<PAGE>
SCHEDULE 13E-3
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934
and Rule 13e-3 (Section 240.13e-3) thereunder)
UTAH RESOURCES INTERNATIONAL, INC.
----------------------------------
(Name of the Issuer)
UTAH RESOURCES INTERNATIONAL, INC.
----------------------------------
(Name of Person Filing Statement)
Common Stock $.10 par value 917518102-2,522,808
--------------------------- -------------------
(Title of Class of Securities) (CUSIP Number of Class of Securities)
Alan B. Roth
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Chicago, Illinois 60606
(312) 201-2000
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(Name, Address, and Telephone Number of Persons Authorized to Receive Notice
and Communications on Behalf of Persons Filing Statement)
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under
the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act
of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [X]
Calculation of Filing Fee
- --------------------------------------------------------------------------------
Transaction valuation $________ Amount of filing fee $________
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
<PAGE>
Amount Previously Paid: ________________________
Form or Registration No: ________________________
Filing Party: ________________________
Date Filed: ________________________
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<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement ("Statement") relates to a
solicitation of proxies by Utah Resources International, Inc. (the "Company") to
be used at an annual meeting ("Annual Meeting") of shareholders of the Company
to consider and vote upon a proposal to amend the Company's Articles of
Incorporation ("Amendment") to effect a reverse split of the Company's issued
and outstanding common stock as of 4:30 p.m., M.S.T., on the date of filing of
the Amendment on the basis that each 1,000 shares of common stock then
outstanding will be converted into one share, at $3.35 per share pre-reverse-
split price, with fractional shareholders given the option to either receive
cash in lieu of their resulting fractional share or purchase additional
fractional shares to round up to one whole share following the reverse split
(the "Transaction").
Simultaneously with the filing of this Statement, the Company is filing
a Preliminary Proxy Statement ("Preliminary Proxy Statement") and Schedule
14A, with exhibits with the Securities and Exchange Commission. The
Preliminary Proxy Statement describes and requires a vote on the Transaction,
election of directors, an amendment to the by-laws of the Company changing
its annual meeting date, certain proposals submitted by Mark Jones on behalf
of Mark Technologies Corporation, which proposals are not supported by the
Board of Directors of the Company and the majority shareholder of the
Company, and other matters. Directors Mark Jones and Jenny Morgan support
the proposals of Mark Technologies Corporation. The cross reference sheet
herein is being supplied pursuant to General Instruction F to Schedule 13E-3
and shows the location in the Preliminary Proxy Statement of the information
required to be included in response to the items of this Statement. The
information in the Preliminary Proxy Statement is hereby expressly
incorporated herein by reference and the responses to each item are qualified
in their entirety by the contents thereof.
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<PAGE>
CROSS REFERENCE SHEET
Pursuant to General Instruction F of Schedule 13E-3, the following table
sets forth the location in the Preliminary Proxy Statement of the registrant
dated ____________ __, 1997 (which has been filed in preliminary form with the
Securities and Exchange Commission and is attached hereto as Exhibit 1), of the
information required by Schedule 13E-3 which is incorporated herein from such
Preliminary Proxy Statement.
Location in
Schedule 13E-3 Item and Caption Preliminary Proxy Statement
- ------------------------------- ---------------------------
Item 1. Issuer and Class of Security
Subject to the Transaction.
(a)-(b) PROCEDURAL MATTERS
(c) PROPOSED REVERSE SPLIT/Market
Price
(d) SPECIAL FACTORS/Reasons for the
Proposed Reverse Split
(e) Not applicable
(f) PROPOSED REVERSE SPLIT/Market Price
Item 2. Identity and Background. This Preliminary Proxy Statement
is being filed by the issuers of
the class of equity securities
which is the subject of this
Rule 13e-3 transaction.
(a)-(g) Not applicable
Item 3. Past Contacts, Transactions
or Negotiations. Not applicable
Item 4. Terms of the Transaction. PROPOSED REVERSE SPLIT/Summary of
the Proposed Reverse Split, Option
to Round Up Stock Holdings, Cash
Payment in Lieu of Fractional
Shares, Market Price,
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<PAGE>
Amendment to Articles of
Incorporation, Exercise of Round Up
Option and Exchange of Stock
Certificates, Voting Requirements,
Dissenters' Rights, Regulatory
Requirements and Purchase of
Returned Shares
Item 5. Plans or Proposals of the
Issuer or Affiliate.
(a)-(b) Not applicable
(c) Not applicable
(d)-(e) Not applicable
(f)-(g) SPECIAL FACTORS/Reasons for the
Proposed Reverse Split,
Recommendation of the Board of
Directors and Conduct of the
Company's Business after the
Proposed Reverse Split
Item 6. Source and Amount of Funds
or Other Consideration.
(a)-(c) SPECIAL FACTORS/Financing the
Proposed Reverse Split
(d) Not applicable
Item 7. Purpose(s), Alternatives,
Reasons and Effects.
(a) SPECIAL FACTORS/Effect of the
Proposed Reverse Split Reasons for
the Proposed Reverse Split
(b) SPECIAL FACTORS/Recommendation of
the Board of Directors
(c) SPECIAL FACTORS/Background of the
Proposed Reverse Split, IMCC
Transaction and Settlement
Agreements, Reasons for the
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<PAGE>
Proposed Reverse Split and
Recommendation of the Board of
Directors
(d) SPECIAL FACTORS/Effect of the
Proposed Reverse Split and
FINANCIAL MATTERS/Federal Income
Tax Consequences
Item 8. Fairness of the Transaction.
(a) SPECIAL FACTORS/Recommendation of
the Board of Directors
(b) SPECIAL FACTORS/Background of the
Proposed Reverse Split, IMCC
Transaction and Settlement
Agreements, Reasons for the
Proposed Reverse Split,
Recommendation of the Board of
Directors and Conduct of the
Company's Business After the
Proposed Reverse Split
(c) PROPOSED REVERSE SPLIT/Voting
Requirements
(d) SPECIAL FACTORS/Background of the
Proposed Reverse Split
(e) SPECIAL FACTORS/Recommendation of
the Board of Directors
(f) Not applicable
Item 9. Reports, Opinions, Appraisals No report, opinion or appraisal and
Certain Negotiations. materially related to this
Rule 13e-3 transaction has been
received by the Issuer
Item 10. Interest in Securities of the
Issuer.
(a) VOTING SECURITIES AND PRINCIPAL
HOLDERS THEREOF
(b) Not applicable
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<PAGE>
Item 11. Contracts, Arrangements or SPECIAL FACTORS/Background of the
Understandings with Respect Proposed Reverse Split
to the Issuer's Securities.
Item 12. Present Intention and Recommen- SPECIAL FACTORS/Recommendation of
dation of Certain Persons with the Board of Directors
Regard to the Transaction.
Item 13. Other Provisions of the
Transaction.
(a) PROPOSED REVERSE SPLIT/Dissenters'
Rights
(b)-(c) Not applicable
Item 14. Financial Information. FINANCIAL MATTERS/Financial
Statements
Item 15. Persons and Assets Employed, SPECIAL FACTORS/Persons and Assets
Retained or Utilized. Employed, Retained or Utilized
Item 16. Additional Information. Not applicable
Item 17. Material to be Filed as Exhibits. Exhibit Index attached hereto
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<PAGE>
Item 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) Information in response to these sub-items is incorporated
herein by reference to "PROCEDURAL MATTERS" on the cover page of registrant's
Proxy Statement dated February, 1997 which has been filed in preliminary form
with the Securities and Exchange Commission ("SEC") (referred to herein as the
"Preliminary Proxy Statement").
(b) Information in response to this sub-item is incorporated
herein by reference to "PROCEDURAL MATTERS" in the Preliminary Proxy Statement.
(c) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Market Price" in the Preliminary
Proxy Statement.
(d) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Reasons for the Proposed Reverse Split"
in the Preliminary Proxy Statement.
(e) Not applicable.
(f) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Market Price" in the Preliminary
Proxy Statement.
Item 2. IDENTITY AND BACKGROUND.
This Proxy Statement is being filed by the Issuer of the class of
equity security which is the subject of this Rule 13e-3 transaction.
(a)-(d) Not applicable.
(e) No executive officer, director, control person, or executive
officer or director of any corporation ultimately in control of the registrant
has been convicted during the last five years in a criminal proceeding
(excluding traffic violations and similar misdemeanors).
(f) No executive officer, director, control person, or executive
officer or director of any corporation ultimately in control of the registrant
during the past five years has been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
further violations of, or prohibiting activities subject to, federal or state
securities laws or a finding of any violation of such laws.
(g) Not applicable.
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<PAGE>
Item 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
Not applicable.
Item 4. TERMS OF THE TRANSACTION.
Information in response to this sub-item is incorporated herein by
reference to "PROPOSED REVERSE SPLIT/Summary of Proposed Reverse Split, Option
to Round Up Stock Holdings, Cash Payment in Lieu of Fractional Shares, Market
Price, Amendments to Articles of Incorporation, Exercise of Round Up Option and
Exchange of Stock Certificates, Voting Requirements, Dissenters' Rights,
Regulatory Requirements and Purchase of Returned Shares" in the Preliminary
Proxy Statement.
Item 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a)-(b) Not applicable.
(c) Not applicable.
(d)-(e) Not applicable.
(f)-(g) Information in response to these sub-items is incorporated
herein by reference to "SPECIAL FACTORS/Reasons for the Proposed Reverse Split
Recommendation of the Board of Directors and Conduct of the Company's Business
After the Proposed Reverse Split" in the Preliminary Proxy Statement.
Item 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) Information in response to these sub-items is incorporated
herein by reference to "SPECIAL FACTORS/Financing the Proposed Reverse Split" in
the Preliminary Proxy Statement.
(d) Not applicable.
Item 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Effect of the Proposed Reverse Split and
Reasons for the Proposed Reverse Split" in the Preliminary Proxy Statement.
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<PAGE>
(b) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Recommendation of the Board of
Directors" in the Preliminary Proxy Statement.
(c) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Background of the Proposed Reverse
Split, IMCC Transaction and Settlement Agreement, Reasons for the Proposed
Reverse Split and Recommendation of the Board of Directors" in the Preliminary
Proxy Statement.
(d) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Effect of the Proposed Reverse Split and
FINANCIAL MATTERS/Federal Income Tax Consequences" in the Preliminary Proxy
Statement.
Item 8. FAIRNESS OF THE TRANSACTION.
(a) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Recommendation of the Board of
Directors" in the Preliminary Proxy Statement.
(b) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Background of the Proposed Reverse
Split, IMCC Transaction and Settlement Agreement, Reasons for the Proposed
Reverse Split, Recommendation of the Board of Directors and Conduct of the
Company's Business after the Proposed Reverse Split" in the Preliminary Proxy
Statement.
(c) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Voting Requirements" in the
Preliminary Proxy Statement.
(d) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Background of the Proposed Reverse
Split" in the Preliminary Proxy Statement.
(e) Information in response to this sub-item is incorporated
herein by reference to "SPECIAL FACTORS/Recommendation of the Board of
Directors" in the Preliminary Proxy Statement.
(f) Not applicable.
Item 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
No report, opinion or appraisal materially related to this Rule 13e-3
transaction has been received by the Issuer.
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<PAGE>
Item 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) Information in response to this sub-item is incorporated
herein by reference to "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF" in the
Preliminary Proxy Statement.
(b) Not applicable.
Item 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES.
Information in response to this item is incorporated herein by
reference to "SPECIAL FACTORS/Background of the Proposed Reverse Split" in the
Preliminary Proxy Statement.
Item 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
Information in response to this item is incorporated herein by
reference to "SPECIAL FACTORS/Recommendation of the Board of Directors" in the
Preliminary Proxy Statement.
Item 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) Information in response to this sub-item is incorporated
herein by reference to "PROPOSED REVERSE SPLIT/Dissenters' Rights" in the
Preliminary Proxy Statement.
(b)-(c) Not applicable.
Item 14. FINANCIAL INFORMATION.
Information in response to this item is incorporated herein by
reference to "FINANCIAL MATTERS/Financial Statements" in the Preliminary Proxy
Statement.
Item 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
Information in response to this item is incorporated herein by
reference to "SPECIAL FACTORS/Persons or Assets Employed, Retained or
Utilized" in the Preliminary Proxy Statement.
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<PAGE>
Item 16. ADDITIONAL INFORMATION.
Not applicable.
Item 17. MATERIAL TO BE FILED AS EXHIBITS.
See the Exhibit Index attached hereto.
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<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
UTAH RESOURCES INTERNATIONAL, INC.
Date: February 13, 1997 By: /s/ John Fife
-------------------------------------
John Fife, Director, Chairman of the
Board, CEO and President
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<PAGE>
EXHIBIT INDEX
TO
RULE 13E-3 TRANSACTION STATEMENT
UTAH RESOURCES INTERNATIONAL, INC.
SEQUENTIALLY
NUMBERED
PAGE *
99.1. Preliminary copy of Transmittal Letter
to Shareholders of Utah Resources
International, Inc. regarding Annual
Meeting of Shareholders.
99.2. Preliminary copy of Notice of Annual
Meeting of Shareholders of Utah
Resources International, Inc.
99.3. Preliminary copy of Proxy Statement of
Utah Resources International, Inc. filed
with the Securities and Exchange
Commission on February 13, 1997.
99.4. Preliminary copy of Shareholder Proxy.
* INCLUDED ONLY ON ORIGINAL SCHEDULE 13E-3 FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT 1
<PAGE>
PRELIMINARY COPY DATED FEBRUARY 13, 1997
FOR REVIEW ONLY
UTAH RESOURCES INTERNATIONAL, INC.
297 West Hilton Drive
Suite #4
St. George, Utah 84770
, 1997
----------------
Dear Shareholder:
You are cordially invited to attend an Annual Meeting of Shareholders of
Utah Resources International, Inc. (the "Company"), to be held in the
___________________________________ on ____________, ______________, 1997 at
_______________.
The Company was organized in Utah in 1966 as Utah Industrial, Inc. It was
renamed Utah Resources International, Inc. in 1969. In 1981, the Company became
a "reporting company" requiring it to file various reports with the Securities
and Exchange Commission. On July 3, 1996, the Company consummated a transaction
with Inter-Mountain Capital Corporation ("IMCC"), whereby common stock
representing 50.5% of the outstanding stock of the Company was transferred to
IMCC for $3.35 per share, payable in accordance with the terms of the Stock
Purchase Agreement by and between the Company and IMCC (the "Stock Purchase
Agreement"). The transfer of such shares to IMCC was the product of the
consummation of a Letter of Intent dated April 5, 1996, as amended (the "Letter
of Intent"), the Stock Purchase Agreement, a settlement agreement by and among
the Company, R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark
Technologies Corporation, Anne Morgan, Victoria Morgan, IMCC, John Fife and
Robinson & Sheen, L.L.C. (the "1996 Settlement Agreement") and a settlement
agreement, by and among the Company, John H. Morgan, Jr., Daisy R. Morgan, IMCC,
John Fife, Robinson & Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, Jr. and
E. Jay Sheen (the "Morgan Settlement Agreement") (the Letter of Intent, Stock
Purchase Agreement, 1996 Settlement Agreement and Morgan Settlement Agreement
together are the "Transaction Agreements"). Among other things, the Transaction
Agreements required the Company to cause a reverse stock split to occur on the
terms as provided therein and herein. In addition to the contractual
requirement that a reverse stock split occur as required by the Transaction
Agreements, the Company's senior management and its Board of Directors have
assessed the advantages and disadvantages of the Company being a "reporting
company" under the Securities and Exchange Act of 1934, as amended. First, such
reporting is very costly. Furthermore, a majority of the Board of Directors
does not believe that being a "reporting company" has given the Company any
significant advantage the Company would not have had as a "non-SEC reporting
company." The Company's registration with the SEC has not improved flexibility
for current or future financing of corporate expansion through the building of a
broader equity base, nor has it made the valuation of shares of the common stock
<PAGE>
Letter to Shareholders of
Utah Resources International, Inc.
- -----------------, 1997
Page 2
significantly easier (since no active market exists for the sale of stock which
is reflective of the Company's operations and earnings potential). Finally,
such registration has not resulted in the development of an active public market
for the common stock and thus has not provided substantially increased liquidity
for shareholders who desire to sell their common stock. Of the approximate 558
shareholders, approximately 479 shareholders of record own fewer than 1,000
shares. These same shareholders have received only a $.10 dividend per share
over the entire history of the Company.
On the basis that: (i) the Company is contractually required to cause a
reverse stock split to occur pursuant to the terms of the Transaction
Agreements; and (ii) it is the belief of a majority of the Board of Directors
that the cost of being a "reporting company" is too high, the Board of Directors
is presenting this transaction for a vote of the shareholders. A company with
assets of over $10 million becomes a "reporting company" when its shareholders
number 500 or more. To thereafter be allowed to become a "non-SEC reporting
company" and cease reporting to the Securities and Exchange Commission, the
number of shareholders must decline to less than 300. The proposed transaction
is designed to result in reducing the number of the Company's shareholders to
less than 300, so that the Company will no longer be required to be a reporting
company. After considering the transaction, a majority of the Board of
Directors voted in favor of the transaction, and believe that the $3.35 per
share price to be paid to participating shareholders is fair to both the
recipients of cash and the remaining shareholders. A majority of the Board of
Directors recommends your affirmative vote.
The accompanying Notice of Annual Meeting of Shareholders and Proxy
Statement describe the formal matters to be acted upon at the meeting. Prior
to any vote to be taken at the meeting, an opportunity will be provided for
questions and discussion by the shareholders. At the meeting, shareholders
will be asked to consider and vote upon a proposal to amend the Company's
Articles of Incorporation to effect a reverse split of the Company's issued
and outstanding common stock as of ________, M.S.T., on ______________, 1997
on the basis that each 1,000 shares of common, $.10 par value per share stock
then outstanding ("Common Stock") will be converted into one share of common
$100.00 par value per share stock (the "New Stock"), with shareholders
holding less than 1,000 shares or any increment thereof (after being given an
opportunity to purchase additional shares as needed to "round up" to the
equivalent of 1,000 shares) being paid cash in exchange for their fractional
shares at a pre-reverse-split price of $3.35 per share for each share
outstanding as of _______ __, 1997 (the "Record Date"). The shareholders
will also be asked to elect a new Board of Directors for the coming year, to
vote upon a proposal to amend the Company's by-laws to provide for an annual
meeting date to be held on the third Monday in July of each year beginning
with the year 1997, and to vote on three proposals submitted by Mark
Technologies Corporation. The first Mark Technologies Corporation proposal
requires that the Company appoint a special shareholders
<PAGE>
Letter to Shareholders of
Utah Resources International, Inc.
- -----------------, 1997
Page 3
Legal Affairs Committee, the second proposal requires that the Company offer
to purchase from all of its shareholders, at a purchase price of $4.00 per
share, shares of the Company's Common Stock and the third proposal requires
that the Company appoint a special shareholders Fiduciary Duty Committee.
IMCC, the holder of 50.5% of the Company's Common Stock, will vote in favor
of the proposal to amend the Company's Articles of Incorporation, the slate
of directors recommended in the Proxy Statement and the proposed amendment to
the Company's by-laws. IMCC has indicated that it will vote against all of
the Mark Technologies Corporation proposals.
If the foregoing proposal is approved, any shareholder of the Company
holding fewer than 1,000 shares of Common Stock or any increment thereof, may
(i) purchase additional shares in order to "round up" to the equivalent of 1,000
shares, or (ii) sell such shares to the Company based upon a pre-reverse-split
price of $3.35 per share.
Also, as indicated above, a shareholder holding 1,000 shares or more (a
"Non-Exercising Shareholder") will have such shares converted into one share of
New Stock of the Company for each 1,000 shares of the Company's Common Stock
owned, with Non-Exercising Shareholders given the option to (i) purchase
additional shares in order to round-up to the next increment of 1,000 shares or
(ii) sell such fractional shares to the Company based upon a pre-reverse-split
price of $3.35 per share.
In addition, any shareholder holding fewer than 1,000 shares or any
increment thereof that does not approve the reverse stock split transaction and
believes that such shares have a value in excess of $3.35 per share may, upon
following the procedures outlined in the Proxy and Part 13 of the Utah Business
Corporation Act, demand payment for the value of the shares believed by such
shareholders to be the fair value of such shares.
As required by the terms of the Transaction Agreements, subsequent to the
proposed reverse split, and subject to applicable state and federal securities
and state corporate law, any Common Stock redeemed through the reverse split
(the "Returned Shares") may be acquired by the remaining shareholders of the
Company, other than IMCC, in increments of 1,000 shares (the "Returned Share
Option"), at a purchase price equal to the pre-reverse-split price of $3.35 per
share (the "Returned Share Purchase Price"). Only those shares for which the
Company has received a fully and properly executed letter of transmittal
accompanied by the required documents will qualify as Returned Shares for
purposes of this Returned Share Option. Such Common Stock shall be purchased in
blocks of 1,000 shares of Common Stock such that each purchase of a 1,000 share
block of Common Stock shall be converted into 1 share of New Stock. In the
event the Returned Share Option is over-subscribed, then each of the exercising
shareholders may purchase the Returned Shares on a pro-rata basis (as determined
by the number of shares held by each of the exercising shareholders as of the
Record Date less those shares
<PAGE>
Letter to Shareholders of
Utah Resources International, Inc.
- -----------------, 1997
Page 4
held by IMCC) in blocks of not less than 1,000 shares. In the event of such
over-subscription, each qualified shareholder could elect to purchase that
percentage of Returned Shares equal to
x
-------
(y - z)
where "x" equals the number of New Stock shares owned by the qualified
shareholder wishing to purchase the Returned Shares, "y" equals the total number
of issued shares of New Stock, and "z" equals the number of New Stock shares
owned by IMCC. Twenty-five percent (25%) of the Returned Share Purchase Price
shall be payable in cash upon exercise, with the remaining balance of $2.51 per
share being evidenced by a promissory note, payable in three years (the
"Returned Share Note"). Subject to applicable Internal Revenue Service rules,
the Returned Share Note shall bear simple interest at the short term applicable
federal rate as stated in June 1996, which interest shall be payable annually in
arrears. Payment of the Returned Share Note will be secured by a pledge of the
Returned Shares purchased, as converted into share(s) of New Stock, pursuant to
a stock pledge agreement to be provided by the Company. Exercising shareholders
purchasing Returned Shares shall be required to apply any dividends,
distributions or other payments made to the shareholder of the Company on the
Returned Shares/New Stock to payment of the unpaid balance of the Returned Share
Note. Returned Shares purchased by an exercising shareholder shall be fully
votable in accordance with the terms of the Company's organizational documents
and other agreements binding the Company for so long as the exercising
shareholder is not in default under the pledge agreement or the Returned Share
Note.
Set forth in the table below is an illustration of the results of this
proposal for hypothetical shareholders owning, immediately prior to the
effective date of the transaction, the following numbers of shares of Common
Stock: (i) 10,001 shares (assuming NO round up), (ii) 10,001 shares (assuming
round up), (iii) 1,000 shares, (iv) 300 shares (assuming NO round up), and
(v) 300 shares (assuming round up):
<PAGE>
Letter to Shareholders of
Utah Resources International, Inc.
- -----------------, 1997
Page 5
<TABLE>
<CAPTION>
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- -----------------------------------------------------------------------------------------------------------------------------------
SHARES OWNED BEFORE STOCK SPLITS
---------------------------------------------------------------------------------------------------------------
10,001 SHARES 10,001 SHARES 300 SHARES 300 SHARES
RESULTS OF (ELECTS NOT TO (ELECT TO ROUND (ELECTS NOT TO (ELECTS TO
STOCK SPLIT ROUND UP) UP) 1,000 SHARES ROUND UP) ROUND UP)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Number of shares held 10 Shares 11 Shares 1 Share 0 Shares Shareholder
immediately following purchases
Reverse Stock Split at fractional share
1 for 1,000 needed to round-
up holdings to 1
whole share
- -----------------------------------------------------------------------------------------------------------------------------------
Cash to be paid as a $3.35 cash to $3,346.65 cash No cash paid to $1,005 cash to $2,345 cash to be
result of completed be paid by the to be paid by shareholder, as be paid by the paid by
transaction Company to shareholder to no fractional Company to shareholder to the
shareholder in the Company in shares resulted shareholder in Company in order
lieu of order to round lieu of to round up to
fractional share up to the next fractional 1,000 shares
increment of shares
1,000 shares
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The foregoing information is qualified in its entirety by the contents of
the Notice of Annual Meeting of Shareholders and the Proxy Statement which are
enclosed with this letter. If you have any questions regarding the proposed
transactions, you may contact Alan B. Roth at (312) 201-2000, Ladd Eldredge
at (801) 252-1976, or the undersigned at (312) 565-1569.
It is important that your shares be represented at the meeting regardless
of the number of shares you hold. Please take a moment to review the Proxy
Statement and complete, sign, and mail the enclosed proxy card in the
accompanying return envelope promptly, regardless of whether you intend to be
present at the meeting. Your proxy is revocable at any time prior to its use.
If you have multiple accounts and receive more than one set of these, please be
sure to vote each proxy received.
WE LOOK FORWARD TO SEEING YOU AT THE MEETING.
Sincerely,
UTAH RESOURCES INTERNATIONAL, INC.
JOHN FIFE,
Director, Chairman of the Board, CEO and President
<PAGE>
EXHIBIT 2
<PAGE>
PRELIMINARY COPY
FEBRUARY 13, 1997
FOR REVIEW ONLY
UTAH RESOURCES INTERNATIONAL, INC.
297 West Hilton Drive, Suite #4
St. George, Utah 84770
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON _______________, 1997
To the Shareholders of Utah Resources International, Inc.
NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders ("Annual
Meeting") of Utah Resources International, Inc., a Utah corporation (the
"Company"), will be held at _____________________________ on
_________________________, 1997 at ____________, M.S.T., for the following
purposes:
1. To consider and vote upon a proposal to amend the Company's Articles
of Incorporation to effect a reverse split of the Company's issued and
outstanding common, $.10 par value per share stock (the "Common Stock"), as of
____________ p.m., M.S.T., on __________________, 1997 on the basis that each
1,000 shares of Common Stock then outstanding will be converted into 1 share of
common, $100.00 par value per share stock (the "New Stock"), with shareholders
holding less than 1,000 shares of Common Stock or any increment thereof (after
being given an option to purchase additional shares as needed to "round up" to
the equivalent of 1,000 shares) being paid cash in exchange for their fractional
shares at a price of $3.35 per share for each share outstanding immediately
prior to such reverse split (the "Reverse Split").
2. To elect five (5) directors to hold office until the next annual
meeting of shareholders or until their successors have been elected and
qualified.
3. To consider and vote upon a proposal to amend Article II, section 1 of
the Company's By-laws to provide for an annual meeting date to be held on the
third Monday in July of each year, beginning with the year 1997.
4. To consider and vote upon three proposals submitted by Mark G.
Jones, a director of the Company on behalf of Mark Technologies Corporation,
which proposals are: (i) to appoint a special shareholders' Legal Affairs
Committee, the sole purpose of which is to select and engage new general
counsel, make a binding determination regarding the settlement, continued
prosecution or other disposition of pending litigation to which the Company
is a party and to make binding determinations regarding counsel selection in
the future and future litigation in which the Company may be a party; (ii) to
cause the Company to offer to purchase from all of its shareholders, at a
purchase price of $4.00 per share, shares of the Company's Common
<PAGE>
Stock, where acceptance of the Company's offer shall be voluntary and the
offer shall not be designed to require acceptance by any shareholder; and
(iii) to appoint a special shareholders Fiduciary Duty Committee, the sole
purpose of which shall be to make a binding determination, upon consultation
with the Company's new general counsel, regarding the activities of the
Company's Board of Directors, officers and counsel to consider whether
actions, complaints or other redress, if any, should be taken by the Company
against such individuals. A majority of the Board of Directors does not
recommend approval of these proposals. IMCC, the Company's majority
shareholder, has indicated that it will not vote in favor of these proposals.
5. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Additional information relating to these matters is set forth in the
attached proxy statement. The Board of Directors has fixed the close of
business on __________________, 1997, as the record date (the "Record Date") for
the determination of shareholders entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. Only shareholders of record at the
close of business on the Record Date are entitled to notice of and to vote at
the Annual Meeting. A list of shareholders entitled to vote at the Annual
Meeting will be available for examination at the offices of the Company for at
least 10 days prior to the Annual Meeting.
Pursuant to a resolution approved by the Board of Directors, the Company
has agreed to provide dissenters' rights to those shareholders holding less than
1,000 shares or any increment thereof that do not approve the Reverse Split, and
believe that such shares have a value in excess of $3.35 per share, for those
fractional shares only, pursuant to the terms of Part 13 of the Utah Business
Corporation Act. Any holder of less than 1,000 shares or any increment thereof
of the Company's Common Stock who is a shareholder of the Company as of the
Record Date and does not assent to the Reverse Split and who believes that such
shares have a value in excess of $3.35 per share will have the right, upon
compliance with specific procedures, to demand from the Company payment of the
fair value of such shareholder's fractional shares only. Such shareholder must,
among other things, not vote for the approval of the Reverse Split, and believe
that such shares have a value in excess of $3.35 per share (which approval would
include submitting a signed proxy form without voting instructions), timely
deliver to the Company a written demand for appraisal of their shares prior to
the Annual Meeting and strictly comply with certain other requirements. For a
more complete description of such rights, reference is made to "Dissenters'
Rights" in the Proxy Statement and to Part 13 of the Utah Business Corporation
Act, a copy of which is attached to the Proxy Statement as Exhibit B.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER, WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO
PROMPTLY MARK, SIGN, DATE AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED, SELF-ADDRESSED, STAMPED ENVELOPE SO THAT YOUR SHARES OF STOCK MAY BE
REPRESENTED AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE MEETING. YOUR PROXY WILL BE RETURNED
TO YOU IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND SHOULD REQUEST SUCH
RETURN OR IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER PROVIDED FOR
REVOCATION OF PROXIES ON THE INITIAL PAGES OF THE ENCLOSED PROXY STATEMENT.
PROMPT RESPONSE
-2-
<PAGE>
BY OUR SHAREHOLDERS WILL REDUCE THE TIME AND EXPENSE OF SOLICITATION.
, 1997 BY ORDER OF THE BOARD OF DIRECTORS
- ---------------------
JOHN FIFE
Director, Chairman of the Board, CEO and
President
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-3-
<PAGE>
EXHIBIT 3
<PAGE>
TABLE OF CONTENTS
PAGE
----
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROCEDURAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PROPOSED REVERSE SPLIT . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary of the Proposed Reverse Split . . . . . . . . . . . . . . . . 3
Option to Round Up Stock Holdings . . . . . . . . . . . . . . . . . . 5
Cash Payment in Lieu of Fractional Shares . . . . . . . . . . . . . . 5
Market Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Amendment to Articles of Incorporation. . . . . . . . . . . . . . . . 7
Exercise of Round Up Option and Exchange of Stock Certificates. . . . 7
Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dissenters' Rights. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Requirements . . . . . . . . . . . . . . . . . . . . . . . 10
Purchase of Returned Shares . . . . . . . . . . . . . . . . . . . . . 10
SPECIAL FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Effect of the Proposed Reverse Split. . . . . . . . . . . . . . . . . 11
Background of the Proposed Reverse Split. . . . . . . . . . . . . . . 12
IMCC Transaction and Settlement Agreements. . . . . . . . . . . . . . 14
Reasons for the Proposed Reverse Split. . . . . . . . . . . . . . . . 18
Recommendation of the Board of Directors. . . . . . . . . . . . . . . 19
Interests of Certain Persons and Potential Conflicts of Interest. . . 21
Conduct of the Company's Business After the Proposed Reverse Split. . 22
Persons and Assets Employed, Retained or Utilized . . . . . . . . . . 22
Financing the Proposed Reverse Split. . . . . . . . . . . . . . . . . 23
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF. . . . . . . . . . . . . . 23
Security Ownership of Certain Beneficial Owners . . . . . . . . . . . 23
Security Ownership of Management. . . . . . . . . . . . . . . . . . . 24
FINANCIAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . . . 26
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . 26
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 27
-i-
<PAGE>
PAGE
----
ELECTION OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Election of Board of Directors. . . . . . . . . . . . . . . . . . . . 27
Current Directors and Nominees For Director . . . . . . . . . . . . . 28
Meetings And Committees Of The Board Of Directors . . . . . . . . . . 31
Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . 31
Compensation Of Directors . . . . . . . . . . . . . . . . . . . . . . 36
Employment Contracts And Termination Of Employment And Change-in-
Control Arrangements . . . . . . . . . . . . . . . . . . . . . . 36
Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Stock Ownership Of Management . . . . . . . . . . . . . . . . . . . . 37
Principal Stockholders. . . . . . . . . . . . . . . . . . . . . . . . 38
AMENDMENT TO BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
MARK TECHNOLOGIES CORPORATION PROPOSALS. . . . . . . . . . . . . . . . . . 45
Material Proceedings and Transactions . . . . . . . . . . . . . . . . 46
Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . 49
Relationship With Independent Public Accountants. . . . . . . . . . . 50
Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . 50
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
EXHIBITS
Exhibit A - Amendment to Articles of Incorporation
Exhibit B - Part 13 of the Utah Business Corporation Act
-ii-
<PAGE>
PRELIMINARY COPY DATED FEBRUARY 13, 1997
FOR REVIEW ONLY
UTAH RESOURCES INTERNATIONAL, INC.
297 West Hilton Drive, Suite #4
St. George, Utah 84770
PROXY STATEMENT
Annual Meeting of the Shareholders to be
Held on _______________, 1997
INTRODUCTION
This Proxy Statement is furnished to the shareholders of Utah Resources
International, Inc. (the "Company") in connection with the solicitation by the
Board of Directors of the Company of proxies to be used at the Annual Meeting of
the Shareholders of the Company (the "Annual Meeting"). The Annual Meeting will
be held on ___________________, 1997, at ___________ p.m., M.S.T., at
_____________________________________________ for the purposes specified in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement and
enclosed form of proxy ("Proxy") were first sent to shareholders on or about
____________________, 1997.
PROCEDURAL MATTERS
The Board of Directors of the Company is soliciting proxies from the
shareholders of the Company in connection with the Annual Meeting. The
enclosed Proxy enables shareholders to vote on all matters scheduled to come
before the Annual Meeting. The matters scheduled to come before the Annual
Meeting include: (i) considering and voting upon a proposal to amend the
Company's Articles of Incorporation to effect a reverse split of the
Company's issued and outstanding common, $.10 par value per share stock (the
"Common Stock"), as of __:__ p.m., M.S.T., on _______________________ __,
1997 on the basis that each 1,000 shares of Common Stock then outstanding
will be converted into 1 share of common, $100.00 par value per share stock
(the "New Stock"), with shareholders holding less than 1,000 shares of Common
Stock or any increment thereof (after being given an option to purchase
additional shares as needed to "round up" to the equivalent of 1,000 shares)
being paid cash in exchange for their fractional shares at a price of $3.35
per share for each share outstanding on _______ __, 1997 (the "Record Date");
(ii) electing five directors to hold office until the next annual meeting of
shareholders or until their successors have been elected and qualified; (iii)
considering and voting upon a proposal to amend Article III, Section 1 of the
Company's by-laws to provide for an annual meeting date to be held on the
third Monday in July of each year, beginning with the year 1997; (iv) the
following three proposals by Mark Technologies Corporation (A) appointment of
a special shareholders Legal Affairs Committee, the sole purpose of which is
to select and engage new general counsel, make a binding determination
regarding the settlement, continued
<PAGE>
prosecution or other disposition of pending litigation to which the Company
is a party and to make binding determinations regarding counsel selection in
the future and future litigation in which the Company may be a party, (B) to
cause the Company to offer to purchase from all of its shareholders, at a
purchase price of $4.00 per share, shares of the Company's Common Stock,
where acceptance of the Company's offer shall be voluntary and the offer
shall not be designed to require acceptance by any shareholders and
(C) appointment of a special shareholders Fiduciary Duty Committee, the sole
purpose of which shall be to make a binding determination, upon consultation
with the Company's new general counsel, regarding the activities of the
Company's Board of Directors, officers and counsel to consider whether
actions, complaints or other redress, if any, should be taken by the Company
against such individuals; and (v) transacting such other business as may
properly come before the meeting and any adjournment thereof. Jenny Morgan,
a director of the Company, opposes the proposals to amend the Company's
Articles of Incorporation to effect a reverse split of the Company's
Common Stock, as more fully described herein, and to amend the by-laws
of the Company. Jenny Morgan and Mark G. Jones, support the Mark
Technologies Corporation proposals. Inter-Mountain Capital Corporation
("IMCC"), the holder of 50.5% of the Company's Common Stock, will vote in
favor of the proposal (i) to amend the Company's Articles of Incorporation to
effect a reverse split of the Company's Common Stock as discussed above; and
(ii) to amend the by-laws of the Company. IMCC opposes and will vote against
the proposals made by Mark Technologies Corporation. When Proxies are
returned properly executed, the shares represented thereby will be voted by
the persons named in the Proxy in accordance with the shareholder's
directions. Shareholders are urged to specify their choices by marking the
enclosed Proxy; if no choice has been specified, the shares will be voted
"for" the proposals set forth in the Notice of Annual Meeting and further
described in this Proxy Statement. The Company encourages the personal
attendance of its shareholders at the Annual Meeting. Execution of the
accompanying Proxy may be revoked at any time before it is voted. Revocation
may be effected by (i) a subsequently dated Proxy, (ii) written notice to the
Company at its principal offices at 297 West Hilton Drive, Suite #4, St.
George, Utah 84770, Attention: Gerry Brown, or (iii) by attending the Annual
Meeting and voting your shares in person. No such notice of revocation of
Proxy or later dated Proxy shall be effective, however, until and unless such
notice or subsequent Proxy has been received by the secretary of the Company
at or prior to the Annual Meeting. A revocation will not affect a vote on
any matters taken prior to the receipt of such revocation. Your attendance
at the Annual Meeting will not of itself revoke a Proxy.
The Board of Directors of the Company has fixed ____________________, 1997,
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of and vote at the Annual Meeting. At the close of business
on the Record Date, 2,522,808 shares of the Company's common stock, par value
$.10 per share (the "Common Stock") were issued and outstanding, and are,
therefore, entitled to vote at the Annual Meeting. Such shares are held by
approximately 558 shareholders of record. Common Stock constitutes the only
class of voting securities entitled to vote at the Annual Meeting. Holders of
record of Common Stock on the Record Date are entitled to one vote per share,
exercisable by Proxy or at the Annual Meeting.
The Company is a Utah corporation and directly owns approximately 394 acres
of undeveloped land in St. George, Utah, 353 acres of which are developable, on
which it conducts its real property development business, primarily through its
wholly owned subsidiary, Tonaquint, Inc. ("Tonaquint"). The principal executive
offices of the Company are located at 297 West Hilton Drive, Suite #4,
St. George, Utah 84770; the Company's telephone number at such office is
(801) 628-8080.
-2-
<PAGE>
PROPOSED REVERSE SPLIT
SUMMARY OF THE PROPOSED REVERSE SPLIT
A majority of the Board of Directors has adopted a resolution which sets
forth a single proposal to amend (the "Amendment") the Articles of Incorporation
(the "Articles of Incorporation") of the Company to (i) effect a reverse stock
split (the "Reverse Split") of the Company's outstanding Common Stock as of
_______ p.m., M.S.T., on ______________, 1997 (the "Effective Date") on the
basis that each 1,000 shares of Common Stock then outstanding will be converted
into one share of common $100.00 par value stock of the Company (the "New
Stock"), with fractional shareholders given the option to (A) receive cash in
lieu of fractional shares of stock, or (B) purchase from the Company that
portion of fractional shares of Common Stock needed to increase their share
holdings to the next one whole share of New Stock; each shareholder holding less
than one whole share of New Stock as of the Effective Date shall be eliminated
as a shareholder by receiving cash in lieu of such fractional shares of stock.
Subsequent to the Reverse Split and after compliance with all applicable
federal and state securities and state corporate laws, the Company will permit
any Common Stock redeemed through the Reverse Split (the "Returned Shares") to
be acquired by the remaining shareholders of the Company, other than IMCC or its
affiliates in 1,000 share increments (the "Returned Share Option"), at a
purchase price equal to the pre-Reverse Split price of $3.35 per share (the
"Returned Share Purchase Price"). Only those shares for which the Company has
received a fully and properly executed letter of transmittal accompanied by the
required documents will qualify as Returned Shares for purposes of this Returned
Share Option. Such Common Stock shall be purchased in blocks of 1,000 shares of
Common Stock such that for each purchase of a 1,000 share block of Common Stock
shall be converted into 1 share of New Stock. In the event the Returned Share
Option is over-subscribed, then each of the exercising shareholders may purchase
the Returned Shares on a pro-rata basis (as determined by the number of shares
held by each of the exercising shareholders as of the Record Date less those
shares held by IMCC), but in no circumstances in less than 1,000 share blocks.
In the event of such over-subscription, each qualified shareholder could elect
to purchase that percentage of Returned Shares equal to
x
-------
(y - z)
where "x" equals the number of New Stock shares owned by the qualified
shareholder wishing to purchase the Returned Shares, "y" equals the total number
of issued shares of New Stock, and "z" equals the number of issued shares of New
Stock Shares owned by IMCC. Twenty-five percent (25%) of the Returned Share
Purchase Price shall be payable in cash upon exercise, with the remaining
balance of $2.51 per share being evidenced by a promissory note, payable in
three years (the "Returned Share Note"). Subject to applicable Internal Revenue
Service rules, the Returned Share Note shall bear simple interest at the short
term applicable federal rate as stated in June 1996, which interest shall be
payable annually in arrears. Payment of the Returned Share Note will be secured
by a pledge of the Returned Shares purchased, as converted into
-3-
<PAGE>
share(s) of New Stock, pursuant to a stock pledge agreement to be provided by
the Company. Exercising shareholders purchasing Returned Shares shall be
required to apply any dividends, distributions or other payments made to the
shareholder of the Company on the Returned Shares/New Stock to payment of the
unpaid balance of the Returned Share Note. Returned Shares, as converted into
New Stock, purchased by an exercising shareholder shall be fully votable in
accordance with the terms of the Company's organizational documents and other
agreements binding the Company for so long as the exercising shareholder is not
in default under the pledge agreement or the Returned Share Note.
The Reverse Split may be abandoned by the Board of Directors at any time
before the Annual Meeting for any reason the Board of Directors deems advisable.
After the Annual Meeting, the Reverse Split may be abandoned if the Company
determines that the number of shareholders after the completion of the Reverse
Split will exceed 300. The Reverse Split would be effected by the filing of the
Amendment with the Secretary of State of the State of Utah and the occurrence of
the Effective Date. The form of the Amendment is set forth in full on Exhibit A
to this Proxy Statement. The Reverse Split will increase and decrease,
respectively, the existing par value per share of the Company's stock and the
total shares outstanding of such stock.
The effect of the Reverse Split on the holders of Common Stock will be as
follows:
1. Fractional Shareholders who DO NOT elect to "round up" their
holdings at least 10 days prior to the Effective Date will have
their fractional shares automatically converted into the right to
receive cash in lieu of the fractional shares of New Stock otherwise
issuable to such holder in the amount set forth herein. (See
"PROPOSED REVERSE SPLIT/Option to Round Up Stock Holdings and Cash
Payment in Lieu of Fractional Shares").
2. Fractional Shareholders who DO elect to "round up" their holdings
to aggregate one whole share of New Stock at least ten days prior to
the Effective Date will, on the Effective Date, have their (then)
whole shares of Common Stock automatically converted into shares of
New Stock. (See "PROPOSED REVERSE SPLIT/Option to Round Up Stock
Holdings").
3. Holders of record of 1,000 or more shares of Common Stock on
___________ __, 1997 (the "Record Date") will have their shares
automatically converted after the Reverse Split into the number
of whole and fractional shares of New Stock equal to the number
of shares of Common Stock outstanding and held by them immediately
prior to the Effective Date divided by 1,000. Such shareholders
may also elect prior to the Effective Date to have their fractional
shares of Common Stock "rounded up" to aggregate one whole share of
New Stock. (See "PROPOSED REVERSE SPLIT/Option to Round Up Stock
Holdings and Cash Payment in Lieu of Fractional Shares").
-4-
<PAGE>
OPTION TO ROUND UP STOCK HOLDINGS
The Board of Directors of the Company determined that it would be
appropriate to give each existing shareholder of the Company the opportunity to
remain as a shareholder of the Company. Without this opportunity, all holders
of less than 1,000 shares of Common Stock (the "Small-Lot Shareholders") would,
as a result of the Reverse Split, receive cash in exchange for their shares of
Common Stock and would cease to be shareholders of the Company. To allow any
Small-Lot Shareholder to avoid that result, the Company is offering Small-Lot
Shareholders and fractional shareholders the option to "round up" their holdings
of shares of stock in the Company to aggregate one whole share of New Stock
after completion of the Reverse Split by purchasing additional fractional shares
of Common Stock in full and in cash (at a price equivalent to the per share
price the Company will pay to shareholders electing to "cash out" their
fractional share holdings) necessary to round-up to aggregate one whole share of
New Stock.
A Small-Lot Shareholder and fractional shareholder will, as a result of the
Reverse Split, have such fractional shares automatically converted into the
right to receive ONLY cash (the "Cash Consideration") IF THE SMALL-LOT
SHAREHOLDER OR FRACTIONAL SHAREHOLDER DOES NOT TIMELY EXERCISE THE FOLLOWING
OPTION TO ROUND UP THE SMALL-LOT SHAREHOLDER'S OR FRACTIONAL SHAREHOLDER'S
HOLDINGS OF STOCK OF THE COMPANY. In order to round up (and forego the Cash
Consideration), within 30 days after the Effective Date each Small-Lot
Shareholder and fractional shareholder must elect to round up by paying $3.35 in
full and in cash for each 1/1000th share needed to round up the Small-Lot
Shareholder's holdings and the fractional shareholder's holdings to equal an
aggregate of one whole share of New Stock (the "Round Up Option"). In other
words, a holder of less than 1,000 shares or any increment thereof of Common
Stock before the Reverse Split would be required to purchase in full and in cash
the fractional shares of Common Stock needed to increase his or her holdings to
the equivalent of 1,000 shares or the next increment of 1,000 shares of Common
Stock before the Reverse Split. The amount of cash required to "round up" will
be equal to the product of 1,000 minus the number of shares initially owned or
that number of shares in excess of a multiple of 1,000 shares multiplied by
$3.35 (For example, if a shareholder currently owns 500, 1,500, or 2,500 shares,
the cost to "round up" would be $1,675 (500 x $3.35 = $1,675)). A Small-Lot
Shareholder or fractional shareholder desiring to take advantage of the Round Up
Option must exercise the Round Up Option within 30 days after the Effective
Date. (See "SPECIAL FACTORS/Exercise of Round Up Option and Exchange of Stock
Certificates"). After expiration of such 30 day period, each Small-Lot
Shareholder who has not exercised the Round Up Option will be eliminated as a
shareholder of the Company and shall only be entitled to receive the Cash
Consideration. After expiration of such 30-day period, each fractional
shareholder who has not exercised the Round Up Option shall remain as a
shareholder of the Company and shall be entitled to receive Cash Consideration
for such fractional shares.
CASH PAYMENT IN LIEU OF FRACTIONAL SHARES
In lieu of issuing fractional shares of Common Stock resulting from the
Reverse Split, the Company will pay Cash Consideration to Small-Lot Shareholders
and fractional shareholders
-5-
<PAGE>
who fail to timely exercise the Round Up Option based upon a value per
outstanding share of Common Stock immediately prior to the Effective Date of
$3.35 per share. (For a discussion of the fairness of the price of $3.35 per
share for the Common Stock, see "SPECIAL FACTORS/Recommendation of the Board of
Directors").
In the event the Reverse Split is adopted, shareholders will receive a
letter of transmittal regarding surrender of certificates formerly representing
Common Stock of the Company for certificates evidencing shares of New Stock,
cash in lieu of fractional shares and exercise of the Round Up Option. (See
"PROPOSED REVERSE SPLIT/Exercise of Round Up Option and Exchange of Stock
Certificates").
MARKET PRICE
In lieu of issuing fractional shares resulting from the Reverse Split, the
Company will pay cash to certain shareholders based upon a value per outstanding
share of Common Stock held immediately prior to the Effective Date of $3.35 per
share. The Company's Common Stock is listed on the National Association of
Securities Dealers bulletin board system and is traded in the over-the-counter
securities through the Automated Quotation System, under the NASDAQ symbol UTRS.
The following table sets forth the quarterly high and low bid prices for the
Company's Common Stock during the last two fiscal years, as reported by the
National Quotations Bureau. The quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission, and may not necessarily represent
actual transactions.
Since September 15, 1993, the Company's Common has been re-listed for
trading in the over-the-counter market. Trading in the stock has been sporadic.
The trading information provided should not be construed as a representation by
the Company or its management that there is an established public trading market
for the Company's Common Stock. Prior to September 15, 1993, there had not been
a public market for the Company's Common Stock for more than the prior two
fiscal years.
- --------------------------------------------------------------------------------
1996 1995 1994
---- ---- ----
- --------------------------------------------------------------------------------
Period High Low High Low High Low
------ ---- --- ---- --- ---- ---
- --------------------------------------------------------------------------------
First Quarter $1.00 $.625 $4.00 $2.00 $3.00 $2.125
Second Quarter $1.50 $.75 $2.00 $1.50 $2.25 $1.50
Third Quarter $1.00 $.875 $1.75 $1.00 $1.75 $1.25
Fourth Quarter $.875 $.875 $1.00 $ .75 $2.00 $1.50
- --------------------------------------------------------------------------------
Except for certain transactions including: (i) the Split-Off Agreement by
and between MidWest Railroad Construction and Maintenance Corporation
("Midwest") and the Company (the "Split-Off Agreement"), wherein the Company
returned its Midwest shares to Robert D.
-6-
<PAGE>
Wolff and Judith J. Wolff (together the "Wolffs") in exchange for the 590,000
shares of the Company's stock held by the Wolffs, (ii) the 1996 Settlement
Agreement, by and among the Company, R. Dee Erickson, E. Jay Sheen, Lyle D.
Hurd, Mark G. Jones, Mark Technologies Corporation, Anne Morgan, Victoria
Morgan, IMCC, John Fife and Robinson & Sheen, L.L.C. (the "1996 Settlement
Agreement"), wherein the Company redeemed 22,950 shares of Anne Morgan's URI
stock and 17,602 shares of Victoria Morgan's URI stock, in cash, at $3.35 per
share, and (iii) the conclusion of the exchange of 10.6 acres of land and 34,150
shares of C.E.C. Industries Corporation stock for 103,488 shares of the
Company's stock; the Company has made no repurchases of its stock during the
Company's second full fiscal year preceding this Proxy Statement. (See "SPECIAL
FACTORS/IMCC Transaction and Settlement Agreements"). The Company did declare a
$.10 cash dividend which was paid January 26, 1995, to shareholders of record
January 12, 1995. A decision to pay dividends in the future will depend upon
the Company's profitability, need for liquidity and other financial
considerations. There are approximately 558 shareholders of the 2,522,808
outstanding shares of the Company's Common Stock. Approximately 479
shareholders hold less than 1,000 shares of the Company's Common Stock.
AMENDMENT TO ARTICLES OF INCORPORATION
Assuming approval of the Reverse Split by the shareholders at the Annual
Meeting, the Amendment to the Articles of Incorporation in the form of Exhibit A
attached hereto will be filed with the Secretary of State of the State of Utah
and the Reverse Split will become effective on the Effective Date thereof.
Under the Amendment, without any further action on the part of the shareholders,
shares of issued and outstanding Common Stock immediately prior to the Effective
Date, will be converted into the right to receive the number of shares of New
Stock equal to the number of shares of Common Stock held of record by a
shareholder, divided by 1,000 or, in the case of Small-Lot Shareholders and
shareholders of fractional shares who do not exercise the Round Up Option on or
before 30 days following the Effective Date, the right to receive the Cash
Consideration, for such fractional shares unless the number of shareholders
after completion of the Reverse Split exceeds 299 (and such condition is not
waived by the Company), as of 6:00 a.m., M.S.T. on the Effective Date.
The Amendment will, by its terms, decrease the number of shares of the
Company's authorized Common Stock from 5,000,000 shares of $.10 par value to
5,000 shares of $100.00 par value each to effectuate the Reverse Split.
EXERCISE OF ROUND UP OPTION AND EXCHANGE OF STOCK CERTIFICATES
After the approval of the Reverse Split, each shareholder will be mailed a
notice of filing ("Notice of Filing") and a letter of transmittal ("Letter of
Transmittal"). The Notice of Filing will indicate that the Amendment was filed
and the Effective Date thereof. The Letter of Transmittal, and instructions
relating thereto, will set forth the procedures by which shareholders will
(i) if such shareholder is a Small-Lot Shareholder or a fractional shareholder,
elect to exercise the Round Up Option (or forego the Round Up Option and elect
to receive only the Cash Consideration of a Small-Lot Shareholder or fractional
shareholder for such shares in excess of multiples of 1,000 shares), and
(ii) tender their Common Stock stock certificates in
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exchange for the Cash Consideration or New Stock stock certificates (and, if
applicable, cash in lieu of fractional shares). A Shareholder will be able to
receive his New Stock and/or cash only by transmitting to the Company (A) a
properly executed and completed Letter of Transmittal, (B) stock certificate(s)
for Common Stock and such evidence of ownership of such shares as the Company
may require, and (C) cash payment necessary for exercise of a Small-Lot
Shareholder's or fractional shareholder's Round Up Option, if applicable.
Payments of cash by the Company to the shareholders will be made only upon
delivery of the relevant items which will be more specifically described in the
Letter of Transmittal sent to each shareholder after approval of the Reverse
Split. Similarly, shareholders who will remain such after the Effective Date
will not receive certificates for New Stock unless and until the certificates
representing their Common Stock are surrendered or such evidence of ownership of
such shares as the Company may require is provided.
THE NOTICE OF FILING AND THE LETTER OF TRANSMITTAL WILL BE TRANSMITTED BY
THE COMPANY TO SHAREHOLDERS ON OR AFTER THE EFFECTIVE DATE. SHAREHOLDERS SHOULD
NOT SEND IN THEIR CERTIFICATES OR PAYMENT FOR ADDITIONAL SHARES UNTIL THE NOTICE
OF FILING AND LETTER OF TRANSMITTAL ARE RECEIVED AND SHOULD SURRENDER THEIR
CERTIFICATES AND, IF APPLICABLE, PAYMENT FOR EXERCISE OF THE ROUND UP OPTION
ONLY WITH SUCH LETTER OF TRANSMITTAL.
There will be no direct service charges or sales commissions payable by the
remaining shareholders in connection with the exchange of their certificates or
by holders of fractional shares in connection with the payment of cash in lieu
of the issuance of fractional Common Stock or fractional New Stock. These costs
will be borne by the Company.
VOTING REQUIREMENTS
Only holders of record of shares of Common Stock at the close of business
on the Record Date will be entitled to notice of and vote at the Annual Meeting.
On the Record Date there were approximately 2,522,808 shares of Common Stock
outstanding. Each such share will be entitled to one vote on each matter
considered at the Annual Meeting. Under Utah law the affirmative vote of a
majority of all shares of Common Stock entitled to vote thereon is required to
approve the Reverse Split. By virtue of a Board of Directors' resolution, the
Board has agreed to make dissenter's rights available, as more fully described
in Part 13 to the Utah Business Corporation Act, to those shareholders who:
(i) possess fractional shares which are eligible to be purchased by the Company
pursuant to the Reverse Split, (ii) do not approve the Reverse Split, and
(iii) follow the guidelines outlined in Part 13 to the Utah Business Corporation
Act. At the Record Date, the Company's executive officers, directors, and
affiliates in the aggregate held with the power to vote approximately 1,613,745
shares of Common Stock, constituting approximately 64% of the shares of Common
Stock entitled to vote at the Annual Meeting. (See "VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF"). IMCC, the holder of 50.5% of the shares of Common
Stock, will vote in favor of the Reverse Split.
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The cost of soliciting Proxies will be borne by the Company. In addition
to the use of the mails, Proxies may be solicited by the directors, officers,
and employees of the Company, without additional compensation, by personal
interview, telephone, telegram or otherwise.
DISSENTERS' RIGHTS
By virtue of a Board of Directors passing a resolution to the effect,
the Board has agreed to make dissenter's rights available, as more fully
described in Part 13 to the Utah Business Corporation Act (the "Utah Business
Act"), to those shareholders who: (i) possess fractional shares which are
eligible to be purchased by the Company pursuant to the Reverse Split, (ii)
do not approve the Reverse Split and believe that such fractional shares
being purchased by the Company pursuant to the Reverse Split have a value in
excess of $3.35 per share, and (iii) follow the guidelines outlined in Part
13 to the Utah Business Act. Any holders of less than 1,000 shares or any
increment thereof of Common Stock who is a shareholder of the Company as of
the Record Date and does not assent to the Reverse Split and believes that
his or her shares have a value greater than $3.35 per share will have the
right upon compliance with specific procedures, to demand from the Company
payment of the fair value of such shareholder's fractional shares. A
majority of the Board of Directors believes that $3.35 per share is the fair
value of the shares of the Company. For a detailed discussion of the
fairness of the $3.35 per share purchase price, see "SPECIAL
FACTORS/Recommendation of the Board of Directors."
Assuming that the Reverse Split is approved by the shareholders, a
holder of less than 1,000 shares or any increment thereof of Common Stock who
objects to the Reverse Split and who believes that such fractional shares
being purchased by the Company pursuant to the Reverse Split have a value in
excess of $3.35 per share, will have appraisal rights, only for those
fractional shares, if he or she complies with all of the provisions of Part
13 of the Utah Business Act. Shareholders who follow the procedures
("Dissenting Shareholders") may receive a cash payment equal to the fair
value of their shares (to the extent such fair value exceeds $3.35 per
share), determined exclusive of any element of value arising from
accomplishment or expectation of the Reverse Split. In order for a
Dissenting Shareholder to pursue a fair value cash payment for such
fractional shares, the Reverse Split must be approved and the Dissenting
Shareholder must (i) deliver a written demand for payment of his or her
fractional shares prior to the taking of the vote of the shareholders on the
Reverse Split, (ii) not vote his or her shares in favor of the Reverse Split,
and (iii) follow the procedures as set forth in Part 13 of the Utah Business
Act. A return of an executed proxy card without any specification as to the
way the shares are to be voted will be treated as a vote in favor of the
Reverse Split and will constitute a waiver of his or her demand rights under
Part 13 of the Utah Business Act. Furthermore, a proxy card with a vote
against the Reverse Split, alone, will not serve as a written demand for
payment. Written demands must be filed with the Company no later than ten
days prior to the Annual Meeting date. The written demand must reasonably
inform the Company of the shareholder's identity and of the intention to
demand payment of his or her shares thereby. Within 10 days after the
Effective Date of the Reverse Split, the Company is required to give notice
that the Reverse Split has become effective to shareholders who have made
written demands. Shareholders who hold more than 1,000 shares of Common
Stock may exercise appraisal rights for only the fractional shares held by
such shareholder. For example, if a shareholder owns 1,500 shares of Common
Stock,
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such shareholder may only exercise his or her appraisal rights with respect to
500 shares of Common Stock. Such shareholder's remaining 1,000 shares of Common
Stock will be converted into 1 share of New Stock.
The shares of any Dissenting Shareholder who subsequently withdraws or
loses this rights of appraisal with respect to the fractional shares will be
converted into cash pursuant to the terms of the Reverse Split on the same basis
as if they had made no demands for payment.
A shareholder's failure to vote on the Reverse Split will constitute a
waiver of his or her demand rights under Part 13 of the Utah Business Act. A
vote against the Reverse Split will not satisfy the requirements with respect to
a written demand for payment referred to above or the other actions specified in
Part 13 of the Utah Business Act to perfect such payment rights, and such
written demand for payment must be in addition to and separate from any proxy or
vote against the Reverse Split.
Only holders of record of less than 1,000 shares or any increment thereof
of Common Stock are entitled to demand rights for those fractional shares as
described above, and the procedures to perfect such rights must be carried out
by and in the name of holders of record. Persons who are beneficial but not
record owners of less than 1,000 shares or any increment thereof and who wish to
exercise payment rights with respect to these fractional shares and the Reverse
Split should consult promptly with the record holders of their shares as to the
exercise of such rights.
The foregoing does not purport to be a complete statement of the provisions
of Part 13 of the Utah Business Act and is qualified in its entirety by
reference to that Part, which is reproduced in full as Exhibit B to this Proxy
Statement.
REGULATORY REQUIREMENTS
The Company has concluded that the Reverse Split will not require the
approval of any government agency.
PURCHASE OF RETURNED SHARES
Subsequent to the Reverse Split and upon compliance with all applicable
federal and state securities and state corporate laws, the Company will permit
any Common Stock redeemed through the Reverse Split (the "Returned Shares") to
be acquired by the remaining shareholders of the Company, other than IMCC or its
affiliates, in increments of 1,000 shares (the "Returned Shares Option"), at a
purchase price per share equal to the pre-Reverse Split share price of $3.35
(the "Returned Share Purchase Price"). Only those shares for which the Company
has received a fully and properly executed Letter of Transmittal accompanied by
the required documents will qualify as Returned Shares for purposes of this
Returned Share Option. Such Common Stock shall be purchased in blocks of 1,000
shares of Common Stock such that each shareholder purchase of a 1,000 share
block of Common Stock shall be converted into 1 share of New Stock. In the
event the Returned Share Option is over-subscribed, then each of the
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exercising shareholders may purchase the Returned Shares on a pro rata basis (as
determined by the number of shares held by each of the exercising shareholders
as of the Record Date less those shares held by IMCC) but in no circumstances in
less than 1,000 share blocks. In the event of such over-subscription, each
qualified shareholder could elect to purchase that percentage of Returned Shares
equal to
x
-------
(y - z)
where "x" equals the number of New Stock shares owned by the qualified
shareholder wishing to purchase the Returned Shares, "y" equals the total number
of issued shares of New Stock, and "z" equals the number of issued shares of New
Stock owned by IMCC. Twenty-Five percent (25%) of the Returned Share Purchase
Price shall be payable immediately in cash upon exercise of the Returned Share
Option with the remaining balance of $2.51 per share being evidenced by a
promissory note, payable in three years (the "Returned Share Note"). Subject to
applicable Internal Revenue Service rules, the Returned Share Note will bear
simple interest at the short term applicable federal rate as stated in June
1996, which interest shall be payable annually in arrears. Payment of the
Returned Share Note will be secured by a pledge of the Returned Shares purchased
as converted into share(s) of New Stock pursuant to a stock pledge agreement to
be provided by the Company. Exercising shareholders purchasing Returned Shares
shall be required to apply any dividends, distributions or other payments made
to the shareholder of the Company on the Returned Shares/New Stock to payment of
the unpaid balance of the Returned Share Note. Returned Shares, as converted
into New Stock purchased by an exercising shareholder, shall be fully votable in
accordance with the terms of the Company's organizational documents and other
agreements binding the Company, for so long as the exercising shareholder is not
in default under the pledge agreement or the Returned Share Note.
SPECIAL FACTORS
EFFECT OF THE PROPOSED REVERSE SPLIT
The Reverse Split will be effected by means of the filing of the Amendment
and the occurrence of the Effective Date. Following the Effective Date, the
Common Stock owned by each Small-Lot Shareholder who does not exercise the Round
Up Option will represent solely the right to receive the Cash Consideration for
such fractional shares. The interest of each such Small-Lot Shareholder in the
Company will thereby be terminated, and such Small-Lot Shareholder will no
longer have any right to vote as a shareholder and will no longer share in the
assets or any future earnings of the Company. Each holder of more than 1,000
shares of Common Stock before the Reverse Split that does not exercise the Round
Up Option will continue to be a shareholder of the Company with rights to vote
as a shareholder and rights to share in the assets and any future earnings of
the Company and will receive the Cash Consideration for such fractional shares.
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On the Effective Date, each shareholder of record who owns one or more
whole shares of New Stock (including holders of 1,000 or more shares of Common
Stock before the Reverse Split AND Small-Lot Shareholders who timely exercise
the Round Up Option) will continue as a shareholder of the Company with respect
to the share or shares of New Stock resulting from the Reverse Split.
The Company has authorized capital stock of 5,000,000 shares of $.10 par
value per share common stock. The number of shares of authorized common stock
will, as a result of the Amendment, be decreased to 5,000 shares of $100.00 par
value per share common stock. (See "PROPOSED REVERSE SPLIT/Amendment to
Articles of Incorporation"). As of October 8, 1996, the number of issued and
outstanding shares of Common Stock was 2,522,808. Based upon the Company's best
estimates (assuming no Small-Lot Shareholders and no fractional shareholders
exercise pre-split the Round Up Option and no shareholders elect to purchase the
Returned Shares), the number of issued and outstanding shares of Common Stock
will be reduced as a result of the Reverse Split from 2,522,808 to approximately
2,419,000, and the number of shareholders of record will be reduced from
approximately 558 to approximately 79. There will be approximately 5,000
authorized, and 2,419 issued shares of New Stock following the Reverse Split.
The number of issued shares of New Stock may be impacted by individuals who own
their shares of Common Stock through brokerage firms.
The Common Stock is currently registered under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and as a result, the Company is
subject to the periodic reporting and other requirements of the Exchange Act.
Upon consummation of the Reverse Split, if the total number of shareholders is
reduced to below 300, the Company will file a Form 15 with the Securities and
Exchange Commission ("SEC") to deregister as a reporting company under the
Exchange Act. Deregistration of the Company under the Exchange Act will
significantly reduce the cost of legal and accounting services, in addition to
the administrative burden of compliance with the filing and other requirements
of registration under the Exchange Act. (See "SPECIAL FACTORS/Reasons for the
Reverse Split").
BACKGROUND OF THE PROPOSED REVERSE SPLIT
The Company was organized in Utah in 1966, as Utah Industrial Inc. It was
renamed Utah Resources International, Inc. in 1969. In 1981, the Company became
a "reporting company" requiring it to file various reports with the SEC. The
Company directly owns approximately 394 acres of undeveloped land in St. George,
Utah, approximately 353 acres of which are developable, on which it conducts its
real property development business through its wholly owned subsidiary,
Tonaquint, Inc.
As a "reporting company," the Company and its "insiders" (generally defined
to include the Company's directors, executive officers and 10% or more
shareholders) have reported to the SEC (pursuant to the Exchange Act) since it
became a public company. In general, under Section 12(g) of the Exchange Act, a
corporation and its insiders are required to file certain periodic and annual
reports with the SEC once the corporation acquires over 500 shareholders (and
maintains over $10 million in assets). The Company currently files various
periodic and
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annual reports with the SEC, as mandated by Section 12(g) of the Exchange
Act, although in recent years some reports required to be filed by the
Company have been filed late or not at all. The Company's periodic and annual
filings include, but are not limited to, Form 10-KSB, Form 10-QSB, Form 8-K,
Proxy Statement and Annual Reports to shareholders. In addition, the
Company's insiders are also required to file certain periodic and annual
reports with the SEC. The Company's insider reporting requirements include,
but are not limited to, Schedule 13D, Schedule 13G, Form 3, Form 4 and Form 5
filings. Finally, the Company and its insiders may be subject to potential
civil and criminal liability if actions on behalf of the Company were found
to violate the provisions of the Exchange Act and the numerous regulations
adopted thereunder.
There are certain advantages to being a "reporting company" under the
Exchange Act. The primary advantage is the potential flexibility for current or
future financing of corporate expansion through the building of a more broad
equity base through publicly offered sales of securities. Furthermore,
registration may provide greater prestige because of the "public" nature of the
corporation. In addition, the valuation of shares of a corporation's stock may
be made easier if there is active trading of such shares on an established
securities exchange.
Registration as a reporting company may also engender a more public market
for a corporation's stock, due to active trading, thus providing increased
liquidity for shareholders who desire to sell the corporation's stock. Finally,
a corporation reporting to the SEC under the Exchange Act must provide detailed
information to its stockholders concerning a corporation's principal
stockholders, directors and executive officers, compensation paid a
corporation's executives, audited financial statements and certain relationships
in related transactions between a corporation's insiders and the corporation.
Under certain circumstances, this could better enable a corporation's
stockholders to assess the financial operations and policies of a corporation.
On July 3, 1996, the Company consummated a transaction with IMCC, whereby
Common Stock, representing 50.5% of the outstanding stock of the Company, was
transferred to IMCC at a price of $3.35 per share and payable in accordance with
the terms set forth in the Stock Purchase Agreement by and between IMCC and the
Company (the "Stock Purchase Agreement"). The transfer of such shares to IMCC
was made pursuant to the transactions contemplated by a Letter of Intent dated
April 5, 1996, as amended, by and between IMCC and the Company, (the "Letter of
Intent"), and a settlement agreement by and among the Company, R. Dee Erickson,
E. Jay Sheen, Lyle D. Hurd, Mark Jones, Mark Technologies Corporation, Anne
Morgan, Victoria Morgan, IMCC, John Fife and Robinson & Sheen L.L.C. (the "1996
Settlement Agreement"), a settlement agreement by and among the Company, John H.
Morgan, Jr., Daisy R. Morgan, IMCC, John Fife, Robinson & Sheen, L.L.C., R. Dee
Erickson, Lyle D. Hurd, and E. Jay Sheen (the "Morgan Settlement Agreement")
(collectively, the "Transaction Agreements"). (See "SPECIAL FACTORS/IMCC
Transaction and Settlement Agreements"). Among other things, pursuant to IMCC's
Stock Purchase Agreement, IMCC agreed to cause the Company to effect the Reverse
Split. In addition to the requirements of the IMCC Stock Purchase Agreement,
the Company's senior management and its Board of Directors have assessed the
advantages and disadvantages of the Company being a reporting company under the
Exchange Act. Of the approximate 558 Shareholders, it was noted that
approximately 479 Shareholders of record own fewer than 1,000 shares. In
addition, senior management and the Board of Directors of the Company noted that
there was little or no pubic market for the
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Company's Common Stock. Upon consummation of the Reverse Split, the Company
will most likely be permitted to deregister as a reporting company under the
Exchange Act. Deregistration will significantly reduce the cost of the
Company's legal and accounting services by eliminating the requirements that the
Company make periodic and annual filings with the SEC. Deregistration would
also reduce or eliminate the potential exposure of the Company and its insiders
for possible failure to comply with Exchange Act requirements. (See "SPECIAL
FACTORS/Reasons for the Proposed Reverse Split").
In considering an ownership restructuring transaction, the Board of
Directors also considered the possible detrimental effects of such a
transaction. An ownership restructuring transaction might reduce the
potential flexibility for current or future financing of the Company's
expansion through the building of a more broad equity base. In addition, a
public company reporting under the Exchange Act must provide detailed
information to its stockholders concerning its principal stockholders,
directors, and executive officers, compensation paid to its executives,
audited financial statements and certain relationships and related
transactions between the company's insiders and the company. Upon
consummation of the proposed ownership restructuring transaction, the Company
will cease reporting under the Exchange Act; and therefore, less financial
and other information will be available to the shareholders with respect to
the Company, and its officers, directors and principal shareholders. This
might limit a shareholder's ability to assess the financial operations and
policies of the Company. Notwithstanding such potential detrimental effects,
a majority of the Board of Directors concluded that in light of the
contractual requirements of the Transaction Agreements and the belief of a
majority of the Board of Directors that continuing as a "reporting company"
was too costly, and a majority of the Board of Directors determined that an
ownership restructuring, designed to deregister the Company, was the most
appropriate course of action. (See "SPECIAL FACTORS/Recommendation of the
Board of Directors").
On January 22, 1997, a majority the Board of Directors voted that a
restructuring of the stock ownership be accomplished through a reverse stock
split and approved the Reverse Split in the form discussed in this Proxy
Statement and directed that a proposal for the Reverse Split be submitted to
a vote of the shareholders. On January 22, 1997, the Chairman of the Board
(by authority of the Board of Directors) set the Record Date of the Annual
Meeting as _________, and set ________, 1997 as the date of the Annual
Meeting.
IMCC TRANSACTION AND SETTLEMENT AGREEMENTS
Over the past nine years, the Company has been involved in various disputes
and controversies involving its ownership, operation and management. A
shareholders derivative action captioned as ERNEST MUTH, ET AL. V. JOHN H.
MORGAN, JR., ET AL., was filed as Civil Number C-87-1632 in the Third Judicial
District Court of Salt Lake County, Utah (the "First State Action"), alleging
among other things that the officers and directors of the Company committed
various breaches of their fiduciary duties to the Company. A settlement
agreement was entered into in the First State Action on April 6, 1993 (the "1993
Settlement Agreement"), wherein, among other things, parties to the lawsuit
agreed to the manner in which directors of the Company would be selected until
such time as the 1993 Settlement Agreement was
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terminated. On or about July 21, 1995, attorneys for the Company on behalf of
the Company filed an action against John H. Morgan, Jr. and Daisy R. Morgan, to
enforce the 1993 Settlement Agreement in the First State Action which resulted
in certain findings of fact and conclusions of law and an order enforcing the
1993 Settlement Agreement entered by Judge Michael R. Murphy on October 4, 1995
(the "Murphy Order"). The Murphy Order was appealed by John H. Morgan, Jr. and
Daisy R. Morgan and cross-appealed by the Company. An Order to Show Cause was
subsequently filed in the First State Action on behalf of the Company by
attorneys for the Company against John H. Morgan, Jr. and Daisy R. Morgan (the
"Order to Show Cause").
On or about June 13, 1995, pursuant to a Plan of Share Exchange
Agreement, dated as of February 16, 1995, by and among the Company, Midwest
Railroad Construction and Maintenance Corporation of Wyoming, a Wyoming
corporation ("Midwest"), Robert D. Wolff ("RD Wolff") and Judith J. Wolff
("JJ Wolff") (the "Share Exchange Agreement"), the Company acquired all of
the outstanding shares of Midwest from RD Wolff and JJ Wolff in exchange for
590,000 restricted shares of authorized but unissued shares of the Company.
Pursuant to the Share Exchange Agreement, RD Wolff became the President of
the Company. For a more detailed description of the Share Exchange
Agreement, see Form 8-K filed July 20, 1995. A shareholders derivative
action captioned as ANNE MORGAN ET AL. V. R. DEE ERICKSON, ET AL., was filed
as Case Number 2:95CV-0661C in the United States District Court for the
District of Utah, Central Division (the "First Federal Action"), alleging
among other things that the defendants had, among other things, violated
proxy solicitation rules, violated disclosure rules under the Securities and
Exchange Act of 1934, breached their fiduciary duties to the Company's
shareholders, breached professional duties, committed fraud, wasted and
looted the Company's assets, converted Company property, engaged in
self-dealing, mismanaged the corporation and breached the duty of loyalty.
The complaint sought among other things, the rescission of the Share Exchange
Agreement. In April 1996, the Company, Midwest, RD Wolff and JJ Wolff
entered into a Split-Off Agreement whereby, among other things, the Share
Exchange Agreement was rescinded (the "Recision Agreement") and the shares of
Midwest acquired by the Company were returned to RD Wolff and JJ Wolff.
On April 5, 1996, the Company entered into a letter of intent ("Letter of
Intent") with IMCC to sell a controlling interest in the Company to IMCC, at a
purchase price equal to $3.35 per share. On May 17, 1996, a shareholders
derivative suit captioned as MARK TECHNOLOGIES CORP. ET AL. V. UTAH RESOURCES
INTERNATIONAL, INC., ET AL., was filed as Civil No. 96-090-3332CV in the Third
Judicial Court of Salt Lake County, Utah (the "Second State Action"). Mark G.
Jones, a director of the Company, is the controlling shareholder of Mark
Technologies Corporation. The Second State Action included, among other things,
a request for the issuance of a temporary restraining order and injunction
against the transactions contemplated in the Letter of Intent. On June 26,
1996, the Company entered into two settlement agreements. The first settlement
agreement was by and among the Company, John H. Morgan, Jr., Daisy R. Morgan,
IMCC, John Fife, Robinson & Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, and
E. Jay Sheen (the "Morgan Settlement Agreement"), whereby certain disputes among
the parties were resolved and settled and the parties agreed to use their best
efforts to terminate the 1993 Settlement Agreement. The second settlement
agreement was by and among the Company,
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R. Dee Erickson, E. Jay Sheen, Lyle D. Hurd, Mark G. Jones, Mark Technologies
Corporation, Anne Morgan, Victoria Morgan, IMCC, John Fife and Robinson &
Sheen, L.L.C. (the "1996 Settlement Agreement"), whereby the parties agreed,
among other things, to dismiss the First Federal Action, the Order to Show
Cause, the Second State Action and to use their best efforts to terminate the
1993 Settlement Agreement. On July 19, 1996, the notice of hearing on
proposed settlement of the Second State Action, the First State Action and
the First Federal Action and the notice of hearing on petition to terminate
the 1993 Settlement Agreement was mailed to all the Company's shareholders of
record as of June 24, 1996. Among other things, the notice provided that the
1996 Settlement Agreement and the Morgan Settlement Agreement (together the
"Settlement Agreements") were to be considered approved by the court on
August 12, 1996, and that all objections to the Settlement Agreements had to
be presented at that time. On August 9, 1996, shareholders Jenny T. Morgan,
Gerard E. Morgan, John C. Morgan and Karen J. Morgan ("Objectors") filed an
objection to the hearing and requested that the court continue the settlement
approval hearing until after a URI shareholders' vote on the Settlement
Agreements and the IMCC Stock Purchase Agreement. In their objections and
request for continuance of hearing, the Objectors, among other things,
claimed that they had insufficient information with which to evaluate the
Stock Purchase Agreement between IMCC and URI; that they objected to the "no
shop" provision contained in the Letter of Intent; that they had insufficient
information regarding John Fife, the sole shareholder of IMCC, and that they
needed additional time and information to evaluate the fairness of the Stock
Purchase Agreement, and to solicit bids to sell the Company. Further, the
Objectors alleged that URI had refused to provide documentation relating to
the Stock Purchase Agreement to them. After considering the Objectors' and
the parties' initial arguments, the court granted both the parties and the
Objectors an additional seven days, through August 19, 1996, to submit
written memoranda in support of their positions. Both the Objectors and the
parties submitted written memoranda supporting their positions in regard to
the Settlement Agreements and the Stock Purchase Agreement. After
considering the written memoranda and arguments presented by both sides, on
or about August 23, 1996 the court denied the Objector's petition, and
entered an order approving the Settlement Agreements. As required by the
Transaction Agreements, as defined below, the 1996 Settlement Agreement and
the Morgan Settlement Agreement were approved by the Third Judicial District
Court of Salt Lake County, West Valley Department Utah, on or about August
28, 1996. The Order to Show Cause was dismissed with prejudice and the 1993
Settlement Agreement was terminated on August 29, 1996.
On July 3, 1996, following the execution of the Letter of Intent and the
execution of the Morgan Settlement Agreement and the 1996 Settlement Agreement,
the Company and IMCC entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") (the Letter of Intent, the Morgan Settlement Agreement, the
1996 Settlement Agreement and the Stock Purchase Agreement are hereinafter
referred to as the "Transaction Agreements") whereby the Company issued and sold
1,275,912 shares (the "Purchased Shares") of common, $.10 par value per share
stock (the "Common Stock") to IMCC, which is wholly owned by John Fife, so that
IMCC owned a 50.5% interest in the Company. IMCC acquired the Purchased Shares
at a price equal to $3.35 per share for an aggregate purchase price of
$4,274,305.20 (the "Purchase Price"), of which $641,145.78 was paid in cash by
IMCC to the Company at the closing. The remaining $3,633,159.42 was evidenced
by IMCC's promissory note (the "Note"). The Note bears interest at a rate equal
to the short-term applicable federal rate published by the Internal Revenue
Service
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<PAGE>
in effect at the time of closing, and is adjusted on each anniversary of the
Note to the applicable short-term federal rate in effect on such anniversary
date. Interest on the Note is paid currently in arrears on each anniversary of
the Note. At the closing, IMCC paid $197,872.52 to the Company which amount
represented the present value first year of interest due under the Note. The
principal and any unpaid interest accrued under the Note is due and payable
August 1, 2001. The Note is secured by the Purchased Shares as evidenced by a
stock pledge agreement, dated as of July 3, 1996, by and between IMCC and the
Company (the "Stock Pledge Agreement"). Pursuant to a separate written guaranty
agreement, John Fife personally guaranteed payment of 25% of all amounts due
under the Note. For a more detailed description of the Stock Purchase
Agreement, see Form 8-K filed by the Company on July 18, 1996, and to review a
copy of the Stock Purchase Agreement, see Schedule 13D-A filed by IMCC on
September 9, 1996.
As required by the Stock Purchase Agreement, E. Jay Sheen and R. Dee
Erickson submitted their resignations as directors of the Company, effective
July 13, 1996. As further required by the Stock Purchase Agreement, John
Fife was appointed a director of the Company. David Fife, the brother of
John Fife, was also appointed as director of the Company. John Fife and
David Fife were appointed as directors of the Company by the Muth Group
pursuant to the 1993 Settlement Agreement, effective July 13, 1996. As
required by the Stock Purchase Agreement, John Fife was elected President and
Chief Executive Officer of the Company in July, 1996, pursuant to a 3-0 vote
of the Board (Mark G. Jones and Jenny Morgan were not present for the vote).
John Fife also serves as Chairman of the Board of the Company pursuant to a
3-2 vote of the Board.
The Letter of Intent and the Transaction Agreements, including the Stock
Purchase Agreement, contemplated that, subject to applicable state and federal
securities and state corporate law, the Company would cause a 1,000 to 1 share
reverse split of the Company's Common Stock to the shareholders of record at
$3.35 per share (the "Reverse Split"), with fractional shareholders given the
option to either purchase additional fractional shares to round up to one whole
share following the reverse split or sell their fractional shares for cash to
the Company. IMCC was granted a ten year option to purchase 150,000 or more
additional shares of stock at a price equal to $3.35 per share and on the same
terms and conditions as those provided under the Stock Purchase Agreement, so
that after the Reverse Split IMCC may maintain its 50.5% interest in the
Company. Subsequent to the Reverse Split and subject to applicable state and
federal securities and state corporate law, any Company shares redeemed by the
Company pursuant to the Reverse Split (the "Returned Shares") may be acquired by
the remaining shareholders, other than IMCC or its affiliates, in increments of
1,000 shares (the "Returned Share Option") at a purchase price equal to the pre-
Reverse-Split price of $3.35 per share (the "Returned Share Purchase Price").
Only those shares for which the Company has received a fully and properly
executed Letter of Transmittal, accompanied by the required documents, will
qualify as Returned Shares for the purposes of this Returned Share Option. Such
Common Stock shall be purchased in blocks of 1,000 shares of Common Stock such
that each purchase of a 1,000 share block of Common Stock shall be converted
into 1 share of common, $100.00 par value per share stock of the Company (the
"New Stock"). In the event the Returned Share Option is over-subscribed, then
each of the exercising shareholders may purchase the Returned Shares on a pro-
rata basis as more fully described herein. See
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"PROPOSED REVERSE SPLIT/Purchase of Returned Shares." Twenty-five percent (25%)
of the Returned Share Purchase Price will be payable in cash upon exercise, with
the remaining balance of $2.51 per share being evidenced by the Returned Share
Note on the terms and conditions as more fully described herein. (See "PROPOSED
REVERSE SPLIT/Purchase of Returned Shares".)
In December, 1995, Mark Technologies Corporation received 201,210 shares
of the Company's Common Stock from Morgan Gas & Oil Co., as partial payment
of a promissory note. The promissory note was given in consideration of the
sale to Morgan Gas & Oil Co. from Mark Technologies Corporation of a limited
partnership interest in Alta Mesa Wind Partners, a California limited
partnership in the wind-generated power business. The Company is a
shareholder of Morgan Gas & Oil Co. The Company brought a shareholders
derivative action against Morgan Gas & Oil Co. and its directors and against
Mark G. Jones, Mark Technologies Corporation, Alta Mesa Wind Partners, John
H. Morgan, Jr., Daisy R. Morgan, Sylvia Wunderly, John Wunderly, and
Melbourne Romney, III, alleging, among other things, that in connection with
the sale of Alta Mesa Wind Partners limited partnership interest to Morgan
Gas & Oil Co., Mark G. Jones, Mark Technologies Corporation, and Alta Mesa
Wind Partners concealed and misrepresented material information to be
provided to Morgan Gas & Oil Co. directors and that the Morgan Gas & Oil Co.
directors committed a breach of fiduciary duty and a wasting of corporate
assets. A majority of the Board of Directors of the Company voted to have
the suit dismissed without prejudice. Directors Jenny Morgan and Mark G.
Jones objected. The suit has been dismissed without prejudice.
REASONS FOR THE PROPOSED REVERSE SPLIT
The Company was organized in Utah in 1966 as Utah Industrial, Inc. It was
renamed Utah Resources International, Inc. in 1969. In 1981, the Company became
a "reporting company" requiring it to file various reports with the SEC. On
July 3, 1996, the Company consummated a transaction with IMCC, whereby common
stock representing 50.5% of the outstanding stock of the Company was transferred
to IMCC for $3.35 per share. The transfer of such shares to IMCC was the
product of the consummation of, the Letter of Intent, the 1996 Settlement
Agreement and the Morgan Settlement Agreement (together the "Transaction
Agreements") (See "SPECIAL FACTORS/IMCC Transaction and Settlement
Agreements"). Among other things, the Transaction Agreements required the
Company to cause a reverse stock split to occur on the terms as provided therein
and herein. In addition to the contractual requirement that a reverse stock
split occur as required by the Transaction Agreements, the Company's senior
management and its Board of Directors have assessed the advantages and
disadvantages of the Company's status as a "reporting company" under the
Exchange Act. First, it is the belief of the Board of Directors that such
reporting is very costly. Furthermore, a majority of the Board of Directors
does not believe that being a "reporting company" has given the Company any
significant advantage the Company would not have had as a "non-SEC reporting
company." The Company's registration with the SEC has not improved flexibility
for current or future financing of corporate expansion through the building of a
broader equity base, nor has it made the valuation of shares of the Common Stock
significantly easier (since no active market exists for the sale of stock which
is reflective of the of the Company's operations and earnings potential).
Finally, such registration has not resulted in the development of an active
public market for the common stock and thus has not provided substantially
increased liquidity
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<PAGE>
for shareholders who desire to sell their Common Stock. Of the approximate 558
shareholders, approximately 479 shareholders of record own fewer than 1,000
shares. These same shareholders have received only a $.10 dividend over the
entire history of the Company.
The Board of Directors has no present intention to raise capital through
sales of equity securities in a future public offering. A majority of the Board
of Directors believes that capital, if needed, can be raised through the sale of
equity securities in a non-public offering. Accordingly, the Company is not
likely to make use of any advantage (for example, being in a better position to
sell securities through a public offering) that the Company's status as a
reporting company may offer. In addition, the Company incurs significant direct
and indirect costs associated with compliance with SEC filing and reporting
requirements imposed on reporting companies. In addition, although it is not
possible to place an annual economic cost on the potential liability of the
Company and its insiders for inadvertent violations of certain provisions of the
Exchange Act, these burdens are substantial, given current civil and criminal
liability for violations of SEC Regulations. A majority of the Board of
Directors believes that, for the reasons set forth above, elimination of these
direct and indirect costs and other burdens are justified and in the best
interests of the Company.
On the basis that: (i) the Company is contractually required to cause a
reverse stock split to occur pursuant to the terms of the Transaction Agreements
and (ii) the belief of a majority of the Board of Directors that the cost of
being a "reporting company" is too high, the Board of Directors is presenting
this transaction for a vote of the shareholders. A company with assets of over
$10 million becomes a "reporting company" when its shareholders number 500 or
more. To thereafter be allowed to become a "non-SEC reporting company" and
cease reporting to the SEC, the number of shareholders must decline to less than
300. The proposed transaction is designed to result in the reduction of the
number of the Company's shareholders to less than 300, so that the Company will
no longer be required to be a reporting company. A majority of the Board of
Directors voted in favor of the Reverse Split, and believes that the $3.35 per
share price to be paid to participating shareholders is fair to both the
recipients of cash and the remaining shareholders who will receive shares of New
Stock or exercise the Round Up Option. The Board has thus determined that the
Reverse Split is the most expeditious method of changing the Company's status
from that of a reporting company to that of a non-SEC reporting company. (See
"SPECIAL FACTORS/Recommendation of the Board of Directors" and "Conduct of
Company's Business After the Proposed Reverse Split").
RECOMMENDATION OF THE BOARD OF DIRECTORS
After careful consideration of the Transaction Agreements and the
background of the Company's reporting status and the advantages and
disadvantages of deregistration and the terms of the Reverse Split, a majority
of the Board of Directors believes that the Reverse Split, is fair to, and in
the best interests of, the shareholders of Company who will receive the Cash
Consideration as well as those who will receive shares of New Stock or exercise
the Round Up Option. A majority of the Board of Directors recommends that the
shareholders vote FOR approval and adoption of the Reverse Split as embodied in
the Amendment. A majority of the Board of Directors and each executive officer
of the Company who owns shares of Common
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<PAGE>
Stock has advised the Company that he or she intends to vote his or her
shares in favor of the Reverse Split. The only director who voted against
the Reverse Split is Jenny Morgan. Mark Jones abstained from voting. Ms.
Morgan believes that although the Company has no current intention to raise
capital through sales of equity securities in a future public offering, it
would serve the Company to be able to retain this option. Ms. Morgan
believes that by meeting its reporting requirements it will be better
positioned to make profitable sales to other bidders. Further, she believes
that the SEC imposed reporting requirements are necessary for the protection
of the Company's shareholders. Even though he abstained from the vote, Mark
G. Jones is of the belief that the Company should remain an SEC-reporting
company for many of the reasons stated by Ms. Morgan.
In reaching their determination that the Reverse Split is fair to, and in
the best interests of, the shareholders and in reaching the recommendation that
the shareholders vote for approval and adoption of the Reverse Split, the Board
of Directors considered the following:
(i) the contractual obligations of the Company set forth in the
Transaction Agreements which require that the Company execute a
1,000 to 1 reverse stock split at a purchase price of $3.35 per
share;
(ii) the purchase price of $3.35 per share paid by IMCC with respect to
its acquisition of a 50.5% interest in the Company on July 3, 1996;
(iii) the purchase price of $3.35 per share paid by the Company in the
redemption of Anne Morgan and Victoria Morgan's shares, pursuant to
the 1996 Settlement Agreement on July 3, 1996;
(iv) each of the directors' knowledge of and familiarity with the
Company's business prospects, financial condition and current
business strategy;
(v) the information with respect to the financial condition, results of
operations, assets, liabilities, business and prospects of the
Company and current real estate industry economic and market
conditions;
(vi) the opportunity presented by the Reverse Split for Small-Lot
Shareholders to liquidate their holdings at a price substantially
above market trades and without incurring brokerage costs,
particularly given the absence of an active market for the Common
Stock reflective of the Company's operations and earnings
potential;
(vii) the opportunity for Small-Lot Shareholders who wished to continue
to be shareholders of the Company to elect to exercise the Round Up
Option at a purchase price of $3.35 per share, which offer was also
made available to fractional shareholders; and
(viii) the future cost savings that will inure to the benefit of the
Company and its continuing shareholders as a result of the Company
deregistering its stock under the Exchange Act.
Furthermore, the Board of Directors considered the Company's business, its
current business strategy and prospects and current real estate industry
economic and market conditions.
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<PAGE>
The Board believes that the financial terms of the Reverse Split is fair both to
shareholders who will receive shares of New Stock and to shareholders who will
receive the Cash Consideration because: (i) the price to be paid to certain
shareholders who will receive the Cash Consideration is fair, and (ii) the
Company will realize cost-savings in its cessation as a reporting company under
the Exchange Act. (See "SPECIAL FACTORS/Reasons for the Proposed Reverse
Split.")
A majority of the Board determined that the terms of the Reverse Split
are procedurally fair to shareholders because the transaction has been
structured as a result of arms-length negotiations as embodied in the
Transaction Agreements (which were approved, in part, by court order) and the
requirement that the holders of at least a majority of the shares entitled to
vote on the Reverse Split must approve the transaction. IMCC has indicated
to the Board that it intends to approve the transaction. The transaction is
also structured so that each of the Small-Lot Shareholders may elect to
remain a shareholder by purchasing from the Company the additional shares of
Common Stock necessary to increase the shareholder's holdings to the
equivalent of 1,000 shares of Common Stock such that any Small-Lot
Shareholder would not be "cashed out" as a result of the Reverse Split.
Furthermore, by Board resolution, the Company has granted Small-Lot
Shareholders and fractional shareholders the right to exercise dissenters
rights as set forth in Part 13 of the Utah Business Act for said fractional
shares.
In view of the circumstances and the wide variety of factors considered
in connection with its evaluation of the fairness of the Reverse Split, the
Board did not find it practicable to assign relative weights to the factors
considered in reaching its determination that the Reverse Split was fair to,
and in the best interests of, the shareholders. The Company's Board of
Directors considered and voted upon the Reverse Split as a group. No special
committees were formed. The Reverse Split has been approved by a majority
vote of the Company's Board of Directors. Jenny Morgan did not vote in favor
of the Reverse Split. Mark G. Jones abstained from voting on the Reverse
Split.
INTERESTS OF CERTAIN PERSONS AND POTENTIAL CONFLICTS OF INTEREST
In considering the recommendation of the Board of Directors with respect to
the Reverse Split, shareholders should be aware that the Company's directors and
executive officers have interests which may present them with conflicts of
interest in connection with the Reverse Split. Specifically, a majority of the
directors and executive officers of the Company own Common Stock and, after the
Reverse Split, all will exchange such shares for shares of New Stock if the
Reverse Split is approved by the shareholders. In addition, the equity
percentage ownership of all shareholders remaining after the Reverse Split will
most likely be increased. Thus, directors and executive officers, in addition
to all other shareholders who remain shareholders after the Reverse Split, may
realize an increase in their relative equity ownership of the Company. (See
"VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF"). Furthermore, these
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remaining shareholders, except for IMCC, shall have the opportunity to increase
their shareholdings by participating in the Returned Shares Option. (See
"PROPOSED REVERSE SPLIT/Summary of Proposed Reverse Split and Purchase of
Returned Shares"). Finally IMCC possesses a ten year option which enables it to
maintain its 50.5% ownership interest in the Company following the Reverse
Split. (See "SPECIAL FACTORS/IMCC Transaction and Settlement Agreements").
Other than the stock ownership the directors and executives officers have in the
Company, there are no special relationships or transactions between the Company
and any of its officers or directors with respect to the Reverse Split.
CONDUCT OF THE COMPANY'S BUSINESS AFTER THE PROPOSED REVERSE SPLIT
After the Reverse Split, the Company expects to conduct its business and
operations in the same manner as is currently being conducted by the Company.
If the Reverse Split is consummated, Small-Lot Shareholders who do not exercise
the Round Up Option will no longer have any interest in, and will not be
shareholders of the Company.
As a result of the Reverse Split, the Company is expected to become a non-
SEC reporting company. In that case, the registration of New Stock under the
Exchange Act will then be terminated. In addition, because the New Stock would
not be registered, the Company would be relieved of the obligation to comply
with the proxy rules of Regulation 14A under Section 14 of the Exchange Act, and
its executive officers, directors and shareholders owning more than 10% of New
Stock would be relieved of the reporting requirements and "short swing" trading
restrictions under Section 16 of the Exchange Act. Furthermore, the Company
would no longer be subject to the periodic reporting requirements of the
Exchange Act and would cease filing information with the SEC. Among other
things, the effect of this change would be a direct and indirect cost savings to
the Company in not having to comply with the requirements of the Exchange Act.
However, this change would also mean that less information would be publicly
available concerning the Company and its executive officers, directors and five
percent (5%) or more shareholders.
If the Reverse Split is effected (and no Small-Lot Shareholders and no
fractional shareholder Round Up) and no remaining shareholders purchase Returned
Shares, the executive officers and directors of the Company will beneficially
own approximately 66% of the Company's outstanding New Stock. As of
____________, __, 1997, such individuals beneficially owned approximately 64%.
(See "VOTING REQUIREMENTS AND PRINCIPAL HOLDERS THEREOF/Security Ownership of
Management.")
PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED
The Company has employed Bekky Levanger for the sole purpose of aiding the
Company in administering the Proxy and Rule 13e-3 transaction. These activities
shall include, among other things, distributing the Proxy and 13e-3 transaction
materials, overseeing the Reverse Split and distributing payments and New Stock
certificates to shareholders following the Reverse Split. Ms. Levanger will be
compensated in the amount of $30 per hour, for such period of time as is
necessary to fulfill her obligations.
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<PAGE>
FINANCING THE PROPOSED REVERSE SPLIT
The Company has incurred or estimates the incurrence of the following
expenses in connection with the Reverse Split:
Filing fees $ 500
Appraisal fees 0
Accounting fees 15,000
Legal fees 100,000
Solicitation and
printing fees [400]
Miscellaneous and
administrative expenses 20,000
Total estimated fees
and expenses $_______
The Company has paid/or will be responsible for paying all of these
expenses.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of October 8, 1996, the following shareholders were the only beneficial
owners, known to management of the Company, of more than five percent (5%) of
the Company's outstanding Common Stock:
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
UTAH RESOURCES INTERNATIONAL, INC.
5% OR GREATER BENEFICIAL OWNERS
AS OF OCTOBER 8, 1996
- --------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES AND
NAME AND ADDRESS OF NATURE OF PERCENT OF COMPANY
BENEFICIAL OWNER BENEFICIAL OWNER SHARES OUTSTANDING
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Inter-Mountain Capital Corporation(1) 1,275,912 50.5%
Mark Technologies Corporation(2) 326,310 13%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) John Fife, Director, President, CEO and Chairman of the Board of the
Company, is the sole shareholder of Inter-Mountain Capital Corporation.
(2) Mark G. Jones, Director of the Company, holds 100 shares individually and
an additional 326,210 in his capacity as the controlling shareholder of
Mark Technologies Corporation.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of October 8, 1996, the shares of Common
Stock beneficially owned by (i) each director of the Company, (ii) the Company's
Chief Executive Officers and the Company's other executive officer and executive
officers as a group. This information is based on public filings made with the
Securities and Exchange Commission through October 8, 1996 and certain
information supplied to the Company by the persons listed below. The persons
named below have sole voting and investment power with respect to all shares
owned, unless otherwise noted.
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<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
UTAH RESOURCES INTERNATIONAL, INC.
COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
AS OF OCTOBER 8, 1996
- ----------------------------------------------------------------------------------------------------------------------------------
BEFORE STOCK SPLIT AFTER STOCK SPLIT*
- ----------------------------------------------------------------------------------------------------------------------------------
PERCENT OF PERCENT OF
NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER POSITION SHARES SHARES SHARES SHARES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David Fife Director 0 0% 0 0%
John Fife, as the sole Director, Chief 1,275,912 (1) 50.5% 1276** 52%
shareholder of IMCC Executive Officer,
President and
Chairman of the
Board
Lyle Hurd Director 2,000 (2) .08% 2(3) .08%
Mark Jones Director 326,210 13% 327**(3) 13%
Jenny Morgan Director 9,523 .38% 10**(3) .41%
Gerry Brown Vice President 2,000 (2) .08% 2(3) .08%
Ladd Worth Eldredge CFO, Secretary 0 0% 0 0%
(and Treasurer)
DIRECTORS AND OFFICERS Directors & 1,613,645 64% 1,617 66%
AS A GROUP Officers
(7 persons)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE FOLLOWING PAGE FOR NOTES
* Assumes No Small-Lot Shareholder exercises the Round Up Option, and no
remaining shareholder elects to purchase the Returned Shares.
** Assumes that Round Up Option is exercised by fractional shareholder.
(1) IMCC also holds a ten year option to purchase 150,000 or more additional
shares of stock, so as to maintain its 50.5% interest in the Company
(2) Lyle Hurd and Gerry Brown each contend that he was granted an option for
25,000 shares pursuant to the Share Exchange Agreement. There is a dispute
as to whether the option was granted. This issue will be resolved following an
investigation in the coming year.
(3) In the event the proposed reverse split is effected, each of these
individuals will be granted an option to purchase additional shares of the
Company's stock pursuant to the terms of the Returned Shares Option. For a more
detailed description of the Returned Shares Option, See "PROPOSED REVERSE
SPLIT/Summary of Proposed Reverse Split and Purchase of Returned Shares."
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<PAGE>
FINANCIAL MATTERS
ACCOUNTING TREATMENT
In connection with the Reverse Split, the payment of cash to Small-Lot
Shareholders (and holders of fractional shares of New Stock receiving cash in
lieu of fractional shares) will be treated as a repurchase of outstanding stock
of the Company. The repurchased stock will be recorded as treasury stock which
will result in a reduction of stockholders' equity. In addition, the Amendment
will result in the par value per share of the Company's common stock increasing
from $.10 to $100.00 and a reduction of the number of authorized shares of such
stock from 5,000,000 to 5,000.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code"), the applicable
treasury regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. The federal income tax consequences to any particular Shareholder
may be affected by matters not discussed below. There also may be state, local
or foreign tax considerations applicable to each Shareholder.
THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL INFORMATION ONLY.
EACH SHAREHOLDER IS URGED TO CONSULT HIS OWN TAX ADVISOR AS TO THE MATTERS
DISCUSSED HEREIN AND ANY ADDITIONAL FEDERAL AND ALL STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES THAT COULD RESULT FROM THE SUBJECT TRANSACTION.
(i) The Reverse Split will constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Code and the Company will not
recognize gain or loss as a result of the Reverse Split.
(ii) A shareholder who receives cash in lieu of fractional shares of
Common Stock will be treated as if the Company had issued fractional
shares to him and then immediately redeemed such shares for cash.
Such shareholder should recognize gain or loss, as the case may be,
measured by the difference between the amount of cash received and
the adjusted basis of his stock allocable to such redeemed shares.
Such gain or loss will generally be capital gain or loss if such
shareholder's stock was held as a capital asset, and any such
capital gain or loss will generally be long-term capital gain or
loss to the extent such shareholder's holding period for his stock
exceeds twelve months.
(iii) A shareholder who owns more than 1,000 shares in the aggregate
immediately before the Reverse Split will not recognize a gain or
loss in respect of the exchange of shares of Common Stock for shares
of New Stock. In the aggregate, the shareholder's basis in the
shares of New Stock will equal the holder's adjusted
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<PAGE>
basis in the shares of Common Stock, less the portion of the
adjusted basis attributable to any fractional shares for which the
shareholder received cash from the Company.
(iv) Any shareholder who purchases fractional shares of Common Stock
pursuant to the Round Up Option will not recognize a gain or loss on
the acquisition of such shares. The amount paid for such shares
will be the holder's initial cost basis in the fractional shares
purchased.
Notwithstanding the foregoing, the federal tax laws significantly limit the
deductibility of capital losses. For corporate taxpayers, capital losses can be
deducted only to the extent of capital gains. For individual taxpayers, capital
losses are similarly deductible up to the extent of the capital gains, but may
further be deductible up to a maximum of $3,000 in any one taxable year.
Carryovers and carrybacks of unused capital losses to other taxable years may be
permitted in certain limited circumstances. Additionally, the ultimate tax
consequences to a Shareholder may be effected by the provisions regarding taxes
resulting from alternative minimum taxable income.
FINANCIAL STATEMENTS
See Pages F-1 to F-17 for the Company's audited consolidated balance
sheets as of December 31, 1995, and related consolidated statements of
operations, stockholders' equity, and cash flows for each of the years in the
two year period ended December 31, 1995.
See Pages Q-1 to Q-7 for the Company's unaudited consolidated balance
sheets as of September 30, 1996 and comparative year-to-date statements of
operations, stockholders' equity, and cash flows for the nine months ended
September 30, 1996.
See Page S-1 for the Company's book value per share as of December 31,
1995 and September 30, 1996.
ELECTION OF DIRECTORS
ELECTION OF BOARD OF DIRECTORS
A Board of five (5) directors are to be elected at the Annual Meeting to
serve until the next annual meeting, or until their successors are elected and
shall have qualified. All of such directors shall be elected by the holders of
Common Stock. The Company recommends voting for the election of each of the
nominees for director listed below. The persons named as proxy holders in the
accompanying Proxy intend to vote each properly signed and submitted Proxy for
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<PAGE>
the election as a director of each of the persons named as a nominee below under
"Nominees for Director" unless authority to vote in the election of directors is
withheld on such proxy. If, for any reason, at the time of the election, one or
more or such nominees should be unable to serve, the proxy will be voted for a
substitute nominee or nominees selected by the Board of Directors. Directors
are elected by a plurality of votes cast at the Annual Meeting.
Unless otherwise specified, all properly executed proxies received by the
Company will be voted for the election of Messrs. John Fife, David Fife, Lyle
Hurd, Mark Jones, and Stuart B. Peterson to hold office until the next annual
meeting of shareholders or until each of their respective successors is elected
and qualified.
THE COMPANY RECOMMENDS VOTING "FOR" THE NOMINEES.
CURRENT DIRECTORS AND NOMINEES FOR DIRECTOR
The following tables set forth the name, age and occupation of each
director currently holding office and the proposed nominees for director to hold
office until the next annual meeting of Shareholders, his/her principal position
with the Company and the year he/she became a director of the Company.
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<PAGE>
CURRENT DIRECTORS
NAME, AGE AND PRINCIPAL OCCUPATION DIRECTOR SINCE
John Fife, 36. . . . . . . . . . . . . . . . . . . . . . . . . . . . July, 1996
Mr. Fife was appointed as director of the Company effective July 13,
1996 by the Muth Group pursuant to the 1993 Settlement Agreement.
Mr. Fife was appointed President and Chief Executive Officer of the
Company in July, 1996. He was named Chairman of the Board of the
Company on October 10, 1996. He is an investor and venture
capitalist and has pursued this course since July 10, 1990. Mr. Fife
is the President and sole shareholder of J.F. Venture, Inc. and IMCC,
both of which are investment companies. IMCC acquired a 50.5%
(majority interest) in the Company on July 3, 1996. For a more
detailed description of IMCC's acquisition of a majority interest in
the Company, see "SPECIAL FACTORS/Background of the Proposed Reverse
Split." He also serves as President of Property Tax Assessor Records
Corp., a Chicago-based real estate tax consulting company. Mr. Fife
also serves as director of Hyatt Research Corporation, a magazine
publisher in Middlebury, Vermont and as a director of Trans-Wasatch
Company, L.L.C., which is a land development company in Park City,
Utah. Prior to 1993, Mr. Fife held the position of Assistant Vice
President of Continental Equity Capital Corp. ("CECC"), a subsidiary
of Continental Bank. At CECC, he negotiated, structured and financed
LBO's and later stage venture capital investments in the Mortgage
Banking, Retail, Cable and Cellular Telephone industries. Prior to
CECC, Mr. Fife worked as a financial analyst in the commercial real
estate department of Trammell Crow Company. Mr. Fife earned his
M.B.A. degree from Harvard University in 1990 and his B.S. in
statistics and computer science from Brigham Young University in
1986. John Fife and David Fife are brothers.
David Fife, 34 . . . . . . . . . . . . . . . . . . . . . . . . . July, 1996
David Fife was appointed a director of the Company on July 3, 1996
by the Muth group pursuant to the terms of the 1993 Settlement
Agreement. Mr. Fife is currently the President and sole beneficial
owner of Home Equity Lending L.L.C. a mortgage origination and
finance company located in Salt Lake City, Utah. Prior to 1993, Mr.
Fife was the President of Property Tax Assessor Records Corp., a
Chicago based real estate tax consulting company. David Fife and
John Fife are brothers.
Lyle Hurd, 60. . . . . . . . . . . . . . . . . . . . . . . . . . . . May, 1993
Mr. Hurd is a director of the Company and has performed services as
Marketing/Consultant Assistant to the President. He is President of
Hurd Owens Hafen, Inc., a publisher of magazines and periodicals
located in St. George, Utah, since December of 1990. Hurd Owens
Hafen Inc. is the publisher of the St. George Magazine and various
other magazines and periodicals. For approximately 16 years prior to
December, 1990, Mr. Hurd provided marketing consulting services to
magazine publishers through Hurd & Associates, Inc., a privately
owned consulting firm. Mr. Hurd was appointed as an independent
director of the Company in May, 1993, pursuant to the terms of the
1993 Settlement Agreement.
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<PAGE>
Mark Jones, 43 . . . . . . . . . . . . . . . . . . . . . . . . . .January, 1996
Mr. Jones is a director of the Company and was designated as such in
January, 1996 by the Morgan Group pursuant to the 1993 Settlement
Agreement. Mr. Jones is President of Mark Technologies Corporation
in San Francisco, California, a real estate and alternative energy
development firm and has held that position for 16 years.
Jenny Tate Morgan, 41. . . . . . . . . . . . . . . . . . . . . . .January, 1996
Ms. Morgan was appointed as a director of the Company, effective
January, 1996, by John H. Morgan, Jr., her relative, pursuant to the
terms of the 1993 Settlement Agreement. From 1992 to the present,
Ms. Morgan, through JT Morgan Financial Consulting Services, has
provided financial consulting services to clients in the areas of
investments, liquidity management, financial strategy, tactical asset
allocation, plan design, re-engineering an entire retirement plan
structure, analysis of securities portfolio, strategic analysis and
workouts. From 1993 to 1996, she served as Vice
President/Institutional Trust Services for First Interstate Bank of
California. Before that, Ms. Morgan worked for one year as a
Financial Services/Account Executive for Citibank, F.S.B. From July,
1982 to April, 1992, Ms. Morgan was the Director of Sales and
Marketing for Purcell International, Inc. Ms. Morgan earned her
M.B.A. from the University of Southern California, Los Angeles in
1995, where her course-work included providing consulting services to
Munchkin Bottling Company, Inc. and Reebok, International.
Ms. Morgan earned her B.S. from the University of Arizona, in 1978.
Ms. Morgan is a licensed California Life and Disability Agent and has
published articles addressing 401(K) Plans in the Los Angeles
Business Journal. Ms. Morgan is not being submitted as a nominee for
director.
NOMINEES FOR DIRECTOR
John Fife
David Fife
Lyle Hurd
Mark G. Jones
Stuart B. Peterson
Stuart B. Peterson, 35 . . . . . . . . . . . . . . . . . . . . . Not Applicable
Mr. Peterson currently serves as a director for C.R. England, Inc., a
Two Hundred Million Dollar, privately owned trucking company based in
Salt Lake City, where he sets the prices for customer contracts and
is responsible for the profitable execution of sales and operating
activities. Mr. Peterson's background includes real estate
investment banking experience with Trammell Crow Company, where he
participated in the securitization and sales of extensive commercial
real estate properties held by Trammell Crow partnerships throughout
the United States. After completing the sale of a One Hundred Sixty
Million Dollar commercial real estate portfolio, Mr. Peterson
supervised the properties, and issued the quarterly financial reports
to investors. Mr. Peterson has also performed the valuation and
marketing of a Four Million Dollar manufacturing company based in
California, cumulating in a leveraged acquisition in 1994.
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<PAGE>
Mr. Peterson received his M.B.A. degree from Harvard University in 1990
and his A.B. in government from Harvard in 1986.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company does not have a standing audit, nominating or compensation
committee. During the Company's last fiscal year, the Board of Directors held
____ meetings. All directors attended at least 75% of the meetings of the Board
of Directors and the committees on which they served in fiscal 1996.
EXECUTIVE OFFICERS
NAME POSITION AGE
- ------------------ --------- ---
John Fife Chairman of the Board, 36
President and Director
Robert D. Wolff Former CEO 56
E. Jay Sheen Former Recorder of 42
Minutes and Former
Director
R. Dee Erickson Former Chairman of the 53
Board and Former Director
Lyle Hurd Former Director of 60
Marketing and Former
Director
Ladd Worth Eldredge CFO, Secretary Treasurer 44
Gerry T. Brown Former President and 56
current Vice President
EXECUTIVE COMPENSATION
The following table summarizes the compensation for John Fife as the CEO of
the Company in 1996 and Robert D. Wolff as the CEO of the Company in 1995, E.
Jay Sheen, R. Dee Erickson, Lyle Hurd, Ladd Worth Eldredge and Gerry T. Brown.
-31-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION AWARDS
------------------- ------
SHARES
NAME AND PRINCIPAL FISCAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
-------- ---- ------ ----- ------- ------------
<S> <S> <C> <C> <C> <C>
John Fife, CEO, President, 1996 $200,000(1) - - -
Chairman of the Board and 1995 - - - -
Director 1994 - - - -
Robert D. Wolff, Former June 1995- $125,000(2a) $25,000/ - -
CEO(2) April 1996 quarter (2b)
1994 - - - -
-
E. Jay Sheen, Former 1996 - - 8,000 -
Recorder of Minutes and 1995 $6,000 - 8,000 $298,066 (3)(3a)
Former Director 1994 $6,000 - 9,000 $101,704(4)
R. Dee Erickson, Former 1996 - - 8,000 -
Chairman of the Board and 1995 $6,000 - 8,000 $106,600 (5)(5a)
Former Director 1994 - - 9,000 $12,400(6)
Lyle Hurd, Former Director 1996 - - 8,000 -
of Marketing and Director 1995 $30,000 - 8,000 $24,615(7)
1994 - - 9,000 $18,340(8)
Ladd Worth Eldredge, CFO, 1996 - - - -
Secretary and Treasurer 1995 $34,583 - - -
1994 $12,550 $500 - -
Gerry T. Brown, Former 1996 - - 8,000 -
President and Vice 1995 $70,000 - 8,000 $8,237(9)
President 1994 $70,000 $1,000 9,000 $14,412(10)
</TABLE>
(1) Pursuant to the terms of the Stock Purchase Agreement, the Company
and Mr. Fife agreed to enter into an employment agreement to provide for,
among other things, (i) the employment of Mr. Fife as President, Chief
Executive Officer, and Chairman of the Board of the Company, and (ii) an
annual salary to be paid to Mr. Fife of no more than $200,000 for any year
during the employment period. A proposed employment agreement was prepared by
Mark Jones and submitted to John Fife and the remaining members of the
Board of Directors. At this time no employment agreement has been entered into
with Mr. Fife. The Company's Board in a 3-2 vote, decided that the
negotiation of the terms of the John Fife employment agreement would take
place following the shareholders' vote on the proposed reverse stock split.
To date, John Fife has received no compensation from the Company for his
services as President.
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<PAGE>
(2) Mr. Wolff served as the CEO of the Company during the term that the
Share Exchange Agreement was in place, July 1, 1995 through April 25, 1996.
(2a) Mr. Wolff actually received approximately $57,292 as his pro-rated
portion for 1995.
(2b) Mr. Wolff actually received approximately $45,833 as his pro-rated
portion for 1996.
(3) Mr. Sheen, in addition to providing services as a recorder of the
minutes, served as a director of the Company, for which he received fees in the
amount of $2,600; and his law firms served as legal counsel for the Company, for
which his respective law firms were paid approximately $191,466. Mr. Sheen also
received 38,000 shares of the Company's stock and $104,000 for services
performed with respect to the Share Exchange Agreement.
(3a) The market value of the 38,000 shares of the Company's stock received
by Mr. Sheen in 1995 is not included in this column.
(4) Mr. Sheen received fees as director of the Company in the amount of
$2,400. Mr. Sheen's law firm also served as legal counsel for the Company for
which his law firm was paid approximately $99,304.
(5) Mr. Erickson received $2,600 in directors fees and 38,000 shares of
the Company's stock and $104,000 for services performed with respect to the
Share Exchange Agreement.
(5a) The market value of the 38,000 shares of the Company's stock received
by Mr. Sheen in 1995 is not included in this column.
(6) Mr. Erickson received $2,400 in directors fees and $10,000 for
consulting services rendered.
(7) In 1995, Mr. Hurd received $2,600 in directors fees, $13,750 in
consulting fees and an additional $8,265 was paid by the Company to ST. GEORGE
MAGAZINE for advertising. Mr. Hurd is an owner of Hurd Owens Hafen Inc., which
publishes ST. GEORGE MAGAZINE.
(8) In 1996, Mr. Hurd received $2,600 in directors fees, $12,500 in
consulting fees and $3,440 was paid to ST. GEORGE MAGAZINE for advertising.
Mr. Hurd is an owner of Hurd Owens Hafen, Inc., which publishes ST. GEORGE
MAGAZINE.
(9) Mr. Brown received $8,237 in commissions from sales of real estate.
(10) Mr. Brown received $14,412 in commissions from sales of real estate.
The following table shows the total number of options granted to each of
the named persons during 1995 (both as the number of shares of Common Stock
subject to such options and as a percentage of all options granted to employees
during 1995) and, for each of these grants, the exercise price per share of
Common Stock and option expiration date.
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<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE
---- ----------- ----------- ------ ----
<S> <S> <C> <C> <C>
IMCC(1) 150,000 or (3) $3.35 2006
more (50.5%
interest)(2)
Robert D. Wolff - - - -
R. Dee Erickson 8,000(4) 16.7% $2.50 4/17/2004
Lyle Hurd 8,000(4) 16.7% $2.50 4/17/2004
Ladd Worth Eldredge - - - -
Gerry Brown 8,000(4) 16.7% $2.50 4/17/2004
E. Jay Sheen 8,000(4) 16.7% $2.50 4/17/2004
</TABLE>
___________________________
(1) John Fife, CEO of the Company is the sole shareholder of IMCC.
(2) For a more detailed description of the IMCC Option, see "ITEM 1 DESCRIPTION
OF BUSINESS/Stock Purchase Agreement - July 3, 1993."
(3) This option was not granted as a part of John Fife's employment.
(4) The option granted was made pursuant to the Company's 1994 Stock Option
Plan, described below. The plan was approved by the shareholders in
January 1995. None of these options were exercised during 1995 or 1996.
All of these presently exercisable options are above the market price of
the underlying Common Stock.
No SARs were outstanding in 1995 and 1996.
The Company has no long-term incentive compensation plans other than the
1994 Stock Option Plan described herein. Gerry Brown, as the former President
of the Company, is a participant in the Company's 1994 Stock Option Plan. Under
the Plan, each of the six individuals were granted options for 25,000 shares of
the Company's Common Stock, pursuant to the terms of a Non-Qualified Stock
Option Agreement between each person and the Company, dated April 7, 1994. The
option exercise price is $2.50 per share, the market price of the stock on the
date of grant. Each of the granted options vested as follows: (a) 9,000 shares
on the date
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<PAGE>
of the Option Agreement; and (b) 8,000 shares on each of the next two
anniversary dates of the Agreement (April 7, 1995, and April 7, 1996).
Gerry Brown has an employment contract with the Company. The Company
entered into a three-year employment agreement with Mr. Brown on June 28, 1995.
-35-
<PAGE>
COMPENSATION OF DIRECTORS
Each director receives $200 per director's meeting. Also, directors who
travel out of town to attend the meetings are, upon Board approval, reimbursed
for their travel, lodging and meals. During 1993 through August 29, 1996, the
directors served pursuant to the 1993 Settlement Agreement. The 1993 Settlement
Agreement was terminated on August 29, 1996.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Pursuant to the Stock Purchase Agreement, the Company and John Fife have
agreed to enter into an employment agreement which would provide for, among
other things, (i) the employment of Mr. Fife as President, CEO, and Chairman of
the Board of the Company, and (ii) an annual salary to be paid to Mr. Fife of no
more than $200,000 for any year during the employment period. A proposed
employent agreement was prepared by Mark Jones and submitted to John Fife
and the remaining members of the Board of Directors. At this time no
employment agreement has been entered into with Mr. Fife. The Company's Board,
in a 3-2 vote, decided that the negotiation of the terms of the John Fife
employment agreement would take place following the shareholders' vote on the
proposed reverse stock split. To date, John Fife has received no compensation
from the Company for his services as President. URI and its subsidiary
currently employ Gerry Brown on a full-time basis, to act as the Vice President
of the Company, where he provides real estate planning, development and sales
services for the Company, Tonaquint, Inc., the Company's wholly-owned subsidiary
and various affiliated partnerships. Mr. Brown is currently the President of
Tonaquint, Inc., where he assists in land use planning, negotiating sales and
financing arrangements, obtaining government approvals, arranging for
construction contracts, and supervising the performance of engineering services
as have been required. The Company entered into a three-year employment
agreement with Mr. Brown on June 28, 1995. Ladd Worth Eldredge is employed by
the Company as its Secretary, Treasurer, CFO and office manager. No employees
are party to a collective bargaining agreement with URI.
STOCK PLANS
The Company has no long-term incentive compensation plans other than the
1994 stock Option Plan. Gerry Brown and each of the five directors are
participating in the Company's 1994 Stock Option Plan. Under the Plan, each of
the six individuals were granted options for 25,000 shares of the Company's
Common Stock, pursuant to the terms of a Non-Qualified Stock Option Agreement
between each person and the Company, dated April 7, 1994. The option exercise
price is $2.50 per share, the market price of the stock on the date of grant.
Each of the granted options vested as follows: (a) 9,000 shares on the date of
the Option Agreement; and (b) 8,000 shares on each of the next two anniversary
dates of the Agreement (April 7, 1995 and April 7, 1996).
-36-
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information as of October 8, 1996 regarding
the beneficial ownership of shares of the Common Stock of the Company by each
nominee and by all directors and officers as a group.
UTAH RESOURCES INTERNATIONAL, INC.
COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
AS OF OCTOBER 8, 1996
<TABLE>
<CAPTION>
BEFORE STOCK SPLIT AFTER STOCK SPLIT*
PERCENT OF PERCENT OF
NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER POSITION SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C>
David Fife Director 0 0% 0 0%
John Fife, as the sole Director, Chief 1,275,912(1) 50.5% 1276** 52%
shareholder of IMCC Executive Officer,
President, and
Chairman of the
Board
Lyle Hurd Director 2,000 (2) .08% 2(3) .08%
Mark Jones Director 326,210 13% 327**(3) 13%
Jenny Morgan Director 9,523 .38% 10**(3) .41%
Stuart B. Peterson Nominee for 0 0% 0 0%
Director
Gerry Brown Vice President 2,000 (2) .08% 2(3) .08%
Ladd Worth Eldredge CFO, Secretary, 0 0% 0 0%
Treasurer
DIRECTORS AND OFFICERS Directors & 1,613,645 64% 1,617 66%
AS A GROUP Officers
(8 persons)
</TABLE>
SEE FOLLOWING PAGE FOR NOTES
-37-
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
COMMON STOCK OWNERSHIP BY DIRECTORS AND NAMED EXECUTIVE OFFICERS
AS OF OCTOBER 8, 1996
<TABLE>
<CAPTION>
BEFORE STOCK SPLIT AFTER STOCK SPLIT*
PERCENT OF PERCENT OF
NUMBER OF OUTSTANDING NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER POSITION SHARES SHARES SHARES SHARES
<S> <C> <C> <C> <C> <C>
</TABLE>
* Assumes No Small-Lot Shareholder exercises the Round Up Option, and no
remaining shareholder elects to purchase the Returned Shares.
** Assumes that Round Up Option is exercised by fractional shareholder.
(1) IMCC also holds a ten year option to purchase 150,000 or more additional
shares of stock, so as to maintain its 50.5% interest in URI.
(2) Lyle Hurd and Gerry Brown each contend that he was granted an option for
25,000 shares pursuant to the Share Exchange Agreement. There is a dispute as
to whether the option was granted. This issue will be resolved following an
investigation in the coming year.
(3) In the event the proposed reverse split is affected, each of these
individuals will be granted an option to purchase additional shares of URI's
stock pursuant to the terms of the Returned Shares Option. For a more detailed
description of this Returned Shares Option, see "PROPOSED REVERSE SPLIT/Summary
of the Proposed Reverse Split and Purchase of Returned Shares."
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of October 8, 1996 regarding
each person other than directors of the Company who were known by the Company to
own beneficially more than 5% of the outstanding shares of Common Stock. Each
person named has sole voting and investment power with respect to the shares
beneficially owned by such person.
- --------------------------------------------------------------------------------
UTAH RESOURCES INTERNATIONAL, INC.
5% OR GREATER BENEFICIAL OWNERS
- --------------------------------------------------------------------------------
NUMBER OF SHARES AND
NAME AND ADDRESS OF NATURE OF PERCENT OF COMPANY
BENEFICIAL OWNER BENEFICIAL OWNER SHARES OUTSTANDING
- --------------------------------------------------------------------------------
Inter-Mountain Capital 1,275,912 50.5%
Corporation (1)
Mark Technologies 326,310 13%
Corporation (2)
- --------------------------------------------------------------------------------
(1) John Fife, Director, President, CEO, and Chairman of the Board of the
Company, is the sole shareholder of Inter-Mountain Capital Corporation.
-38-
<PAGE>
(2) Mark Jones, Director of the Company, holds 100 shares individually and an
additional 326,210 in his capacity as the controlling shareholder of Mark
Technologies Corporation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
John H. Morgan, Jr., his wife, Daisy Morgan, the Estate of John H.
Morgan, Sr. and Morgan Gas & Oil Co., a company controlled by John H.
Morgan, Jr., and other members of Mr. Morgan's family, have owned interests in
several entities (mostly partnerships) in which the Company also owns interests
or with which the Company has engaged in certain transactions. Mr. Morgan is a
co-personal representative of the Estate of John H. Morgan, Sr. The sole
beneficiary of the Estate of John H. Morgan, Sr. is the John H. Morgan Sr.
Sheltered Trust, of which Mr. Morgan is a co-trustee and a beneficiary. The
Morgans and their affiliates' ownership in these partnerships was one of the
subjects of the shareholders derivative lawsuit captioned as ERNEST MUTH, ET AL.
V. JOHN MORGAN, JR. ET AL., which was filed as Civil Number C-87-1632 in the
Third Judicial Court of Salt Lake County, Utah (the "First State Action").
TONAQUINT-INDIAN HILLS LIMITED PARTNERSHIP
Tonaquint-Indian Hills was involved in developing condominiums in
St. George in the 1980's. It has been inactive since before 1990, although it
continues to hold liquid assets of approximately $15,500, which will be
distributed when the partnership is dissolved. Effective May 7, 1993, all of
the partnership interests held by John H. Morgan, Jr., Daisy R. Morgan, Dawn
Delvie, and the Estate of John H. Morgan, Sr. were transferred to Utah Resources
pursuant to the 1993 Settlement Agreement, aggregating 7.66% of the total
partnership interests. After that, Mr. and Mrs. Morgan's daughters and
Mr. Morgan's other sisters continued to own approximately 8.5% of the
partnership interests, the Estate of John H. Morgan, Sr. owned 1.255%, and
Morgan Gas & Oil Co. owned 8.46%.
In the settlement of the shareholder's derivative lawsuit in 1993,
approximately $120,000 of the amounts paid to the plaintiffs for their attorneys
fees came from the liquidation of the remaining assets in Tonaquint-Indian Hills
Limited Partnership. The partnership will be dissolved.
RESOURCES LIMITED PARTNERSHIP (ST. GEORGE HILTON INN)
Effective May 1, 1993, URI owned 83.62% of Resources Limited Partnership,
which owned and operated the St. George Hilton Inn. On that date, all of the
partnership interests held by John H. Morgan, Jr., Daisy R. Morgan, Dawn Delvie,
and the Estate of John H. Morgan, Sr. were transferred to URI pursuant to the
1993 Settlement Agreement aggregating 10.2955% of the total partnership
interests. After that, Mr. and Mrs. Morgan's other sisters continued to own
approximately .2% of the partnership interests, the Estate of John H.
Morgan, Sr. owned .9765%, and Morgan Gas & Oil owned 7.49%
-39-
<PAGE>
Effective May 1, 1993, the St. George Hilton Inn was sold to St. George Inn
L.C., an independent party. From the proceeds of the sale allocable to the sale
of the St. George Hilton Inn, Resources Limited Partnership has paid all of the
monies owned to the Company for the various loans and advances made to Resources
Limited Partnership by the Company. Also, a portion of the purchase price was
paid through the assumption by St. George Inn L.C. of the remaining obligations
of Resources Limited Partnership on the notes described in the proceeding
paragraph, and the Company and the other co-makers and guarantors were released.
Resources Limited Partnership will be dissolved.
SERVICE STATION LIMITED PARTNERSHIP #2
Effective May 1, 1993, URI owned 79% of Service Station Limited
Partnership, which owned and operated the Texaco Service Station next to the
St. George Hilton Inn. On that date, all of the partnership interests held by
John H. Morgan, Jr. and one-half interests held by the Estate of John H.
Morgan, Sr. were transferred to URI pursuant to the settlement of the
shareholders derivative lawsuit, aggregating 12% of the total partnership
interests. After that, the Estate of John H. Morgan, Sr. continues to own 7% of
the partnership interests and Morgan Gas & Oil Co. owns 14%.
Morgan Gas & Oil Co. holds notes in the total principal amount of $110,932
from the Service Station Partnership #2, ostensibly representing loans made by
Morgan Gas & Oil to the partnership. Morgan Gas & Oil claims the loans are
overdue. However, since the transactions were between related parties, all of
whom were controlled by John H. Morgan, Jr. at the time of the transactions, and
since the Company also advanced funds to the Service Station, the Company is
performing an internal audit to verify the legitimacy of the losses and their
proper characterization, before it determines whether to acknowledge and pay the
debt. These notes payable are included in net assets of discontinued
operations.
COUNTRY CLUB PARTNERSHIP
In the mid-1980s, the Country Club Partnership, together with a partnership
owned by two unrelated persons, owned approximately 6.9 acres of real property
contiguous to the Southgate Golf Course, next to the St. George Hilton Inn.
Effective May 1, 1993, all of the partnership interests held by John H.
Morgan, Jr., Daisy R. Morgan, Dawn Delvie, and the Estate of John H. Morgan, Sr.
were transferred to URI pursuant to the 1993 Settlement Agreement, aggregating
9.2% of the total partnership interests. Thereafter, the John H. Morgan, Sr.
Sheltered Trust continued to own 4.2% of the partnership interests, and Morgan
Gas & Oil Co. owned 8.4%. The partnership is in dissolution.
SOUTHGATE PLAZA
URI owns 52.5% of the partnership interests in Southgate Plaza Limited
Partnership, which is one of three general partners in Southgate Plaza General
Partnership. The general partnership is involved in real property development
activities in St. George, comprised mostly of selling its undeveloped properties
for commercial development. Before May 1, 1993, the
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<PAGE>
Company's ownership interest was 33.33%. After that date, interests held by
John H. Morgan, Jr., Daisy R. Morgan, Dawn Delvie, and the John H. Morgan, Sr.
Sheltered Trust were transferred to URI pursuant to the 1993 Settlement
Agreement, aggregating 19.16% of the total partnership interests.
SOUTHGATE PALMS
Prior to May 1, 1993, URI and Tonaquint, Inc. owned 98% of the partnership
interests in Southgate Palms Limited Partnership, which was one of the three
general partners of the Southgate Palms General Partnership, formed to conduct
real property development activities in St. George in the mid-1980s. Effective
May 1, 1993, the 2% partnership interests held by Mr. and Mrs. Morgan were
transferred to URI pursuant to the 1993 Settlement Agreement, resulting in the
dissolution of the partnership.
SOUTHGATE PARTNERSHIP TRANSACTIONS
The Company, John H. Morgan, Jr. and Daisy R. Morgan have signed a number
of notes as general partner, co-makers or guarantors, the proceeds of which were
used by the three Southgate general partnerships discussed above. The balance
of the only remaining bank note of approximately $396,000 was paid in full
during 1993, and was extinguished during 1994. Payments on this note, as well
as other expenses of the Southgate general partnerships are made in equal thirds
between the respective limited partnerships, and Mike Hughes and the Estate of
Ralph O. Brown, the other two general partners in the Southgate general
partnerships. The limited partnerships' shares of such payments are made by the
Company and its subsidiary.
MARK G. JONES TRANSACTIONS
On December 22, 1995, Mark Technologies Corporation, a California
corporation ("MTC") which is a wholly owned subsidiary of METC, Inc., a
California corporation ("METC") whose controlling shareholder and board member
is Mark G. Jones (a director of the Company), acquired 201,210 shares of common
stock of the Company from Morgan Gas & Oil Co., in consideration for the pay
down of a promissory note dated as of January 1, 1995 associated with the sale
of a limited partnership interest in a California limited partnership owned by
MTC. The promissory note issued by Morgan Gas & Oil Co. to MTC was credited by
the amount of $603,630 ($3.00 per share) as consideration of the transfer of the
201.210 shares of URI Common Stock to MTC. One hundred (100) shares of URI
Common Stock were previously acquired by Mark G. Jones, by gift from JH Morgan
and DR Morgan on May 9, 1995.
Subsequent to the period covered by this report, on April 20, 1996, Mark
Technologies Corporation, a California corporation ("MTC") which is a wholly
owned subsidiary of METC, Inc., a California corporation ("METC") whose
controlling shareholder and board member is Mark G. Jones, acquired 125,000
shares of URI stock from the Morgan Charitable Trust. A promissory note was
issued to the Morgan Family Charitable Trust by MTC in the principal amount of
$375,000 ($3.00 per share) as the entire consideration received for the transfer
of the
-41-
<PAGE>
125,000 shares of URI stock. The promissory note is secured by certain project
revenues otherwise payable to a wholly-owned subsidiary of METC.
JOHN FIFE TRANSACTION
Subsequent to the period covered by this report, John Fife, as the sole
shareholder of IMCC, acquired a 50.5% interest in the Company on July 3, 1996.
For a more detailed description of this acquisition see "ITEM 1 DESCRIPTION OF
BUSINESS/Stock Purchase Agreement -- July 3, 1996."
SHARE EXCHANGE AGREEMENT TRANSACTION
On June 13, 1995 the Company consummated the exchange of 590,000 shares of
its common stock in exchange for the receipt of all issued and outstanding stock
of Midwest (the "Share Exchange Agreement"). Midwest was wholly owned by
Robert D. Wolff, subsequent CEO of the Company, and Judith J. Wolff. Among
other things, the Share Exchange Agreement provided for the payment of
compensation, for services rendered, by the Company to R. Dee Erickson and
E. Jay Sheen (both directors of the Company) in the amount of 38,000 shares each
of the Company's Common Stock and $104,000 each. For a more detailed
description of the Share Exchange Agreement, see "ITEM 1 DESCRIPTION OF
BUSINESS/Share Exchange Agreement."
1996 SETTLEMENT AGREEMENT TRANSACTION AND RELATED TRANSACTIONS
The following amounts were paid through August 14, 1996 by the Company in
connection with the 1996 Settlement Agreement, the Morgan Settlement Agreement
and the IMCC Stock Purchase Agreement:
Hunter & Brown, approximately $34,843.08, as legal counsel for Mark Jones,
Director of the Company;
Campbell, Maack & Sessions, approximately $167,987.68, as legal counsel, as
follows, $81,000 for legal services performed for Anne and Victoria Morgan,
daughters of John H. Morgan, Jr. and Daisy R. Morgan, both Directors of the
Company in 1995, pursuant to the 1996 Settlement Agreement with the balance of
$86,987.68 for services performed as legal counsel for Mark Technologies
Corporation, a corporation controlled by Mark Jones, Director of the Company;
Dorton, Jones, Nicolatus & Stuart Inc., approximately $4,225, as experts
for Mark Technologies Corporation, a corporation controlled by Mark Jones;
Mark Technologies Corporation, approximately $10,090.03, a corporation
controlled by Mark Jones, a Director of the Company, for a retainer paid to
Dorton, Jones, Nicolatus & Stuart, Inc. and for certain out-of-pocket expenses;
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<PAGE>
Victoria Morgan, daughter of John H. Morgan, Jr. and Daisy R. Morgan, in
the amount of $58,966.70 for repurchase of all shares owned in the Company by
Ms. Morgan;
Anne Morgan, daughter of John H. Morgan, Jr. and Daisy R. Morgan, in the
amount of $76,882.50 for a repurchase of all shares owned in the Company by
Ms. Morgan;
John H. Morgan, Jr., in the amount of $89,229.81, representing the total
monetary judgment collected from him by the Company pursuant to the Murphy Order
and all amounts covered by the Order regarding Stay of Execution and Acceptance
of Undertaking under the Murphy Order;
Robinson & Sheen, L.L.C. $76,133.54, as counsel for the Company;
Jardine, Linebaugh & Dunn, approximately $22,732.97, as counsel for the
Company;
Wildman, Harrold, Allen & Dixon, approximately $72,433.52, as counsel for
IMCC, a company wholly owned by John Fife, Director, CEO, President and Chairman
of the Board of the Company;
Giauque, Crockett, Bendinger & Peterson, $22,391.68, as counsel for IMCC,
IMCC, a company wholly owned by John Fife, Director, CEO, President and Chairman
of the Board of the Company;
IMCC, a company wholly owned by John Fife, Director, CEO, President and
Chairman of the Board of the Company, approximately $5,014.79 for reimbursement
of the retainer to Giauque, Crockett, Bendinger & Peterson; and
Brown Wright & Associates, approximately $19,937.45 as experts for the
Company.
LEGAL REPRESENTATION OF THE COMPANY
During 1994 and 1995, the law firms of Moyle Draper and Robinson & Sheen,
L.L.C. provided legal representation to the Company. E. Jay Sheen, a former
director of the Company, was a partner at Moyle Draper and currently is a
partner at Robinson & Sheen. During 1994, Moyle Draper received approximately
$99,304 in legal fees. During 1995, Robinson & Sheen received approximately
$144,800.29 in legal fees and Moyle Draper received approximately $46,666 in
legal fees.
COMMISSION AND CONSULTING FEES
1994
During 1994, Lyle Hurd and R. Dee Erickson, both directors of the Company,
received consulting fees from the Company in the amounts of $12,500 and $10,000,
respectively. An additional $3,440 was paid by the Company to ST. GEORGE
MAGAZINE for advertising. Mr. Hurd,
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<PAGE>
who also served as Director of Marketing of the Company, is an owner of Hurd
Owens Hafen, Inc., which publishes ST. GEORGE MAGAZINE. In 1994, Gerry Brown,
President of the Company, received $14,412 in commissions for sales of Company
owned real estate.
1995
During 1995, Lyle Hurd, a director of the Company and Director of
Marketing, received $13,750 in consulting fees. An additional $8,265 was paid
by the Company to ST. GEORGE MAGAZINE for advertising. Mr. Hurd, who also
served as Director of Marketing of the Company, is an owner of Hurd Owens Hafen,
Inc., which publishes ST. GEORGE MAGAZINE, among others. In 1995, Gerry Brown,
the President of the Company, received $8,327 in commissions.
AMENDMENT TO BY-LAWS
A majority of the Board of Directors has adopted a resolution which sets
forth a single proposal to amend Article II, Section 1. of the Company's By-Laws
(the "By-Laws Amendment"), by deleting Article II, Section 1. in its entirety
and replacing it with the following:
The annual meeting of the Shareholders shall be held on the third
Monday in the month of July in each year, beginning with the year 1997
at an hour designated by the President in the notice of annual
meeting, for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the State of
Utah, such meeting shall be held on the next succeeding business day.
The Company recommends voting for the By-Laws Amendment. The terms of the
1996 Settlement Agreement provided that the parties to that agreement would take
all actions necessary to maintain Mark G. Jones as a director of the Company for
a period of one year from the date of the closing of the Stock Purchase
Agreement between IMCC and the Company. IMCC has informed the Company that it
will not support the nomination of Mark G. Jones as a director at the next
annual meeting of the Company, to be held on the third Monday of July, 1997, as
set forth in the amendment to the By-Laws. The persons named as proxy holders
in the accompanying Proxy intend to vote each properly signed and submitted
Proxy for the By-Laws Amendment, unless authority to vote is withheld on such
Proxy. By-Laws may be amended by the Board of Directors at any regular or
special meeting of the Board of Directors. Unless otherwise specified, all
properly executed proxies received by the Company will be voted in favor of the
By-Laws Amendment.
THE COMPANY RECOMMENDS VOTING "FOR" THE BY-LAWS AMENDMENT.
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<PAGE>
MARK TECHNOLOGIES CORPORATION PROPOSALS
SPECIAL SHAREHOLDERS' LEGAL AFFAIRS COMMITTEE
Mark G. Jones, a director of the Company, on behalf of Mark Technologies
Corporation, proposes to appoint a special shareholders' Legal Affairs
Committee, the sole purpose of which is to select and engage new general
counsel, make a binding determination regarding the settlement, continued
prosecution or other disposition of pending litigation to which the Company
is a party and to make a binding determination regarding counsel selection in
the future and future litigation in which the Company may be a party. This
proposal requires an affirmative vote by the holders of a majority of the
Common Stock of the Company. The Company does NOT recommend a vote in favor
of this proposal. IMCC, the Company's majority shareholder, has indicated it
will not vote in favor of this proposal. The Utah Business Corporation Act
provides, in part, that one of the powers of the corporation is, "to sue and
be sued, complain and defend in its corporate name," SEE Section 16-10a-302
General Powers/Utah Business Corporation Act. The Utah Business Corporation
Act also provides, in part, that all corporate powers shall be exercised "by
or under the authority of, and the business and affairs of the corporation
managed under the direction of, its board of directors," SEE Section
16-10a-801(2) of the Utah Business Corporation Act. In order for the
Company's Board of Directors to carry out its obligations under the Utah
Business Corporation Act, it must make decisions as to whether to pursue
litigation and if so, in what manner. These decisions would include, among
other things, the decision as to who would represent the Company and the
course of litigation. These Utah provisions firmly place these
litigation-based decisions and obligations within the Board's responsibility.
A majority of the Board does not recommend its approval. IMCC, the Company's
majority shareholder, has indicated it will NOT vote in favor of this
proposal.
TENDER OFFER
Mark G. Jones, a director of the Company, on behalf of Mark Technologies
Corporation, proposes to cause the Company to offer to purchase from all of its
shareholders, at a purchase price of $4.00 per share, shares of the Company's
Common Stock, where acceptance of the Company's offer shall be voluntary and the
offer shall not be designed to require acceptance by any shareholder. This
proposal requires an affirmative vote by the holders of a majority of the Common
Stock of the Company. The Board of Directors does not recommend a vote in favor
of this proposal. IMCC, the Company's majority shareholder, has indicated it
will not vote in favor of this proposal. The Company and IMCC entered into the
Stock Purchase Agreement and two settlement agreements which contractually
require the Company to undertake a 1,000 share to 1 share reverse stock split at
$3.35 per share. The Mark Technologies Corporation proposal is inconsistent
with and contrary to the required $3.35 per share reverse stock split. In
addition, a majority of the Board of Directors believes that a $4.00 per share
tender offer, if approved by the shareholders of the Company, would force the
Company to liquidate in order to meet its obligations pursuant to such tender
offer. Consequently, the Company does not
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<PAGE>
recommend its approval. IMCC, the Company's majority shareholder, has indicated
it will NOT vote in favor of this proposal.
SPECIAL SHAREHOLDERS FIDUCIARY DUTY COMMITTEE
Mark G. Jones, a director of the Company, on behalf of Mark Technologies
Corporation, proposes to cause the Company to appoint a special shareholders'
Fiduciary Duty Committee, the sole purpose of which shall be to make a
binding determination, upon consultation with the Company's new general
counsel, regarding the activities of the Company's Board of Directors,
officers and counsel to consider whether actions, complaints or other
redress, if any, should be taken by the Company against such individuals. A
majority of the Board of Directors does not recommend its approval. IMCC, the
Company's majority shareholder, has indicated it will NOT vote in favor of
this proposal.
Unless otherwise specified, all properly executed proxies received by
the Company will be voted AGAINST the three Mark Technologies Corporation
proposals.
THE COMPANY RECOMMENDS VOTING "AGAINST" THE MARK TECHNOLOGIES CORPORATION
PROPOSALS.
MATERIAL PROCEEDINGS AND TRANSACTIONS
Over the past nine years, the Company has been involved in various disputes
and controversies involving its ownership, operation and management. A
shareholders derivative action captioned as ERNEST MUTH, ET AL. V. JOHN H.
MORGAN, JR., ET AL., was filed as Civil Number C-87-1632 in the Third Judicial
District Court of Salt Lake County, Utah (the "First State Action"), alleging
among other things that the officers and directors of the Company committed
various breaches of their fiduciary duties to the Company. A settlement
agreement was entered into in the First State Action on April 6, 1993 (the "1993
Settlement Agreement"), wherein, among other things, parties to the lawsuit
agreed to the manner in which directors of the Company would be selected until
such time as the 1993 Settlement Agreement was terminated. On or about July 21,
1995, attorneys for the Company, on behalf of the Company filed an action
against John H. Morgan, Jr. and Daisy R. Morgan to enforce the 1993 Settlement
Agreement in the First State Action which resulted in certain findings of fact
and conclusions of law and an order enforcing the 1993 Settlement Agreement,
entered by Judge Michael R. Murphy on October 4, 1995 (the "Murphy Order"). The
Murphy Order was appealed by John H. Morgan, Jr. and Daisy R. Morgan and cross-
appealed by the Company. An Order to Show Cause was subsequently filed in the
First State Action on behalf of the Company by attorneys for the Company against
John H. Morgan, Jr. and Daisy R. Morgan (the "Order to Show Cause").
On or about February 16, 1995, pursuant to a Plan of Share Exchange
Agreement by and among the Company, Midwest Railroad Construction and
Maintenance Corporation of Wyoming, a Wyoming corporation ("Midwest"), Robert D.
Wolff ("RD Wolff") and Judith J. Wolff ("JJ Wolff") (the "Share Exchange
Agreement"), the Company acquired all of the outstanding shares of Midwest from
RD Wolff and JJ Wolff in exchange for 590,000 restricted shares of authorized
but unissued shares of the Company (the "Share Exchange Agreement"). Pursuant
to the Share Exchange Agreement, RD Wolff became the President of the Company.
For a more detailed description of the Share Exchange Agreement see Form 8-K
filed July 20, 1995. A shareholders derivative action captioned as ANNE MORGAN
ET AL. V. R. DEE ERICKSON, ET AL., was filed as Case Number 2:95CV-0661C in the
United States District Court for the District of Utah, Central Division (the
"First Federal Action"), alleging that the defendants had, among other things,
violated proxy solicitation rules, violated disclosure rules under the Exchange
Act of 1934, breached their fiduciary duties to the Company's shareholders,
breached professional duties, committed fraud, wasted and looted the Company's
assets, converted Company property, engaged in self-dealing, mismanaged the
corporation and breached the duty of loyalty. The
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<PAGE>
complaint sought, among other things, rescission of the Share Exchange
Agreement. In April 1996, the Company, Midwest, RD Wolff and JJ Wolff entered
into a Split-Off Agreement whereby, among other things, the Share Exchange
Agreement was rescinded (the "Rescission Agreement") and the shares of Midwest
acquired by the Company were returned to RD Wolff and JJ Wolff.
On April 5, 1996, the Company entered into a letter of intent ("Letter of
Intent") with IMCC to sell a controlling interest in the Company to IMCC, at a
purchase price equal to $3.35 per share. On May 17, 1996, a shareholders
derivative suit captioned as MARK TECHNOLOGIES CORP. ET AL. V. UTAH RESOURCES
INTERNATIONAL, INC., ET AL., was filed as Civil No. 96-090-3332CV in the Third
Judicial Court of Salt Lake County, Utah (the "Second State Action"). Mark G.
Jones, a director of the Company, is the controlling shareholder of Mark
Technologies Corporation. The Second State Action included, among other things,
a request for the issuance of a temporary restraining order and injunction
against the transactions contemplated in the Letter of Intent. On June 26,
1996, the Company entered into two settlement agreements. The first settlement
agreement was by and among the Company, John H. Morgan, Jr., Daisy R. Morgan,
IMCC, John Fife, Robinson & Sheen, L.L.C., R. Dee Erickson, Lyle D. Hurd, and
E. Jay Sheen ("Morgan Settlement Agreement"), whereby certain disputes among the
parties were resolved and settled and the parties agreed to use their best
efforts to terminate the 1993 Settlement Agreement. The second settlement
agreement was by and among the Company, R. Dee Erickson, E. Jay Sheen, Lyle D.
Hurd, Mark G. Jones, Mark Technologies Corporation, Anne Morgan, Victoria
Morgan, IMCC, John Fife and Robinson & Sheen, L.L.C. (the "1996 Settlement
Agreement") and the parties, among other things, agreed to dismiss the First
Federal Action, the Order to Show Cause, the Second State Action and to use
their best efforts to terminate the 1993 Settlement Agreement. On July 19,
1996, the notice of hearing on proposed settlement of the Second State Action,
the First State Action and the First Federal Action and the notice of hearing on
petition to terminate the 1993 Settlement Agreement was mailed to all the
Company's shareholders of record as of June 24, 1996. Among other things, the
notice provided that the 1996 Settlement Agreement and the Morgan Settlement
Agreement (together the "Settlement Agreements") were to be considered approved
by the court on August 12, 1996, and that all objections to the Settlement
Agreements had to be presented at that time. On August 9, 1996, shareholders
Jenny T. Morgan, Gerard E. Morgan, John C. Morgan and Karen J. Morgan
("Objectors") filed an objection to the hearing and requested that the court
continue the settlement approval hearing until after a URI shareholders' vote on
the Settlement Agreements and the IMCC Stock Purchase Agreement. In their
objections and request for continuance of hearing, the Objectors, among other
things, claimed that they had insufficient information with which to evaluate
the Stock Purchase Agreement between IMCC and URI; that they had insufficient
information regarding John Fife, the sole shareholder of IMCC, and that they
needed additional time and information to evaluate the fairness of the Stock
Purchase Agreement, and to solicit bids to sell the Company. Further, the
Objectors alleged that URI had refused to provide documentation relating to the
Stock Purchase Agreement to them. After considering the Objectors' and the
parties' initial arguments, the court granted both the parties and the Objectors
an additional seven days, through August 19, 1996, to submit written memoranda
in support of their positions. Both the Objectors and the parties submitted
written memoranda supporting their positions in regard to the Settlement
Agreements and the Stock
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<PAGE>
Purchase Agreement. After considering the written memoranda and arguments
presented by both sides, on or about August 23, 1996 the court denied the
Objector's petition, and entered an order approving the Settlement Agreements.
As required by the Transaction Agreements, as defined below, the 1996 Settlement
Agreement and the Morgan Settlement Agreement were approved by the Third
Judicial District Court of Salt Lake County, West Valley Department, Utah, on or
about August 28, 1996. The Order to Show Cause was dismissed with prejudice and
the 1993 Settlement Agreement was terminated on August 29, 1996.
On July 3, 1996, following the execution of the Letter of Intent, the
Morgan Settlement Agreement and the 1996 Settlement Agreement, the Company and
IMCC entered into a Stock Purchase Agreement (the "Stock Purchase Agreement")
(the Letter of Intent, the Morgan Settlement Agreement, the 1996 Settlement
Agreement and the Stock Purchase Agreement are hereinafter referred to as the
"Transaction Agreements") whereby the Company issued and sold 1,275,912 shares
(the "Purchased Shares") of common, $.10 par value per share stock (the "Common
Stock") to IMCC, which is wholly owned by John Fife, so that IMCC owned a 50.5%
interest in the Company. IMCC acquired the Purchased Shares at a price equal to
$3.35 per share for an aggregate purchase price of $4,274,305.20 (the "Purchase
Price"), of which $641,145.78 was paid in cash by IMCC to the Company at the
closing. The remaining $3,633,159.42 was evidenced by IMCC's promissory note
(the "Note"). The Note bears interest at a rate equal to the short-term
applicable federal rate published by the Internal Revenue Service in effect at
the time of closing, and is adjusted on each anniversary of the Note to the
applicable short-term federal rate in effect on such anniversary date. Interest
on the Note is paid currently in arrears on each anniversary of the Note. At
the closing, IMCC paid $197,872.52 to the Company which amount represented the
present value first year of interest due under the Note. The principal and any
unpaid interest accrued under the Note is due and payable August 1, 2001. The
Note is secured by the Purchased Shares as evidenced by a stock pledge
agreement, dated as of July 3, 1996, by and between IMCC and the Company (the
"Stock Pledge Agreement"). Pursuant to a separate written guaranty agreement,
John Fife personally guaranteed payment of 25% of all amounts due under the
Note. For a more detailed description of the Stock Purchase Agreement, see
Form 8-K filed by the Company on July 18, 1996, and to review a copy of the
Stock Purchase Agreement, see Schedule 13D-A filed by IMCC on September 9, 1996.
As required by the Stock Purchase Agreement, E. Jay Sheen and R. Dee
Erickson submitted their resignations as directors of the Company, effective
July 13, 1996. As further required by the Stock Purchase Agreement, John Fife
was appointed a director of the Company. David Fife, the brother of John Fife,
was also appointed a director of the Company. John Fife and David Fife were
appointed as directors of the Company by the Muth Group pursuant to the 1993
Settlement Agreement, effective July 13, 1996. As required by the Stock
Purchase Agreement, John Fife was elected President and Chief Executive Officer
of the Company in July 1996, pursuant to a 3-2 vote of the Board. John Fife
also serves as Chairman of the Board of the Company pursuant to a 3-2 vote of
the Board.
The Letter of Intent and the Transaction Agreements, including the Stock
Purchase Agreement contemplated that subject to applicable state and federal
securities and state corporate
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<PAGE>
law, the Company would cause a 1,000 to 1 share reverse split of the Company's
stock to the shareholders of record at $3.35 per share (the "Reverse Split"),
with fractional shareholders given the option to either purchase additional
fractional shares to round up to one whole share following the Reverse Split or
sell their fractional shares for cash to the Company. IMCC was granted a ten
year option to purchase 150,000 or more additional shares of stock at a purchase
price equal to $3.35 per share and on the same terms and conditions as those
provided under the Stock Purchase Agreement so that after the Reverse Split IMCC
may maintain its 50.5% majority interest in the Company. Subsequent to the
Reverse Split and subject to applicable state and federal securities and state
corporate law, any Company shares redeemed by the Company pursuant to the
Reverse Split (the "Returned Shares") may be acquired by the remaining
shareholders, other than IMCC or its affiliates, in increments of 1,000 shares
(the "Returned Share Option") at a purchase price equal to the pre-reverse-split
price of $3.35 per share (the "Returned Share Purchase Price") as more fully
described herein.
Only those shares for which the Company has received a fully and properly
executed letter of transmittal, accompanied by the required documents, will
qualify as Returned Shares for purposes of this Returned Share Option. Such
Common Stock shall be purchased in blocks of 1,000 shares of Common Stock such
that each purchase of a 1,000 share block of Common Stock shall be converted
into 1 share of common, $100.00 par value per share stock of the Company (the
"New Stock"). In the event the Returned Share Option is over-subscribed, then
each of the exercising shareholders may purchase the Returned Shares on a pro
rata basis. Twenty-five percent (25%) of the Returned Share Purchase Price will
be payable in cash upon exercise, with the remaining balance of $2.51 per share
being evidenced by the Returned Share Note.
In December, 1995 Mark Technologies Corporation received 201,210 shares of
the Company's Common Stock from Morgan Gas & Oil Co., as partial payment of a
promissory note. The promissory note was in consideration of the sale to Morgan
Gas & Oil Co. from Mark Technologies Corporation of a limited partnership
interest in Alta Mesa Wind Partners, a California limited partnership in the
wind-generated power business. The Company is a shareholder of Morgan Gas & Oil
Co. The Company brought a Shareholders derivative action against Morgan Gas &
Oil Co. and its directors and against Mark G. Jones, Mark Technologies
Corporation, Alta Mesa Wind Partners, John H. Morgan, Jr., Daisy R. Morgan,
Sylvia Wunderly, John Wunderly, and Melbourne Romney, III, alleging, among other
things, that in connection with the sale of Alta Mesa Wind Partners limited
partnership interest to Morgan Gas & Oil Co., Mark G. Jones, Mark Technologies
Corporation and Alta Mesa Wind Partners concealed and misrepresented material
information to be provided to Morgan Gas & Oil Co. directors and that the Morgan
Gas & Oil Co. directors committed a breach of fiduciary duty and a wasting of
corporate assets. The suit was dismissed without prejudice.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports
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<PAGE>
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, the
Company's officers, directors and greater than ten percent beneficial owners
complied with all applicable Section 16(a) filing requirements, except for the
following individuals with respect to the following forms:
R. Dee Erickson, Form 4
Robert D. Wolff, Form 4
John Fife, Form 4
IMCC, Form 4
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the fiscal year ended
December 31, 1996 and for the current year are Tanner + Co. A representative of
Tanner + Co. is expected to be present at the meeting, with the opportunity to
make a statement if he desires to do so, and he is expected to be available to
respond to appropriate questions from stockholders.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1995, including financial statements, accompanies this Proxy
Statement. However, no action is proposed to be taken at the meeting with
respect to the Annual Report, and it is not to be considered as constituting any
part of the proxy soliciting material.
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals which may be proper
subjects for inclusion in the proxy statement and for consideration at the
annual meeting. To be considered, proposals must be submitted on a timely
basis. Proposals for the 1997 stockholders' meeting, if applicable, must be
received by the Company no later than March 24, 1997. Any such proposals, as
well as any questions related thereto, should be directed to the Secretary of
the Company.
OTHER MATTERS
Management knows of no other business likely to be brought before the
meeting. If other matters do come before the meeting, the persons named in the
form of proxy or their substitute will vote said proxy according to their best
judgment.
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<PAGE>
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995 is available without charge to stockholders upon
written request to the Company's _________________.
By order of the Board of Directors
John Fife
Director, Chairman of the Board and President
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<PAGE>
EXHIBITS
Exhibit A: Amendment to Articles of Incorporation
Exhibit B: Part 13 of the Utah Business Corporation Act
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
ITEM 14 FINANCIAL INFORMATION
1. Financial Statements - December 31, 1995 Included
2. Financial Statements - September 30, 1996 Included
3. Ratio of earnigns to fixed changes Not included
4. Book value per share Included
<PAGE>
UTAH RESOURCES
INTERNATIONAL, INC.
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
PAGE
----
Independent Auditors' Report F-1
Consolidated balance sheet, December 31, 1995 F-2
Consolidated statements of operations for the years
ended December 31, 1995 and 1994 F-3
Consolidated statement of stockholders' equity for the
years ended December 31, 1995 and 1994 F-4
Consolidated statement of cash flows for the years ended
December 31, 1995 and 1994 F-5
Notes to consolidated financial statements F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS OF
UTAH RESOURCES INTERNATIONAL, INC.,
AND SUBSIDIARIES
We have audited the accompanying consolidated balance sheet of Utah
Resources International, Inc., and subsidiaries at December 31, 1995 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the two years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Utah Resources International, Inc., and subsidiaries as of December 31, 1995 and
the results of their operations and their cash flows for the two years ended
December 31, 1995, in conformity with generally accepted accounting principles.
June 21, 1996 except for note 15,
which is dated July 10, 1996
F-1
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
DECEMBER 31, 1995
ASSETS
Cash and cash equivalents $ 765,831
Accounts receivable from related parties 372,622
Notes receivable 178,989
Income tax receivable 212,328
Property and equipment, net of
accumulated depreciation and
amortization of $36,409 36,959
Real estate held for resale 854,821
Royalty interest in petroleum and mineral
production, net of amortization of $41,034 9,176
Other assets 10,599
Net assets of discontinued operations 657
----------
$2,441,982
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 276,446
Accrued expenses 312,474
Earnest money deposits 36,000
Notes payable 599,627
----------
Total liabilities 1,224,547
----------
Minority interest 152,113
Commitment and contingencies -
Stockholders' equity:
Common stock; par value $.10 per share,
5,000,000 shares authorized,
1,851,198 shares issued and outstanding 185,120
Additional paid-in capital 348,757
Retained earnings 531,445
----------
Total stockholders' equity 1,065,322
----------
$2,441,982
----------
----------
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------
1995 1994
---- ----
<S> <C> <C>
Sales $ 587,663 2,274,222
Cost of sales 156,250 567,453
---------- -----------
Gross profit 431,413 1,706,769
General and administrative expenses 1,045,854 678,368
---------- -----------
Income (loss) from operations (614,441) 1,028,401
---------- -----------
Other income (expense):
Rental income - 32,183
Royalty income 61,006 92,455
Interest and dividend income 102,794 50,458
Interest expense (51,279) (60,020)
Other income (expense) 35,906 (18,074)
---------- -----------
Total other income (expense) 148,427 97,002
---------- -----------
Income (loss) before minority interest and
provision for income taxes (466,014) 1,125,403
Minority interest in net (loss) of subsidiaries 26,988 29,109
---------- -----------
Income (loss) before provision for income taxes
and discontinued operations (439,026) 1,154,512
Income tax (provision) benefit 179,000 (436,000)
---------- -----------
Income (loss) from continuing operations (260,026) 718,512
Discontinued operations:
Income from discontinued operations net of income
taxes of $48,000 93,407 -
Loss from disposal of discontinued operations
net of income taxes benefit of $275,000
and $16,000 (583,000) (31,416)
---------- -----------
Total discontinued operations (489,593) (31,416)
---------- -----------
Net income (loss) $ (749,619) 687,096
---------- -----------
---------- -----------
Earnings (loss) per share $(.46) .54
----- ---
----- ---
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
------ ------ -------- --------
<S> <C> <C> <C> <C>
Balance, January 1, 1993 1,284,027 $128,403 127,174 722,431
Net income - - - 687,096
----------- ---------- ----------- -----------
Balance, December 31, 1994 1,284,027 128,403 127,174 1,409,527
Common stock issued to
purchase subsidiary valued
at book value of subsidiary
($.43 per share) 590,000 59,000 196,503 -
Common stock issued for
services in acquisition
of subsidiary valued at
$.43 per share 76,000 7,600 25,080 -
Repurchase of stock
through land issuance at
$.10 per share (102,429) (10,243) - -
Common stock issued in
settlement of dispute valued
at $.10 per share 3,600 360 - -
Dividends - - - (128,463)
Net loss - - - (749,619)
----------- ---------- ----------- -----------
Balance, December 31, 1995 1,851,198 $185,120 348,757 531,445
----------- ---------- ----------- -----------
----------- ---------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------
1995 1994
----- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (749,619) 687,096
Less income from discontinued operation (93,407) -
Add loss from disposition of discontinued operation 583,000 -
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation and amortization 12,349 22,756
Minority interest in net income
of subsidiaries (26,988) (29,109)
Gain on disposition of assets (3,106) (36,267)
Bad debt expense 10,899 -
Common stock issued for services 33,040 -
(Increase) decrease in:
Accounts receivable (118,310) (238,503)
Other assets (775) 76,403
Real estate held for resale (237,850) 100,263
Income tax receivable (212,529) 443,201
(Decrease) increase in:
Accounts payable 115,912 8,302
Accrued expenses 21,143 171,488
Ernest money deposits - (10,000)
Deferred income tax (300,000) 300,000
----------- -----------
Net cash provided by (used in) continued operation (966,241) 1,495,630
Net cash used in discontinued operations (104,846) -
----------- -----------
Net cash provided by (used in)
operating activities (1,071,087) 1,495,630
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from marketable securities - 29,920
Proceeds from disposition of assets 18,140 390,000
Payments on notes receivable 137,348 160,989
Purchase of property and equipment (2,690) (7,601)
Increase in notes receivable (112,137) (206,843)
Decrease in minority interest (4,020) (51,126)
Decrease in other assets - 3,289
----------- -----------
Cash from investing activities - continuing operation 36,641 318,628
Cash from investing activities - discontinued operation 76,839 -
----------- -----------
Net cash provided by
Investing activities 113,480 318,628
----------- -----------
</TABLE>
F-5
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of dividends (128,463) 27,249
Payments on notes payable (90,129) (72,315)
------------ ------------
Cash for financing activities - continued operation (218,592) (45,066)
Cash for financing activities - discontinued operation (196,765) -
------------ ------------
Net cash (used in)
financing activities (415,357) (45,066)
------------ ------------
(Decrease) increase in cash (1,372,964) 1,769,192
Cash and cash equivalents, beginning of year 2,138,795 369,603
------------ ------------
Cash and cash equivalents, end of year $ 765,831 2,138,795
------------ ------------
------------ ------------
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
1995
----
The Company purchased the assets of another company for common stock valued
at $255,503.
The Company financed the purchase of equipment with debt in the amount of
$28,278.
The Company purchased and retired 102,429 shares of common stock through
the issuance of 10.6 acres of land under the terms of a prior year agreement.
The Company disposed of debt in the amount of $3,933, which was assumed in
the sale of land for which the Company received a note receivable.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for
1995 1994
---- ----
Interest $62,427 36,992
------- ------
------- ------
Income taxes - -
------- ------
------- ------
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Utah Resources International, Inc., and consolidated entities (the
Company) is engaged primarily in the development of real estate including
the sale of developed and undeveloped real estate. The Company's assets
are located in the Rocky Mountain West.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial statements
of Utah Resources, Inc., Tonaquint Inc. and a number of limited
partnerships of which the Company has ownership in excess of 50 percent and
has management responsibility. All material intercompany transactions and
balances have been eliminated in consolidation of the Companies and
partnerships.
Discontinued operations include Midwest Railroad Construction and
Maintenance Corporation (Midwest) from June 13, 1995 ( date of acquisition)
through December 31, 1995. The Company disposed of Midwest effective March
31, 1996, see note 7. Discontinued operations also included those of a
Service Station which was closed in 1993. The Service Station has
continued to incur costs to resolve certain environmental issues since the
closing of the station.
METHOD OF RECOGNITION OF INCOME
Real Estate
Profits on sale of developed lots, developed land and raw land are
recognized in accordance with standards established for the real estate
industry which generally provide for deferral of all or part of the profit
on a sale if the buyer does not meet certain down payment requirements or
certain other tests of the buyer's financial commitment to the purchase, or
the seller is required to perform significant obligations subsequent to the
sale.
Cost of sales include a pro rata portion of acquisition and development
costs (including estimated costs to complete) along with sales commissions,
closing costs and other costs specifically related to the sale.
F-7
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
METHOD OF RECOGNITION OF INCOME - CONTINUED
Other
Royalty income is recognized when received. The Company has overriding
mineral and oil and gas royalty interests and thus exercises no control
over the activities of the royalty payers and is notified of the amounts or
royalties due when the cash is received.
PROPERTY AND EQUIPMENT
Property and equipment is carried at cost. Depreciation is computed
using the straight-line method based upon the following useful lives:
Building 15-30 years
Furniture and equipment 3-10 years
REAL ESTATE HELD FOR RESALE
Real estate held for resale includes developed lots, land under
development and raw land. Real estate held for resale is carried at the
lower of cost or market. The cost of development of building lots includes
the land and the related costs of development (planning, survey,
engineering and other) which are capitalized. The cost of interest and
property taxes are expensed.
INTANGIBLE ASSETS
The cost of identifiable intangible assets, consisting of royalties, is
being amortized on a straight-line basis over the expected productive life
of the asset, 15 years.
INCOME TAXES
Deferred income taxes are provided in amounts sufficient to give effect
to temporary differences between financial statement and tax reporting
purposes. The differences are primarily a result of differing methods of
accounting for land sales and depreciation of property and equipment.
EARNINGS PER SHARE
The weighted average of outstanding common shares is approximately
1,619,000 shares and 1,284,000 shares for the years ended December 31, 1995
and 1994, respectively. Common stock equivalents have not been included as
the exercise price is in excess of the market price and the amounts are
antidilutive in 1995.
F-8
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
STATEMENT OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of trade receivables. In
the normal course of business, the Company provides credit terms to its
customers. Accordingly, the Company performs ongoing credit evaluations of
its customers and maintains allowances for possible losses which, when
realized, have been within the range of management's expectations.
The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Company has not experienced any
losses in such account and believes it is not exposed to any significant
credit risk on cash and cash equivalents.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
principally related to estimated costs to complete uncompleted contracts
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 amount of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
(2) ACCOUNTS RECEIVABLE FROM RELATED PARTIES
Accounts receivable include $132,843 which is due from an entity which
has some shareholders in common with the Company and $131,573 which is due
from various related partnerships. Also included is $87,263 due from one
of the shareholders of the Company.
F-9
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(3) NOTES RECEIVABLE
The Company has the following notes receivable at December 31, 1995:
Note receivable from an individual
due in March, 1996, with interest at
9%, secured by real estate $138,989
Note receivable from an individual
due in September 1995, with interest at
8% 40,000
--------
$178,989
--------
--------
Future maturities of notes receivable are as follows:
YEAR AMOUNT
---- ---------
1996 $ 40,000
1997 138,989
--------
Total $178,989
--------
--------
(4) REAL ESTATE HELD FOR RESALE
Real estate held for resale consists of the following real estate
located in the St. George, Utah area at December 31, 1995:
DEVELOPED
The Company has three developed residential lots with an aggregate cost
of $67,106.
RAW LAND AND PARTIALLY DEVELOPED LAND
The Company has approximately 390 acres of real estate of which
approximately 350 acres is currently planned for single family dwelling
lots, commercial development and multiple housing. The aggregate cost of
the raw land and partially developed land is $797,958.
F-10
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(5) ACCRUED EXPENSES
Accrued expenses at December 31, 1995 consist of the following:
Deficit in investment in partnership $168,857
Accrued interest 34,775
Other accrued expenses 108,842
--------
Total $312,474
--------
--------
(6) NOTES PAYABLE
The Company has the following notes payable at December 31, 1995:
Note payable to a trust requiring quarterly
interest payments at 10%, principal due
in 1996 secured by certain real estate held
for resale $400,000
Notes payable to a governmental entity
requiring annual payments of approximately
$15,000 plus interest at 5.94%, secured
by real estate 106,810
Note payable to entity requiring annual
payments of $10,386 including interest
at 9%, secured by real estate 67,282
Note payable to a financial institution
requiring monthly payments of $491
including interest at 10.5%, secured
by a vehicle 23,600
Other 1,935
--------
Total $599,627
--------
--------
F-11
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(6) NOTES PAYABLE - CONTINUED
Future maturities of notes payable are as follows:
YEAR AMOUNT
---- ------
1996 $425,849
1997 24,949
1998 25,490
1999 25,992
2000 27,057
Thereafter 70,290
--------
Total $599,627
--------
--------
None of the Company's debt instruments are held for trading purposes.
The Company estimates that the fair value of all financial instruments at
December 31, 1995, does not differ materially from the aggregate carrying
values of its financial instruments recorded in the accompanying balance
sheet.
(7) INVESTMENT IN MIDWEST
Effective June 13, 1995, the Company acquired 100% ownership of Midwest
through the issuance of 590,000 shares of the Company's common stock for
all of the outstanding stock of Midwest. The acquisition was accounted for
as a purchase. The fair market value of the Midwest assets and liabilities
approximated the historical cost of the assets and liabilities and no
goodwill was therefore recorded.
Effective March 31, 1996, the Company sold Midwest to its former owner.
The Company received 590,000 shares of common stock and agreed to forgive
$317,000 due from Midwest as a result of net cash advances made to Midwest
by the Company. The 1995 financial statements reflect a write down of
approximately $780,000 for its investment in Midwest to its estimated
realizable value.
F-12
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(8) DISCONTINUED OPERATIONS
The Company has included in net assets of discontinued operations those
of Midwest and the Service Station.
Condensed financial information for Midwest is as follows at December
31, 1995 and for the period June 13, 1995 (date of acquisition) through
December 31, 1995:
<TABLE>
<CAPTION>
BALANCE SHEET
DECEMBER 31, 1995
ELIMINATIONS
AND
ADJUSTMENT
SERVICE TO
MIDWEST STATION REALIZABILITY TOTAL
------- ------- ------------- -----
<S> <C> <C> <C> <C>
Assets $3,836,017 - (731,994) 3,104,023
---------- --------- -------- ---------
---------- --------- -------- ---------
Liabilities 3,439,107 159,077 (542,818) 3,055,366
Equity 396,910 (159,077) (237,176) 657
---------- --------- -------- ---------
Total liabilities and equity $3,836,017 - (779,994) 3,056,023
---------- --------- -------- ---------
---------- --------- -------- ---------
</TABLE>
Included in the adjustment is $731,994 loss recognized on disposition of
discontinued operations.
STATEMENT OF OPERATIONS
PERIOD ENDING DECEMBER 31, 1995
MIDWEST
-------
JUNE 13, 1995 SERVICE
(DATE OF STATION
ACQUISITION) --------
THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1995 TOTAL
---- ---- -----
Revenues $5,598,542 - 5,598,542
Costs and expenses 5,457,135 - 5,457,135
---------- ------- ---------
Net income before income tax 141,407 - 141,107
Income tax expense 48,000 - 48,000
---------- ------- ---------
Net income $ 93,407 - 93,407
---------- ------- ---------
---------- ------- ---------
F-13
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(8) DISCONTINUED OPERATIONS - CONTINUED
At December 31, 1995, the net loss from disposal of discontinued
operations was $731,994 from Midwest and $78,006 from Service Station less
$275,000 of income tax benefit. For the year ended December 31, 1994, the
net loss was $47,416 from disposal of the Service Station less income tax
benefit of approximately $16,000.
(9) INCOME TAXES
The (provision) benefit for income taxes is as follows:
CONTINUING OPERATIONS
1995 1994
---- ----
Current $106,000 (136,000)
Deferred 73,000 (300,000)
-------- --------
Total continuing operations $179,000 (436,000)
-------- --------
-------- --------
DISCONTINUED OPERATIONS
1995 1994
---- ----
Current $ - (16,000)
Deferred 227,000 -
-------- --------
Total continuing operations $227,000 (16,000)
-------- --------
-------- --------
The (provision) benefit for income taxes differs from the amount computed
at the federal statutory rate as follows:
CONTINUING OPERATIONS
1995 1994
---- ----
Income tax (expense) benefit at federal
statutory rates $158,000 (392,000)
State income taxes 23,000 (50,000)
Other (2,000) 6,000
-------- --------
Total current income taxes $179,000 (436,000)
-------- --------
-------- --------
F-14
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(9) INCOME TAXES - CONTINUED
DISCONTINUED OPERATIONS
1995 1994
---- ----
Income tax (expense) benefit at federal statutory rates $227,000 (7,000)
State income taxes 20,000 (2,000)
Other (20,000) (7,000)
-------- -------
Total $227,000 (16,000)
-------- -------
-------- -------
Deferred income taxes have been established to reflect timing differences
between financial reporting and income tax purposes. The primary differences
are as follows:
1995 1994
---- ----
Condemnation sales $ 300,000 300,000
Discontinued operations (227,000) -
Net operating loss carryforward (73,000) -
--------- --------
$ - 300,000
--------- --------
--------- --------
(10) LITIGATION
The Company is involved in certain litigation where the Company has
prevailed. The opposing side has filed an appeal of the decision. It is not
known the final outcome but the Company is vigorously defending its position.
Management believes that the final outcome will not have a material effect on
the financial position of the Company.
The Company in June 1996, entered into a settlement agreement with
shareholders and former officers of the Company which had filed litigation
against certain of the Company's Board of Directors and officers and who the
Company had filed litigation against. The terms of the settlement provide
that the Company pay all legal costs related to the legal action for all
parties with the exception of the majority shareholder which will receive
reimbursement up to $81,000. The Company will sell 1,275,912 shares of its
common stock for $3.35 per share to an other entity with the Company
providing limited recourse financing for a portion of the purchase price and
the purchase 40,552 shares at $3.35 per share from certain existing
shareholders. Certain existing employment agreements are terminated and the
Company will enter into new employment agreements with a former shareholder
and the new majority shareholder.
F-15
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(11) CONTINGENCIES
The Company, through predecessor entities, has understandings where certain
individuals may be entitled to an interest in the ownership or profits on
unidentified projects. This contingency is currently in litigation on
appeal.
In addition, the Company has accrued amounts totaling $37,771 for potential
amounts owing from transactions which took place a number of years ago. It
cannot be determined if and when such amounts will be paid. That balance is
included in accrued expenses.
The Company is aware of certain unasserted claims which could result in
claims in excess of amounts accrued in the financial statements. Management
believes that any such claim, if asserted, will not result in any adverse
affect on the financial position of the Company.
The Company is in the process of remediation of the service station
property. It is not known if any additional costs over what the Company has
accrued will be needed to complete the remediation.
(12) COMMITMENTS
The Company leases its office facility under a year lease requiring monthly
payments of $950 which expires in August 1996. Lease expense was $11,400 in
1995.
The Company leases certain equipment under operating lease agreements.
Those agreements require monthly payments of $531 which expire between 1996
and 1998. Annual lease expense under these agreements is $6,089 and $2,375
for the years ended December 31, 1995 and 1994. Minimum payments under the
noncancellable operating leases are as follows:
YEAR AMOUNT
---- ------
1996 $ 6,761
1997 6,366
1998 2,653
--------
Total $15,780
F-16
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(13) SIGNIFICANT CUSTOMERS
The Company had land sales to the following significant customers in 1995
and 1994:
1995 1994
---- ----
Customer A $ - 979,000
Customer B $152,000 254,000
(14) STOCK OPTION PLAN
In 1994, the Company established a stock option plan wherein the five
directors and the Company's president were each granted options to acquire
25,000 shares of the Company's stock at $2.50 per share. The options vest as
follows: 9,000 shares at the option date and 8,000 shares in 1995 and 8,000
shares in 1996.
(15) SUBSEQUENT EVENTS
The Company had the following material subsequent events:
- Effective March 31, 1996, the Company disposed of Midwest Railroad
which was a wholly owned subsidiary. See note 7.
- The Company settled certain litigation relating to shareholders and
members of the Board of Directors. See note 11.
- The Company entered into an agreement where it agreed to purchase
40,552 shares of the Company stock for a cash price of $3.35 per
share.
- The Company entered into an agreement where it sold 1,275,912
shares of the Company at $3.35 per share or $4,274,305. The stock
sell price included $641,146 cash plus a note receivable of
$3,633,159. The note requires interest based upon the federal rate
published by the Internal Revenue Service. Interest on the note
for the first year is paid at closing with the remaining interest
to be paid annually commencing on the second anniversary date of
the note. All principal and unpaid interest is due August 1, 2001.
The note is secured by the stock sold plus a guarantee from the
purchaser of 25% of the original outstanding note.
F-17
<PAGE>
UTAH RESOURCES
INTERNATIONAL, INC.
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<C> <S>
Cash and cash equivalents $ 257,900
Accounts receivable 281,982
Notes receivable 157,454
Income tax receivable 222,128
Property and equipment, net of
accumulated depreciation and
amortization of $43,229 30,755
Real estate held for resale 655,133
Royalty interest in petroleum and mineral
production, net of amortization of $41,034 9,176
Other assets 10,599
----------
$1,625,127
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 191,389
Accrued expenses 253,423
Earnest money deposits 36,000
Notes payable 180,357
Net liabilities of discontinued operations 48
-----------
Total liabilities 661,217
-----------
Minority interest 147,434
Stockholders' equity:
Common stock; par value $.10 per share,
5,000,000 shares authorized, 2,522,808
shares issued and outstanding 252,281
Additional paid-in capital 4,431,232
Stock subscription receivable (3,633,159)
Retained earnings (233,878)
----------
Total stockholders' equity 816,476
----------
$1,625,127
----------
----------
</TABLE>
Q-1
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<C> <S> <S> <S> <S>
Sales $ - 128,462 178,070 459,201
Cost of sales - 38,419 60,286 117,831
------ ------- ------- -------
Gross profit - 90,043 117,784 341,370
General and administrative expenses 828,042 104,320 1,066,144 941,534
-------- ------- --------- --------
Loss from operations (828,042) (14,277) (948,360) (600,164)
-------- ------- --------- --------
Other income (expense):
Royalty income 45,674 17,527 120,574 43,479
Interest and dividend income 49,468 48,304 41,054 54,491
Other income 600 - 600 -
Interest expense (1,766) 5,452 (36,038) (20,825)
-------- ------- --------- --------
Total other income 93,976 71,283 126,190 77,145
-------- ------- --------- --------
Loss before minority interest and
income taxes (734,066) 57,006 (822,170) (523,019)
Minority interest in net loss
of subsidiaries 3,631 13,494 4,679 13,494
-------- ------- --------- --------
Loss before provision for income
taxes and discontinued operations (730,435) 70,500 (817,491) (509,525)
Income tax (provision)
benefit - deferred - (18,000) 29,600 197,000
-------- ------- --------- --------
Loss from continuing operations (730,435) 52,500 (787,891) (312,525)
</TABLE>
Q-2
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<C> <S> <S> <S> <S>
Discontinued operations:
Income (loss) from discontinued
operations net of income taxes
of $-0-, $-0-, $68,000 and $-0- $ - 60,392 132,140 33,016
Loss from disposal of discontinued
operations net of income tax
benefit of $-0-, $-0-, $48,200,
and $-0- (15,878) - (109,572) -
--------- --------- --------- --------
Total discontinued operations (15,878) 60,392 22,568 33,016
--------- --------- --------- --------
Net (loss) income $(746,313) 112,892 (765,323) (279,509)
--------- --------- --------- --------
--------- --------- --------- --------
Loss per share $ (.30) .06 (.37) (.14)
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average shares 2,522,808 1,976,280 2,075,068 1,976,280
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Q-3
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(765,323) (279,509)
Less income from discontinued operations (132,140) (33,016)
Add loss from disposition of discontinued operation 109,572 -
Adjustments to reconcile net loss
to net cash (used in) operating
activities:
Common stock issued for services - 122,667
Depreciation and amortization 6,820 8,175
Minority interest in net loss
of subsidiaries (4,679) (13,494)
(Increase) decrease in:
Accounts receivable 90,640 (83,478)
Real estate held for resale 199,688 (128,220)
Income tax receivable (9,800) (106,265)
(Decrease) increase in:
Accounts payable (85,057) 57,957
Accrued expenses (47,871) 45,137
Deferred income tax - (314,000)
--------- ---------
Net cash used in continuing operations (638,150) (724,046)
Net cash provided by discontinued operations 23,273 (66,111)
--------- ---------
Net cash used in
operating activities (614,877) (790,157)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (616) (185,166)
Increase in notes receivable - -
Payments on notes receivable 21,535 2,978
Decrease in other assets - -
--------- ---------
Cash provided by (used in) investing activities -
continuing operations 20,919 (182,188)
Cash from investing activities - discontinued operations - 38,419
--------- ---------
Net cash provided by
Investing activities 20,919 (143,769)
--------- ---------
Q-4
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (419,270) (45,802)
Investments in subsidiary - -
Issuance of common stock 641,146 (128,443)
Purchase of common stock (135,849) 3,684
--------- ---------
Cash used in financing activities - continued operations 86,027 (170,561)
Cash for financing activities - discontinued operations - (98,383)
--------- ---------
Net cash provided by
financing activities 86,027 (268,944)
--------- ---------
Decrease in cash (507,931) (1,202,870)
Cash and cash equivalents, beginning of period 765,831 2,138,795
--------- ---------
Cash and cash equivalents, end of period $ 257,900 935,925
--------- ---------
--------- ---------
Q-5
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - CONTINUED
SUPPLEMENTAL SCHEDULE FOR NON-CASH ACTIVITIES:
1996
----
In July 1996, the Company sold 1,275,912 shares of the Company's common
stock for $3.35 per share. The Company received $641,146 in cash and a
receivable for the balance of $3,633,159.
The Company also issued 2,625 shares of stock to an individual to relieve a
liability that had been accrued in the amount of $11,180.
As part of the split up with Midwest Railroad, the Company received back
590,000 shares of its own common stock.
1995
----
On June 13, 1995, the Company issued 590,000 shares of the Company's common
stock to Midwest Railroad Construction and Maintenance Corporation in
exchange for 100 percent of Midwest. The following is a summary of the
acquired assets and liabilities:
Cash $ 7,368
Accounts receivable 922,693
Notes receivable 183,915
Inventory 158,731
Net property and equipment 896,011
Other assets 2,550
Accounts payable (736,685)
Accrued expenses (65,769)
Notes payable (741,765)
Deferred income taxes (40,000)
---------
Common stock issued for subsidiary $ 587,049
---------
---------
Q-6
<PAGE>
UTAH RESOURCES INTERNATIONAL
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(1) The unaudited financial statements include the accounts of Utah
Resources International, Inc., and subsidiaries and include all
adjustments (consisting of normal recurring items) which are, in the
opinion of management, necessary to present fairly the financial
position as of September 30, 1996 and the results of operations for
three and nine months ended September 30, 1996 and 1995, and cash
flows for the nine months ended September 30, 1996 and 1995. The
results of operations for the three and nine months ended September
30, 1996 are not necessarily indicative of the results to be expected
for the entire year.
(2) Loss per common share is based on the weighted average number of
shares outstanding during the period.
Q-7
<PAGE>
UTAH RESOURCES INTERNATIONAL, INC.
BOOK VALUE PER SHARE
Book Value - December 31, 1995 $.58 per share
----
----
Book Value - September 30, 1996 $.33 per share
----
----
S-1
<PAGE>
EXHIBIT A
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
UTAH RESOURCES INTERNATIONAL, INC.
To the Secretary of State:
Pursuant to the provisions of the Utah Business Corporation Act, Section
16-10a-1003, the undersigned corporation hereby amends its Articles of
Incorporation, and for that purpose submits the following statement:
(1) The name of the corporation is: Utah Resources International, Inc.;
(2) The text of each amendment adopted is:
The Articles of Incorporation of Utah Resources International, Inc. (the
"Company"), are hereby amended as follows. Article Fourth of the Company's
Articles of Incorporation is hereby deleted and replaced with the following:
FOURTH. That the total authorized capital stock of this corporation
is Five Hundred Thousand Dollars ($500,000) divided into 5,000
shares of the common capital stock with a par value of One Hundred
Dollars ($100) per share. Shareholders shall have no preemptive
rights to acquire additional shares of this corporation.
(3) the manner (if not set forth in the amendment) of implementation of
any exchange, reclassification, or cancellation of issued shares
is as follows:
Immediately prior to the filing of the Articles of Amendment, the total
number of shares of all classes of stock which the Company has authority to
issue is 5,000,000 shares of common, $.10 par value per share stock (the
"Common Stock"). As of ___ p.m., on the date of the filing of this Amendment
with the Secretary of State of Utah (the "Filing Date"), and subject to
majority approval by the Company's shareholders, each 1,000 shares of common,
$.10 par value per share stock then outstanding shall be converted into one
share of common $100.00 par value per share stock of the Company (the "New
Stock"), with shareholders holding fewer than 1,000 shares or any increment
thereof (the "Fractional Shareholders") being given the option to either
(A) receive cash in lieu of fractional shares of stock, or (B) purchase from
the Company that portion of fractional shares of the Common Stock needed to
increase their share holdings to the next one whole share of New Stock (the
"Reverse Split"). The Company will then have 5,000 authorized shares of
common, $100.00 par value per share stock. The Reverse Split is designed to
result in reducing the number of the Company's shareholders to less than 300,
so that the Company will no longer be required to be an SEC-reporting
company. These Articles of Amendment will not effect a change in the amount
of stated capital in the Company.
<PAGE>
Fractional Shareholders who do not elect to round up their holdings at
least ten days prior to _________ __, 1997 (the "Annual Meeting Date") will
have their fractional shares automatically converted into the right to
receive cash in lieu of the fractional shares of New Stock otherwise issuable
to such holder at $3.35 per share.
Fractional shareholders who do elect to round up their holdings to
aggregate one whole share of New Stock at least ten days prior to the Annual
Meeting Date will, on the Annual Meeting Date, have their then whole shares
of Common Stock automatically converted into shares of New Stock.
Holders of record of 1,000 or more shares of Common Stock on
________ __, 1997 (the "Record Date") will have their shares automatically
converted after the Reverse Split into the number of whole and fractional
shares of New Stock equal to the number of shares of Common Stock outstanding
and held by them on the Record Date, prior to the Effective Date divided by
1,000.
(4) Amendment's Adoption:
The Company's Board approved the Amendment on January 22, 1997, and the
Shareholders approved the Amendment at their Annual Meeting on ________ __,
1997, to be effective immediately.
There are approximately 2,522,808 issued shares of the Company's stock.
Of this, at least 1,275,912 or 50.5% was voted in favor of the Amendment,
which was sufficient for its approval.
Dated as of ______________.
UTAH RESOURCES INTERNATIONAL, INC.
-----------------------------------
John Fife, President and CEO
<PAGE>
EXHIBIT B
PART 13.DISSENTERS' RIGHTS
16-10A-1301 DEFINITIONS.--For purposes of Part 13:
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by merger
or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 16-10a-1302 and who exercises that right when and
in the manner required by Sections 16-10a-1320 through 16-10a-1328.
(4) "Fair value" with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the statutory rate set forth in
Section 15-1-1, compounded annually.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
that are registered in the name of a nominee to the extent the beneficial owner
is recognized by the corporation as the shareholder as provided in
Section 16-10a-723.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
16-10A-1302 RIGHT TO DISSENT.--(1) A shareholder, whether or not entitled
to vote, is entitled to dissent from, and obtain payment of the fair value of
shares held by him in the event of, any of the following corporate anions:
(a) consummation of a plan of merger to which the corporation is a party
if:
(i) shareholder approval is required for the merger by Section 16-10a-1103
or the articles of incorporation; or
(ii) the corporation is a subsidiary that is merged with its parent under
Section 16-10a-1104;
(b) consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired;
(c) consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of the corporation for which a shareholder
vote is required under Subsection 16-10a-1202(1), but not including a sale for
cash pursuant to a plan by which all or substantially all of the net proceeds of
the sale will be distributed to the shareholders within one year after the date
of sale; and
(d) consummation of a sale, lease, exchange, or other disposition of all,
or substantially all, of the property of an entity controlled by the corporation
if the shareholders of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to Subsection 16-10a-1202(2).
(2) A shareholder is entitled to dissent and obtain payment of the fair
value of his shares in the event of any other corporate action to the extent the
articles of incorporation, bylaws, or a resolution of the board of directors so
provides.
(3) Notwithstanding the other provisions of this part, except to the
extent otherwise provided in the articles of incorporation, bylaws, or a
resolution of the board of directors, and subject to the limitations set forth
in Subsection (4), a shareholder is not entitled to dissent and obtain payment
under Subsection (1) of the fair value of the shares of any class or series of
shares which either were listed on a national securities
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<PAGE>
exchange registered under the federal Securities Exchange Act of 1934, as
amended, or on the National Market System of the National Association of
Securities Dealers Automated Quotation System, or were held of record by more
than 2,000 shareholders, at the time of:
(a) the record date fixed under Section 16-10a-707 to determine the
shareholders entitled to receive notice of the shareholders' meeting
at which the corporate action is submitted to a vote;
(b) the record date fixed under Section 16-10a-704 to determine
shareholders entitled to sign writings consenting to the proposed corporate
action; or
(c) the effective date of the corporate action if the corporate action is
authorized other than by a vote of shareholders.
(4) The limitation set forth in Subsection (3) does not apply if the
shareholder will receive for his shares, pursuant to the corporate action,
anything except:
(a) shares of the corporation surviving the consummation of the plan of
merger or share exchange;
(b) shares of a corporation which at the effective date of the plan of
merger or share exchange either will be listed on a national securities exchange
registered under the federal Securities Exchange Act of 1934, as amended, or on
the National Market System of the National Association of Securities Dealers
Automated Quotation System, or will be held of record by more than 2,000
shareholders;
(c) cash in lieu of fractional shares; or
(d) any combination of the shares described in Subsection (4), or cash in
lieu of fractional shares.
(5) A shareholder entitled to dissent and obtain payment for his shares
under this part may not challenge the corporate action creating the entitlement
unless the action is unlawful or fraudulent with respect to him or to the
corporation.
16-10A-1303 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(1) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if the shareholder dissents with respect to all
shares beneficially owned by any one person and causes the corporation to
receive written notice which states the dissent and the name and address of each
person on whose behalf dissenters' rights are being asserted. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which the shareholder dissents and the other shares held of record by him were
registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(a) the beneficial shareholder causes the corporation to receive the
record shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) the beneficial shareholder dissents with respect to all shares of
which he is the beneficial shareholder.
(3) The corporation may require that, when a record shareholder dissents
with respect to the shares held by any one or more beneficial shareholders, each
beneficial shareholder must certify to the corporation that both he and the
record shareholders of all shares owned beneficially by him have asserted, or
will timely assert, dissenters' rights as to all the shares unlimited on the
ability to exercise dissenters' rights. The certification requirement must be
stated in the dissenters' notice given pursuant to Section 16-10a-1322.
DECISIONS UNDER PRIOR LAW
.1 DISPUTING STOCKHOLDERS' REMEDY IN FEDERAL COURTS.--Dissenting
stockholders' remedies are available only in state courts. MCGHEE V GENERAL
FINANCE CORP., 84 FSUPP 24 (WD VA 1949); SHERIDAN V AMERICAN MOTORS CORP, 132
FSUPP 121 (ED PA 1955).
16-10A-1320 NOTICE OF DISSENTERS' RIGHTS.--(1) If a proposed corporate
action creating dissenters' rights under Section 16-10a-1302 is submitted to a
vote at a shareholders' meeting, the meeting
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<PAGE>
notice must be sent to all shareholders of the corporation as of the applicable
record date, whether or not they are entitled to vote at the meeting. The
notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this part. The notice must be accompanied by a copy of
this part and the materials, if any, that under this chapter are required to be
given the shareholders entitled to vote on the proposed action at the meeting.
Failure to give notice as required by this subsection does not affect any action
taken at the shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10a-704, any written or oral solicitation of a shareholder to execute
a written consent to the action contemplated by Section 16-10a-704 must be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this part, by a copy of this
part, and by the materials, if any, that under this chapter would have been
required to be given to shareholders entitled to vote on the proposed action if
the proposed action were submitted to a vote at a shareholders' meeting.
Failure to give written notice as provided by this subsection does not affect
any action taken pursuant to Section 16-10a-704 for which the notice was to have
been given.
16-10A-1321 DEMAND FOR PAYMENT--ELIGIBILITY AND NOTICE OF INTENT.--(1) If
a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights:
(a) must cause the corporation to receive, before the vote is taken,
written notice of his intent to demand payment for shares if the proposed action
is effectuated; and
(b) may not vote any of his shares in favor of the proposed action.
(2) If a proposed corporate action creating dissenters' rights under
Section 16-10a-1302 is authorized without a meeting of shareholders pursuant to
Section 16-10a-704, a shareholder who wishes to assert dissenters' rights may
not execute a writing consenting to the proposed corporate action.
(3) In order to be entitled to payment for shares under this part, unless
otherwise provided in the articles of incorporation, bylaws, or a resolution
adopted by the board of directors, a shareholder must have been a shareholder
with respect to the shares for which payment is demanded as of the date the
proposed corporate action creating dissenters' rights under Section 16-10a-1302
is approved by the shareholders, if shareholder approval is required, or as of
the effective date of the corporate action if the corporate action is authorized
other than by a vote of shareholders.
(4) A shareholder who does not satisfy the requirements of Subsections (1)
through (3) is not entitled to payment for shares under this part.
16-10A-1322 DISSENTERS' NOTICE.--(1) If a proposed corporate action
creating dissenters' rights under Section 16-10a-1302 is authorized, the
corporation shall give a written dissenters' notice to all shareholders who are
entitled to demand payment for their shares under this part.
(2) The dissenters' notice required by Subsection (1) must be sent no
later than ten days after the effective date of the corporate action creating
dissenters' rights under Section 16-10a-1302, and shall:
(a) state that the corporate action was authorized and the effective date
or proposed effective date of the corporate action;
(b) state an address at which the corporation will receive payment demands
and an address at which certificates for certificated shares must be deposited;
(c) inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(d) supply a form for demanding payment, which form requests a dissenter
to state an address to which payment is to be made;
(e) set a date by which the corporation must receive the payment demand
and by which certificates for certificated shares must be deposited at the
address indicated in the dissenters' notice, which dates may
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<PAGE>
not be fewer than 30 nor more than 70 days after the date the dissenters' notice
required by Subsection (1) is given;
(f) state the requirement contemplated by Subsection 16-10a-1303(3), if
the requirement is imposed; and
(g) be accompanied by a copy of this part.
16-10A-1323 PROCEDURE TO DEMAND PAYMENT.--(1) A shareholder who is given
a dissenters' notice described Section 16-10a-1322, who meets the requirements
of Section 16-10a-1321, and wishes to assert dissenters' rights must, in
accordance with the terms of the dissenters' notice:
(a) cause the corporation to receive a payment demand, which may be the
payment demand form contemplated in Subsection 16-10a-1322(2)(d), duly
completed, or may be stated in another writing;
(b) deposit certificates for his certificated shares in accordance with
the terms of the dissenters' notice; and
(c) if required by the corporation in the dissenters' notice described in
Section 16-10a-1322, as contemplated by Section 16-10a-1327, certify in writing,
in or with the payment demand, whether or not he or the person on whose behalf
he asserts dissenters' rights acquired beneficial ownership of the shares before
the date of the first announcement to news media or to shareholders of the terms
of the proposed corporate action creating dissenters' rights under
Section 16-10a-1302.
(2) A shareholder who demands payment in accordance with Subsection (1)
retains all rights of a shareholder except the right to transfer the shares
until the effective date of the proposed corporate action giving use to the
exercise of dissenters' rights and has only the right to receive payment for the
shares after the effective date of the corporate action.
(3) A shareholder who does not demand payment and deposit share
certificates as required, by the date or dates set in the dissenters' notice, is
not entitled to payment for shares under this part.
16-10A-1324 UNCERTIFICATED SHARES.--(1) Upon receipt of a demand for
payment under Section 16-10a-1323 from a shareholder holding uncertificated
shares, and in lieu of the deposit of certificates representing the shares, the
corporation may restrict the transfer of the shares until the proposed corporate
action is taken or the restrictions are released under Section 16-10a-1326.
(2) In all other respects, the provisions of Section 16-10a-1323 apply to
shareholders who own uncertificated shares.
16-10A-1325 PAYMENT.--(1) Except as provided in Section 16-10a-1327, upon
the later of the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302, and receipt by the corporation of each payment
demand pursuant to Section 16-10a-1323, the corporation shall pay the amount the
corporation estimates to be the fair value of the dissenters' shares, plus
interest to each dissenter who has complied with Section 16-10a-1323, and who
meets the requirements of Section 16-10a-1321, and who has not yet received
payment.
(2) Each payment made pursuant to Subsection (1) must be accompanied by:
(a) (i) (A) the corporation's balance sheet as of the end of its most
recent fiscal year or if not available, a fiscal year ending not more than 16
months before the date of payment,
(B) an income statement for that year;
(C) a statement of changes in shareholders' equity for that year and a
statement of cash flow for that year, if the corporation customarily provides
such statements to shareholders; and
(D) the latest available interim financial statements, if any
(ii) the balance sheet and statements referred to in Subsection (i) must be
audited if the corporation customarily provides audited financial statements to
shareholders;
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<PAGE>
(b) a statement of the corporation's estimate of the fair value of the
shares and the amount of interest payable with respect to the shares;
(c) a statement of the dissenter's right to demand payment under
Section 16-10a-1328; and
(d) a copy of this part.
16-10A-1326 FAILURE TO TAKE ACTION.--(1) If the effective date of the
corporate action creating dissenters' rights under Section 16-10a-1302 does not
occur within 60 days after the date set by the corporation as the date by which
the corporation must receive payment demands as provided in Section 16-10a-1322,
the corporation shall return all deposited certificates and release the transfer
restrictions imposed on uncertificated shares, and who submitted a demand for
payment pursuant to Section 16-10a-1323 shall thereafter have all rights of a
shareholder as if no demand for payment had been made.
(2) If the effective date of the corporate action creating dissenters'
rights under Section 16-10a-1302 occurs more than 60 days after the date set by
the corporation as the date by which the corporation must receive payment
demands as provided in Section 16-10a-1322 then the corporation shall send a new
dissenters' notice, as provided in Section 16-10a-1322 and the provisions of
Sections 16-10a-1323 through 16-10a-1328 shall again be applicable.
16-10A-1327 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED AFTER
ANNOUNCEMENT OF PROPOSED CORPORATE ACTION.--(1) A corporation may, with the
dissenters' notice given pursuant to Section 16-10a-1302, state the date of the
first announcement to news media or to shareholders of the terms of the proposed
corporate action creating dissenters' rights under Section 16-10a-1302 and state
that a shareholder who asserts dissenters' rights must certify in writing, in or
with the payment demand whether or not he or the person on whose behalf he
asserts dissenters' rights acquired beneficial ownership of the shares before
that date. With respect to any dissenter who does not certify in writing, in or
with the payment demand that he or the person on whose behalf the dissenters'
rights are being asserted, acquired beneficial ownership of the shares before
that date, the corporation may, in lieu of making the payment provided in
Section 16-10a-1325, offer to make payment if the dissenter agrees to accept it
in full satisfaction of the demand.
(2) An offer to make payment under Subsection (1) shall include or be
accompanied by the information required by Subsection 16-10a-1325(2).
16-10A-1328 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.--
(1) A dissenter who has not accepted an offer made by a corporation under
Section 16-10a-1327 may notify the corporation in writing of his own estimate of
the fair value of his shares and demand payment of the estimated amount, plus
interest, less any payment made under Section 16-10a-1325, if:
(a) the dissenter believes that the amount paid under Section 16-10a-1325
or offered under Section 16-10a-1327 is less than the fair value of the shares;
(b) the corporation fails to make payment under Section 16-10a-1325 within
60 days after the date set by the corporation as the date by which it must
receive the payment demand; or
(c) the corporation, having failed to take the proposed corporate action
creating dissenters' rights, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares as required
by Section 16-10a-1326.
(2) A dissenter waives the right to demand payment under this section
unless he causes he corporation to receive the notice required by Subsection (1)
within 30 days after the corporation made or offered payment for his shares.
16-10A-1330 JUDICIAL APPRAISAL OF SHARES--COURT ACTION.--(1) If demand for
payment under Section 16-10a-1328 remains unresolved, the corporation shall
commence a proceeding within
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60 days after receiving the payment demand contemplated by Section 16-10a-1328,
and petition the court to determine the fair value of the shares and the amount
of interest. If the corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unresolved the
amount demanded.
(2) The corporation shall commence the proceeding described in
Subsection (1) in the district court of the county in this state where the
corporation's principal office, or if it has no principal office in this state,
the county where its registered office is located. If the corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with, or whose shares were acquired by, the foreign
corporation was located.
(3) The corporation shall make all dissenters who have satisfied the
requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or
not they are residents of this state whose demands remain unresolved, parties to
the proceeding commenced under subsection (2) as an action against their shares.
All such dissented who are named as parties just be served with a copy of the
petition. Service on each dissenter may be by registered or certified mail to
the address stated in his payment demand made pursuant to Section 16-10a-1328.
If no address is stated in the payment demand, service may be made at the
address stated in the payment demand given pursuant to Section 16-10a-1323. If
no address is stated in the payment demand, service may be made at the address
shown on the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares. Service may also be made otherwise
as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under Subsection (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
Subsection (2) is entitled to judgment:
(a) for the amount, if any, by which the court finds that the fair value
of his shares, plus interest, exceeds the amount paid by the corporation
pursuant to Section 16-10a-1325; or
(b) for the fair value, plus interest, of the dissenter's after-acquired
shares for which the corporation elected to withhold payment under
Section 16-10a-1327.
16-10A-1331 COURT COSTS AND COUNSEL FEES.--(1) The court in an appraisal
proceeding commenced under Section 16-10a-1330 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
that the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 16-10a-1328.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of Sections 16-10a-1320 through 16-10a-1328; or
(b) against either the corporation or one or more dissenters, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this part.
(3) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to those counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
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EXHIBIT 4
PRELIMINARY COPY DATED ___________ ____, 1997
FOR REVIEW ONLY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
OF
UTAH RESOURCES INTERNATIONAL, INC.
The undersigned, revoking any proxy heretofore given, hereby appoints John
Fife, who holds the power to appoint a substitute, proxy of the undersigned,
with full power of substitution, with respect to all of the shares of common
stock of Utah Resources International, Inc. in which the undersigned is entitled
to vote at the Annual Meeting of Shareholders of Utah Resources, International,
Inc., to be held on _____________ ___, 1997, and any adjournment thereof.
In his discretion, the proxy is authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
1 PROPOSAL: APPROVAL OF AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO EFFECT THE
REVERSE SPLIT
[] FOR [] AGAINST [] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
2 PROPOSAL: ELECTION OF FIVE DIRECTORS TO HOLD OFFICE UNTIL
THE NEXT ANNUAL MEETING
[] FOR all nominees listed below (except as marked [] WITHHOLD
AUTHORITY to vote for all
to the contrary below) nominees listed
below.
John Fife, David Fife, Lyle Hurd, Mark G. Jones and Stuart B. Peterson
(Instruction: To withhold authority to vote for any individual nominee write
that nominee's name on the line provided below)
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THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
ALL THE NOMINEES LISTED ABOVE.
3 PROPOSAL: AMEND ARTICLE II, SECTION 1 OF THE COMPANY'S BY-LAWS
REGARDING ANNUAL MEETING DATE
[] FOR [] AGAINST [] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
4 PROPOSAL: MARK TECHNOLOGIES CORPORATION PROPOSALS
A) APPOINT A SPECIAL SHAREHOLDERS LEGAL AFFAIRS
COMMITTEE
[] FOR [] AGAINST [] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AGAINST
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
B) CAUSE THE COMPANY TO EFFECT A $4.00 PER SHARE
TENDER OFFER
[] FOR [] AGAINST [] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AGAINST
THE MATTER SPECIFICALLY REFERRED TO ABOVE.
C) APPOINT A SPECIAL SHAREHOLDERS FIDUCIARY DUTY COMMITTEE
[] FOR [] AGAINST [] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED AGAINST THE
MATTER SPECIFICALLY REFERRED TO ABOVE.
Dated , 1997
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Print Name Signature
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Print Name Signature
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(Number of Shares Title
Held of Record)
Please sign as name appears to the left. If stock is registered in the
name of two or more persons, each should sign. Executors, attorneys, corporate
officers, administrators and trustees should add their titles.
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