UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 2, 1999
Aarow Environmental Group, Inc.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-6292 73-1491593
(Commission File Number) (IRS Employer Identification No.)
1317 S. Turner, Springdale, Arkansas 72764
(Address of principal executive offices) (Zip Code)
(501) 927-1884
(Registrant's Telephone Number)
Item 2. Acquisition or Disposition of Assets.
Effective September 2, 1999, Aarow Environmental Group, Inc. acquired
all of the issued and outstanding shares of Utica Publishing Corporation (Utica)
of Rogers, Arkansas, an Arkansas corporation pursuant to an Agreement for Stock
Purchase dated September 2, 1999 and signed and agreed to by all of the
shareholders of Utica on or before that date(Agreement). A copy of that certain
Agreement is attached hereto as Exhibit 2.1, and by this reference made a part
hereof. Pursuant to the Agreement, Aarow exchanged 1,400,000 shares of Aarow
common stock for all of the issued and outstanding shares of Utica. Each share
of Utica was converted to the right to receive 1.4 shares of Aarow common stock.
Prior to the acquisition of Utica by Aarow, the assets of Utica were used to
publish an internet online magazine, a bilingual monthly magazine and a Spanish
language weekly news magazine; and to operate a general commercial printing and
copying business. As a result of the stock purchase by Aarow, Utica became and
is a wholly owned subsidiary of Aarow and will continue its publishing and
printing business under the name Utica Publishing Corporation. The acquisition
of Utica by Aarow includes the ownership of all of the assets of Utica as shown
on the "Inventory of Utica Assets" attached as Exhibit C to the Agreement
attached hereto as Exhibit 2.1.
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Upon the completion of the transaction set forth in the Agreement,
Lloyd A. Phillips and Stanley L. Sisemore, who are officers and directors of
Aarow became officers and directors of Utica.
Item 7. Financial Statements. Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Acquired Business
Utica Publishing Corporation was formed October 8, 1998 by the merger
of Copies Plus, Inc. and Arkansas Chronicle, a sole proprietorship. The audited
balance sheets and income statements of Copies Plus and Arkansas Chronicle for
December 31, 1997 and the audited balance sheet and income statement of Utica
Publishing Corporation for December 31, 1998 will be filed by amendment to this
Form 8-K no later than November 16, 1999 within the time allowed by the
instructions for Item 7 (a) (4) and supported by Reg. 210.3-5 (b) (4) (ii).
(b) Pro Forma Financial Information.
The unaudited balance sheets of Aarow Environmental Group, Inc. for the
period June 30, 1999 have been filed with the SEC as part of Aarow's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999 on August 13, 1999 and
are incorporated herein by reference.
(c) Exhibits.
2.1 Agreement for Stock Purchase dated September 2, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAROW ENVIRONMENTAL GROUP, INC.
By: /s/ D. Frederick Shefte
Name: D. Frederick Shefte
Title: Vice President
Date: September 15, 1999
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Exhibit 2.1
AGREEMENT FOR PURCHASE AND SALE OF STOCK
This Agreement for Purchase and sale of Stock (Agreement) is made effective this
2 day of September, 1999 at Rogers, Arkansas by and between Aarow Environmental
Group, Inc., a Nevada corporation (Aarow) Jim Bolt, Sam Yates, Trish Camp, Paul
Bryan, Lucia Kugler, Nick Bohannon, Jay McDonald, Tony Amend, Mel Robinson, Ray
and Marie Forehand (collectively "Shareholders") and Utica Publishing Company,
Inc., an Arkansas corporation (Utica), who each for valuable consideration,
receipt of which is hereby acknowledged by each party, agree as follows.
1. Facts. This Agreement is made with reference to the following facts:
a. Aarow, Shareholders and Utica are herein sometimes collectively
referred to as "the Parties."
b. Shareholders and Utica are sometimes collectively referred to herein
as "Sellers."
c. Shareholders represent that they own all of the outstanding stock of
Utica.
d. Aarow desires to purchase from Shareholders, and each of them, and
Shareholders, and each of them, desire to sell to Aarow all of the
outstanding stock of Utica (the Shares).
e. September 2, 1999 or such other time and place to which the Parties
mutually agree to postpone the Closing is the effective date of this
Agreement.
f. Aarow is a publicly traded company whose common stock is traded on the
over the counter market under the symbol AARO.
g. Aarow currently has 30,000,000 shares of common stock authorized, and
has 5,000,000 shares of convertible preferred shares authorized. Each
share of convertible preferred Aarow stock is convertible to three
shares of Aarow common stock.
h. Aarow currently has about 11,155,942 shares of common stock issued and
outstanding, and has about 3,300,000 shares of convertible preferred
shares issued and outstanding.
i. The shares of Utica common stock are owned as shown on Exhibit A,
attached hereto and by this reference made a part hereof.
2. Purchase and Sale of Shares. On and subject to the terms and conditions
of this Agreement, on the effective and closing date, Shareholders shall
transfer and convey all of the shares of Utica to Aarow, and Aarow shall acquire
all of the outstanding common stock of Utica. The parties adopt this Agreement
as a plan of reorganization under Section 368 (a) (1) (B) of the Internal
Revenue Code.
3. Closing date, Effective date: Consummation of the purchase and sale
transaction set forth herein shall be as soon as practicable after all of the
conditions established in this Agreement have been satisfied, but in no event
later than September 30, 1999. The Closing shall be held at 3:00 p.m. at the
offices of Utica Publishing Corporation in Rogers, Arkansas, or at such other
time and place as the parties agree (Closing). The time of Closing shall be the
effective date of this Agreement.
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4. Purchase and Sale Price. As payment for the transfer of the Shares by
Shareholders to Aarow, Aarow shall deliver to Shareholders at the Closing
1,400,000 shares of Aarow common stock which shall be issued in the respective
individual amounts set forth in Exhibit B, attached hereto and by this reference
made a part hereof.
5. Shareholders' and Utica's Representations and Warranties. Sellers
jointly and severally represent and warrant that:
a. Organization, Standing and Qualification. Utica is duly organized,
validly existing, and in good standing under the laws of Arkansas, and has the
corporate power to own all of its assets and to carry on its business as it is
being conducted as of the Effective Date. Utica's board of directors has
authorized the execution of this Agreement and Utica has the corporate power and
authority to enter into this Agreement.
b. Capital Structure. Utica has 30,000,000 shares of authorized common
stock, $0.01 par value, of which 990,000shares are issued and outstanding. All
issued and outstanding shares have been validly issued in full compliance with
all federal and state securities laws, are fully paid and nonassessable, and
have voting rights. There are no outstanding subscriptions, options, rights,
warrants, conversion rights, or other agreements or commitments obligating Utica
to issue or to transfer from treasury any additional shares of its capital stock
of any class.
c. Title to Shares. Shareholders are the owners, beneficially and of record
of all of the Shares free and clear of liens. Encumbrances, security agreements,
equities, claims, charges, and restrictions. Shareholders each have full power
to transfer the Shares to Aarow without obtaining the consent or approval of any
other person, entity or government authority.
d. No Subsidiaries. Utica has no subsidiaries.
e. Financial Statements. All financial statements, balance sheets, and
income statements and related documents which have been delivered to Aarow by
Utica fairly present the financial position of Utica as of the date shown on
such documents, and have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of preceding
years. Utica has no debt, liability or obligation of any nature that is not
reflected in Utica's Financial Statements except those that have been incurred
in the ordinary course of business and which are usual and normal in amount,
after the date of such Financial Statements.
f. Property and Inventory. Attached hereto as Exhibit "C" and by this
reference made a part hereof is a complete schedule listing all of Utica's
assets, property and inventory, including without limitation all lease
agreements, accounts receivable, trade marks, trade names, trade secrets,
patents, rights, intellectual property, leases, and insurance policies.
g. No Undisclosed Liabilities. There are no liabilities of Utica which have
not been disclosed to Aarow on the balance sheet or incurred in the ordinary
course of business since the date of the balance sheet.
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h. Absence of changes to Balance Sheet. Attached hereto as Exhibit "D", and
by this reference made a part hereof, are financial statements of Utica (Utica's
Financial Statements). Since the date of each of Utica's Financial Statements,
there has not been:
1) Any change in the business results of operations, assets, financial
conditions or manner or conducting business of Utica other that changes in
the ordinary course of business and that certain transaction set forth in
Exhibit "E", attached hereto and by this reference made a part hereof. No
such changes has had an adverse effect on the business, results of
operations, assets, financial condition or prospects of Utica.
2) Any damage, destruction or loss adversely affecting the business or
operations of Utica.
3) Any increase in the compensation, bonus options or rights of any of
Utica's officers, employees, directors consultants or agents nor any
agreement therefor.
4) Any indebtedness incurred by Utica except as specifically set forth
herein including the Exhibits hereto.
5) Any amendment to Utica's articles of incorporation or bylaws.
i. Permits Licenses and Franchises. Utica has obtained all necessary
licenses, permits, franchises and other authorizations and has complied with all
laws applicable to the conduct of its business. All such licenses, permits,
franchises and authorizations are in full force and effect.
j. Court Proceedings. Utica is not party to any court action or proceeding
or any administrative proceeding, and is not subject to any judgment, decree or
order.
k. Powers of Attorney. Utica has no power of attorney outstanding other
than those issued in the ordinary course of business with respect to insurance
or tax.
l. Disclosure. No representation or warranty by Utica in this Agreement and
no statement by Utica or any person on Utica's behalf or in any way connected
with Utica contained in this Agreement or in any other document or writing
furnished by or on behalf of Utica to Aarow in connection with this transaction,
contains any untrue statement or omits to state any material fact necessary to
make it not misleading or necessary to fully provide the information required to
be provided.
m. Tax Returns. Within the times and in the manner prescribed by law, Utica
has filed all federal, state, and local tax returns required by law and has paid
all taxes due.
n. Customers. Attached hereto as Exhibit "F" and by this reference made a
part hereof is a current list of Utica's major customers, together with
summaries of their business with Utica in this fiscal year.
o. Other Contracts. Utica is not a party to or in any way bound by any
contract not specifically disclosed to Aarow herein.
6. Aarow's Representations and Warranties. Aarow represents and warrants to
Utica as follows:
a. Organization, Standing and Qualification. Aarow is duly organized,
validly existing, and in good standing under the laws of Nevada. And has
the corporate power to own all of its assets and to carry on its business
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as it is being conducted as of the Effective Date. Aarow's board of
directors has authorized the execution of this Agreement and Arrow has the
corporate power and authority to merge into Aarow pursuant to this
Agreement.
b. Capital Structure. Aarow has 30,000,000 shares of authorized common
stock, $0.01 par value, of which about 11,155,942 shares are issued and
outstanding, and also has 5,000,000 shares of convertible preferred stock,
of which about 3,300,000 are issued and outstanding. All issued and
outstanding shares have been validly issued in full compliance with all
federal and state securities laws, are fully paid and nonassessable, and
have voting rights. There are no outstanding subscriptions, options,
rights, warrants, conversion rights, or other agreements or commitments
obligating Utica to issue or to transfer from treasury any additional
shares of its capital stock of any class.
c. No Subsidiaries. Aarow has no subsidiaries.
d. Financial Statements. All financial statements, balance sheets, and
income statements and related documents which have been delivered to Utica
by Aarow fairly present the financial position of Aarow as of the date
shown on such documents, and have been prepared in accordance with
generally accepted accounting principles applied on a basis consistent with
that of preceding years.
e. Property and Inventory. Attached hereto as Exhibit "G" and by this
reference made a part hereof is a complete schedule listing all of Aarow's
assets, property and inventory, including without limitation all lease
agreements, accounts receivable, trade marks, trade names, trade secrets,
patents, rights, intellectual property, leases, and insurance policies.
f. No Undisclosed Liabilities. There are no liabilities of Aarow which
have not been disclosed to Utica on the balance sheet or incurred in the
ordinary course of business since the date of Aarow's balance sheet.
g. Absence of changes to Balance Sheet. Attached hereto as Exhibit
"H", and by this reference made a part hereof, are financial statements of
Aarow (Aarow's Financial Statements). Since the date of each of Aarow's
Financial Statements, there has not been:
1) Any change in the business results of operations, assets,
financial conditions or manner or conducting business of Aarow other
that changes in the ordinary course of business and that certain
transaction set forth in Exhibit "E", attached hereto and by this
reference made a part hereof. No such changes has had an adverse
effect on the business, results of operations, assets, financial
condition or prospects of Aarow.
2) Any damage, destruction or loss adversely affecting the
business or operations of Aarow.
3) Any increase in the compensation, bonus options or rights of
any of Aarow's officers, employees, directors consultants or agents
nor any agreement therefor.
4) Any indebtedness incurred by Aarow except as specifically set
forth herein including the Exhibits hereto.
5) Any amendment to Aarow's articles of incorporation or bylaws.
h. Permits Licenses and Franchises. Aarow has obtained all necessary
licenses, permits, franchises and other authorizations and has complied
with all laws applicable to the conduct of its business. All such licenses,
permits, franchises and authorizations are in full force and effect.
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i. Court Proceedings. Aarow is not party to any court action or
proceeding or any administrative proceeding, and is not subject to any
judgment, decree or order except as specifically set for on Exhibit "I",
attached hereto and by this reference made a part hereof.
j. Powers of Attorney. Aarow has no power of attorney outstanding
other than those issued in the ordinary course of business with respect to
insurance or tax.
k. Disclosure. No representation or warranty by Aarow in this
Agreement and no statement by Aarow or any person on Aarow's behalf or in
any way connected with Utica contained in this Agreement or in any other
document or writing furnished by or on behalf of Aarow to Utica in
connection with this transaction, contains any untrue statement or omits to
state any material fact necessary to make it not misleading or necessary to
fully provide the information required to be provided.
l. No violation of other instruments. The execution and delivery of
this Agreement and the consummation of the transactions contemplated by
this Agreement do not result in or constitute a breach violation or default
of the Articles of Incorporation or Bylaws of Aarow or of any contract or
obligation of Aarow; or an event that would permit acceleration of any
obligation or Aarow.
7. Conditions Precedent to Parties' Obligation to Close: The parties'
respective obligations to consummate the transactions contemplated by this
Agreement are subject to the satisfaction on or before the Closing of the
following conditions:
a. Approvals: Delivery to Aarow of (1) a certified copy of a
Resolution of the Board of Directors of Utica authorizing and approving
this Agreement and the merger and directing that it be submitted to a vote
of Utica's shareholders, and (2) a resolution adopting this Agreement duly
approved by the holders of at least a majority of the total number of
outstanding shares of the common stock of Utica. Delivery to Utica and
Shareholders of copies of documents showing the approval of the Board of
Directors and holders of a majority of the voting stock of Aarow have
authorized and approved the execution
b. Approvals and Consents: Each part will have received, or shall have
satisfied itself that it will receive, all necessary approvals of the
transaction contemplated herein from any authorities having jurisdiction
over the business of each party or over the subject matter of this
Agreement, and consents from other person or entities to the mortgages,
notes, leases, franchises, agreements licenses, and permits of each party
necessary to permit consummation of the merger and continuation of the
businesses of each party.
c. Employment Agreements: Each party shall have satisfied itself that
the designated executives and employees of each shall have agreed to
continued employment on satisfactory terms after the merger.
d. New Transactions. Without Aarow's consent, Utica will not (1) enter
into any contract, commitment or transaction except in the ordinary course
of business, (2) make any capital expenditure or enter into any lease, (3)
sell or dispose of any capital asset, (4) declare or pay any dividend or
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bonus, or purchase or redeem any shares of capital stock, (5) pay any
obligation except in the ordinary course of business, (6) waive or
compromise any claim, (7) cancel any obligation owing to Utica, or (8)
enter into a contact to do any of the items listed in this paragraph.
e. Representations and warranties true at closing. All representations
and warranties of either party set forth in this Agreement shall be true at
closing as though made at that time. Each party shall have performed,
satisfied and complied with all agreements and conditions required of this
Agreement to be performed or complied with by any of them on or before the
closing date.
f. Corporate Approval. The execution and delivery of this Agreement by
all parties and the performance of their respective covenants and
obligations under it shall be duly authorized by all necessary corporate
action, and each party shall have received copies of the other
corporation's certified authorizations.
g. Investment Letters. Execution of investment letters in the forms
set forth in Exhibits "J" and "K" attached hereto and by this reference
made a part hereof.
h. No Material Adverse Change. There shall not have been any material
adverse change in the condition of either Utica or Aarow and neither of
them shall have sustained any material loss or damage to its assets.
8. Shareholders' Noncompetition. Shareholders, and each of them, agree that
he or she will not at any time within five (5) years after the effective date of
this Agreement directly or indirectly engage in or have any interest in any
person, firm, corporation, or business as an employee, officer, director, agent,
security holder, creditor, consultant or otherwise that engages in any activity
in Washington or Benton Counties, Arkansas which activity is the same as or
similar to or competitive with any activity now engaged in by Utica or Aarow in
either Benton or Washington County, Arkansas.
9. Filings. The Chief executive officer of Aarow shall cause all necessary
filings of this stock purchase agreement or other necessary filings to be done
on a timely basis.
10. No Finders or Brokers. Each party represents and warrants that it has
dealt with no broker or finder in connection with any transaction contemplated
by this Agreement and, as far as it knows, no broker or other person is entitled
to any commission or finder's fee in connection herewith.
11. Costs. If this contemplated transaction does not close, each party
shall be solely responsible for its own legal, accounting and other fees and
expenses incurred by it with respect to the transaction. If Closing occurs,
Aarow will timely pay or reimburse each party for such reasonable expenses.
12. Effect of Headings. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for convenience only and shall not
affect the construction or interpretation of any of its provisions.
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13. Entire Agreement, Modification, Waiver. This written Agreement
constitutes the entire written agreement between the parties pertaining to the
subject matter contained herein, and supersedes all prior and contemporaneous
agreements, representations, warranties and understandings of the parties. No
supplement, modification or amendment of this Agreement shall be binding or
effective unless executed in writing by all the parties. No waiver of any
provision of this Agreement shall be deemed or shall constitute a waiver of any
other provision, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the waiver.
14. Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
15. Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons or entities other than the parties to it and their
respective successors and assigns; nor is anything in this Agreement intended to
relieve or discharge an obligation or liability of any third person or entity;
nor shall any provision give any third person or entity any right of subrogation
or action over any party. Nothing in this Agreement is intended to make any
person or entity a third party beneficiary of this Agreement.
16. Assignment. This agreement shall be binding on and shall inure to the
benefit of the parties, and their respective heirs, successors, assigns,
representatives, directors, partners, officers, and employees. No party may
assign any right duty or obligation under the terms of this Agreement. Any
authorized assignment shall not relieve the assignor of any of its obligations
or duties under this Agreement.
17. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by first class,
registered or certified United States mail to the principle office or residence
of the party to whom notice is given, or to such other address as such party may
hereunder designate in writing by this Notice provision.
18. Invalidity. Of any term or provision of this Agreement shall to any
extent be invalid or unenforceable, the remainder of the Agreement shall not be
affected thereby, but rather shall remain valid.
19. Governing Law. The validity of this Agreement any of its terms and
provisions as well as the rights and duties of the parties shall be interpreted
and construed pursuant to and in accordance with the laws of the United States
and the state of Arkansas. Substantial obligations under this Agreement are to
be performed in Washington County, Arkansas. The parties select Washington
County Arkansas as the proper and sole venue for any action or proceeding filed
to enforce, construe or interpret this Agreement.
20. Interpretation. No provision of this Agreement shall be interpreted
against the party who or whose representative drafted such provision.
21. Attorney's Fees. In the event of any action or proceeding brought by
any party against or adverse any other party under this Agreement, the
prevailing party shall be entitled to recover all costs and expenses including
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reasonable fees of its attorneys in such action or proceeding, whether or not
such action or proceeding proceeds to judgment.
22. Time of the Essence. Time is of the essence of each provision of this
Agreement.
23. Cumulative Remedies. Cumulative Remedies. The various rights, options,
elections and remedies of any party shall be cumulative and no one of them shall
be deemed exclusive of any other right or remedy at law or equity.
24. Pronouns. The masculine, feminine or neuter pronoun as used herein
shall include the other such pronouns, and the singular shall include the plural
and vice-versa.
25. Exhibits. Each Exhibit to this Agreement is hereby incorporated herein
by this reference and made a part of this Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
and effective this_______day of _________, 1999 at ________________, Arkansas.
Aarow Environmental Group, Inc. Utica Publishing Company, Inc.
By: /s/ Lloyd W. Phillips By: /s/ Sam Yates
--------------------- ------------------
President President
/s/ Jim Bolt /s/ Trish Camp
--------------------- ------------------
/s/ Paul Bryan /s/ Nick Bohannon
--------------------- ------------------
/s/ Jay Mc Donald /s/ Lucia Kugler
--------------------- ------------------
/s/ Tony Armend /s/ Mel Robinson
--------------------- ------------------
/s/ Ray Forehand /s/ Marie Forehand
--------------------- ------------------
/s/ Sam Yates
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Index to Exhibits to Utica/Aarow
Agreement for Purchase and Sale of Stock
Exhibit A: Utica Stock Ownership List.
Exhibit B: Aarow Shares to be Delivered to Utica Shareholders in Purchase
of Utica Shares.
Exhibit C: Inventory of Utica Assets.
Exhibit D: Utica's Financial Statements.
Exhibit E: Interim Bridge Loan Financing.
Exhibit F: Utica Customer List.
Exhibit G: Inventory of Aarow's Assets.
Exhibit H: Aarow's Financial Statements.
Exhibit I: Aarow Court Proceedings and Judgments.
Exhibit J: Utica Investment Letters.
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Exhibit A
Utica Stock Ownership List
Sam Yates 402,500 shares
Jim Bolt 402.500 shares
Trish Camp 80,000 shares
Paul Bryan 20,000 shares
Nick Bohannon 25,000 shares
Jay McDonald 30,000 shares
Lucia Kugler 10,000 shares
Tony Amend 10,000 shares
Mel Robinson 10,000 shares
Ray and Marie Forehand 10,000 shares
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Exhibit B
Aarow Shares to be Delivered to Utica Shareholders
in Purchase of Utica Shares
Sam Yates 563,500 shares
Jim Bolt 563.500 shares
Trish Camp 112,000 shares
Paul Bryan 28,000 shares
Nick Bohannon 35,000 shares
Jay McDonald 42,000 shares
Lucia Kugler 14,000 shares
Tony Amend 14,000 shares
Mel Robinson 14,000 shares
Ray and Marie Forehand 14,000 shares
-----------------
Total: 1,400,000 shares
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<TABLE>
<CAPTION>
Exhibit C
Inventory of Utica Assets
UTICA DESCRIPTION YEAR ORIGINAL MARKET CURRENT LIEN
PMS# SHOW MANUFACTURER, MODEL, SERIAL NO ACQUIRED COST VALUE BALANCE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1001 Table, Printer Stand 1998 $125.00 $125.00 $-
1002 Chairs, Conference, HON, 6 each 1998 $1,800.00 $1,800.00 $-
1003 Table, Conference 1998 $1,400.00 $1,400.00 $-
1004 Counter, Work 3' x 6' 1998 $650.00 $650.00 $-
1005 Counter, Work 3' x 5' 1998 $400.00 $400.00 $-
1006 Counter, Work 3' x 12' 1998 $1,400.00 $1,400.00 $-
1007 Counter, Work 2' x 8' 1998 $800.00 $800.00 $-
1008 Chair, Stackable 1998 $125.00 $125.00 $-
1009 Workstation, with hutch, computer 1998 $600.00 $600.00 $-
1010 File cabinet, 2-drawer 1998 $80.00 $80.00 $-
1011 File cabinet, 2-drawer 1998 $120.00 $120.00 $-
1012 File cabinet, 2-drawer 1998 $120.00 $120.00 $-
1013 File cabinet, 2-drawer 1998 $120.00 $120.00 $-
1014 File cabinet, 2-drawer 1998 $40.00 $40.00 $-
1015 File cabinet, 5-drawer, 4-turn lock 1998 $650.00 $650.00 $-
1016 File cabinet, 5-drawer, 4-turn lock 1998 $650.00 $650.00 $-
1017 Counter, L-shape 1998 $700.00 $700.00 $-
1018 Counter, L-shape 1998 $700.00 $700.00 $-
1019 Counter, Work, 3'x8' 1998 $500.00 $500.00 $-
1020 Storage Unit, 25 slot 1998 $400.00 $400.00 $-
1021 Table, Work, 4' x 6' 1998 $200.00 $200.00 $-
1022 Table, computer printer stand 1998 $200.00 $200.00 $-
1023 Desk, 5' 1998 $400.00 $400.00 $-
1024 Table, work, 24" x 7' 1998 $450.00 $450.00 $-
1025 Table, fluor light, layup 1998 $800.00 $800.00 $-
1026 Table, light stand. 48" x 96", 7-drw. 1998 $700.00 $700.00 $-
1027 Cabinet, 7-door 1998 $750.00 $750.00 $-
1028 Table, Platemaker 1998 $350.00 $350.00 $-
1029 Cabinet, 9-door overhead 1998 $850.00 $850.00 $-
1030 Table, work, roll-about 1998 $400.00 $400.00 $-
1031 Table, work, 3' x 9' 1998 $600.00 $600.00 $-
1032 Table, 3-tier, printer's workstation 1998 $400.00 $400.00 $-
1033 Storage Unit, 7'x8', multi-bin type 1998 $3,100.00 $3,100.00 $-
1034 Storage Unit, paper, 20-bin 1998 $400.00 $400.00 $-
1035 Storage Unit, 11"x17" type 1998 $125.00 $125.00 $-
1036 Chair, executive swivel 1998 $400.00 $400.00 $-
1037 Chair, executive swivel 1998 $400.00 $400.00 $-
1038 Chair, secretarial 1998 $275.00 $275.00 $-
1039 File cabinet, 2-drawer 1998 $120.00 $120.00 $-
1040 Copier, Canon NP6060, autofeed/sorter 1998 $37,250.00 $37,250.00 $-
1041 Copier, Xerox 5028, autofeed/sorter 1998 $4,100.00 $4,100.00 $-
1042 Copier, Canon CLC500 color w/edit bd 1998 $51,000.00 $51,000.00 $-
1043 Copier, Canon CLC320 color w/edit bd 1998 $14,000.00 $14,000.00 $-
1044 Copier, Xerox 5065, autofeed/sorter 1998 $61,000.00 $61,000.00 $-
1045 Copier, Xerox 2510 Engineering Copier 1998 $14,000.00 $14,000.00 $-
1046 Press, ABDick 360, 1-unit conv damp 1998 $8,250.00 $8,250.00 $-
1047 Uniden Sportcat portable scanner 1999 $225.00 $225.00 $-
1048 Platemaker, ITEK 616S 1998 $16,000.00 $16,000.00 $-
1049 Platemaker, Mitsubishi CP50S 1998 $4,500.00 $4,500.00 $-
1050 Risograph GR3750 digital press 1998 $14,500.00 $14,500.00 $-
1051 Collator, Plockmatic, 10-bin 1998 $8,000.00 $8,000.00 $-
1052 Booklet maker, MBM, 11"x17" 1998 $9,000.00 $9,000.00 $-
1053 Imaging Unit, Riso GR3750 1998 $1,100.00 $1,100.00 $-
1054 Imaging Unit, Riso GR3750 1998 $1,100.00 $1,100.00 $-
1055 Imaging Unit, Riso GR3750 1998 $1,100.00 $1,100.00 $-
1056 Imaging Unit, Riso GR3750 1998 $1,100.00 $1,100.00 $-
1057 Imaging Unit, Riso GR3750 1998 $1,100.00 $1,100.00 $-
1058 Imaging Unit, Riso GR3750 1998 $1,100.00 $1,100.00 $-
14
<PAGE>
1059 Jogger, Syntron, 19" 1998 $1,900.00 $1,900.00 $-
1060 GBC Thermalbind 320 bindery unit 1998 $2,100.00 $2,100.00 $-
1061 Jogger, LectroJog 1998 $450.00 $450.00 $-
1062 Jogger, Martin Yale 1998 $450.00 $450.00 $-
1063 Challenge Number Pro numbering unit 1998 $1,150.00 $1,150.00 $-
1064 IBICO "Kombo" booklet maker 1998 $375.00 $375.00 $-
1065 Alps 14" laminator 1998 $360.00 $360.00 $-
1066 Challenge paper drill, single unit 1998 $1,470.00 $1,470.00 $-
1067 USI 12" continuous laminator 1998 $370.00 $370.00 $-
1068 AstroSeal Hot Pouch seal unit 1998 $840.00 $840.00 $-
1069 B&D Heat Gun 1998 $40.00 $40.00 $-
1070 Tasklight, halogen, adjustable 1998 $70.00 $70.00 $-
1071 Dolly, 2-wheel 1998 $175.00 $175.00 $-
1072 Challenge 19" paper cutter 1998 $3,550.00 $3,550.00 $-
1073 Microwave unit, Goldstar 1998 $80.00 $80.00 $-
1074 Sony cordless phone, 900 mhz 1999 $135.00 $135.00 $-
1075 Rolodex Telemaster 2000 phone 1998 $200.00 $200.00 $-
1076 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1077 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1078 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1079 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1080 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1081 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1082 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1083 Motorola Maxtrac, 800 mhz 1998 $1,250.00 $1,250.00 $-
1084 Dremel-Moto industrial tool unit 1998 $70.00 $70.00 $-
1085 Motorola Maxtrac, 800 mhz 1998 $1,350.00 $1,350.00 $-
1086 Compaq LTE Elite notebook computer 1998 $3,000.00 $3,000.00 $-
1087 Nokia 638 cell phone 1998 $250.00 $250.00 $-
1088 Sony M-527V Microcassette recorder 1998 $85.00 $85.00 $-
1089 IBM Selectric II Typewriter 1998 $300.00 $300.00 $-
1090 Casio cash register 1998 $475.00 $475.00 $-
1091 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1092 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1093 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1094 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1095 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1096 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1097 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1098 Motorola MTX800 HandieTalkie/charger 1998 $1,100.00 $1,100.00 $-
1099 Motorola Mic adapter, MTX type 1998 $100.00 $100.00 $-
1100 Nokia 239 cell phone 1998 $200.00 $200.00 $-
1101 Nokia 128 cell phone 1998 $150.00 $150.00 $-
1102 Nokia 739 cell phone 1998 $150.00 $150.00 $-
1103 Baum 714 Friction Feed folder 1998 $3,200.00 $3,200.00 $-
1104 Sanyo refrigerator 1998 $150.00 $150.00 $-
1105 Friden mailing machine 1998 $2,500.00 $2,500.00 $-
1106 Canon EOS camera ensemble, lenses 1998 $2,200.00 $2,200.00 $-
1107 Canon A1 camera ensemble, lenses 1998 $1,100.00 $1,100.00 $-
1108 Olympus 914 Pearlcorder 1998 $325.00 $325.00 $-
1109 Canon MultiPass fax/printer 1998 $490.00 $490.00 $-
1110 Hewlett-Packard Laserjet MP 11"x17" 1998 $1,990.00 $1,990.00 $-
1111 Apple ColorStyle color printer 1998 $400.00 $400.00 $-
1112 Mustec 24-bit color scanner 1998 $400.00 $400.00 $-
1113 Apple Pwer PC 6300 1998 $3,000.00 $3,000.00 $-
1114 AST Bravo P133 Computer 1998 $3,000.00 $3,000.00 $-
1115 Hitachi 17 color Monitor 1998 $770.00 $770.00 $-
1116 Canon IX4015 1998 $1,050.00 $1,050.00 $-
1117 ZIP Disk, PC type, external 1998 $100.00 $100.00 $-
1118 Prarie PC 166 computer, w?15" Monitor 1998 $2,200.00 $2,200.00 $-
1119 Macintosh SE personal computer 1998 $375.00 $375.00 $-
1120 ImagerwriterII Printer 1998 $250.00 $250.00 $-
1121 Dell Dimension XP Computer w/19" Moni 1998 $3,200.00 $3,200.00 $-
1122 Hewlett Packard LaserJet IIP Printer 1998 $700.00 $700.00 $-
1123 Att Cordless Phone 1998 $100.00 $100.00 $-
15
<PAGE>
1124 Magnavox 15" Color Monitor 1998 $350.00 $350.00 $-
1125 Goldstar 15" color Monitor 1998 $100.00 $100.00 $-
1126 Hewlett Packard 4V Laserwriter/Platemake 1998 $2,750.00 $2,750.00 $-
1127 SWQ Bell Caller ID Unit 1998 $25.00 $25.00 $-
1128 SW Bell Caller ID 1998 $25.00 $25.00 $-
1129 Software, Page Maker 6.0 1998 $690.00 $690.00 $-
1130 Software, Page Maker 6.0 (Macintosh) 1998 $690.00 $690.00 $-
1131 Software, Clari Works (Mac) 1998 $450.00 $450.00 $-
1132 Software, Clickart, DOS 1998 $125.00 $125.00 $-
1133 Radio, Frequency scanning, 100-500 MxZ 1998 $250.00 $250.00 $-
1134 LectorStik Hand Waxer 1998 $85.00 $85.00 $-
1135 Task Lights Flourecent, 4- Unit 1998 $175.00 $175.00 $-
1136 Chair, Stackable 1998 $50.00 $50.00 $-
1137 Printer Canon BJ-620 1998 $300.00 $300.00 $-
1138 Padding Station, Adjustable 1998 $400.00 $400.00 $-
1139 Wire Binder Unit 1998 $400.00 $400.00 $-
1140 Adding Machine, Sharp 1998 $75.00 $75.00 $-
1141 Calculator, TI BAII Plus 1998 $85.00 $85.00 $-
1142 Sign, Illuminated "Copies Plus 1998 $1,430.00 $1,430.00 $-
1143 Omega III Telephone System 1998 $12,115.00 $12,115.00 $-
1144 Printing Press, AB Dick Mod 9870, S/N 5232 1999 $57,500.00 $57,500.00 $-
1145 Printing Press, AB Dick Mod 9870, S/N 5231 1999 $57,500.00 $57,500.00 See PMS 1144
1146 Printing Press, AB Dick Mod 9850, S/N 985 1999 $19,200.00 $19,200.00 See PMS 1144
1147 Automobile, Ford Crown Victoria, 1997 1999 $18,300.00 $18,300.00 $-
1148 Canon Copier (#2) Mod 6060 w/sorter 1999 $32,500.00 $32,500.00 $-
1149 Canon Copier Mod 9800 w/sorter 1999 $48,000.00 $48,000.00 $-
1150 Riso RA 4200 Digital Duplicator 1999 $9,300.00 $9,300.00 $-
1151 Craftsman Table Saw 1999 $540.00 $540.00 $-
1152 Skil Saw, gear driven 1999 $190.00 $190.00 $-
MARKET CURRENT LIEN
VALUE BALANCE
-------------------------------------
Totals $600,470.00 $-
</TABLE>
16
<PAGE>
Exhibit D
Utica's Financial Statements
Utica's financial statements were attached to this agreement as Exhibit D but
are not included herewith for Form 8-K purposes. Utica financial statements will
be included in the amended Form 8-K as discussed in Item 7 (a).
17
<PAGE>
Exhibit E
Interim Bridge Loan Financing
NOT USED
18
<PAGE>
Exhibit F
Utica Customer List
Name
- ----
Bo's Pizza
Career Network
Chamber of Commerce
Cooks
CPI
Davis Pack
Eoff Photography
First Commercial Bank
Fisherman's Directory
Gore Engineering
Grace Hill Elementary
Immages Copy Graphics
Jack Pope
Kumpe, Chad
MSI
NCS Healthcare
New Beginnings Church
New Life
Premier Concepts
Regions Bank
Remington
Rogers FD
Rogers Law Firm
Rogers Rotary
Rogers School Services
St. Clair
St. Vincent
Tony C Taxi
Tony C's
Village Bible
We Deliver
Woods Creek, Inc.
19
<PAGE>
Exhibit G
Inventory of Aarow's Assets
Drill $ 200
Fax 404
Software 2,910
Misc. Tools 538
Tools 204
Tools 250
Incinerator 1,400
Pipe 633
Hand Truck 419
Desk 110
Tables 150
Copier 6,364
Auger Equipment 300
Auger Equipment 600
VCR 202
Tools 1,473
Computer 1,052
Phone System 2,912
4 Desks 1,975
----------
Total $ 22,096
20
<PAGE>
<TABLE>
<CAPTION>
Exhibit H
Aarow's Financial Statements
UNAUDITED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
June December
Assets 30, 1999 31, 1998
------------- --------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 65 $ 0
Inventory 32,400 32,400
------------- --------------
Total Current Assets $ 32,465 $ 32,400
PROPERTY, PLANT AND EQUIPMENT (net of accumulated
depreciation of $ 15,905 and $ 13,937 respectively) 6,191 8,159
Other Assets
Organization Costs (net of accumulated
amortization of $ 3,450 and $ 2,925 respectively) $ 1,050 $ 1,575
Noncompete Covenant (net of accumulated
amortization of $ 3,450 and $ 2,550 respectively) 14,550 15,450
------------- --------------
TOTAL OTHER ASSETS $ 15,900 $ 17,025
------------- --------------
TOTAL ASSETS $ 54,556 $ 57,584
============ ==============
Liabilities and Stockholders Equity
Current Liabilities:
Accounts Payable $ 51,265 $ 41,142
Payroll Taxes Payable 120,137 103,496
Accrued Interest Payable 36,497 24,229
Judgment Payable 18,370 18,370
Short Term Notes 252,004 204,686
Accrued Salaries Payable 19,276 0
Current Portion of Long Term Notes 60,000 60,000
------------- --------------
TOTAL CURRENT LIABILITIES $ 557,549 $ 451,923
LONG TERM LIABILITIES 0 0
------------- --------------
TOTAL LIABILITIES $ 557,549 $ 451,923
Stockholders Equity
Common Stock, $ 0.001 par value, 30,000,000 shares authorized, $ 11,156 $ 10,381
11,155,942 shares issued and outstanding
Convertible Preferred Stock, $0.001 par value, 5,000,000 shares 3,000 3,000
authorized, 3,000,000 shares issued and outstanding,
one share convertible for three shares common
Paid in Capital 219,782 220,557
Retained Earnings ( 736,931) ( 628,277)
-------------- ---------------
TOTAL STOCKHOLDERS EQUITY ($ 502,993) ($ 394,339)
-------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 54,556 $ 57,584
============= ==============
</TABLE>
See notes to unaudited financial statements.
21
<PAGE>
<TABLE>
<CAPTION>
AAROW ENVIRONMENTAL GROUP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended June 30, 1999, the Three Months Ended June 30, 1998,
the Six Months Ended June 30, 1999 and the Six Months Ended June 30, 1998
Three Months Three Months Six Months Six Months
6-30-99 6-30-98 6-30-99 6-30-98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales Income $ 0 $ 18,079 $ 0 $ 28,290
Cost of Sales
Materials 0 12,861 0 18,427
----------- ----------- ----------- -----------
GROSS PROFIT $ 0 $ 5,218 $ 0 $ 7,815
Operating Expenses 42,950 76,427 90,308 107,170
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS ($ 42,950) ($ 71,209) ($ 90,308) ($ 99,355)
Other Income and (Expenses)
Interest Expense ($ 6,439) ($ 7,212) ($ 12,530) ($ 12,998)
Penalties ( 3,122) ( 1,115) ( 5,817) ( 3,397)
------------ ------------ ------------ ------------
Total Other Income and (Expenses) ($ 9,561) ($ 8,327) ($ 18,347) ($ 16,395)
------------ ------------ ------------ ------------
NET INCOME (LOSS) ($ 52,511) ($ 79,536) ($ 108,655) ($ 115,750)
============ ============ ============ ============
WEIGHTED AVERAGE number of common stock
and common stock equivalents outstanding 20,155,942 18,318,904 20,155,942 18,318,904
=========== =========== ========== ============
NET INCOME (LOSS) per common stock and
common stock equivalents ($ .003) ($ .004) ($ .005) ($ .006)
============ =========== ============ ============
</TABLE>
See notes to unaudited financial statements.
22
<PAGE>
<TABLE>
<CAPTION>
AAROW ENVIRONMENTAL GROUP, INC.
STATEMENTS OF CASH FLOWS
For Six Months Ended June 30, 1999 and the Six Months Ended June 30, 1998
Six Months Six Months
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) ($108,655) ($115,750)
Adjustments to reconcile net loss to net cash provided
by operating activities
Depreciation 1,968 1,968
Amortization 1,125 1,124
Extraordinary Items 0 0
(Increase) decrease in:
Accounts Receivable 0 ( 6,760)
Inventory 0 1,762
Increase (decrease) in:
Bank Overdraft 0 ( 1,056)
Accounts Payable 10,123 14,770
Payroll Taxes Payable 16,641 15,924
Accrued Salaries Payable 19,276 0
Accrued Interest Payable 12,268 8,469
--------- ---------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES ($ 47,254) ($ 79,549)
CASH FLOWS FROM FINANCING ACTIVITIES
New borrowings
Long-Term $ 0 $ 0
Short-Term 47,319 46,884
Debt Reduction
Long-Term 0
Sale of Stock 0 32,665
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES $ 47,319 $ 79,549
--------- ---------
NET INCREASE IN CASH $ 65 $ 0
CASH AT BEGINNING OF THE PEROID 0 0
--------- ---------
CASH AT END OF PERIOD $ 65 $ 0
========= =========
SUPPLEMENTAL DISCLOSURES
Interest Paid $ 12,530 $ 12,998
========= =========
</TABLE>
See notes to unaudited financial statements.
23
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
STATEMENT OF SIGNIFICANT ACCOUNTING ASSUMPTIONS
BASIS OF ACCOUNTING
The financial statements of Aarow Environmental Group, Inc. (the "Company") at
June 30, 1999, have been prepared on the accrual basis of accounting. Using this
method, revenue and expenses are recognized when occurred.
The financial statements included in this report have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission for interim reporting and include all adjustments which are, in the
opinion of management, necessary for a fair presentation. These financial
statements have not been audited by an independent accountant.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations for
interim reporting. The Company believes that the disclosures are adequate.
However, these financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the annual report on
form 10-KSB for the year ended December 31, 1998. The financial data for the
interim periods presented may not necessarily reflect the results to be expected
for the full year.
INVENTORY
Inventory is carried at the lower of cost or market and consists of raw
materials and ready to sell products.
PROPERTY AND EQUIPMENT
Property and Equipment are recorded at acquisition cost. Depreciation is
computed using accelerated methods by charging against earnings amounts
sufficient to amortize the cost of the related assets over their estimated
useful lives.
INCOME TAXES
For income tax reporting and financial statement reporting at June 30, 1999, the
Company is using depreciation methods that are the same and therefore there is
no accrual for deferred income taxes at this time. However, because of various
elections available at the time of filing the income tax returns, there may be
future differences between income tax depreciation expense and financial
statement depreciation expense giving rise to accrual of deferred income taxes
Note 1: Property, Plant and Equipment
All assets are recorded at original cost. Depreciation is calculated using
accelerated methods, lives are five years for office equipment, seven years for
manufacturing equipment and furniture, and 10 years for Leasehold Improvements.
24
<PAGE>
<TABLE>
<CAPTION>
AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
Note 2: Noncompete Covenant
On July 29, 1998 the Company entered into an agreement with Evergreen
BioServices, Inc. whereby Evergreen grants Aarow the right to use Evergreen's
name and reputation to exclusively market remediation throughout the U.S. and
Mexican markets. Additionally, Evergreen agrees to work exclusively through
Aarow and Evergreen agrees not to compete with Aarow. Evergreen will supply the
engineering and technical support and will be responsible to accept or reject
all proposals concerning remediation through Aarow. This agreement begins on
July 29, 1998 and remains in effect for ten years at which time Aarow can renew
one time for an additional ten years
June 30, Dec. 31,
1999 1998
---------------- ----------------
<S> <C> <C>
Noncompete Covenant $ 18,000 $ 18,000
Accumulated Amortization ( 3,450) ( 2,550)
----------------- -----------------
Net Noncompete Covenant $ 14,550 $ 15,450
================ ================
Note 3: Judgment Payable
On October 2, 1998 a judgment was entered in the Washington County Court,
Fayetteville, AR, against the Company. This judgment is in the amount of $
18,370 and accrues interest at the rate of 10 %.
Note 4: Short-Term Notes
On September 15, 1997 the Company issued a series of short term notes in the
amount of $ 5,000 each for a total of $ 55,000. Each note accrues interest at
the rate of 8 % and is a single pay note due September 15, 1998. In addition
20,000 shares of common stock and 100,000 common stock warrants were issued to
each note holder. In case of default the note agreements call for the issuance
of an additional 40,000 shares of common stock to each note holder.
One of the shareholders who is also a Director loaned the Company $ 2,230. This
is an unsecured non interest demand note.
Note 5: The company's Long Term debt consists of the following:
June 30, Dec. 31,
1999 1998
---------------- ----------------
Springdale Bank & Trust, 10.25%, Monthly Int. Only $ 60,000 $ 60,000
Maturity Date 6-21-97
Secured by Inventory and A/R
Current Portion of Long Term debt ( 60,000) ( 60,000)
----------------- -----------------
Long Term debt, less current portion $ 0 $ 0
================ ================
The following is a summary of principal maturities of long term debt during the
next five years:
1999 60,000 60,000
</TABLE>
25
<PAGE>
AAROW ENVIRONMENTAL GROUP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
Note 6: Stockholders' Equity
Common Stock: At June 30, 1999 there were 30,000,000 shares authorized,
11,155,942 issued and outstanding at $ 0.001 per share par value. At December
31, 1998 there were 30,000,000 shares authorized, 10,380,942 issued and
outstanding at $ 0.001 per share par value. The Company trades it's stock on the
over the counter bulletin board using the stock symbol of AARO.
Stock Warrants: There are 1,100,000 common stock warrants issued. Each common
stock warrant permits the holder to purchase at any time from September 15, 1998
until September 15, 2002 one share of the Company's common stock at the initial
exercise price of $ 0.50 per share. The common stock warrants are redeemable by
the Company upon thirty days written notice to the holder, at $ 0.001 per
warrant, conditioned upon the price of the common stock of the Company closing
for fourteen consecutive business days above $ 2.00 per share.
Convertible Preferred Stock: At June 30, 1999 and December 31, 1998 there were
5,000,000 shares authorized, 3,000,000 shares issued and outstanding. Each share
has a $ 0.001 par value and is convertible for three shares of common stock.
Note 7: Going Concern
As shown in the accompanying financial statements, the Company has incurred a
loss for the period ended June 30, 1999 and has a deficit in working capital.
Management has a continuing plan to recapitalize the Company, reestablish the
relationship with the distributors and development new products. There can be no
assurance that the Company will be successful in its efforts to implement this
plan. If the Company is unsuccessful in its efforts, it may be necessary to
undertake such other actions as may be appropriate to preserve asset value. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
NOTE 7: Earnings Per Share of Common Stock
Earnings per common share were computed using the weighted average number of
common shares outstanding after adding the dilutive effect of the conversion of
the preferred stock.
26
<PAGE>
<TABLE>
<CAPTION>
AAROW ENVIRONMENTAL GROUP, INC.
SUPPLEMENTAL INFORMATION TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
SUPPLEMENTAL INFORMATION
Three Months Three Months Six Months Six Months
6-30-99 6-30-98 6-30-99 6-30-98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating Expenses
Accounting $ 3,200 $ 10,546 $ 4,700 $ 15,060
Advertising 0 0 614 0
Amortization 563 562 1,125 1,124
Auto & Truck 4,085 251 4,085 750
Bank Charges 1,146 7,508 1,146 7,528
Credit Card Fees 72 0 72 0
Depreciation 984 984 1,968 1,968
Dues & Subscriptions 0 65 0 65
Equipment Rental 0 132 0 224
Insurance 290 0 290 0
Legal Fees 290 4,140 290 4,892
Miscellaneous 168 196 168 196
Office Expense 234 709 1,209 1,509
Office Salaries 9,000 23,157 35,000 33,775
Payroll Tax Expense 689 1,772 2,678 2,584
Postage 0 0 0 414
Professional Fees 822 959 822 1,702
Rent 1,500 6,000 4,250 9,000
Supplies 3,200 135 3,200 365
Taxes & Licenses 775 326 775 326
Telephone 2,580 6,478 10,866 10,146
Travel 12,983 11,697 15,975 14,297
Unemployment Taxes 369 810 1,075 1,245
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES $ 42,950 $ 76,427 $ 90,308 $ 107,170
=========== =========== =========== ===========
</TABLE>
See notes to unaudited financial statements.
27
<PAGE>
Exhibit I
Aarow Court Proceedings and Judgements
On October 2, 1997 a judgment was entered in the Washington County
Court, Fayetteville, AR, against the Company. This judgment is in the amount of
$ 18,370 and accrues interest at the rate of 10%.
28
<PAGE>
Exhibit J
Investor's Certificate
The undersigned, as a condition to receive ______ shares of the common
stock of Aarow Environmental Group, Inc. (Aarow) ( said _____________ shares are
herein sometimes refereed to as "the securities") as part of a transaction (the
transaction) under the terms of which Aarow Environmental Group, Inc is
purchasing all of the issued and outstanding shares of Utica Publishing Company,
Inc.(Utica) certifies to Aarow as follows:
1. My full name, residence and business addresses are as follows:
Name: Residence Address: Business Address:
- ---- ----------------- ----------------
2. I am receiving the securities in my own name or as trustee for myself and for
my own account. No other person has any interest in or right with respect to the
securities; nor have I agreed to give any person any such interest or right.
3. I am acquiring the securities for investment and not with a view to or for
resale in connection with any distribution of the securities. I recognize that
the securities have not been registered under the Federal Securities Act of 1933
or qualified under the provisions of the laws of any State, that the disposition
of the securities is subject to restrictions imposed by federal and state law,
and that the securities will bear a restrictive legend. I understand that I
cannot dispose of the securities without registration and qualification, and
that no undertaking has been made with regard to registering or qualifying the
securities in the future. I understand that the availability of an exemption in
the future will depend on circumstances beyond my control and that I may be
required to hold the securities for a substantial period. I recognize that no
market exists for the securities and no representation of the availability of
such a market in the future has been made to me.
4. I have not received any advertisement or solicitation with respect to the
securities.
5. I have agreed to receive the securities in exchange for all of my shares of
Utica Publishing Company, Inc., which is the total consideration for the
securities.
6. Because of my existing relationship with Utica, and my understanding of the
transaction, and by reason of my business or financial experience, I am capable
of evaluating the merits and the risks of the transaction and of my transfer of
Utica shares for the securities, and of protecting my own interests in
connection with the transaction and my receipt of Aarow shares. I have been
given the opportunity to and have been advised by Utica and Aarow to seek
professional and financial advise concerning the transaction.
7. I acknowledge that I have been given access to financial information about
Aarow, Utica and the transaction, and have been given the opportunity to obtain
any information and ask any questions concerning Aarow, Utica and the
transaction. To the extent that I have availed myself of this opportunity, I
have received complete and satisfactory information and answers.
Dated: _________________ _____________________________
29
