<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996.
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
COMMISSION FILE NUMBER 0-3718
- -------------------------------------------------------------------------------
EQUITY GROWTH SYSTEMS, INC.
(Name of Small Business Registrant in its charter)
Delaware 11-2050317
-------- ----------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
3821-B TAMIAMI TRAIL, SUITE 201; PORT CHARLOTTE, FLORIDA 33952
---------------------------------------------------------------
(Address of principal executive offices including Zip Code)
(941) 255-9582
--------------
(Registrant's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of June 14, 1996, there
were 3,491,148 shares of the Registrant's common stock outstanding.
This report is comprised of 37 consecutive pages. The exhibit index
required by Item 601 of Regulation SB is contained at consecutively numbered
page 19.
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE NUMBER
- ---- -----------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 2
Cover Page 3
Table of Contents 4
Auditors' Report 5
Balance Sheet 6
Condensed Statement of Income and Accumulated Deficit 7
Statements of Shareholders' Deficit 8
Condensed Statements of Cash Flows 10
Notes to the Condensed Financial Statements 11 - 16
Item 2. Management's Discussion and Analysis 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 3. Default Upon Senior Securities 18
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
(a) Exhibits 19 - 21
(b) Reports on Form 8-K 21
SIGNATURES 21
ADDITIONAL INFORMATION 22
</TABLE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See following pages.
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 2
<PAGE> 3
EQUITY GROWTH SYSTEMS, inc.
FINANCIAL STATEMENT
JUNE 30, 1996
<PAGE> 4
EQUITY GROWTH SYSTEMS, inc.
FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
FINANCIAL STATEMENTS
Accountant's Compilation Report 1
Balance Sheets 2
Statements of Income and Accumulated Deficit 3
Statements of Shareholders' Equity 4-5
Statements of Cash Flows 6
Notes to Financial Statements 7-12
</TABLE>
<PAGE> 5
[LEO J. PAUL, P.A. LETTERHEAD]
To the Shareholders
Equity Growth Systems, inc.,
Port Charlotte, Florida 33952
I have compiled the accompanying balance sheet of Equity Growth Systems, inc.
as of June 30, 1996 and 1995 and the related statements of income and retained
earnings and cash flows for the six months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
/s/ Leo J. Paul
- ----------------------------
Leo J. Paul
August 2, 1996
1
<PAGE> 6
EQUITY GROWTH SYSTEMS, inc.
BALANCE SHEET
JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 12,507 $ -
Other receivables 5,671 3,792
Mortgage receivable, current portion
(Note 6) 190,964 229,935
Promissory notes, current portion
(Note 7) 8,757 8,757
---------- -----------
TOTAL CURRENT ASSETS 217,899 242,484
OTHER ASSETS
Mortgages receivable (Note 6) 1,907,162 2,194,913
Promissory notes (Note 7) 338,039 298,719
Interest receivable 44,793 -
Patent and proprietary product
development costs - 101
---------- -----------
TOTAL OTHER ASSETS 2,289,994 2,493,733
--------- -----------
TOTAL ASSETS $2,507,893 $ 2,736,217
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Other current liabilities (Note 2) $ 55,299 $ -
Mortgage payable, current portion
(Note 6) 487,827 364,950
Loan payable (Note 9) 104,000 -
----------- ------------
TOTAL CURRENT LIABILITIES 647,126 364,950
LONG-TERM LIABILITIES
Mortgage payable (Note 6) 1,283,299 1,637,652
----------- ------------
SHAREHOLDERS' EQUITY (Note 12)
Preferred stock-no par value authoriz-
ed-5,000,000 shares; zero issued and
outstanding - -
Common stock-$.01 par value author-
ized-20,000,000 shares; issued and
outstanding-3,491,338 shares 34,914 18,391
Capital in excess of par value 2,695,178 2,918,162
Accumulated deficit (2,152,624) (2,202,938)
----------- ------------
577,468 733,615
------------
TOTAL LIABILITIES $ 2,507,893 $ 2,736,217
----------- ------------
</TABLE>
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial
statements.
2
<PAGE> 7
EQUITY GROWTH SYSTEMS, inc.
CONDENSED STATEMENT OF INCOME AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Income $ 56,338 $ - $ 112,813 $ -
General and Adminis-
trative Expenses 60,302 - 118,913 1,266
---------- ---------- ---------- ----------
Net Income (Loss)
Before Provisions
for Income Taxes (3,964) - (6,100) (1,266)
Provisions for Income
Taxes (Note 2) - - - 50
---------- ---------- ---------- ----------
Net Income (Loss) (3,964) - (6,100) (1,316)
Accumulated Deficit-
Beginning (2,148,660) (2,270,770) (2,146,524) 2,269,454
Write Off of Old
Liabilities Unable
to Locate Creditors - (67,832) - (67,832)
---------- ---------- ---------- ----------
Accumulated Deficit-
Ending (2,152,624) (2,202,938) (2,152,624) (2,202,938)
---------- ---------- ---------- ----------
Earnings Per Share .00 .00 .00 .00
Weighted Average of
Shares Outstanding 2,411,036 2,000,000 2,411,036 2,000,000
---------- ---------- ---------- ----------
</TABLE>
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial
statements.
3
<PAGE> 8
EQUITY GROWTH SYSTEMS, inc.
STATEMENTS OF SHAREHOLDERS' EQUITY
JUNE 30, 1996
<TABLE>
<CAPTION>
Capital in
No. of Common Excess of Accumulated
Shares Stock Par Value Deficit
<S> <C> <C> <C> <C>
Balances, December
31, 1991 $1,902,152 $19,022 $2,101,411 $(2,137,567)
Net (loss) for the
year ended December
31, 1992 (7,320)
---------- ------- ---------- -----------
Balances, December
31, 1992 1,902,152 19,022 2,101,411 (2,144,887)
Common stock issued
as payment for pro-
fessional fees 75,000 750
Common stock issued
in exchange for
accrued interest 22,848 228 24,126
Net (loss) for the
year ended December
31, 1993 (39,700)
---------- ------- ---------- -----------
Balances, December
31, 1993 2,000,000 20,000 2,155,537 (2,184,587)
Net (loss) for the
year ended December
31, 1994 (17,136)
---------- ------- ---------- -----------
Balances, December
31, 1994 2,000,000 20,000 2,125,537 (2,201,723)
Reverse Split (1,800,000) (18,000) 18,000
Common shares issued 2,622,072 26,221 537,711
Net income for the year
ended December 31,
1995 55,199
---------- ------- ---------- -----------
Balances, December
31, 1995 2,822,072 28,221 2,681,248 (2,146,524)
</TABLE>
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial
statements. 4
<PAGE> 9
EQUITY GROWTH SYSTEMS, inc.
STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
JUNE 30, 1996
<TABLE>
<CAPTION>
Capital in
No. of Common Excess of Accumulated
Shares Stock Par Value Deficit
<S> <C> <C> <C> <C>
Common stock issued
in exchange for
services 669,266 6,693 - -
Additional contribution
June 30, 1996 - - 13,930 -
Net (Loss) for the
six months ended
June 30, 1996 (6,100)
--------- ------- ---------- -----------
Balances, June 30,
1996 3,491,338 $34,914 $2,695,178 $(2,152,624)
--------- ------- ---------- -----------
</TABLE>
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial
statements.
5
<PAGE> 10
EQUITY GROWTH SYSTEMS, inc.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<S> <C> <C>
Cash Flow From Operating Activities:
Net Loss $ (6,100) $ (1,316)
-------- --------
Adjustments to Reconcile Income to
Net Cash Used for Operating Activities
Decrease in receivable 89,141 -
Increase in current liabilities 14,141 (61,559)
Decrease in notes payable (105,298)
Capital stock issued 6,693 61,294
-------- --------
4,677 265
-------- --------
Net Cash (Used) for Operation (1,423) (1,051)
Cash Flow From Investing Activities
Additional paid in capital contributed 13,930 -
-------- --------
Net Increase in Cash 12,507 (1,051)
Cash-Beginning of Period - 1,051
-------- --------
Cash-End of Period $ 12,507 $ -
-------- --------
</TABLE>
Read Accountant's Compilation Report
The accompanying notes are an integral part of these financial
statements.
6
<PAGE> 11
EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Organization
The Company (formerly known as InfoTech, Inc.) was organized under
the laws of the State of Delaware on December 8, 1964. The principal business
of the Company is specializing in structuring and marketing mortgaged backed
securities as well as, the acquisition of select commercial real estate for
its own account.
Fixed Assets
Fixed assets are stated at cost and expenses pursuant to IRS Code
sec 179. The taxpayer has elected to accelerate the depreciation expense.
Income Taxes
Due to the loss carry forward, no provision for income taxes is
required.
NOTE 2 - SETTLEMENT WITH CREDITORS
In March of 1995, the Company issued 20,000 shares of the Company's
$.01 par value of common stock after the reverse split in payment of legal
bills of $45,734, and 6,072 shares $.01 par value stock in payment of
accounting bill of $15,360. The balance of $67,832 was written off as Company
was not able to locate creditors.
On August 15, 1995, the Company has issued 200,000 shares of the
Company's $.01 par value of common stock for significant services to the
corporation at the request of its President with a value of $2,000.
NOTE 3 - EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Edward
Granville-Smith, a chief executive officer for an initial term of five years
commencing June 1, 1995. The Company registered with the Securities and
Exchange Commission to issue 110,000 shares of common stock to Edward
Granville-Smith for compensation for services prior to June 1, 1995. In
addition, annual salary is a sum equal to the lesser of 5% of the Company's
annual gross income on a calendar basis or 15% of its net pre-tax profit as
determined for federal income tax purposes, without taking depreciation or tax
credits into account to be paid on or before March 30, following the calendar
for which salary is due; subject
7
<PAGE> 12
EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 3- EMPLOYMENT AGREEMENT (CONTINUED)
to availability of cash flow. Edward Granville-Smith would also be entitled to
an annual bonus payable in shares of the Company's common stock, determined by
dividing 5% of the Company's pre-tax profits for the subject calendar year by
the average bid price for the Company's common stock during the last five
trading days prior to the end of the last day of each year and the first days
of the new year.
NOTE 4 - CONSULTING AGREEMENTS
The Company entered into two consulting agreements. One with Bolina
Trading Company, S.A., a Panamanian Corporation and the second one with Warren
A. McFadden. Each consultant shall serve as a special advisor to Mr.
Granville-Smith, in conjunction with Mr. Granville-Smith's role as an officer
and director of the Company, with special responsibilities in the areas of
strategic planning and raising debt on equity capital required to implement the
Company's strategic plans. Bolina Trading Company, S.A. will receive as
compensation 84,000 shares of the Company's common stock plus $100 per hour
after 520 hours of service per year. Warren A. McFadden will receive as
compensation 110,000 shares of the Company's common stock plus $100 per hour
after 520 hours of service per year.
NOTE 5 - INDENTURE OF TRUST AND WRAP AROUND MORTGAGES RECEIVABLE
On June 30, 1995, the Company issued 1,616,000 shares of common
stock in payment of an indenture of trust and wrap around mortgages subject to
the underlying mortgages, from the following partnerships: Pay-West
Associates, Montco Associates, San-Safe Associates and San-Ten Associates.
The indenture of trust consists of (4) four demand notes bearing
interest at prime plus 4%. These notes are payable from the rental of the
various properties less payment on the wrap around mortgages. The payment does
not cover the accrued interest which is added back to the notes.
The wrap around notes bear interest of 9.08% to 13.50%. The
underlying mortgages bear interest at 9.625 to 9.75%. The difference between
payments on the wrap around mortgages and underlying mortgages are applied to
debt service of the demand notes.
8
<PAGE> 13
EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 6 - MORTGAGES
Mortgages consist of the following:
<TABLE>
<S> <C>
Subordinate "wrap" mortgage receivables:
(a) Nevada/California Property 12.940% $ 814,459
(b) Tennessee Property 13.500% 284,721
(c) Kansas Property (see Note 13) 12.320% 335,469
(d) Oregon Property 9.080% 663,477
----------
2,098,126
Less: Current Portion 190,964
----------
$1,907,162
----------
Original Mortgages Payable:
(a) Nevada/California Property 9.750% $ 800,440
(b) Tennessee Property 9.625% 213,505
(c) Kansas Property (see Note 13) 9.750% 131,788
(d) Oregon Property 9.750% 625,393
----------
1,771,126
Less: Current Portion 487,827
----------
$1,283,299
----------
</TABLE>
(a) The mortgage secures a promissory note and is payable in equal
quarterly installments of $42,701.69 with a final payment of $291,096.92,
maturing January 1, 2001. There is also an underlying "wrap mortgage that is
payable in equal quarterly installments of $42,826.50, maturing July 1, 2005,
with quarterly payments decreasing to $9,314.75 for the last five years.
(b) The mortgage secures a promissory note and is payable in equal
quarterly installments of $23,437.01, with a final payment of $198,238.33
maturing December 31, 1996. There is also an underlying "wrap" mortgage that
is payable in equal quarterly installments of $23,562.25 maturing December
2006, with quarterly payments decreasing to $7,329 for the last 10 years.
(c) The mortgage secures a promissory note and is payable in equal
quarterly installments of $18,508.87 maturing December 31, 1995. There is also
an underlying "wrap" mortgage that is payable in annual installments of
$74,482, maturing October 1, 2005, with annual payments decreasing to $22,962
the last 10 years. (See Note 13)
(d) The mortgage secures a promissory note and is payable in equal
quarterly installments of $26,409.87 with a final payment of $232,199.50,
maturing January 1, 2003. There is also an underlying "wrap" mortgage that is
payable in equal annual payments of $106,640 maturing December 31, 2002.
9
<PAGE> 14
EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 7 - NOTES RECEIVABLE
<TABLE>
<S> <C>
Nevada/California Property
Quarterly payments of $868.55
4% above prime, currently 12.62%
original amount $63,000 $132,144
Tennessee
Quarterly payment of $477.90
4% above prime, currently 12.62%
original amount $40,000 89,050
Kansas
Quarterly payments of $341.73
4% above prime, currently 12.62%
original amount $21,073 (See Note 13) 42,332
Oregon
Quarterly payments of $501.13
4% above prime, currently 12.62%
original amount $38,742 83,270
--------
346,796
Less: Current Portion (8,757)
--------
$338,039
--------
</TABLE>
NOTE 8 - LEASE COMMITMENTS
The various operating leases were acquired with the various
mortgages. The income generated under these operating leases is used to pay
the underlying mortgages. The future minimum rental commitment receivable by
year for the non-cancelable lease, as of December 31, 1995 is as follows:
<TABLE>
<CAPTION>
Nevada
Years Ending California Tennessee Kansas Oregon
<S> <C> <C> <C> <C>
December 31, 1996 $174,423 $95,660 $ 75,555 $ 107,964
December 31, 1997 174,423 - 75,555 107,964
December 31, 1998 174,423 - 18,889 107,964
December 31, 1999 174,423 - - 107,964
December 31, 2000 174,423 - - 107,964
-------- ------- -------- ----------
Total $872,115 $95,660 $169,999 $ 539,820
-------- ------- -------- ----------
Total Minimum Payments $1,677,594
----------
</TABLE>
10
<PAGE> 15
EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 8 - LEASE COMMITMENTS (CONTINUED)
The Company only recognizes as Interest income those amounts
collected in excess of the profits from the wrap mortgages and the interest
income which were $112,813 and $-0- respectively.
<TABLE>
<CAPTION>
NOTE 9 - LOAN PAYABLE 1996 1995
<S> <C> <C>
A secured loan payable due on
demand with interest payable
quarterly at a rate of 10% per
annum. This loan was assumed
by the Company as part of the
asset acquisition, subsequent
to the year end a formal note
is to be executed. $104,000 $ -
-------- --------
</TABLE>
NOTE 10 - RELATED PARTY TRANSACTION
The chief executive officer of the Company is also an officer
of the general partner in all the partnership involved in the wrap around
mortgages subject to the underlying mortgages and promissory notes.
NOTE 11 - COMPENSATION
No officer or director has received any compensation to date.
NOTE 12 - STOCKHOLDERS' EQUITY
On May 18, 1995, the Company adopted a resolution to change the
authorized capitalization as follows:
(a) The 2,000,000 shares of common stock, $.01 par value then
authorized, all of which were currently outstanding, were reverse split into
200,000 shares, $0.01 par value; and immediately thereafter;
(b) The Company's authorized common stock was increased from 200,000
shares, $0.01 par value, to 20,000,000 shares of common stock, without par
value, and
(c) The Company was authorized to issue 5,000,000 shares of
preferred stock, the attributes of which are to be determined by the Company's
Board of Directors from time to time, prior to issuance, in conformity with the
requirements of Sections 151 of the Delaware General Corporation Law.
11
<PAGE> 16
EQUITY GROWTH SYSTEMS, inc.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 13 - LEGAL MATTERS
The Company is currently in default on a property in Kansas City.
The tenant submitted an irrevocable offer to purchase the property. A formal
contract is being prepared and will be executed shortly. The Company's legal
counsel has confirmed that the first mortgage holder has withheld any action to
foreclose the mortgage due to the pending sale which will satisfy all pending
liabilities. At the time the sale is consummated the wrap mortgage asset will
be eliminated as well as the underlying liability.
12
<PAGE> 17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATION
During the six months ended June 30, 1996, the Registrant reported
interest income of approximately $113,000 as compared to income from all
sources of $0 during the prior six months ended June 30, 1996. This increase
was attributable to the Registrant's exchanging 1,616,000 shares of common
stock in payment of an indenture to trust and various wrap around mortgages
subject to the underlying mortgages. Also, the leases were similarly acquired
in the same transaction.
During the six months ended June 30, 1996, the Registrant's cost of
revenue increased by approximately $117,000 over the prior six months ended
representing costs associates with increased total revenues. The Registrant's
cost of revenue increased primarily as a result of the increased cost managing
the mortgages, mostly consisting of interest expenses incurred in satisfying
the underlying mortgages. During the 1996 six month ended, the Registrant
recognized an approximate $10,600 increase in its general and administrative
expenses primarily resulted by the advent of the interest expenses.
During the six months ended June 30, 1996, the Registrant reported a net
loss of approximately $6,000 or $.0 per share as compared to a net loss of
approximately $1,000 or $.0 per share during the prior year end. The increase
in losses resulted from expenses incurred to update the Registrant's filings
with the Securities and Exchange Commission and with expenses associated with
debt service on acquired assets. The apparent reduction in expenses on a per
share basis is based on the fact that a substantially greater number of shares
were outstanding as of June 30, 1996.
LIQUIDATED CAPITAL RESOURCES
As of June 30, 1996, the Registrant had working capital position of
approximately ($429,000) as compared to a working capital position of
approximately ($122,000) for the six months ended June 30, 1995. This increase
reflects the Registrant's acquisition of the previously discussed mortgages and
leases. To date, the cash flow generated from operations have been adequate to
meet the Registrant's mortgage obligations. A shareholder has been contributing
funds to meet various general and administrative expenses required to fulfill
all of the Registrant's obligations. No officer of the Registrant has been
receiving or accruing compensation at this time.
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 17
<PAGE> 18
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is currently not a party to any legal proceedings. Based
on information available to the Registrant, it believes that there is a
potential for litigation involving:
San Safe Associates limited partners (who have retained counsel to assist
them in removing an affiliate of the Registrant as general partner).
Management has retained legal counsel who is negotiating with counsel for the
limited partners on behalf of the Registrant and the general partner. See Item
2, Description of Properties - Investment Property - A. Leases - Associated
Wholesale Grocers, Inc., Lease.
The Registrant's predecessors in interest (the Milpitas partnerships)
entered into negotiations with Exten Ventures, Inc., a Delaware corporation,
during 1990, for sale of the assets subsequently assigned to the Registrant.
The Milpitas Partnerships have advised the Registrant's management that the
transactions were never concluded due to the inability or refusal of Exten
Ventures, Inc., to comply with its commitments. While management notes that
applicable status of limitation on any alleged transactions with Exten Ventures,
Inc., have probably expired, management cannot provide any assurances that Exten
Ventures, Inc., will not initiate litigation in the future
The Registrant has not made the final payments required under the mortgage
for its Kansas City property. The tenant had a conditional right to purchase
such property and submitted an irrevocable offer to purchase, which was to
have been rejected by counsel representing the Registrant, however, such
counsel may have failed to take the steps required to effect such rejection.
Consequently, the Registrant and the tenant are currently in negotiation to
formalize terms of sale. Legal counsel to the Registrant has advised management
that the mortgage holder has not initiated action to enforce the mortgage based
on its acknowledgment that the pending sale will generate sufficient income to
discharge the mortgage obligation.
The Registrant has used its best efforts to obtain information concerning
the assets it obtained from Milpitas; however, much of the information was
under the control of Charles Schnepfe, Milpitas' accountant, who served for
material periods as its chief executive officer and as the chairman of its
board of directors. Mr. Schnepfe refuses to provide any information with
respect to activities by Milpitas during the time it was under his control, to
the Registrant. It is possible that the Registrant is unaware of matters
performed or ignored by Mr. Schnepfe which could prove material in the future.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Registrant has no senior securities.
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 18
<PAGE> 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the first
quarter of 1996.
ITEM 5. OTHER INFORMATION.
The Registrant's reports disclosed under Item 6, if any, are incorporated
by reference as material subsequent events.
Diversified Corporate Consulting Group, LLC, a Delaware limited liability
company which acts as a consultant to the Registrant, has acquired all of the
Registrant's common stock heretofore held by Mr. Warren A. McFadden, in
consideration for assumption of approximately $30,000 in obligations of Mr.
Mcfadden to the Registrant. In conjunction with the terms of its consulting
agreement with Diversified Corporate Consulting Group, LLC, the Registrant will
shortly file a registration statement on Form S-8, registering an option
permitting Diversified Corporate Consulting Group, LLC to purchase 200,000
shares of the Registrant's common stock, at an aggregate exercise price of
$80,000.
Copies of the agreement between the Registrant and Diversified Corporate
Consulting Group, LLC, and the agreement between Mr. McFadden, Diversified
Corporate Consulting Group, LLC and the Registrant are filed as exhibits to
this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
2.1 Plan and Agreement of Merger dated April 7, 1993 between the
Registrant and Mercantile Realty Investors, Inc. (1)
2.2 Amendment dated May 25, 1993 to Plan and Agreement of Merger.
(3)
2.3 Agreement pertaining to cancellation of the merger between the
Registrant and Equity Growth Systems, Inc. (5)
2.4 Stock Exchange Agreement re Homan Equities, Inc. (7)
2.5 Stock Exchange Agreement re Moffitt Properties, Ltd. (7)
2.6 Stock Exchange Agreement re Equity Growth Realty, inc. (7)
</TABLE>
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 19
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
3.1 Certificate of Incorporation of the Registrant. (2)
3.11 Certificate of Amendment to Certificate of Incorporation (May,
1995). (5)
3.2 By-laws of the Registrant. (2)
10.1 Agreement for settlement of outstanding claims with the
Registrant's attorneys. (5)
10.2 Agreement for settlement of outstanding claims with the
Registrant's accountants. (5)
10.3 Employment Agreement with Edward Granville-Smith. (5)
10.4 Consultant Agreement with Bolina Trading Co., S.A. (5)
10.5 Settlement Agreement between Registrant and Equity Growth
Systems, inc., a Maryland corporation. (6)
10.6 Assignment of Indenture of Trust by Milpitas, Inc., including
Indenture of Trust. (7)
10.7 Engagement agreement with Diversified Corporate Consulting
Group, LLC. (7)
10.8 Corrective Bill of Sale. (7)
10.9 Employment Agreement with Gene R. Moffitt. (7)
10.10 Employment Agreement with Donald E. Homan. (7)
10.11 Employment Agreement with Charles J. Scimeca. (7)
10.12 Repayment Agreement with WEFT Trust. (7)
16 Letter re: Change in Certifying Accountant. (7)
21 Subsidiaries. (7)
27 Financial Data Schedule (for SEC use only).
99.1 Notifications to National Association of Securities Dealers,
Inc., pursuant to Securities and Exchange Commission Rule
10b-17. (5)
</TABLE>
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 20
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
99.2 Real Estate Title Reports for Nevada/California, Tennessee,
Kansas and Oregon properties subject to Wrap Mortgages and
Leases. (7)
99.3 Diversified Corporate Consulting Group, LLC, Agreements,
sequentially numbered page .
---
- ------
(1) Filed as exhibit 2 to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1992; incorporated by reference herein as
an Exhibit hereto.
(2) Filed as an exhibit to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1991, bearing the exhibit designation
number shown above; incorporated by reference herein as an exhibit
hereto.
(3) Filed as an exhibit to the Registrant's registration statement on Form
S-4, filed together with Mercantile Realty Investors, registration
number 33-64526, declared effective by the Securities and Exchange Com-
mission on June 24, 1994, at the identical exhibit designation numbers;
and, incorporated by reference herein as an exhibit hereto.
(4) Filed as an exhibit to the Registrant's Report on Form 10-K for the
fiscal year ended December 31, 1993, bearing the exhibit designation
number shown above; incorporated by reference herein as an exhibit
hereto.
(5) Filed as an exhibit to the Registrant's Report on Form 10-KSB for the
fiscal year ended December 31, 1994, bearing the exhibit designation
number shown above; incorporated by reference herein as an exhibit
hereto.
(6) Filed as an exhibit to the Registrant's Report on Form 8-K designation
number shown above; incorporated by reference herein as an exhibit
hereto.
(7) Filed as an exhibit to the Registrant's Report on Form 10-KSB for the
fiscal year ended December 31, 1995, bearing the exhibit designation
number shown above; incorporated by reference herein as an exhibit
hereto.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
</TABLE>
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 21
<PAGE> 22
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
EQUITY GROWTH SYSTEMS, INC.
Date: August 12, 1996
By: /s/Edward Granville-Smith
----------------------------------
Edward Granville-Smith
Chairman and Chief Executive Officer
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 22
<PAGE> 23
ADDITIONAL INFORMATION
CORPORATE HEADQUARTERS:
3821-B Tamiami Trail, Suite 201, Port Charlotte, Florida, 33952
Telephone Number (941) 255-9582
Fax Number (941) 625-4491
DIRECTOR
Edward Granville-Smith
EXECUTIVE OFFICERS
Edward Granville-Smith, Jr.; Chairman, President and Chief Executive Officer
Gene R. Moffitt; Executive Vice President, Asset Management
and Chief Operating Officer
Rafi Weiss; Senior Vice President, Acquisitions
Donald E. Homan; Vice President & Chief Financial Officer
Charles J. Scimeca; Secretary & Treasurer
INDEPENDENT PUBLIC ACCOUNTANT:
JOEL S. BAUM, P.A., CPA
1515 University Drive, Suite 222; Coral Springs, Florida 33071
Telephone Number (945) 752-1712
TRANSFER AGENT:
Liberty Transfer Company
191 New York Avenue; Huntington, New York 11743
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF EQUITY GROWTH SYSTEMS, INC. FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,507
<SECURITIES> 0
<RECEIVABLES> 2,495,386
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,507,893
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,507,893
<CURRENT-LIABILITIES> 647,126
<BONDS> 1,283,299
0
0
<COMMON> 34,914
<OTHER-SE> 542,554
<TOTAL-LIABILITY-AND-EQUITY> 2,507,893
<SALES> 112,813
<TOTAL-REVENUES> 112,813
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 96,135
<INCOME-PRETAX> (6,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,100)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
<PAGE> 1
EXHIBIT 99.3
DIVERSIFIED CORPORATE CONSULTING GROUP, LLC AGREEMENTS
- ------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 24
<PAGE> 2
Administrative Offices
DIVERSIFIED CORPORATE CONSULTANT GROUP, LLC
A Delaware Limited Liability Company
BUSINESS CONSULTANTS & ADVISORS
- ------------------------------
<TABLE>
<CAPTION>
William A. Calvo, III, LLM Registered & Associated Offices: Headquarters & Branch Offices:
Managing Member ------------------------------- ------------------------------
<S> <C> <C>
c/o Harvard Business Services, Inc. 53 Wall Street
Honig, Zevallos & Company 25 Greystone Manor Fifth Floor
Marketing & Public Relations Counsel Lewes, Delaware 19958 New York, New York 10005
Telephone (800) 345-2677 Telephone (212) 858-7734
KTL Financial Services, Inc. Fax Number (302) 645-7400 Facsimile Transmission (212) 858-7750
Financial Counsel
10500 S.W. 134th Street 84 Clum Hill Road
Miami, Florida 33176 Elka Park, New York 12427
Telephone (305) 251-4427 Telephone (518) 589-9190
Fax Number (305) 254-4347 Fax Number (518) 589-0341
133 "F" Avenue 11355 Southeast 54th Avenue
Coronado, California 92118 Belleview, Florida 34420
Telephone (619) 435-2545 Telephones (352) 245-4126 (352) 368-
Fax Number (619) 435-2014 6525
Mobile Number (352) 812-0347
Fax Number (352) 245-5913
E-Mail [email protected]
1515 Pear Tree Circle
Brentwood, Tennessee 37027
Telephone (615) 370-3239
Fax Number (615) 371-1899
Please Respond to Belleview, Florida
Address
</TABLE>
April 2, 1996
Edward Granville-Smith
Chairman & Chief Executive Officer
EQUITY GROWTH SYSTEMS, INC.
22247 New Rochelle Avenue
Port Charlotte, Florida 33952
By Facsimile Transmission to (941) 625-4491
RE: Professional Engagement
Dear Mr. Granville-Smith:
This letter confirms the terms pursuant to which we have been engaged to
provide the following services to Equity Growth Systems, inc., a Delaware
corporation with shares registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended (the
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 25
<PAGE> 3
1. Assist you to organize the Company, develop its constituent documents,
develop reorganization agreements pursuant to which the Company will
become a holding company for one or more subsidiary corporations in the
future.
2. Assist the Company, on an ongoing basis, with acquisitions and, subject
to meeting applicable criteria, to consider qualifying it as a business
development company pursuant to Sections 55 et. seq. of the Investment
Company At of 1939, as amended.
3. Review and comment on the required disclosure documents to be prepared by
the Company's legal counsel, complying with the requirements of
Securities and Exchange Commission Rule 15c2-11.
4. Recruit and retain at least five market makers for the Company's common
stock.
5. Recruit and supervise a financial public relations firm acceptable to the
Company's Board of Directors, to assist the Company to disseminate
information required in order to permit its securities to realize their
proper trading value.
6. Use our best efforts to introduce the Company to at least two
journalistic publications in multiple media, and to encourage such
publications to feature the Company's progress in communications to
subscribers.
7. (a) Assist the Company to qualify as a business development company
authorized to raise capital pursuant to Securities and Exchange
Commission Regulation E, if the Company so desires;
(b) Assist the Company to list its securities, if eligible, for trading
on either one or more national securities exchanges or on the NASDAQ
inter dealer quotation system.
8. Use best efforts to induce retail securities brokerage firms to consider
the Company's securities as appropriate investments for their retail
clients.
9. Assist the Company to effect corporate restructuring designed to maximize
its operational efficiency, initiate an acquisitions program, and
develop programs to assure compliance with applicable securities laws,
with initial legal services to be provided through your legal counsel.
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 26
<PAGE> 4
10. If required, train the Company's legal and accounting personnel and
consultants in proper procedures for its various strategic and tactical
plans.
TERMS OF ENGAGEMENT
1. We will bill at our standard hourly rates for all work as to which a
prior arrangement with different terms has not been entered into. Any
documents prepared by us on existing forms will be subject to a $50 per
page initial licensing fee augmented by the time spent in personalizing
the subject form.
2. In addition to the foregoing, you hereby grant to us an option to
purchase 200,000 shares of the Company's common stock registered on
Securities and Exchange Commission Form S-8, for the aggregate sum of
$80,000.
3. Unless requested by you to the contrary, work will be performed by the
person with the lowest billing rate and requisite knowledge and
experience.
4. All work requiring legal review will be submitted for approval by you to
your legal counsel prior to its use, or, in the alternative, we will
engage legal counsel to conduct such review on your behalf. In the
latter case, our general counsel will review legal matters pertaining to
states in which it is licensed to practice law and matters pertaining to
other states will be referred to attorneys licensed in such other states.
Payment of all balances due such unrelated attorneys will be your
responsibility, notwithstanding our collection function.
5. In addition to our hourly fees, you will be responsible for payment of
all costs and disbursements associated with our services. All
statements will be paid within 10 days after receipt. In the event
additional time is required, the Firm will have the option of selling the
account receivable and you agree to pay interest thereon at the monthly
rate of 1.5%. In the event collection activities are required, you agree
to pay all of our out pocket costs associated therewith. There will be
no change or waiver of the provisions contained herein, unless such
change is in writing and signed by you and the Firm.
6. Diversified Corporate Consulting Group, L.C., shall have a right of first
refusal to arrange all financing for the Company and its affiliates
(whether debt or equity, foreign or domestic), during the initial 12
months of this engagement and shall be kept apprised of all capital
raising activities by the Company, whether on a debt or equity basis.
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 27
<PAGE> 5
7. (a) The Company shall supply Diversified Corporate Consulting Group,
L.C., on a regular and timely basis with all approved data and
information about the Company, its management, its products, and
its operations and Company shall be responsible for advising
Diversified Corporate Consulting Group, L.C. of any fact which would
affect the accuracy of any prior data and information supplied to
Diversified Corporate Consulting Group, L.C.
(b) The Company shall use its best efforts to promptly supply
Diversified Corporate Consulting Group, L.C. with full and complete
copies of all filings with all federal and state securities
agencies; with full and complete copies of all shareholder reports
and communications whether or not prepared with Diversified
Corporate Consulting Group, L.C.'s assistance, with all data and
information supplied to any analyst, broker-dealer, market maker,
or other member of the financial community; and with all
product/services brochures, sales materials, etc.
(c) The Company shall promptly notify Diversified Corporate Consulting
Group, L.C. of the filing of any registration statement for the sale
of securities and/or of any other event which triggers any
restrictions on publicity.
(d) The Company shall notify Diversified Corporate Consulting Group,
L.C. if any information or data supplied by the Company to
Diversified Corporate Consulting Group, L.C. has not been released
or promulgated to the public.
(e) The Company shall be deemed to make a continuing representation of
the accuracy of any and all material facts, material, information,
and data which it supplies to Diversified Corporate Consulting
Group, L.C. and the Company acknowledges its awareness that
Diversified Corporate Consulting Group, L.C., will rely on such
continuing representation in disseminating such information and
otherwise performing its functions under this engagement letter.
(f) Diversified Corporate Consulting Group, L.C., in the absence of
notice in writing from the Company, may rely on the continuing
accuracy of material, information and data supplied by the
Company.
8. Final drafts of any matters prepared by us will be reviewed by you and,
if legally required, by legal your counsel, to assure that:
(a) All required information has been provided;
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 28
<PAGE> 6
(b) All materials are presented accurately; and,
(c) That no materials required to render information provided "not
misleading" are omitted.
Only after such review and approval by you and, if required, your legal
counsel, will any documents be filed with regulatory agencies or provided
to third parties. Financial data will be reviewed by competent,
independent, certified public accountants to be separately retained by
you. If required by you, we will assist in selection and supervision of
such attorneys and accountants. Such accountants will be required to
review and approve all financially related filings, prior to submission
to the appropriate regulatory authorities.
9. In the event our services are provided for the benefit of juridical
entities other than the Company, no materials for which we are
responsible will be submitted to third parties until they have been
reviewed and approved as to form and content by all executive officers,
directors, partners, joint venturers or persons performing similar roles
for the subject juridical entity. The filing of materials prepared by us
with any governmental agency or provision of copies thereof to other
persons shall be deemed presumptive evidence that our materials have been
reviewed and approved as heretofore described.
DUE DILIGENCE MATERIALS
We will upon receipt of a signed copy of this engagement letter. provide
you with the following materials:
1. Officers & Directors Questionnaires to be completed by all officers,
directors and principal consultants to entities for which we perform
services at your request, and then returned to us;
2. A Company Questionnaire to be completed by a knowledgeable person or
persons designated by entities for which we perform services at your
request and then returned to us (e.g., the Company and entities acquired
by it);
3. A memorandum prepared by us acquainting you with the requirements of
Securities and Exchange Commission Regulation S-B, which will govern the
bulk of required Securities and Exchange Commission disclosure, both in
conjunction with fund raising activities and with periodic reporting
obligations; and
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 29
<PAGE> 7
4. A memorandum prepared by us acquainting you with business development
companies and Securities and Exchange Commission Regulation E.
In the event that you desire different arrangements, either in general or
for specific projects, we will be glad to consider your proposals; however, all
contrary arrangements must be memorialized in a written instrument signed by
this firm. Please sign a copy of this transmission and return it to us by
facsimile transmission to (352) 245-5913.
We look forward to a pleasant and mutually profitable relationship.
Very truly yours,
DIVERSIFIED CORPORATE CONSULTING GROUP, L.C.
William A. Calvo, III
Managing Member
The foregoing is hereby accepted, as of the date first above written.
Mr. Edward Granville-Smith
Chairman & Chief Executive Officer
EQUITY GROWTH SYSTEMS, inc.
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 30
<PAGE> 8
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered into by and
among EQUITY GROWTH SYSTEMS, INC., a Delaware corporation with securities
registered under the Securities Exchange Act of 1934, as amended ("EGSI");
DIVERSIFIED CORPORATE CONSULTING GROUP, LLC, a Delaware limited liability
company ("Diversified"); and, WARREN A. MCFADDEN, an individual residing in the
State of Florida ("McFadden;" EGSI, Diversified and McFadden being collectively
referred to as the "Parties" and each being sometimes hereinafter generically
referred to as a "Party").
P R E A M B L E:
WHEREAS, McFadden owes EGSI the principal sum of $30,000, plus accrued
interest, as reflected in the copy of the promissory note annexed hereto and
made a part hereof as exhibit 0.1 (the "Note"), the Note being secured by
18,000,000 shares of the common stock of KSC TECHNOLOGIES, INC., a Maryland
corporation ("KSC"); and
WHEREAS, McFadden is unable to pay such note but owns 110,000 free trading
and registered shares of the common stock of EGSI (the "McFadden Stock"); and
WHEREAS, EGSI desires to enter into an engagement agreement with
Diversified, in the form annexed hereto and made a part hereof as exhibit 0.2,
pursuant to which, Diversified will provide six months of the consulting
services described therein in exchange for the right to purchase 200,000 shares
of EGSI common stock, registered on Securities and Exchange Commission Form S-8,
for $80,000 (the "Diversified Stock"); and
WHEREAS, Diversified is willing to enter into such agreement, provided that
it also be permitted to acquire the McFadden Stock, in consideration for which,
it will agree to assume McFadden's obligations under the McFadden Note and pay
to EGSI the total sum of $110,000 in cancellation thereof and as payment for the
Diversified Stock, through a short term, non-recourse promissory note, secured
by the McFadden Stock and the Diversified Stock; and
WHEREAS, EGSI and McFadden are agreeable to the foregoing:
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally bound,
hereby agree as follows:
W I T N E S S E T H:
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995, Page 31
<PAGE> 9
FIRST: TERMS OF EXCHANGE
1.1 McFadden hereby conveys to Diversified all 110,000 free trading and
registered shares of the common stock of EGSI held by him, in
consideration for Diversified's execution of the Diversified Note in
favor of EGSI.
1.2 EGSI hereby agrees to release McFadden from all claims arising under the
McFadden Note, in consideration for the replacement thereof by the
Diversified Note.
1.3 EGSI hereby agrees to immediately enter into the Diversified Consulting
Agreement and to prepare and file a registration statement on Form S-8,
registering the 200,000 shares issuable to Diversified thereunder.
1.4 Subject to receipt of the McFadden Stock and to receipt of the S-8 shares
referred in Section 1.3, Diversified hereby agrees to execute the
Diversified Note.
SECOND: MUTUAL RELEASES
In consideration for the exchange of covenants reflected above but
excepting only the obligations created by this Agreement, EGSI and McFadden
hereby each release, discharge and forgive the other and each of the others
officers, directors, partners, agents and employees from any and all
liabilities, whether current or inchoate, from the beginning of time until the
date of this Agreement.
THIRD: MISCELLANEOUS
3.1 AMENDMENT.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is evinced by a written instrument, subscribed by
the Party against which such modification, waiver, amendment, discharge or
change is sought.
3.2 NOTICE.
All notices, demands or other communications given hereunder shall be in
writing and
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995
Page 32
<PAGE> 10
shall be deemed to have been duly given on the first business day after mailing
by United States registered or unaudited mail, return receipt requested, postage
prepaid, addressed as follows:
To McFadden:
11680 Point Drive, Dragon Point; Merritt Island, Florida 32952
To EGSI:
Post Office Box 9131; Port Charlotte, Florida 33949
Attention: Edward Granville-Smith
To Diversified:
84 Clum Hill Road; Elka Park, New York 12427
Attention Joseph D. Radcliffe.
or such other address or to such other person as any Party shall designate to
the other for such purpose in the manner hereinafter set forth. Copies of any
notice shall also be sent to William A. Calvo, III, Esquire; William A. Calvo,
III, P.C.; by facsimile transmission to (352) 245-5913, who has acted as
scribner for the Parties, but, being a managing member of Diversified, has
advised McFadden and EGSI to obtain independent legal review hereof on their
behalf.
3.3 Merger.
This instrument, together with the instruments referred to herein,
contains all of the understandings and agreements of the Parties with respect to
the subject matter discussed herein. All prior agreements whether written or
oral are merged herein and shall be of no force or effect.
3.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
3.5 Severability.
If any provision or any portion of any provision of this Agreement, other
than one of
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995
Page 33
<PAGE> 11
the conditions precedent or subsequent, or the application of such
provision or any portion thereof to any person or circumstance shall be held
invalid or unenforceable, the remaining portions of such provision and the
remaining provisions of this Agreement or the application of such provision or
portion of such provision as is held invalid or unenforceable to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby.
3.6 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the
State of New York and any proceedings pertaining directly or indirectly to the
rights or obligations of the Parties hereunder shall, to the extent legally
permitted, be held in Greene County, New York.
3.7 INDEMNIFICATION.
Each Party hereby irrevocably agrees to indemnify and hold the other
Parties harmless from any and all liabilities and damages (including legal or
other expenses incidental thereto), contingent, current, or inchoate to which
they or any one of them may become subject as a direct, indirect or incidental
consequence of any action by the indemnifying Party or as a consequence of the
failure of the indemnifying Party to act, pursuant to requirements of this
Agreement. In the event it becomes necessary to enforce this indemnity
through an attorney, with or without litigation, the successful Party shall be
entitled to recover from the indemnifying Party, all costs incurred including
reasonable attorneys' fees throughout any negotiations, trials or appeals,
whether or not any suit is instituted.
3.8 LITIGATION.
In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing Party
shall be entitled to recover its costs and expenses, including reasonable
attorney's fees up to and including all negotiations, trials and appeals,
whether or not litigation is initiated.
3.9 BENEFIT OF AGREEMENT.
The terms and provisions of this Agreement shall be binding upon and
inure to the benefit of the Parties, their successors, assigns, personal
representatives, estate, heirs and legatees.
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995
Page 34
<PAGE> 12
3.10 Captions.
The captions in this Agreement are for convenience and reference only and
in no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
3.11 NUMBER AND GENDER.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
3.12 FURTHER ASSURANCES
The Parties agree to do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered and to perform all such acts and
deliver all such deeds, assignments, transfers, conveyances, powers of attorney,
assurances, stock certificates and other documents, as may, from time to time,
be required herein to effect the intent and purpose of this Agreement.
3.13 STATUS
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, employer-employee relationship, lessor-lessee
relationship, or principal-agent relationship, rather, the relationships
established hereby are those of settling potential litigants.
3.14 COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
executed counterparts shall constitute one Agreement notwithstanding that all
signatories are not signatories to the original or the same counterpart.
Execution by exchange of facsimile transmission shall be deemed legally
sufficient to bind the signatory; however, the Parties shall, for aesthetic
purposes, prepare a fully executed original version of this Agreement, which
shall be the document filed with the Securities and Exchange Commission.
- -------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995
Page 35
<PAGE> 13
3.15 LICENSE.
This Agreement is the property of William A. Calvo, III, P.C., a New York
professional corporation. The use hereof of the Parties is authorized hereby
solely for purposes of this transaction and, the use of this form of agreement
or of any deviation thereof without William A. Calvo, III, P.C.'s prior written
permission is prohibited.
* * *
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
effective as of the 2nd day of April, 1996.
Signed, sealed and delivered
In Our Presence:
DIVERSIFIED CORPORATE CONSULTING GROUP, LLC
______________________________________
______________________________________ _____________________________________
By: William A. Calvo, III,
Managing Member
EQUITY GROWTH SYSTEMS, INC.
______________________________________
______________________________________ ______________________________________
By: Edward Granville-Smith, President
(CORPORATE SEAL)
ATTEST:
_______________________________________
_______________________________________ __________________________________
Charles J. Scimeca, Secretary
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995
Page 36
<PAGE> 14
- -------------------------------------------------------------------------------
__________________________________
__________________________________ __________________________________
Warren A. McFadden
- --------------------------------------------------------------------------------
Infotec, Form 10-QSB, March 31, 1995
Page 37
