<PAGE> 1
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Information Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
</TABLE>
INTERNATIONAL BASIC RESOURCES, INC. SEC File No. 1-6110
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
It is intended that the definitive information statement will be
mailed to shareholders on or about April 22, 1997.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
INTERNATIONAL BASIC RESOURCES, INC.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY
INFORMATION STATEMENT
DATE, TIME AND PLACE INFORMATION
A meeting of the shareholders of the Company will be held on May 12,
1997, at the Los Angeles Airport Hilton Hotel, 5711 West Century Boulevard, Los
Angeles, California 90045, at 4:00 P.M.
The principal executive offices of the Company are 1213 Hope Ranch
Lane, Las Vegas, Nevada 89134.
The date on which this Information Statement is being sent to
shareholders is April 22, 1997.
ITEMS TO BE VOTED UPON AT MEETING
It is anticipated that the following items will be voted upon at the
meeting, in addition to any other items which may be proffered by shareholders
for action at the meeting.
1. Election of directors. Management intends to nominate the
following three persons for election as the directors of the Company, to serve
until the next annual meeting of shareholders or until their successors are
otherwise duly elected: Patrick Joseph Magee, Pieter Gerhard Keyfer
Oosthuizen, and Patrick Lappin. Mr. Magee and Mr. Oosthuizen are currently the
only directors of the Company.
The by-laws of the Company provide for 5 directors. Although
management only proposes to nominate persons to fill three of those
directorships, any shareholder, present at the meeting in person or by proxy,
may vote for such persons and/or such other person or persons as he may choose,
in the manner described in the following paragraph.
In the election of directors, each shareholder of record, as of the
close of business on the record date, namely April 9, 1997, is entitled to
cumulate his votes by giving one person for whom he wishes to vote as many
votes as equal the number of directors eligible for election (which is 5),
multiplied by the number of his shares, or by distributing such number of votes
among any number of persons for whom he wishes to vote. The five persons with
the most votes (or all such persons for whom votes have been cast, if less than
five) shall become the directors.
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<PAGE> 3
The by-laws provide that the directors can fill vacancies. Therefore,
if three directors are elected at the shareholders' meeting, the directors who
are elected will have the authority to appoint additional directors to fill
those vacancies, and to hold office until the next annual meeting of
shareholders or until their successors are duly elected.
2. Cancellation of shares. To amend the Articles of Incorporation of
the Company by adding a provision thereto which cancels 29/30 of the
outstanding and issued shares, resulting in each shareholder of the Company
owning, thereafter, one share for each 30 shares previously owned by that
shareholder. The amendment will effectively provide that to the extent a
shareholder owns less than 30 shares, he will thereafter own a fraction of a
share equal to the number of shares he previously owned, divided by 30; and
that to the extent a shareholder owns a number of shares greater than 30, but
not exactly divisible by 30, he shall thereafter own such exact number of
shares, including a fraction of a share, resulting from the division of the
number of shares which he previously owned, divided by 30.
The amendment to the Articles will provide that the number of
authorized shares of the Company will remain at 100,000,000 shares, at a par
value per share of $0.10. As of the present time, there are 54,213,721 shares
issued and outstanding. The amendment will reduce the number of issued and
outstanding shares to 1,807,124 shares. Consequently, if the amendment is
adopted, the Company will be thereafter be authorized to issue 98,192,876
additional shares.
The amendment will add a Section 7 to Article VI ("Capital Stock") of
the Articles, which will read as follows, except for such technical
modifications in wordage as may be required to comply with state law:
"29/30 of the issued and outstanding shares of the Corporation shall
be canceled, effective at the beginning of business on the first business day
following the filing of this resolution of shareholders, amending the articles
of incorporation, with the State of Idaho. The cancellation shall result in
each shareholder, as of the effective time of the cancellation, owning
thereafter 1 share (including a fractional share where the number of shares
owned as of such time is not exactly divisible by thirty) for each thirty
shares or portion thereof owned as of the effective time of the cancellation.
This cancellation of issued and outstanding shares shall not result in any
cancellation of the authorized shares of the Corporation, which shall remain at
100,000,000 shares of common stock of ten cents ($.10) par value per share.
The issued and outstanding shares of the Corporation which are canceled shall
thereafter constitute authorized but unissued shares."
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<PAGE> 4
The shares of the Company are currently listed on the NASDAQ
small-cap market. The last trading price of the Company's stock, on March 31,
1997, was 3/32 of a dollar 9.375 cents per share). Management's purpose in
proposing a consolidation of the shares of the Company, through cancellation of
29/30 of the outstanding shares, is to increase the price of the shares on the
NASDAQ small cap market, with an objective of making the shares more attractive
to potential investors who may choose to purchase the shares in the market, or
to potential investors to whom the Company may choose to offer shares.
Management believes it is likely that the Company will seek, within the next
fiscal quarter, to raise between $1,000,000 and $3,000,000, through the
issuance of authorized but unissued shares, through a private placement outside
of the United States. The purpose of such a placement will be to provide
operating capital for administration and overhead expenditures, and to
otherwise support the Company's development activities at the Port of Ensenada,
Mexico.
Management cannot predict the price at which the Company's shares
will be bid, or trade, on NASDAQ after the shares of the Company are
consolidated. However, it is unlikely that the shares of the Company will be
bid, or trade, at 30 times their present level; and, in fact, it is likely that
they will be bid, and will trade, at substantially below 30 times their present
level. To the extent that is so, the value of each shareholder's shares will
be diluted from their present value. Shareholders who thereafter subscribe to
a future placement, or purchase shares on the open market, will be
correspondingly advantaged. Shares issued in any future placement by the
Company will likely be issued at a price comparable to or below the then market
price of the Company's shares on NASDAQ. To the extent persons are able to
purchase shares at a price lower than 30 times the current market price,
notwithstanding the 1/30 consolidation of shares, such persons will be able to
purchase a higher percentage of the Company's total shares, per $1 paid, than
were the value of each current shareholders' shares not diluted from present
value as the result of the share consolidation.
In any future public or private placement, the Company will not
prevent or discourage current substantial shareholders, officers or directors,
or persons related to the foregoing, from subscribing to shares, and in fact
may solicit equity capital from such persons. Additionally, the Company may in
the future seek to raise equity in amounts greater than $1,000,000 -
$3,000,000, as above described.
Management believes that consolidation of the shares of the Company,
notwithstanding the above-described dilutive effect which is likely, is
advisable in order to attract investors to the Company.
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<PAGE> 5
Management also believes that consolidation of the shares is advisable
for the following reason. The continued listing of the shares of the Company
on the NASDAQ small cap market is dependent upon the Company continuing to meet
the requirements of NASDAQ for continued listing. One of those requirements
(subject to the current exception described below) is that the closing bid
price for the Company's shares be $1 or above, per share. If the closing bid
price is below that level for ten consecutive trading days, the Company's
shares are subject to delisting by NASDAQ. There is currently an exception to
that requirement, where the value of the market float is at least $1 million or
greater, and the capital and surplus of the Company is at least $2 million
dollars. Market float is measured by the number of issued shares (excluding
those shares which are held by officers, directors, or ten percent or greater
shareholders), times the bid price for those shares. At the present time,
management calculates the number of issued shares in the "market float", which
would exclude those shares held by Inland Mortgage & Guaranty Co., Inc. and
Doggart Trading, Ltd. (see table of 5% or greater shareholders, listed in this
Information Statement), as 43,197,348 shares. After consolidation, such number
of shares would total 1,439,912 shares. Consequently, a bid price of $0.70 or
greater would be necessary for the market float of the Company's shares, after
consolidation, to equal $1,000,000 (based upon the current number of shares in
the "market float"). Management cannot assure that the shares of the Company,
after consolidation, will command or continue to command such a bid price.
Therefore, it is possible that consolidation of the Company's shares will
result in the Company's market float, which is now greater than $1,000,000,
thereafter being less than $1,000,000.
However, in February, 1997, the Board of Directors of NASDAQ adopted a
proposed change to its listing requirements, which would eliminate the
$1,000,000 market float exception to the $1 minimum bid price requirement for
continued listing of a company's shares on NASDAQ. This proposed rule is
currently subject to approval by the Securities and Exchange Commission. Under
the new proposed rule, the Company's shares will be subject to delisting if the
closing bid price for its stock, on NASDAQ, is lower than $1 per share for
thirty consecutive trading days. There is be no "market float" exception to
this requirement.
Consequently, if the proposed change in listing requirements is
finalized, the Company's shares, at their current price level, would be
delisted.
While management is hopeful that consolidation of the shares of the
Company will enable the Company to meet a $1 per share minimum bid, necessary
to maintain its listing under the new proposed rule, management cannot
represent that the Company's stock will be bid at that level. It is, in fact,
possible that the bid price for the Company's stock price will not increase
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<PAGE> 6
substantially, or maintain an increased bid price for a substantial period of
time, after a consolidation of the shares. Many factors determine bid price,
particularly the attractiveness of the stock to investors, which in turn
depends upon the success of the Company in its business endeavors. No market
studies or other professional analyses have been done by or on behalf of
management to assess the likely effects of the proposed consolidation of
shares.
3. Change of Name. To amend the Articles of Incorporation to change
the name of the Company to "International Resort Developers, Inc."
Accordingly, the amendment will change Article I ("Name") to read as
follows: "The name of the corporation is International Resort Developers, Inc."
Management believes that such change of name more accurately reflects
the current business of the Company. The former name reflected the former
business of the Company, which was primarily in oil and gas development and
production. The Company no longer engages in the oil and gas business, and is
devoting its entire focus, presently, to the development of its concession at
the Port of Ensenada, Mexico.
4. Appointment of La Voie, Clark, Trading & May, P.C., Tucson,
Arizona, as the accountants to audit the financial statements of the Company
for its fiscal year ending June 30, 1997.
Management intends to seek the proxies of the current five-percent or
greater shareholders (listed below) in support of the above proposals,
including election of Patrick Magee, Patrick Lappin and Pieter Oosthuizen as
the directors of the Company.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
There are currently 54,213,721 shares of common stock outstanding.
Except as described above with respect to cumulative voting for directors,
each share is entitled to one vote on each matter on which shareholders are
entitled to vote at any shareholders' meeting. In order for a meeting, having
been called, to proceed to conduct any business (including adoption of any of
the proposals described above, or the election of directors), a quorum must be
present in person and/or by proxy, namely a majority of the issued and
outstanding shares.
An amendment to the Articles of Incorporation must be adopted by a
vote of shares equal to a majority of all outstanding shares of the Company.
The proposal to appoint La Voie, Clark, Trading & May, P.C., Tucson, Arizona,
as the accountants to audit the financial statements of the Company for its
fiscal year ending June
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<PAGE> 7
30, 1997, must be adopted by a majority of the shares represented at the
meeting.
Shareholders of record as of the close of business on April 9, 1997,
shall be the shareholders of the Company who are entitled to vote at the
meeting of shareholders on May 12, 1997, and whose shares will be counted to
determine if a quorum is represented at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following are believed by management to be the beneficial owners
of more than 5% of the Company's common stock (which is the only outstanding
class of stock). In certain regards, these holdings differ from the amounts
indicated on records of the transfer agent of the Company, as described in more
detail in footnote 2 below, and to that extent cannot be verified by the
Company.
<TABLE>
<CAPTION>
Title of Class Name and Address Number of Percentage
- -------------- ---------------- ---------- ----------
of Beneficial Shares of Class
------------- ------ --------
Owner
-----
<S> <C> <C> <C>
Common Inland Mortgage 6,811,000 12.6
& Guaranty
Company, Inc.(1)
1929 Westgate Road
Springfield, OH 45504
Common Walworth Trust (2) 2,800,000 5.2
5th Floor
Anderson Square Bldg.
Georgetown
Grand Cayman, BWI
Common Kestrel Management (2) 2,842,858 5.2
Corporation
Lavaterstrasse 45
Zurich 8022
Switzerland
</TABLE>
6
<PAGE> 8
<TABLE>
<S> <C> <C>
Common Gerald Carden 4,300,000 7.9
417 Lynnwood Drive
Nashville, TN 37205
Common Doggart Trading,Ltd.(2)(3) 5,880,591 10.5
5th Floor
Anderson Square Building
Georgetown, Grand Cayman
Cayman Islands, B.W.I.
Common Patrick J. Magee (4) 5,880,591 10.5
49 Botanic Avenue,
Belfast,
Ireland BT7-1JL
</TABLE>
(1) The records of the transfer agent indicate that Inland Mortgage
& Guaranty Company, Inc. is the owner of 3,811,000 shares. However the Company
has been informed by Inland Mortgage & Guaranty Company, Inc. that its
beneficial ownership is as shown in the table. The Company has also been
informed that Inland Mortgage & Guaranty Company, Inc. is a wholly owned
subsidiary of B.M. Woods, Inc., a company owned (one-third each) by Bryan D.
Miller (a former member of the Board of Directors of International Basic
Resources, Inc.), Michael Miller and Stephen Miller, who are the children of
M.K. Miller, former Chairman of the Board of Directors of International Basic
Resources, Inc.
(2) The natural person who is identified as the controlling
shareholder in Kestrel Management Corporation, in a Form 13-D filed with the
Securities and Exchange Commission, is Michael Harrison, 133 Ebury Street,
London SW1, England. The Company has been informed that the controlling person
with respect to the Walworth Trust is Euro Bank Corporation as Trustee, P.O.
Box 1702, Grand Cayman, British West Indies. The Company has been further
informed that the Managing Director of Euro Bank Corporation is Don Stewart,
P.O. Box 1792, Grand Cayman, British West Indies. Euro Bank is a private
corporation, and the Company has been informed that the identities of its
shareholders are confidential. It is a licensed bank and trust company in the
Cayman Islands.
It is further reported to the Company by Patrick J. Magee, President
and CEO of the Company, that at present he is the sole beneficial owner of
Doggart Trading, Ltd.
(3) Doggart Trading, Ltd. is the owner of record of 4,205,373 shares.
However, pursuant to agreement between Doggart Trading Co., Ltd. and the
Company, the Company has the obligation to issue 1,675,218 additional shares to
Doggart Trading, Ltd. in satisfaction of advances of $1,280,252 made by Doggart
Trading, Ltd. during fiscal years ended June 30, 1995 and June 30, 1996, as
well as the first two quarters of fiscal year ended June 30, 1997.
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<PAGE> 9
The shares have not yet been issued, but are included in the total of shares
shown for Doggart.
(4) These are the same shares shown in the table as owned by Doggart
Trading, Ltd. Patrick J. Magee, President and CEO of International Basic
Resources, Inc., has informed the Company that he is the sole shareholder of
Doggart Trading, Ltd.
_______________________
The records of the transfer agent indicate that Penistone Finance SA,
P.O. Box N 408, 6 Place Des Fauz Vives, Geneva 3 1211, Switzerland, is the
holder of 3,992,857 shares as of the date of filing of this report. Penistone
as advised the Company that it has transferred ownership of all but 750,000 of
these shares.
The following are the ownership interests of management (including
nominees for Director) in the common stock of the Company.
<TABLE>
<CAPTION>
Title of Class Name and Address Number of Percentage
- -------------- ---------------- ---------- ----------
of Beneficial Shares of Class
------------- ------ --------
Owner
-----
<S> <C> <C>
Officers and 5,880,591 10.5
Directors
as a group (1)
</TABLE>
(1) These constitute the shares beneficially owned by Doggart
Trading, Ltd., as reported above. Patrick J. Magee, President and CEO of
International Basic Resources, Inc., has informed the Company that he is the
sole shareholder of Doggart Trading, Ltd.
Doggart Trading, Ltd. ("Doggart") is a corporation, organized in the
Cayman Islands, which entered into an agreement dated March 4, 1994, with
Addendum dated June 7, 1994, pursuant to which it transferred to International
Basic Resources, Inc., in June, 1994, 8.5 miles of coastal beach-front property
in the State of Campeche, Mexico, in consideration of the issuance of
37,000,000 shares of International Basic Resources, Inc. to Doggart and/or its
designees, including the then-shareholders of Doggart. The above-identified
holdings of Walworth Trust, Kestrel Management Corporation, as well as
4,000,000 of the shares held by Doggart
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<PAGE> 10
Trading, Ltd., constitute a portion of those shares. Additionally, the shares
held by Mr. Cardin were transferred to him by a former shareholder of Doggart
Trading, Ltd. to whom was issued a portion of the 37,000,000 shares.
MEMBERS OF BOARD OF DIRECTORS (INCLUDING NOMINEES THEREFOR)
Directors
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
NAME AND AGE TERM PERIOD SERVED OTHER POSITIONS
AS MEMBER OF BOARD HELD WITH BUSINESS
OF DIRECTORS OF COMPANY EXPERIENCE
COMPANY
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Patrick J. Magee Until next 02/08/97 to President, CEO and **
Age: 52 meeting of share- present Chief Financial
holders Officer of Company,
(05/12/97) 02/08/97 to
present; President
and member of Board
of Directors of
Playas Palmeras,
S.A. and Ensenada
Cruiseport Village,
S.A. de C.V.,
04/01/97 to present
-----------------------------------------------------------------------------------------------------
Peter G.K. Until next 03/29/97 to Chairman of the **
Oosthuizen meeting of share- present Board of Directors
Age: 65 holders of Company,
(05/12/97) 3/29/97 to present
-----------------------------------------------------------------------------------------------------
Patrick Lappin Nominee for N.A. N.A. **
Age: 46 Director
-----------------------------------------------------------------------------------------------------
</TABLE>
**See description of business experience during the past five years on pages
following.
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EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
NAME POSITIONS HELD PERIOD SERVED BUSINESS
AND WITH COMPANY AS SUCH EXPERIENCE
AGE
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Patrick J. Magee President, CEO, Chief 02/08/97 to present **
Age: 52 Financial Officer, and
member of Board of Directors
of Company;
President and member of 04/01/97 to present
Board of Directors of Playas
Palmeras, S.A. and Ensenada
Cruiseport Village, S.A. de
C.V.
---------------------------------------------------------------------------------------------------------------
David J. Lawrence General Director, Ensenada 10/01/94 to present **
Cruiseport Village, S.A. de
C.V.
Member of Board of Directors 04/01/97 to present
of Playas Palmeras, S.A. and
Ensenada Cruiseport Village,
S.A. de C.V.
---------------------------------------------------------------------------------------------------------------
Steven B. Barker Manager and member of Board 12/20/95 to present **
of Directors of Ensenada
Cruiseport Village, S.A. de
C.V. and member of Board of
Directors of Playas
Palmeras, S.A.
Secretary/Treasurer of
Ensenada Cruiseport Village, 04/01/97 to present
S.A. de C.V. and Playas
Palmeras, S.A.
---------------------------------------------------------------------------------------------------------------
</TABLE>
**See description of business experience during the past five years in pages
following.
Officers of the Company serve at the pleasure of the directors.
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Business Experience.
Patrick J. Magee is an entrepreneur whose particular experience is in
construction and development and project finance. His principal activities
during the past five years have been the development and funding of two
shopping centers in Ireland. Mr. Magee is a resident of Ireland. He is also
the President and sole shareholder of Doggart Trading, Ltd., a substantial
shareholder of the Company.
Pieter G.K. Oosthuizen is currently Vice Chairman of WEBCO Europe
S.A., a private European investment company headquartered in Luxembourg,
Europe. During the previous five years, he has also served as the Managing
Director of Euro-Hexagon S.A., a private European investment company located in
Luxembourg, as Managing Director of Infe Ltd., a private investment and
financial engineering consulting group located in London, England, and as a
financial advisor to a number of international companies. Over the past
thirty-five years, Mr. Oosthuizen has held numerous executive positions with
major banking institutions, including Citibank, where between 1967 and 1974 his
positions included Vice President in charge of International Operations and
Administration, International Banking Group, New York, and Vice-President,
Product Management Division, Corporate Banking Group, New York.
Patrick Lappin holds a Bachelor of Science degree in Civil Engineering
in Great Britain, and has been a resident of the United States since 1986,
during which time he has worked as part of managing agent/contractor teams in
the construction of several major commercial buildings, including the New Paul
Getty Museum and Disney Concert Hall.
David J. Lawrence has 26 years experience in managerial and
directorship positions in Mexico. During the five-year period ending in
August, 1993, he served as Director of New Projects for a substantial Mexican
real estate developer. Between August, 1993 and November 1, 1994, he acted as
an independent business consultant to companies doing business in Mexico.
Since November 1, 1994, Mr. Lawrence has been engaged on a full time basis in
working for the Company, with responsibilities in planning and negotiation of
financing and business arrangements.
Steven B. Barker has engaged in property development, construction and
tourism promotion and development for more than twenty-five years, including
real estate sales and property development in southern Spain for more than ten
years, and the management of hotel development and tourism promotion in
southeast Asia for approximately seven years. His experience includes water
and marina oriented projects.
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<PAGE> 13
Involvement in Legal Proceedings. During the past five years, none of
the following events occurred which are material to an evaluation of the
ability or integrity of any director, person nominated to become a director or
executive officer of the Company:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; and
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has
not been reversed, suspended, or vacated.
Indebtedness of Management. Since the beginning of the past fiscal
year, none of the directors, executive officers or nominees for director, any
security holder known to the Company to own more than five percent of the
Company's shares, any member of the immediate family of any of the foregoing
persons (including spouse, parents, children, siblings, mothers and
fathers-in-law, sons-in-law, daughters-in-law, and brothers and
sisters-in-law), any corporation or organization in which any of the foregoing
persons is an executive officer, partner, or the beneficial owner of ten
percent of more of any class of securities, or any trust or estate in which any
of the foregoing persons has a substantial beneficial interest, have been
indebted to the Company or any of its subsidiaries in an amount in excess of
$60,000.
Certain Business Relationships. Since the beginning of the last
fiscal year, none of the directors or nominees for director: 1) has been an
executive officer of, or owns, or during the last fiscal year has owned, of
record or beneficially, in excess of ten percent equity interest in any business
or professional entity that has made during the last fiscal year, or proposes to
make, payments to the Company or its subsidiaries for property or services in
excess of five percent of the Company's consolidated gross revenues for its last
full fiscal year or the other entity's consolidated gross revenues for its last
full fiscal year; 2) has been an executive officer of, or owns, or during the
last fiscal year has owned, of record or beneficially, in excess of ten percent
equity
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<PAGE> 14
interest in any business or professional entity to which the Company or its
subsidiaries has made during the Company's last fiscal year, or proposes to
make, payments for property or services in excess of five percent of the
Company's consolidated gross revenues for its last full fiscal year or the
other entity's consolidated gross revenues for its last full fiscal year,
except as specified in the table herein for Compensation of Directors and
Executive Officers; 3) has been an executive officer of, or owns, or during the
last fiscal year has owned, of record or beneficially, in excess of ten percent
equity interest in any business or professional entity to which the Company or
its subsidiaries was indebted at the end of the Company's last fiscal year in
an aggregate amount in excess of five percent of the Company's total
consolidated assets at the end of such fiscal year; 4) has been a member of, or
of counsel to, a law firm that the Company has retained during the last fiscal
year or proposes to retain during the current fiscal year; 5) has been a
partner or executive officer of any investment banking firm that has performed
services for the Company; or 6) has had any other relationships that the
Company is aware of between that director or nominee and the Company that are
substantially similar in nature and scope to those listed above in this
paragraph.
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of Forms 3 and 4, furnished to the Company during
its most recent fiscal year, and Forms 5, furnished to the Company with respect
to its most recent fiscal year, the Company believes that the following persons
who were directors, officers, or beneficial owners of more than 10% of the
stock of the Company, during the most recent fiscal year, failed to file on a
timely basis, as disclosed in such forms, reports required by section 16(a) of
the Exchange Act during the most recent fiscal year or prior fiscal years:
1. Allan Ferguson, President and a Director of the Company between
June 1, 1995 and December 31, 1995. Form 5, representing late Form 3 filing,
and indicating no beneficial interest in the Company, was filed on or about
February 16, 1996.
Audit, Nominating and Compensation Committees of the Board of
Directors. There are none.
Meetings of the Board of Directors. Five meetings of the Board of
Directors were held during the fiscal year of the Company ended June 30, 1996.
No director, during that fiscal year, attended fewer than 75% of the
aggregate of meetings of the Board and meetings of committees of the Board on
which he served, during the period he was a director and/or member of said
committees.
13
<PAGE> 15
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following compensation was paid or accrued, during the last three
fiscal years, by the Company and/or its subsidiaries, to each person who was
acting as Chief Executive Officer of the Company at any time during the last
fiscal year, and to each other person whose compensation from the Company
and/or any of its subsidiaries, during the last fiscal year, exceeded $100,000.
ANNUAL COMPENSATION
A. Annual Compensation
<TABLE>
<CAPTION>
Name and Fiscal Salary Bonus Other Annual
Principal Year ------ ----- Compensation
Position End ------------
- -------- ---
<S> <C> <C> <C> <C>
M. K. Miller, 6/96 $16,000 0 0
Chairman of
Board and
Chief Executive 6/95 $48,000 0 0
Officer until
11/95
6/94 $48,000 0 0
Alton E. Jones 6/96 $186,000(1) 0 0
President and
Chief Executive
Officer, 1/08/96
until 2/97
6/95 $117,000(1) 0 0
6/94 0 0 0
Francis H. Cobb 6/96 $106,000 0 0
Vice President,
Secretary and 6/95 $18,000 0 0
General Counsel
6/94 0 0 0
</TABLE>
(1) Mr. Jones' compensation was paid to Armada, Inc., a real estate
management and consulting firm wholly owned by Mr. Jones and of which Mr. Jones
was President.
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In addition to the compensation set forth above, the Company paid for
suitable lodging and transportation for the above-named individuals while in
Mexico.
INDEPENDENT PUBLIC ACCOUNTANTS
The shareholders will vote at the meeting on the appointment of La
Voie, Clark, Trading & May, P.C. to prepare the audited financial statements of
the Company for the fiscal year ending June 30, 1997.
La Voie, Clark, Trading & May, P.C. prepared the audited financial
statements of the Company for its fiscal years ending June 30, 1994, 1995, and
1996. It is not expected that representatives of this firm will be present at
the shareholders' meeting, or be available to respond to questions; although
they will have the opportunity to make a statement if they desire to do so.
On July 12, 1994, Robert Moe & Associates, P.S., the independent
auditors of the financial statements of the Company, resigned, due to a
reduction in its staff and its lack of experience in international accounting
or foreign exchange adequate to perform an audit with respect to the additional
activities engaged in by the Company. In so resigning, Robert Moe &
Associates, P.S. specifically indicated that it had no disagreements with
management as to accounting principles, auditing procedures or other similarly
significant matters.
During the two fiscal years prior to such resignation, and any
subsequent interim period preceding such resignation, there were no
disagreements with Robert Moe & Associates, P.S. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
None of the following events occurred within the Company's two most
recent fiscal years prior to such resignation, and any interim period preceding
the resignation of Robert Moe & Associates: 1) the accountant having advised
the Company that the internal controls necessary for the Company to develop
reliable financial statements did not exist; 2) the accountant having advised
the Company that information had come to the accountant's attention that led it
to no longer be able to rely on management's representations or that made it
unwilling to be associated with the financial statements prepared by
management; 3) the accountant having advised the Company of the need to expand
significantly the scope of its audit or that information had come to the
accountant's attention that if further investigated might (a) materially impact
the fairness or reliability of a previously issued audit report or the
underlying financial statements, or materially impact the financial statements
issued or to be issued covering the fiscal periods subsequent to
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<PAGE> 17
the date of the most recent financial statements covered by an audit report or
(b) cause the accountant to be unwilling to rely on management's
representations or be associated with the Company's financial statements; or 4)
the accountant having advised the Company that information had come to the
accountant's attention that it concluded materially impacted the fairness or
reliability of (a) a previously issued audit report or the underlying financial
statements or (b) the financial statements issued or to be issued covering the
fiscal periods subsequent to the date of the most recent financial statements
covered by an audit report.
On September 1, 1994, the Company entered into an engagement agreement
with La Voie, Clark, Trading & May, P.C., CPAs, of Tucson, Arizona, for the
audit of the consolidated financial statements of the Company for the year
ended June 30, 1994. Prior to engaging this firm, the Company did not consult
with the newly engaged accountants regarding either the application of
accounting principles to a specified transaction or the type of audit opinion
that might be rendered on the Company's financial statements.
AUTHORIZATION OF SECURITIES
The authorized capital of the Company is currently 100,000,000 shares
of common stock, of $0.10 par value per share, 54,213,721 of which shares are
issued and outstanding. Each shareholder of record, as of close of business
on the record date, namely April 9, 1997, is entitled to one vote for each
share of stock standing in his (its) name, on any matter which is subject to
shareholder vote in accordance with the Corporations Code of Idaho, except for
the cumulative voting provisions described in the next sentence with respect to
election of directors. With respect to the election of directors, each
shareholder of record, as of close of business on the record date, April 9,
1997, is entitled to cumulate his votes by giving one person for whom he wishes
to vote as many votes as equal the number of directors eligible for election
(which is 5), multiplied by the number of his shares, or by distributing such
number of votes among any number of persons for whom he wishes to vote. Each
share is entitled to participate equally with all other shares in any dividends
which are declared. No shares have preemptive rights to purchase, subscribe
for, or otherwise acquire any shares of stock of the Company.
It is proposed to maintain the authorized capital at 100,000,000
shares of common stock while canceling 29/30 of all issued and outstanding
shares, through amendment to the Articles of Incorporation. The shareholders
will vote on this amendment at the meeting of May 12, 1997.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following transactions have occurred, during the past two years,
in which persons who are directors or officers of the Company, nominees for
election as director, any security holder named in the section hereof entitled
"Security Ownership of Certain Beneficial Owners and Management," and any
member of the immediate family of any of the foregoing (including spouse,
parents, children, siblings and in-laws) have had a direct or indirect material
interest.
1) David Lawrence, a director of Ensenada Cruiseport Village, S.A. de
C.V. and Playas Palmeras, S.A., owned a 5% interest in two corporations,
Ensenada Nautico Turistica, S.A. de C.V. ("ENT") and Terminales Maritima
Nacionales, S.A. de C.V. ("TMN"), which the Company, in December, 1995, agreed
to acquire in consideration of the $854,000, payable in stock and/or cash of
the Company. These companies owned concessions with respect to the development
of piers and facilities at the Port of Ensenada, which concessions were
converted into the concession now held by the Company, through its subsidiary
Ensenada Cruiseport Village S.A. de C.V. David Lawrence, as a 5% owner of
each of those corporations, is entitled to payment of $40,000 in stock of the
Company, in consideration of the transfer to the Company of the stock of ENT
and TMN.
2) Doggart Trading, Ltd. ("Doggart"), which owns a 10.5% beneficial
interest in the Company as specified in "Security Ownership of Certain
Beneficial Owners and Management", has advanced funds for working capital to
the Company, during the Company's fiscal years ended June 30, 1995 and June 30,
1996, of $935,286. During the first two quarters of fiscal year ending June 30,
1997, Doggart advanced an additional $394,966. These advances did not bear
interest. $50,000 of said advances, together with interest thereon at 7% per
annum, have been converted into stock at $1.00 per share(i.e. one share issued
in satisfaction of each $1 of debt plus interest). The remainder of the
advances have been agreed between the Company and Doggart to be converted by
the Company into stock on the following basis. The remainder of the advances
made during fiscal years 1995 and 1996, without interest, are to be converted
at $1.00 per share The advances made during the first two quarters of fiscal
1997 are to be converted at $0.50 per share, without interest (i.e. one share
issued in satisfaction of each $0.50 of debt). With respect to any further
advances which may be made by Doggart to the Company, Doggart and the Company
have agreed that the Company will have the option to convert such advances,
made during each quarter, at the average bid price for the Company's stock
during the last five trading days of that quarter.
None of the advances by Doggart to the Company have been memorialized
in written agreements or loan documents.
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3) Kestrel Management Corporation, which owns a 5.2% beneficial
interest in the Company, has advanced funds for working capital to the Company,
during the Company's fiscal year ended June 30, 1996, in the amount of
$650,000. These advances, without interest, were converted into 650,000 shares
of stock in the Company, in the fiscal year ended June 30, 1996.
4) In June, 1994, the Company purchased from Doggart Trading, Ltd.
8.5 miles of coastal property in Campeche, Mexico, in consideration of the
issuance of 37,000,000 shares of the Company's common stock, 33,000,000 of
which were issued at that time to seven shareholders of Doggart Trading, Ltd.
and two other persons designated by Doggart. The remaining 4,000,000 shares
were issued to Doggart Trading, Ltd. in the last quarter of the Company's last
fiscal year.
5) In April, 1995, the Company entered into an agreement with Dardell
International Limited ("Dardell"), a company which was not related to the
Company prior to said agreement, for the purchase of a land contract between
Dardell and a company by the name of Granjas Los Bucaneros SA. Under the land
contract, Granjas Los Bucaneros SA had the obligation to sell, and Dardell had
the obligation to purchase, approximately 3.5 miles of unimproved beach-front
property, constituting a total of 580 acres, in the State of Campeche, Mexico,
adjacent to the Company's 8.5 miles of coastal property in the State of
Campeche, Mexico.
The agreement between the Company and Dardell provided that Dardell
would sell and the Company would buy the above-described land contract for a
price of $2,000,000, and that upon closing of the contract, that purchase price
would be paid through the issuance of 3,000,000 shares of the Company's stock
to Dardell.
The Company determined that the issuance of 3,000,000 shares to
Dardell in payment of the $2,000,000 purchase price for the land contract (i.e.
valuing the shares at $0.67 per share) was appropriate based upon the trading
range of the Company's stock during the previous month (March, 1995) and up to
the date the agreement was verbally consummated between the Company and
Dardell, namely the first week of April, 1995. The average closing price of
the Company's stock between March 1, 1995 and the end of the first week of
April, 1995 was $0.683 per share.
The consideration paid by the Company to Dardell was in addition to
the assumption by the Company of Dardell's obligations under the land contract.
The obligations assumed by the Company required a payment to Granjas Los
Bucaneros SA (an unrelated party) in the amount of $1,050,000, with $50,000 due
on or before May 29, 1995 and $1,000,000 due on or before May 24, 1997. The
$50,000 due on or before May 29, 1995 has been paid by the Company. Upon
payment of the final installment, Granjas Los Bucaneros SA is
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obligated to execute a new deed transferring all of its rights in the property.
Until and unless the Company completes its obligations to Granjas Los
Bucaneros SA, namely the payment of $1,000,000 on or before May 24, 1997, it
does not have the right to develop or otherwise use the property. Prior to
that time, the seller has agreed that it will facilitate access of the buyer
for purposes of making technical studies, which would include activities such
as undertaking survey work or platting.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS
TO BE ACTED UPON
None.
MATERIALS INCORPORATED BY REFERENCE
FINANCIAL STATEMENTS
The Company incorporates herein by reference the following financial
statements of the Company, from its Form 10-KSB for fiscal year ended June 30,
1996: Audited consolidated balance sheets of the Company, as of June 30, 1996,
and June 30, 1995; audited consolidated statements of operations and cash flows
for fiscal years ended June 30, 1996, June 30, 1995 and June 30, 1994; audited
consolidated statement of changes in stockholders' equity from July 1, 1992 to
June 30, 1996; notes to financial statements and audit report of La Voie,
Clark, Charvoz & May, P.C. for fiscal years ended June 30, 1995 and June 30,
1996.
The Company also incorporates herein by reference the following
financial statements of the Company from its Form 10-QSB for the fiscal quarter
ended December 31, 1996: consolidated balance sheet (unaudited) as of December
31, 1996; consolidated statement of operations (unaudited) for the three and
six month periods ended December 31, 1996; and consolidated statement of cash
flows (unaudited) for the three and six month periods ended December 31, 1996;
and notes to consolidated financial statements (unaudited).
This Information Statement is accompanied by the above referenced Form
10-KSB and Form 10-QSB which include the aforesaid financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company incorporates herein by reference Management's Discussion
and Analysis or Plan of Operation contained in its Form 10-KSB filed for its
fiscal year ended June 30, 1996 and its Form 10-QSB filed for its fiscal
quarter ended December 31, 1996. This Information Statement is accompanied by
the said Form 10-KSB and Form 10-QSB which include the said discussions and
analyses.
Without limitation on the foregoing incorporation by reference, the
Company indicates specifically as follows:
1) The auditors' report accompanying the financial statements of the
Company as of June 30, 1996, indicates that the financial condition of the
Company raises substantial doubt about the Company's ability to continue as a
going concern. More specifically, the Company's ability to continue as a going
concern is dependent upon securing very substantial financing, in the near
future, to undertake its large planned capital projects in Ensenada, as well as
its ability to secure necessary funding to satisfy its working capital
deficiency and to meet ongoing working capital needs.
2) The Company's subsidiary, in Mexico, Ensenada Cruiseport Village,
S.A. de C.V. ("Cruiseport"), holds a 35-year concession in the Port of
Ensenada, Mexico, with an option on the part of Cruiseport to renew for an
additional 12 years. The total focus of the Company's business and activities,
at the present time, is on this concession.
Pursuant to an agreement dated December 19, 1995 between the Company's
subsidiary, Ensenada Cruiseport Village, S.A. de C.V. ("Cruiseport"), and the
Port Authority of Ensenada (the "concession agreement"), Cruiseport has been
granted the right to build and operate a pier and cruiseship terminal and
marina and marina village, together with associated commercial and tourist
development in a designated area of approximately 47 acres in the Port of
Ensenada, in consideration of substantial annual rental payments to the Port
Authority. The concession agreement grants to Cruiseport the sole right to
render extensive services within the concession area, and to charge and receive
anchorage fees from cruise ships which arrive in the concession area.
Pursuant to its concession agreement with the Port Authority,
Cruiseport is committed to an investment program in the range of $25,000,000
over a five-year period, in fulfillment of a conceptual plan embodying three
phases of construction.
The Company has delivered a "design of the works" to the Port
Authority, constituting a conceptual plan describing the three phases of
construction. Phase I, at a current estimated cost of $11,000,000, encompasses
the construction of two (2) piers
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(approximately 780' and 623' in length, respectively) suitable for use by large
cruise ships, with related dredging and construction of a sea (retaining) wall,
together with a smaller pier along the sea wall for medium size cruise ships.
Phases II and III, at estimated costs of $4,800,000 and $8,900,000
respectively, encompass the construction of various facilities, including
terminal building, commercial, specialty, retail and office space, marina
slips, condominiums, apartments, and specialty docks.
The concession agreement was modified by formal agreement between
Cruiseport and the Port Authority in November, 1996 (which agreement is
attached to the Form 10-QSB for the Company's quarter ended December 31, 1996).
The amendment provides that the Company would provide detailed engineering and
technical specifications to the Port Authority, respecting Phase I, prior to
December 31, 1996 (which has been done) and respecting Phase II, on or before
September 30, 1997.
The concession agreement, as modified, provides that Cruiseport is
obligated to begin work on Phase I by no later than March 15, 1997, and on
Phase II within two months of such future time as it receives necessary
approvals for that Phase, after submission of the engineering and technical
specifications relating to that Phase. The Company's failure to meet either of
those timelines would constitute a default under the concession agreement,
giving the Port Authority the right to terminate the concession.
On March 10, 1997, the Company commenced dredging work for Phase I,
having received provisional authorization to do so. On March 14, the Board of
Directors of the Port Authority of Ensenada met and ratified and confirmed the
final authorization for work to begin on Phase I. As of that time, a local
construction company in Ensenada, under the Company's supervision, had placed
on site and begun to operate three 110-ton drag lines in the conduct of
dredging operations. The Company currently has a $500,000 budget for its
dredging operations, shoreline rock work, containment and fill, all of which is
required for the start of the pier construction and which is scheduled to take
up to three months. Hugh Downey, a British resident who advanced approximately
$550,000 to the Company during the period July l, 1996 to February 15, 1997,
for administrative expenses and pre-development activities (see discussion in
Form 10-QSB for quarter ended December 31, 1996), has agreed to advance the
necessary additional funds to meet this $500,000 budget. The advances are on
an unsecured, demand basis, and bear interest at 6% per annum.
However, the Company has not as of this time secured commitments for
the necessary capital (including a loan or loans from financial institutions or
equity capital) to complete Phase I, and can give no assurances that it will be
able to do so. The Company believes, at this time, that the completion of Phase
I may
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be less expensive than originally projected; the Company's current estimate
being in the range of $11,000,000; and the Company is currently diligently
pursuing financing from a substantial Mexican bank for $7 million of that
projected cost, as well as private equity capital for the balance.
The Company has not yet entered into a construction contract with a
Mexican general contractor for carrying out the balance of Phase I. (The
contractor which has begun mechanical dredging operations on March 10, 1997 is
a local operator who is not of the size or resources necessary to act as
general contractor for the overall project). However, management does not
believe that entering into a construction contract for the balance of Phase I
will be protracted or difficult, when and if financing commitments for the
balance of Phase I are secured.
Management does believe that its ability to secure necessary capital
commitments for the balance of Phase I, and to have in place a general
contractor, within the next several weeks, and the ability of that contractor
to continue, without interruption, the work which has begun on Phase I, may be
necessary for the Company to retain its concession rights in the Port.
In its Form 10-QSB for the quarter ended December 31, 1996,
management indicated that New York counsel had accrued legal fees of $172,000
with respect to certain transactions which have been abandoned by the Company,
that management did not believe that these fees were properly due and payable,
and did not know whether New York counsel would pursue payment by the Company
of a portion or all of said amount. New York counsel has subsequently
indicated that it intends to seek collection of that amount.
EXHIBITS
The Company will provide to each shareholder, who so requests, a copy
of any exhibit to its Form 10-KSB for its fiscal year ended June 30, 1996 and
its Form 10-QSB for quarter ended December 31, 1996, upon payment of copying
charges of $0.15 per page and actual mailing charges.
22
