee at $0.10 per share ............................... 80,000 8,000 -- --
Net loss for the year ended
August 31, 1997 ...................................... -- -- -- (8,000)
----------- ----------- ----------- -----------
Balance, August 31, 1997 .............................. 4,958,078 $ 495,808 $ 1,040,508 $(1,769,704)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
<TABLE>
<CAPTION>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
November 26,
For the Years Ended 1962 Through
August 31, August 31,
1997 1996 1997
--------------- --------------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) ........................................... $ (8,000) $ 181,371 $(1,769,704)
Adjustments to reconcile net loss to
net cash used by operating activities:
Loss on discontinued operations ............................. -- -- 303,243
Gain on disposal of assets .................................. -- (278,983) (278,983)
Stock issued for services ................................... 8,000 97,612 105,612
Increase (decrease) in accounts and taxes payable ........... -- -- 233,388
----------- ----------- ---------
Net Cash Used by Operating Activities .................... -- -- (1,406,444)
----------- ----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment ....................................... -- -- (124,208)
----------- ----------- ---------
Net Cash Used by Investing Activities .................... -- -- (124,208)
----------- ----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable ................................. -- -- 350,000
Issuance of common stock for cash ........................... -- -- 1,180,652
----------- ----------- ---------
Net Cash Provided by Financing Activities ................ -- -- 1,530,652
----------- ----------- ---------
NET INCREASE (DECREASE) IN CASH ............................... -- -- --
----------- ----------- ---------
CASH AT BEGINNING OF PERIOD ................................... -- -- --
----------- ----------- ---------
CASH AT END OF PERIOD ......................................... $ -- $ -- $ --
=========== =========== =========
CASH PAID FOR:
Interest .................................................... $ -- $ -- $ --
Income taxes ................................................ $ -- $ -- $ --
NON CASH FINANCING ACTIVITIES
Common stock issued for services ............................ $ 8,000 $ 97,612 $ 105,612
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
August 31, 1997 and 1996
NOTE 1 - ORGANIZATION AND HISTORY
The Company was incorporated under the laws of the State of Kansas on
November 26, 1962 under the name of "Flexweight Drillpipe Company,
Inc." The purpose of the Company was to engage in manufacturing and
marketing of double-wall drill pipe. It changed its name to
"Flexweight Corporation" on September 11, 1967.
The Company filed for Chapter 11 bankruptcy protection on June 25,
1987. In September 1995, the Company's only asset, a building, was
foreclosed upon.
a. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected an August 31 year end.
b. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
c. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding at the date of the
financial statements.
d. Provision for Taxes
At August 31, 1997, the Company had net operating loss carryforwards
of approximately $1,500,000 that may be offset against future taxable
income through 2012. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the
potential tax benefits of the loss carryforwards are offset by a
valuation account of the same amount.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
8
<PAGE>
FLEXWEIGHT CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
August 31, 1997 and 1996
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is the intent of
the Company to seek a merger with an existing, operating company.
Until that time, shareholders of the Company have committed to meeting
its minimal operating needs.
NOTE 3 - DISCONTINUED OPERATIONS
The Company has been inactive since August 1995. All activity
subsequent to August 1995 is relating to the discontinued operations.
The following is a summary of income (loss) from operations of the
Company.
Revenue $ 729,587
Expenses (2,778,274)
---------------
Loss from Discontinued Operations $ (2,048,687)
===============
Write-off of assets $ (295,373)
Gain on write off of debt 574,356
------------
Gain on Disposal of Discontinued Operations $ 278,983
============
NOTE 4 - STOCK TRANSACTIONS
On August 8, 1996, the Board of Directors approved to issue 878,504
and 97,612 shares of common stock to A-Z Professional Consultants and
Park Street Investments, Inc. for consulting fees valued at $87,850
and $9,761, respectively.
In June 1997, the Company issued a total of 80,000 shares of its
common stock to its officers for services they rendered valued at
$8,000.
NOTE 5 - TAXES PAYABLE
The taxes payable pertain to personal property taxes payable on
equipment and machinery which the Company no longer owns.
9
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On March 8, 1990, the Company's auditors Allen, Gibbs, & Houlik were
confirmed by a majority vote of the shareholders in a Special Meeting of the
shareholders. However, soon thereafter, the Company's operations significantly
declined and later became dormant. Allen, Gibbs & Houlik resigned as the
Company's auditors soon after the Company moved it operations from Kansas to
Utah. There were no disagreements between the Company and Allen, Gibbs, & Houlik
regarding accounting principles and practices, financial statement disclosure,
or auditing scope and procedures. The Company engaged Jones, Jensen and Company
on August 28, 1997. The Company did not consult with the auditors regarding the
application of accounting principles, type of audit opinion or any other matters
outlined in Item 304(a)(2) of Reg. S-B under the Securities Act of 1933.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors, Executive Officers and Control Persons
Name Age Positions(s) and Office(s)
Tammy Gehring 22 President, Director
BonnieJean Tippetts 55 Secretary, Director
Ken Kurtz 30 Control Person
Tammy Gehring became president and director of the Company on August
10, 1996. Ms. Gehring is employed at Park Street Investments as an assistant and
consultant in Mergers and Acquisitions. She has been employed at Park Street
since June 1997. For approximately a year and a half, Ms. Gehring was employed
as an administrative assistant in the mergers and acquisitions department of a
financial consulting firm based in Salt Lake City, Utah. Previous to that, Ms.
Gehring was an accounting and finance student at Salt Lake Community College.
BonnieJean Tippetts became secretary and director of the Company on March
1, 1996. Ms. Tippetts has been employed as an executive assistant since 1992.
Prior to 1992, she was employed as a schoolteacher. Ms. Tippetts earned a B.A.
in commercial art with a minor in music from Lewis and Clark College in 1958,
and later earned a B.S. in Pre-Medicine in 1964. Ms. Tippetts went on to earn a
Masters degree in vocational home economics in 1968. Ms. Tippetts has been
employed in various business occupations including accounting and purchasing and
has owned two franchises and a professional kennel. She is also a professional
concert pianist.
Ken Kurtz, has never been named as an officer or director of the Company.
He may, however, be deemed to be a control person based upon his significant
influence and "control" (as defined in Rule 12b-2 of the Securities Exchange Act
of 1934) over the affairs of the Company. Mr. Kurtz is the sole owner of Park
Street Investments, Inc., a shareholder of the Company who, pursuant to a
Consulting Agreement executed with the Company, will receive a quantity of
Common Stock equivalent to up to 15% of the total shares outstanding upon the
successful completion of a merger with or acquisition of a third party. Mr.
Kurtz has been the president and sole director of Park Street Investments, Inc.,
since February 1992. From November 1990 to February 1992, Mr. Kurtz was
secretary-treasurer of Boss International, Inc., a company which published time
management systems. Park Street Investments, Inc. is also the employer of the
Company's president, Tammy Gehring.
<PAGE>
<TABLE>
<CAPTION>
Compliance with Section 16(a) of the Exchange Act
The Company is aware that Tammy Gehring, the Company's president and a
director, failed to file a Form 3 within 10 days of being appointed as an
officer and director as required to have been filed by Section 16(a) of the
Securities Exchange Act of 1934. The Company is also aware that Ms. Gehring
failed to timely file Form 4 as required to have been filed by Section 16(a) of
the Securities Exchange Act of 1934 on or before the tenth day after the end of
the month in which she received 40,000 shares of the Company's Common Stock as
compensation.
The Company is aware that BonnieJean Tippetts, the Company's secretary,
treasurer and a director, failed to file a Form 3 within 10 days of being
appointed as an officer and director as required to have been filed by Section
16(a) of the Securities Exchange Act of 1934..
The Company is aware that Steven Pollack, the Company's past president
and a director, failed to file a Form 3 within 10 days of being appointed as an
officer and director as required to have been filed by Section 16(a) of the
Securities Exchange Act of 1934. The Company is also aware that Mr. Pollack
failed to timely file a Form 4 as required to have been filed by Section 16(a)
of the Securities and Exchange Commission on or before the tenth day after the
end of the month in which he received 40,000 shares of the Company's Common
Stock as compensation.
The Company is also aware that Steven Christensen, the Company's past
director, failed to file a Form 3 within 10 days of being appointed as a
director as required to have been filed by Section 16(a) of the Securities
exchange Act of 1934.
Finally, the Company is aware that A-Z, a beneficial owner of 17.7% of the
Company's issued and outstanding Common Stock, failed to file a Form 3 within 10
days of acquiring such stock as required to have been filed by Section 16(a) of
the Securities Exchange Act of 1934.
ITEM 10. EXECUTIVE COMPENSATION
Executive Compensation
No compensation in excess of $100,000 was awarded to, earned by, or
paid to any executive officer of the Company during the years 1996 to 1997. The
following two tables and the accompanying notes provide summary information for
each of the last two fiscal years concerning cash and non-cash compensation paid
to or accrued by the Company to Steven Pollack, the Company's president through
August 10, 1996, and Tammy Gehring, the Company's president from August 1996 to
present.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Restricted Securities
Name and Other Annual Stock Underlying LTIP payouts All Other
Principal Position Year Salary Bonus Compensation Award(s) Options ($) Compensation
($) ($) ($) ($) SARs(#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
(1)Tammy Gehring 1997 - - - 400 - - -
Current President 1996 - - - - - -
Steven Pollack 1996 - - - 400 - -
Former President
Gerald Kathol 1995 - - - - - - -
Former President
</TABLE>
- ---------------
(1) Ms. Gehring and Mr. Pollack were awarded 40,000 shares of the Company's
restricted stock as compensation for their services as the Company's president.
The shares were valued at $.01
<PAGE>
<TABLE>
<CAPTION>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership
of the Company's Common Stock as of December 30, 1997, with respect to (i) each
person known to the Company to be the beneficial owner of more than five percent
of the Company's Common Stock; (ii) all directors; and (iii) directors and
executive officers of the Company as a group. For purposes of determining the
beneficial owners of more than five percent of the Common Stock, as well as the
Percent of Class column below, the Company has assumed that 4,958,078 shares of
Common Stock were issued and outstanding on December 30, 1997.
Amount and Nature of
Title of Class Name and Address of Beneficial Owner Beneficial Ownership Percent of class
<S> <C> <C> <C>
Common Stock A-Z Professional Consultants, Inc. 878,504 17.7%
($0.10 par value) 268 West 400 South, Suite 306
Salt Lake City, Utah 84101
Common Stock Capital Investors 333,333 6.7%
($0.10) par value Rt. 3 Box 1660
Afton, OK 74331
Common Stock Grand Lake Investments 527,048 10.6%
($0.10) par value 8614 Stoneridge
Wichita, KS 67206
Common Stock Gerald Kathol Estate 342,300 6.9%
($0.10) par value P.O. Box 18154
Wichita, KS 67218
Common Stock Lea Kathol 273,871 5.5%
($0.10) par value 8100 E 22nd St. N
Bldg. 300, Suite 200
Wichita, KS 67208
Common Stock George Pace Estate 391,157 7.9%
($0.10) par value P.O. Box 364
Great Bend, KS 67530
Common Stock Tammy Gehring 40,000 0.8%
($0.10) par value 2133 East 9400 South, #151
Sandy, UT 84093
Common Stock Directors and Executive Officers as 40,000 0.8%
($0.10) par value a Group (2 individuals)
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 1, 1997, the company executed a Consulting Agreement with
Park Street Investments, a Utah corporation whose sole officer and director is
Ken Kurtz, a control person of the Company, (See Item 9 "Directors, Executive
Officers, Promoters And Control Persons; Compliance With Section 16(a) of The
Exchange Act"). Pursuant to the terms of the Agreement, PSI will receive an
issuance of shares equal to up to 15% of the Company's issued and outstanding
Common Stock upon the execution of the Company's merger or acquisition with a
third party. Because the Company's president, Tammy Gehring is also an employee
at PSI, the Agreement may be deemed to not have been negotiated at arms-length.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits beginning on page 11 of this
Form 10-KSB, which is incorporated herein by reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter ended by the period covered in this report.
[THIS SPACE LEFT INTENTIONALLY BLANK]
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 21st day of January 1998.
Flexweight Corporation
/s/ Tammy Gehring
Tammy Gehring, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title Date
/s/Tammy Gehring President and Director January 21, 1998
Tammy Gehring
/s/BonnieJean C. Tippettts Secretary, Treasurer and Director January 21, 1998
BonnieJean C. Tippetts
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
3(i) * Articles of Incorporation, filed in Kansas on
November 26, 1962 under the name of Flexweight
Drillpipe Company, Inc., incorporated herein by
reference from the Company's report on Form 10-K
for the fiscal year ended August 31, 1989
3(ii) * By-Laws of the Company as filed in Kansas on
November 26, 1962, incorporated herein by reference
from the Company's report on Form 10-K for the
fiscal year ended August 31, 1989
MATERIAL CONTRACTS
10(ii) Exhibits
10(i)(a) 12 Consulting Agreement by and between Flexweight
Corporation and A&Z Professional Consultants, Inc.
dated March 1, 1996.
10(i)(b) 18 Consulting Agreement between the Company and Park
Street Investments, dated July 1, 1997.
10(i)(c) 23 Mutual Agreement to Terminate dated April 1, 1997
between the Company and A-Z Professional
Consultants
10(i)(d) 26 Settlement Agreement between the Company and Barton
County, Kansas
CONSULTING AGREEMENT
This Consulting Agreement is made effective this 1st day of March, 1996
by and between A & Z Professional Consultants, Inc., a Utah corporation with
offices at 268 West 400 South, Suite 310, Salt Lake City, Utah 84101
(hereinafter "Consultant") and Flexweight Corporation a Kansas corporation, with
offices as found under "Notices" below (hereinafter "Client").
RECITALS
WHEREAS, Consultant is in the business of providing general business
consulting services to privately held and publicly-held corporations,
and
WHEREAS, Client desires to retain Consultant to provide advice relative
to corporate and consulting services, and
WHEREAS, Mr. Gerald Kathol is a shareholder and director of Client and
agrees to facilitate Consultant's efforts to the benefit of the Client
and subject to the limitations of their Agreement, then
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is expressly
acknowledged, Client and Consultant agree as follows:
1. Engagement of Consultant.
(a) Consultant agrees to retain sub-contractors, including Canton
Financial Services Corporation to act under Consultant's guidance, to
assist and counsel Client relative to the steps necessary to prepare
client for a merger. This includes, but is not limited to, facilitating
efforts to cause Client's corporate status with the state to be in good
standing; re-structuring Client's capital formation possibly through
reverse splits, re-authorization of debt and equity; participating in
the negotiations for potential settlement of Client's outstanding debts
and litigation; preparing financial statements and audits; preparing and
filing other documents with the necessary regulatory bodies as is
required by law, including, but not limited to preparing and filing
forms 10K and 10Q as necessary.
(b) Consultant agrees to prospect for, interview and perform necessary
due diligence on potential merger candidates and to negotiate and
structure proposed mergers with potential candidates.
(c) Consultant further agrees to aid Client in preparation of Client's
15c2-11, and to use its best efforts to recruit market makers in order
to develop a market for Client's stock. Additionally, Consultant agrees
to assist client in preparing press releases and corporate fact sheets
and to perform other public and investor relations services in an
attempt to develop an active market for Client's stock.
(d) Consultant requires, in order to proceed as outlined and proposed
herein, and Client agrees to use its best efforts to acquire, a vote
among existing shareholders to approve a reverse stock split which shall
reduce existing outstanding shares to no less than 50,000 shares.
(e) Client agrees to attempt to acquire sufficient vote from existing
shareholders to elect new board members and company officers as directed
by Consultant. Said board may also include Mr. Gerald Kathol at Mr.
Kathol's sole discretion. Mr. Kathol further agrees to allow Consultant
to have complete voting rights of his shares for the term of this
agreement -- after which time said voting rights shall revert to him
automatically without any further instruments being executed.
2. Compensation.
(a) Upon the execution of this agreement, Client agrees to issue as an
engagement fee an amount equal to 25% of the issued and outstanding
shares of Client in restricted stock ("Engagement Shares") (the nature
of the restriction to be subject to approval of Mr. Kathol), to be
divided among parties (described in items (i) and (ii) below) as
follows:
<PAGE>
(i) A-Z Professional Consultants, Inc. shall receive
an amount equal to ninety-percent (90%) of
Engagement Shares.
(ii) Park Street Investment, Inc., shall receive an
amount equal to ten (10%) of Engagement Shares.
(iii) Said shares shall be common stock of Client with a
par value of .001. If Client experiences a share
split of its stock, said shares shall be adjusted
proportionately.
(c) Upon completion of Client's audited financials, filing of a current
10K and 10Q, and delivery of a Rule 15c2-11 package to a market maker as
submittal for trading on the NASD electronic bulletin board, Client
shall issue as an additional fee to designees of Consultant an amount
equal to fifteen-percent (15%) of the issued and outstanding shares of
Client. Said shares shall be issued pursuant to a form S-8 registration
to be prepared by Consultant with cooperation from Client and Mr.
Kathol. In the event that an issuance based upon a form S-8 registration
is not available, said shares shall be issued with registration rights
as further described herein as Attachment "A".
(d) In addition to these fees, Consultant and/or its designees shall be
entitled to an option on additional shares in the event of a merger
between Client and parties introduced by Consultant. Said option shall
be equal to an amount such that Consultant and or its designees shall
own no more than ninety-percent (90%) of the issued and outstanding
shares of Client immediately prior to Transfer. Said shares shall be
issued pursuant to a form S-8 registration to be prepared by Consultant
with cooperation from Client and Mr. Kathol. In the event that an
issuance based upon a form S-8 registration is not available, said
shares shall be issued with registration rights as further described
herein as Attachment "A".
(e) In the event of a merger, Consultant shall further pay to Mr. Kathol
and/or designees ten percent (10%) of the total stock fee earned by
Consultant or its designees in the aggregate, or a minimum of 40,000
shares of Client's common stock for such merger, whichever is greater.
(f) For the Term of this Agreement, Client agrees not to issue
additional shares of Client to any parties without Consultant's written
permission.
3. Term of Agreement, Extensions and Renewals.
This Agreement shall have an initial term of one (1) year ("Term") from
the above date first appearing herein, although the Agreement may be
terminated earlier if the consulting services are completed prior to the
expiration of this time period. This Agreement can be extended on a
month to month basis (the "Extension Period") by mutual agreement of the
parties executed in writing specifying the compensation for the
Extension Period. Such notice of either extension or termination shall
be in writing and shall be effective ten (10) days after delivery to the
other party. In the event of termination pursuant to this paragraph,
neighter party shall have any further rights or obligations hereunder
after the effective date of such termination except that the obligation
of Client to make payments as provided for in this Agreement and to
reimburse costs and expenses shall continue until paid in full by
Client.
4. Due Diligence.
(a) Client will provide Consultant as soon as possible the following
information:
* Articles, By-Laws, Minutes of Shareholder's and
Director's meetings, Board Resolutions
* Copies of all tax and SEC filings going back five years
(including 10K's and 10Q's if available)
* Copies of most current three years of financial
statements
* Previous 15c-211 if available
* Letter from the Company listing all pending or
threatened litigation
* Computer printout of shareholder list and stock
transfer records
* Proof of ownership of assets, accounts receivable, bank
statements and copies of deeds, liens, mortgages, and
any other documents that may be reasonably required by
Consultant to execute its due diligence for the
transactions contemplated herein.
<PAGE>
(b) Client shall use best efforts to make available to Consultant other
information relating to its business as may be reasonably requested by
Consultant to enable Consultant to make such investigation of Client and
its business prospects, and Client shall use best efforts to make
available to Consultant names, addresses and telephone numbers as
Consultant may need to verify or substantiate any such information
provided.
5. Best Efforts Basis.
Consultant agrees that it will at all times faithfully and to the best
of its experience, ability and talents, perform all the duties that may
be required of and from Consultant pursuant to the terms of this
Agreement. Consultant does not guarantee that its efforts will have any
impact on Client's business or that any subsequent financial improvement
will result of Consultant's efforts. Client understands and acknowledges
that the success or failure of Consultant's efforts will be predicated
on Client's assets and operating results, of which Consultant has been
advised that there are minimal assets and operating results at best.
6. All Prior Agreements Terminated.
This Agreement constitutes the entire understanding of the parties with
respect to the engagement of Consultant, and all prior agreements and
understandings with respect thereto are hereby terminated and shall be
of no force effect.
7. Consultant is Not an Agent or Employee.
Consultant's obligations under this Agreement consist solely of the
Consulting Services described herein. In no event shall Consultant be
considered to act as the employee or agent of Client or otherwise
represent or bind Client. For the purposes of this Agreement, Consultant
is an independent contractor. All final decisions with respect to acts
of Client or its affiliates, whether or not made pursuant to or in
reliance on information or advice furnished by Consultant hereunder,
shall be those of Client or such affiliates and Consultant shall under
no circumstances be liable for any expense incurred or loss suffered by
Client as a consequence of such action or decisions.
8. Independent Legal and Financial Advice.
Consultant is not a law firm, neither is it an accounting firm,
Consultant does, however, employ professionals in those capacities to
better enable Consultant to provide consulting services. Client
represents that it has not nor will it construe any of Consultant's
representations to be statements of law. Client has and will continue to
seek the independent advice of legal and financial counsel regarding all
material aspects of the transactions contemplated by this Agreement,
including the review of all documents provided by Consultant to Client
and all opportunities Consultant introduces to Client. Client
acknowledge that the attorneys, accountants and other advisors employed
by Consultant represent the interests of Consultant solely, and that no
representation or warranty has been given to Client by Consultant as to
any legal, tax, accounting, financial or other aspect of the
transactions contemplated by this Agreement.
9. Miscellaneous.
(a) Authority. The execution and performance of this Agreement have been
duty authorized by all requisite corporate action. This Agreement
constitutes a valid and binding obligation of the parties hereto.
(b) Amendment. This Agreement may be amended or modified at any time and
in any manner only by an instrument in writing executed by the parties
hereto.
<PAGE>
(c) Waiver. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and
remedies provided bylaw. No delay or failure on the part of either party
in the exercise of any right or remedy arising from a breach of this
Agreement shall operate as a waiver of any subsequent right or remedy
arising from a subsequent breach of this Agreement. The consent of any
party where required hereunder to any act of occurrence shall not be
deemed to be a consent to any other act of occurrence.
(d) Assignment:
(i) Neither this Agreement nor any right created by it
shall be assignable by either party without the
prior written consent of the other;
(ii) This agreement is intended to confer its rights
and benefits upon Mr. Rosenberg, the Client, its
heirs, assigns, and successors in interest.
(e) Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the Unites States mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public
telegraph company for transmittal or when sent by facsimile
transmission, charges prepared provided that the communication is
addressed:
(i) In the case of Consultant to:
Canton Financial Services, Inc.
Attention: Steven A. Christensen
268 West 400 South
Suite 310
Salt Lake City, Utah 84101
Telephone: (801) 575-8073
Facsimile: (801) 575-8340
(ii) In the case of Client, to:
Flexweight Corporation
Attention: Gerald J. Kathol
7701 East Kellog Suite 600
Witchita, KS 67207
Telephone: (316) 684-6182
Facsimile: (316) 684-4764
or to such other person or address designed by Client to receive notice.
(f) Headings and Captions. The headings of paragraphs are included
solely for convenience. If a conflict exists between any heading and the
text of this Agreement, the text shall control.
(g) Entire Agreement. This instrument and the exhibits to this
instrument contain the entire Agreement between the parties with respect
to the transaction contemplated by the Agreement. It may be executed in
any number of counterparts but the aggregate of the counterparts
together constitute only one and the same instrument.
(h) Effect of Partial Invalidity. In the event that any one or more of
the provisions contained in this Agreement shall for any reason be held
to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other
provisions of this Agreement, but this Agreement shall be constructed as
if it never contained any such invalid, illegal or unenforceable
provisions.
<PAGE>
(i) Controlling Law. The validity, interpretation, and performance of
this Agreement shall be controlled by and construed under the laws of
the State of Kansas.
(j) Attorney's Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to
recover actual attorney's fee from the other party. The attorney's fees
may be ordered by the court in the trial of any action described in this
paragraph or may be enforced in a separate action brought for
determining attorney's fees.
(k) Time is of the Essence. Time is of the essence of this Agreement and
of each and every provision hereof.
(l) Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such
other and further documents and take such other and further actions as
may be necessary or convenient to effect the transactions described
herein.
(m) Indemnification. The parties agrees to indemnify each other and hold
each other harmless from and against all demands, claims, actions,
losses, damages, liabilities, costs and expenses, including without
limitation, interest, penalties and attorneys' fees and expenses
asserted against or imposed or incurred by either party by reason of or
resulting from a breach of any representation, warranty, covenant
condition or agreement of the other party to this Agreement.
(n) No Third Party Beneficiary. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties
hereto and their successors, any rights or remedies under or by reason
of this Agreement, unless this Agreement specifically states such
intent.
(o) Facsimile Counterparts. If a party signs this Agreement and
transmits an electronic facsimile of the signature page to the other
party, the party who receives the transmission may rely upon the
electronic facsimile a signed original of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
herein above written.
A-Z PROFESSIONAL CONSULTANTS, INC.
By:/s/ Richard Surber
Richard Surber
President
FLEXWEIGHT CORPORATION
By:/s/ Gerald Kathol
President & Director
FINANCIAL CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 1st day
of July 1997 by and between, Park Street Investments, Inc. ("Consultant"), a
Utah corporation and Flexweight Corporation ("Client"), a Kansas corporation
with respect to the following:
RECITALS
WHEREAS, Consultant is in the business of providing general business
consulting services to privately held and publicly held corporations; and
WHEREAS, Client desires to retain Consultant to provide advice relative
to corporate and business consulting services.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is expressly acknowledged, Client and Consultant
agree as follows:
1. Engagement of Consultant. Consultant agrees to use its best efforts to
assist Client:
a. and counsel Client relative to the steps necessary to prepare
Client for a merger, acquisition or business combination
("Reorganization"). This includes, but is not limited to,
facilitating efforts to cause Client's corporate status with the
state to be in good standing and to maintain its standing as so
during the term of this Agreement; in the negotiations for
potential settlement of Client's outstanding debts and litigation;
in preparing financial statements and obtaining an audit on the
financial statements in accordance with U.S GAAP standards by an
accounting firm with SEC peer review; in preparing and filing
other documents with the necessary regulatory bodies as is
required by law, including, but not limited to preparing and
filing forms 10K and 10Q as necessary;
b. in restructuring Client's capital formation through a reverse
split, re-authorization of debt and equity; in preparing and
filing proxy material and in obtaining shareholder votes on
corporate matters.
c. in prospecting for, negotiating with and structuring a merger or
business combination with a potential reorganization candidate
("Reorganization Candidate").
d. in finding an attorney to provide any necessary legal assistance
and opinions as required or if requested;
e. to maintain Client's corporate books and records
f. to assist Client in the preparation of corporate resolutions, and
other correspondencies necessary to fulfill its obligations under
this Agreement.
g. in funding all of the costs for the above
<PAGE>
All of the foregoing services collectively are referred to herein as the
"Consulting Services."
2. Compensation Client shall compensate Consultant for consulting services
("Consulting Services") rendered pursuant to this Agreement as follows:
a. At closing time of a reorganization between Client and a
Reorganization Candidate, Client shall issue to Consultant, shares
of its common stock in an amount not to exceed fifteen percent
(15%) of the total issued and outstanding shares of Client which
amount is to be based on the total issued and outstanding shares
of Client after a Reorganization between Client and a
Reorganization Candidate.
b. Consultant shall also be entitled to any cash fee that it is able
to achieve from the reorganization candidate.
c. All shares issued to Consultant pursuant to this Agreement shall
be registered under section S-8 of the Securities and Exchange
Act. If Consultant's shares are deemed restricted under the Act,
such shares shall have "piggy back" registration rights with any
registration statement, such statement filed at such time as
Client, in its sole discretion, deems advisable.
3. Term of Agreement, Extensions and Renewals
This Agreement shall have a term of two years (the "Initial Consulting
Period") from the date first appearing herein. This Agreement may be
extended on a month to month basis (the "Extension Period") by mutual
agreement of the parties executed in writing specifying the compensation
for the Extension Period. This Agreement may also be terminated when a
Reorganization is completed and Consultant is compensated as described in
this Agreement. Notwithstanding the above in this paragraph, in the event
of early termination, Client shall be obligated for any amounts due under
this agreement. Such notice of either extension or termination shall be in
writing and shall be delivered via U.S. certified mail, when applicable,
effective ten (10) days after delivery to the other party.
4. Due Diligence
Client shall supply and deliver to Consultant all information as may be
reasonably requested by Consultant to enable Consultant to make an
investigation of the Client and its business prospects, and they shall make
available to Consultant names, addresses, and telephone numbers as
Consultant may need to verify or substantiate any such information
provided.
5. Best Efforts Basis
Consultant agrees that it will at all times faithfully, to the best of its
experience, ability and talents, perform all the duties that may be
required of and from Consultant pursuant to the terms of this Agreement.
Consultant does not guarantee that its efforts will have any impact on the
Clients' business or that any subsequent financial improvement will result
from Consultants' efforts. Client understands and acknowledges that the
success or failure of Consultants' efforts will be predicated on the
Clients' assets and operating results.
<PAGE>
6. Independent Legal and Financial Advice
Consultant is not a law firm; neither is it an accounting firm. Consultant
does, however, employ professionals in those capacities to better enable
Consultant to provide consulting services. Client represent that they have
not nor will they construe any of the Consultants' representations to be
statements of law. Each entity has and will continue to seek the
independent advice of legal and financial counsel regarding all material
aspects of the transactions contemplated by this Agreement, including the
review of all documents provided by Consultant to Client and all
opportunities Consultant introduces to Client.
7. Miscellaneous
a. The execution and performance of this Agreement has been duly
authorized by all requisite individual or corporate actions and
approvals and is free of conflict or violation of any other individual
or corporate actions and approvals entered into jointly and severally
by the parties hereto. This Agreement represents the entire Agreement
between the parties hereto, and supersedes any prior agreements with
regards to the subject matter hereof. This Agreement may be executed in
any number of facsimile counterparts with the aggregate of the
counterparts together constituting one and the same instrument. This
Agreement constitutes a valid and binding obligation of the parties
hereto and their successors, heirs and assigns and may only be assigned
or amended by written consent from the other party.
b. No term of this Agreement shall be considered waived and no breach
excused by either party unless made in writing. In the event that any
one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be
constructed as if it never contained any such invalid, illegal or
unenforceable provisions. From time to time, each party will execute
additional instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to any
property transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
c. The validity, interpretation, and performance of this Agreement shall
be governed by the laws of the State of Utah and any dispute arising
out of this Agreement shall be brought in a court of competent
jurisdiction in Salt Lake County, Utah. If any action is brought to
enforce or interpret the provisions of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees, court
costs, and other costs incurred in proceeding with the action from the
other party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
herein above written.
Flexweight Corporation
/s/ Tammy Gehring Date: July 1, 1997
Tammy Gehring, President
Park Street Investments, Inc.
/s/ Ken Kurtz Date: July 1, 1997
Ken Kurtz, President
MUTUAL AGREEMENT TO TERMINATE
THIS MUTUAL AGREEMENT TO TERMINATE ("Termination") is effective the 1ST day of
April 1997 by and between Flexweight Corporation, a Kansas corporation with
principal offices at 2133 East 9400 South, Suite 151 ("Flexweight"), and A-Z
Professional Consultants, Inc., a Utah corporation with its principal offices at
268 West 400 South, Suite 300, Salt Lake City, Utah 84101 ("A-Z").
PREMISES
WHEREAS, on March 1, 1996, Flexweight and A-Z (hereinafter collectively
referred to as the "Parties") executed a Consulting Agreement ("Agreement")
pursuant to which Flexweight was to receive financial consulting services for a
period of one year (which has since been renewed on a month-to-month basis) from
A-Z in exchange for monthly consulting fees;
WHEREAS, the Parties agreed to mutually terminate the Agreement to the
full extent that it is still binding on either party on the 1ST day of April
1997;
WHEREAS, the Parties have not yet executed a document necessary to
evidence the termination of the Agreement and wish this Termination to serve
that purpose;
AGREEMENT
1. Termination. The Parties hereby agree that A-Z shall immediately cease
providing any and all consulting services or other performance required
or implied under the terms of the Agreement and Flexweight shall cease
making any payments or providing any other future performance required
under the Agreement.
2. Mutual Releases. The Parties agree to hold one another harmless from,
cease any and all claims against one another stemming from, and
indemnify one another with respect to any and all obligations arising
pursuant to or stemming from the termination of the Agreement.
3. Mutual Representations and Warranties of A-Z and Flexweight. The
Parties hereby represent, warrant and covenant that each of the
following are true and complete as of the date of this Termination:
A. The execution and performance of this Termination have
been duly authorized by all requisite corporate action.
This Termination constitutes a valid and binding
obligation of the Parties. This Termination will not
violate or result in a breach of, or constitute a default
in any agreement, instrument, judgment, order or decree to
which either party is subject.
B. Each party shall execute such other documents and take
such other and further action to effect the Termination
including effecting corporate action in the form of
appropriate resolutions to terminate such Agreement.
C. Neither party will suffer damages, either direct or
indirect, as a result of this Termination.
D. Each party, in making its decision to execute this
Termination relied solely on the advice of its principals,
or its financial advisors and not on the advice given by
the agents, principals, consultants or employees of the
other party.
4. Miscellaneous.
A. Entire Agreement. This Termination sets forth the entire
agreement between the Parties as of the date of this
Termination. No prior written or oral statement or
agreement contrary to this Termination shall be recognized
or enforced.
<PAGE>
B. Effect of Partial Invalidity. In the event that nay one or
more of the provisions contained in this Termination shall
for any reason be held to be invalid, illegal or
enforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of
this Agreement.
C. Controlling Law. The validity, interpretation and
performance of this Termination shall be governed by the
laws of the State of Utah without regard to its law on the
conflict of laws. Any dispute arising out of this
Termination shall be brought in a court of competent
jurisdiction in Salt Lake Count, State of Utah. The
Parties exclude any and all statutes, laws and treaties
which would allow or require any dispute to be decided in
another forum or by other rules of decision than provided
in this Termination.
D. Attorney's Fees. If any action at law or in equity,
including an action for declaratory relief, is brought to
enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover actual
attorney's fees, court costs or other costs incurred in
proceeding with the action from the other party. The
attorney's fees, court costs or other costs may be ordered
by the court in its decision of any action described in
the Paragraph or may be enforced in a separate action
brought for determining attorney's fees, court costs or
other costs. Should either party be represented by
in-house counsel, such party may recover attorney's fees
incurred by that in-house counsel in an amount equal to
that attorney's normal fees for similar matters, or,
should that attorney not normally charge a fee, by the
prevailing rate charged by attorneys with similar
backgrounds in that legal community.
E. Time is of the Essence. Time is of the essence of this
Termination and of each and every provision.
F. Mutual Cooperation. The Parties agree to cooperate with
each other to achieve the purpose of this Termination and
shall execute such other and further documents and take
such other and further actions as may be necessary or
convenient to effect the purpose of this Termination.
G. No Third Party Beneficiary. Nothing in this Termination,
expressed or implied is intended to confer upon any
person, other than the Parties hereto and their
successors, any rights or remedies under or by reason of
this Termination.
H. Facsimile Counterparts. If a party signs this Termination
and transmits an electronic facsimile of the signature
page to the other party, the party who receives the
transmission may rely upon this electronic facsimile as a
signed original of this Termination.
IN WITNESS WHEREOF, the Parties have executed this Termination Agreement this
26TH day of June 1997.
A-Z Flexweight
A-Z Professional Consultants, Inc. Flexweight Corporation
/s/ Richard Surber /s/ Tammy Gehring
Richard Surber, President Tammy Gehring, President
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is made this 26th day of
November 1997, by and between Flexweight Corporation, a Utah company
("Flexweight"), and the Treasurer of Barton County, Kansas ("Treasurer"),
regarding personal property tax liabilities.
PREMISES
WHEREAS, to date, Flexweight has not paid personal property taxes owing
to the Treasurer incurred during the 1980's, which tax liability, when combined
with interest, exceeds $200,000.
WHEREAS, Flexweight and Treasurer hereby desire to settle any and all
personal property tax liabilities owed by Flexweight to Treasurer by Flexweight
paying Treasurer $12,500, pursuant to the terms outlined below.
AGREEMENT
NOW THEREFORE, with the above provisions incorporated herein by this
reference, in consideration of the mutual promises contained herein, the
benefits to be derived by each party hereunder the sufficiency of which is
hereby expressly acknowledged and for other good and valuable consideration,
Flexweight and Treasurer agree as follows:
Flexweight will pay Treasurer, within ninety (90) days hereafter,
Twelve Thousand Five Hundred Dollars ($12,500) as full payment for any
and all personal property taxes Flexweight has ever incurred in Barton
County, Kansas;
Treasurer agrees that when such $12,500 is paid and received,
Flexweight will owe no personal property taxes whatsoever in any form
or for any period to Barton County, Kansas, and will therefore have no
any outstanding tax liability whatsoever to Barton County, Kansas;
Treasurer further acknowledges and represents that she, Ms. Jan
Hallmark, or whomever signs below, has actual and express authority to
bind Barton County, Kansas to the terms of this Agreement;
The Parties agree that this Agreement constitutes a valid and binding
obligation of the Parties hereto and their successors, heirs and
assigns and may only be assigned or amended by written consent from the
other party; and
Treasurer agrees to remove any and all outstanding liens evidencing
Flexweight's tax liability.
IN WITNESSETH WHEREOF, the parties have executed this Settlement
Agreement on this the 26th day of November 1997.
"Flexweight" - Flexweight Corporation
"Treasurer" - Treasurer of Barton County, Kansas
/s/ Tammy Gehring By: /s/Jepoith Hallmark
Tammy Gehring, President Title: County Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINES SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED AUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
AUGUST 31, 1997 ANNUAL REPORT ON FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000316128
<NAME> FLEXWIGHT CORPORATION
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-30-1996
<PERIOD-END> AUG-31-1997
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 233,388
<BONDS> 0
0
0
<COMMON> 495,808
<OTHER-SE> (729,196)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (8,000)
<EXTRAORDINARY> 0
<CHANGES> (8,000)
<NET-INCOME> 0
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
