SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 1996.
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from __________
to ____________.
Commission file number: I-9418
THE CANTON INDUSTRIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0509512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
268 West 400 South, Salt Lake City, Utah 84101
(Address of principal executive office) (Zip Code)
(801) 575-8073
(Issuer'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 XX No
The number of outstanding shares of the issuer's common stock, $0.001
par value (the only class of voting stock), as of May 3, 1996 was 6,298,648.
1
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TABLE OF CONTENTS
Part I
ITEM 1. FINANCIAL STATEMENTS..................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.............4
Part II
ITEM 1. LEGAL PROCEEDINGS.....................................................8
ITEM 5 OTHER INFORMATION.....................................................9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................9
SIGNATURES....................................................................10
INDEX TO EXHIBITS.............................................................10
2
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PART I
ITEM 1. FINANCIAL STATEMENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page
Consolidated Balance Sheets..................................................F-1
Consolidated Statements of Operations........................................F-3
Consolidated Statements of Stockholders' Equity..............................F-4
Consolidated Statements of Cash Flows........................................F-5
Condensed Notes to Consolidated Financial Statements.........................F-6
3
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<TABLE>
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITTED CONDENSED BALANCE SHEET
March 31, 1996 (Unaudited) and December 31, 1995
ASSETS
March 31, December 31,
1996 1995
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash .................................... $ 30,356 $ 18,605
Receivable - brokerage account .......... 1,687 3,337
Accounts receivable - trade ............. 367,119 248,129
Accounts receivable - related parties ... 534,663 200,017
Note receivable - current portion ....... 64,288 12,000
Inventories ............................. -- 36,371
Prepaid expenses ........................ 20,519 36,677
---------- ----------
TOTAL CURRENT ASSETS ....................... 1,018,632 555,136
---------- ----------
PROPERTY AND EQUIPMENT ..................... 5,958,267 4,860,260
---------- ----------
OTHER ASSETS
Investment - securities ................. 987,995 968,396
Mortgages receivable .................... 353,000 353,000
Notes receivable - net of current portion 694,950 653,027
Investments - other ..................... 221,341 244,321
Deposits ................................ 16,687 16,345
Media and other credits ................. 246,865 223,885
--------- ----------
TOTAL OTHER ASSETS ......................... 2,520,838 2,458,974
---------- ----------
TOTAL ASSETS ............................... $9,497,737 $7,874,370
========== ==========
</TABLE>
See notes to consolidated financial statements.
F-1
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<TABLE>
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEET (Continued)
March 31, 1996 (Unaudited) and December 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY March 31 December 31
- ------------------------------------ 1996 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Notes payable .............................. $ 381,088 $ 57,493
Current maturities of long-term debt ....... 190,449 149,059
Accounts payable ........................... 313,915 328,751
Accounts payable - related parties ......... 180,615 17,413
Accrued liabilities ........................ 160,000 160,000
Interest ................................. 36,288 19,330
Real estate taxes ........................ 321,438 317,751
Payroll and related taxes payable ........ 167,261 143,200
Deferred income ............................ 19,988 25,979
Deposit - real estate sales ................ 171,900 171,900
------------ ------------
TOTAL CURRENT LIABILITIES ..................... 1,942,942 1,390,876
------------ ------------
LONG-TERM LIABILITIES
Long-term debt, less current portion ....... 2,824,901 2,764,757
------------
MINORITY INTEREST ............................. 1,154,464 347,923
------------ ------------
SHAREHOLDERS' EQUITY
Preferred stock par value $.001; 20,000,000
shares authorized; No shares issued
Common stock par value $.001; 200,000,000
shares authorized; 5,954,090 and 5,886,799
shares issued ............................ 5,954 5,887
Additional paid-in capital ................. 11,459,218 11,428,674
Accumulated deficit ........................ (7,889,742) (8,063,747)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY .................... 3,575,430 3,370,814
------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY .......................... $ 9,497,737 $ 7,874,370
============ ============
</TABLE>
See notes to consolidated financial statements.
F-2
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<TABLE>
<CAPTION>
THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For The Three Months Ended March 31, 1996 and March 31, 1995(Unaudited)
3 Months Ended 3 Months Ended
March 31, March 31,
1996 1995
------------ -----------
<S> <C> <C>
REVENUE
Consulting ........................... $ 765,628 $ 545,695
Rentals .............................. 105,218 55,586
Other ................................ 59,792 8,611
----------- -----------
TOTAL REVENUE ........................... 930,638 609,892
----------- -----------
COST OF REVENUE
Consulting ........................... 342,162 232,398
Rental ............................... 102,337 57,933
Other ................................ 40,247 3,224
----------- -----------
TOTAL COST OF REVENUE ................... 484,746 293,555
----------- -----------
GROSS PROFIT ............................ 445,892 316,337
----------- -----------
SELLING GENERAL AND ADMINISTRATIVE ...... 336,379 236,241
Environmental Cleanup ................ 20,000 --
----------- -----------
TOTAL GENERAL AND ADMINISTRATIVE ........ 356,379 236,241
----------- -----------
OPERATING PROFIT ........................ 89,513 80,096
----------- -----------
OTHER INCOME AND (EXPENSE):
Interest income ...................... 554 15,880
Interest expense ..................... (71,859) (29,405)
Other income ......................... 20,388 4,620
Gain (loss) from investment securities 116,873 108,750
----------- -----------
TOTAL OTHER INCOME ...................... 65,956 99,845
----------- -----------
GAIN (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS ................... 155,469 179,941
PROVISION FOR INCOME TAXES
MINORITY INTEREST IN LOSS ............ 18,536
NET INCOME .............................. $ 174,005 $ 179,941
=========== ===========
INCOME (LOSS) PER COMMON SHARE
Income ............................... $ .03 $ .06
Minority interest in loss ............ .00 .00
----------- -----------
Net income per weighted average
common share outstanding ........... $ .03 $ .06
=========== ===========
Weighted average number of common
shares outstanding ................ 5,902,546 3,075,864
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-3
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For Three Months Ended March 31, 1996 (Unaudited)
Total
Common Stock Paid-In Shareholders'
Shares Amount Capital Deficit Equity
--------- ------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995 5,886,799 $ 5, 887 $ 11,428,674 $(8,063,747) $ 3,370,814
Common Stock Activity:
Issued for services ..... 67,291 67 30,544 30,611
Net Profit for period ....... 174,005 174,005
----------- ------ ----------- ----------- -----------
BALANCES AT MARCH 31, 1996 .. 5,954,090 $ 5,954 $ 11,459,218 $(7,889,742) $ 3,575,430
=========== ====== =========== =========== ===========
See notes to consolidated financial statements.
F-4
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THE CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For Three Months ended March 31, 1996 and March 31, 1995(Unaudited)
Three Three
Months Ended Months Ended
March 31, March 31,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ............................ $ 174,005 $ 179,941
Adjustments to reconcile net income (loss)
to net cash provided:
(Gain) loss from sale of investments ....... (116,873) (108,750)
Minority interest in loss .................. (18,536) (63,500)
Depreciation and Amortization .............. 54,337 44,075
Services paid with common stock ............ 30,611 1,530
Common stock issued for assets and debt .... 60,000
Decrease (increase) in assets:
Receivables .............................. (504,234) (67,135)
Inventories .............................. 36,371 --
Prepaid expenses and other ............... 16,218 --
Investments - other ...................... (22,980) (140,000)
Increase (decrease) in liabilities:
Accounts and notes payable ............... 513,351 143,513
Accrued liabilities ...................... 44,706 66,371
Deferred income .......................... (5,991) (93,161)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 200,985 $ 86,384
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ....................... (1,143,184) (61,946)
Proceeds from sales of investments ......... 194,187 --
Purchase of non-current security investments -- --
Minority interest in subsidiary ............ 825,000 --
----------- -----------
NET CASH FLOWS (USED) IN INVESTING ACTIVITIES .. $ (123,997) $ (61,946)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock for cash .............. -- --
Increase in long term debt .................. -- --
Reduction of long term debt ................. (65,237) (34,686)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ...... $ (65,237) $ (34,686)
----------- -----------
INCREASE (DECREASE) IN CASH .................... 11,751 (10,248)
CASH AT BEGINNING OF PERIOD .................... 18,605 29,001
----------- -----------
CASH AT END OF PERIOD .......................... $ 30,356 $ 18,176
=========== ===========
</TABLE>
See notes to consolidated financial statements
F-5
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CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
NOTE 1: Basis of Presentation
The accompanying consolidated unaudited condensed financial statements have been
prepared by management in accordance with the instructions in Form 10-QSB and
therefore, do not include all information and footnotes required by generally
accepted accounting principles and should therefore, be read in conjunction with
the Company's Annual Report to Shareholders on Form 10-KSB for fiscal year ended
December 31, 1995.
In management's opinion, the accompanying consolidated unaudited condensed
financial statements contain all adjustments, consisting only of normal
recurring adjustments necessary for a fair statement of the results for the
interim periods presented. The interim operation results are not necessarily
indicative of the results for the fiscal year ending December 31, 1996.
Certain prior year amounts have been reclassified to conform to the 1996
classification.
NOTE 2: Acquisition of Subsidiaries
Cyber Real Estate, Inc.
Cyber Real Estate, Inc., a Nevada corporation ("CRE"), was incorporated by the
Company on February 2, 1996 for the purpose of acquiring, owning and managing
real property. On February 20, 1996, CRE purchased a dormitory building in
DeKalb, Illinois.
The property was purchased for $1,100,000, paid by CRE's issuance of its
preferred stock valued at $825,000 and a $275,000 Mortgage evidenced by a
Uniform Real Estate Contract, with an interest rate of 6% per annum payable to
the seller. Payments of interest only are due quarterly with the entire balance
due on or before February 20, 1997, with no penalties for prepayment.
Homes for America Holdings, Inc.
Homes for America Holdings, Inc., a Nevada corporation ("Homes"), was
incorporated by the Company as GELT Enterprises on January 9, 1996. On February
26, 1996, the name of the corporation was changed to Homes for America Holdings,
Inc. On February 18, 1996, Homes entered into a Memorandum of Understanding to
purchase a 50% interest in a contract of sale on property located in Huntsville,
Alabama.
The Company retained a fifty percent (50%) ownership interest in Homes for its
assistance in the formation. On February 28, 1995, Homes conducted a private
placement offering of its common stock pursuant to Rule 504 of Regulation D
under the Securities Act of 1933, as amended. Under this offering, Homes issued
500,000 shares of its common stock to the Company for a $50,000 cash infusion;
thereby increasing the Company's ownership to fifty-six percent (56%). The
Company has subsequently sold a portion of their ownership in Homes diluting its
interest to forty-six percent (46%).
NOTE 3: Stock Option Plans and Agreement
On January 18, 1996 the Company established a new stock option plan for its
employees and consultants ("The 1996 Stock Option Plan of The Canton Industrial
Corporation"). Each option issued under the plan has a term of one year and an
exercise price of ninety percent (90%) of the bid price on the day of exercise.,
unless otherwise established by the Board of Directors. Under the plan, up to
one million (1,000,000) shares can be issued.
During the quarter ended March 31, 1996, the Company reserved from the 1,000,000
shares one hundred four thousand four hundred seventy-two (104,472) shares for
options granted under previous Stock Option Plans and the Company granted
options in the amount of 9,092 which were exercised on March 26, 1996.
F-6
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CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
NOTE 3: Stock Option Plans and Agreement (continued)
As of March 31, 1996 no options had been exercised pursuant to the Stock Option
Agreements with AZ Professional Consultants ("AZ") and Investment Sanctuary
Corporation ("ISC") which were entered into on December 22, 1995. Under the
agreements, the Company granted options giving AZ and ISC the right to purchase
a quantity of shares of the Company's common stock equivalent to twenty-six
percent (26%) and twenty-five percent (25%), respectively, of the issued and
outstanding shares on the exercise date, with an established price of $0.59 per
share.
NOTE 4: Contingencies
In March 1995, Xeta Corporation filed suit against the Company seeking recovery
of $116,500 which it contends was fraudulently transferred to the Company by
ATC, a client of its subsidiary Canton Financial Services Corporation, in order
to avoid payment of a judgment held by Xeta against ATC. On April 16, 1996 the
Court announced its intention to grant a judgment against the Company. An
objection to the entry of such a judgment has been filed and the Company
continues to dispute the allegations.
KMC foods, Inc. ("KMC"), a subsidiary of the Company received a claim from The
Division of Revenue of the Department of Finance for the State of Delaware in
excess of $300,000. The claim is for alleged taxes due based upon the gross
revenues of KMC for the tax period April 1, 1989 through March 31, 1992. This
tax period is prior to the purchase of KMC by the Company. Prior management has
assured the Company that the tax does not apply as all soles of products were
outside the state of Delaware, and thus the Delaware tax is not due. The Company
has retained an attorney in Delaware to resolve the liability issue favorably to
KMC.
In March 1994, State of Illinois filed an action against the Company seeking
cleanup of tires and toxic paint drums at its Canton, Illinois warehouse site.
The Court issued an Interim Order requiring the deposit of $140,000 into an
escrow account and required the complete removal of the tire by December 31,
1996. The Company did not deposit the required funds. In August 1995, the
Company began removal of the tires from the facility. In September 1995, the
Company was informed by the Illinois Environmental Protection Agency ("IEPA")
that it had rejected the Company's proposed plan for removal and was proceeding
with its own removal plan. The Court sought from this decision, but was denied.
The state concluded work in the first quarter of 1996 believing all waste tires
had been removed from the site. In April 1996, the State informed the Company of
its intent to seek recovery of its estimated cost of $325,000 incurred in the
removal of tires. The Company believes the ultimate intent of the Interim Order,
the complete removal of the tires, has been met because the tires had been
completely removed or reduced to the IEPA's control but not within the Court's
exact specifications. As a result of this technical non-compliance, the Court
may impose penalties of up to $50,000 for non-compliance with the order and
$10,000 per day from the date of the violation.
The Company believes that the ultimate outcome of all pending litigation matters
should not have a material adverse effect on the financial position of the
Company; however it is possible that the results of operations or cash flows of
the Company in any particular quarterly or annual periods or the financial
condition of the company could be materially affected by the ultimate outcome of
certain pending litigation matters. Management is unable to derive a meaningful
estimate of the amount or range of any possible loss in any particular quarterly
or annual period or in the aggregate.
F-7
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CANTON INDUSTRIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
March 31, 1996
NOTE 5: Stockholders' Equity
On March 4, 1996, the Company declared a dividend in the form of common stock of
Oasis Hotel, Resort & Casino I, Inc. ("OHRCI") and Oasis Hotel, Resort & Casino
II, Inc. ("OHRCII") owned by its subsidiary Oasis International Corporation. The
dividend rate was declared to be one share in both OHRCI and OHRCII for every
100 shares of the common stock of the Company owned by each shareholder of
record on March 27, 1996.
On March 21, 1996, the Company declared a dividend in the form of common stock
of Zahav, Inc. ("Zahav") and Cyber Information, Inc. ("CI") owned by its
subsidiary Canton Financial Services. The dividend rate was declared to be one
share in both Zahav and CI for every 100 shares of common stock of the Company
owned by each shareholder of record on April 23, 1996.
As of May 10, 1996, the above dividends had not yet been issued.
During the quarter ended March 31, 1996, the Company issued 67,291 shares of its
common stock in exchange for services.
NOTE 6: Additional footnotes included by reference
Except as indicated in the footnotes above there has been no other material
change in the information disclosed in the notes to the financial statements
included in the Company Annual Report on Form 10-KSB for the year ended December
31, 1995. Therefore those footnotes are included herein be reference.
F-8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
As used herein, the term "Company" refers to The Canton Industrial
Corporation, a Nevada corporation, its subsidiaries and predecessors, unless
otherwise indicated. The Company provides financial consulting services as well
as a variety of Internet-related services and invests in real estate. The
Company employs professionals with expertise in law, accounting, finance, the
Internet, and public and investor relations in its consulting operations.
Typically, the Company provides services and support functions which include
advice relating to regulatory compliance, document preparation, capital
formation, financial analysis, promotional campaigns, debt settlement, and
general corporate problem solving.
The Company recorded a net profit for the quarter ended March 31, 1996,
and its overall financial condition continued to improve. Under the direction of
prior management, the Company had filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code, in the United States Bankruptcy
Court for the Central District of Illinois on February 22, 1988. The Company
exited from bankruptcy on November 7, 1994 pursuant to the Bankruptcy Court's
order of this same date.
The Annual Meeting of the Company's shareholders is scheduled for June
11, 1996. The board of directors will be sending the shareholders a proxy
statement including a proposal to change the Company's name from The Canton
Industrial Corporation to CyberAmerica Corporation, a proposal to elect three
directors to the board and a proposal to ratify the selection of Andersen,
Andersen & Strong, L.C. as the Company's independent auditors for the fiscal
year ending December 31, 1996. The change in the Company's name stems from its
expanded involvement in providing a variety of Internet related services. For
more information on these services, please see the discussion below under
"Internet Services."
CONSULTING SERVICES
The types of consulting services the Company performs for its clients
include document preparation, capital formation, financial analysis, debt
settlement and general corporate problem solving. The Company has also begun
assisting private organizations in need of capital by preparing limited private
placement offering documentation, although the Company does not actively assist
in the actual placement (i.e., the selling of shares) of the offering.
Acceptable payments and the size of payments the Company charges for its
services vary with the volatility of the clients' securities, the amount and
nature of work involved, and the expenses related to the services being
rendered. Consulting fees the Company accepts, in order of frequency, range from
the clients' equity, to cash, to other assets. When payment is made in equity,
the number of shares to be paid is dependent on the price of the clients'
equity, when available. The Company accepts equity with the expectation that its
services will assist in its appreciation, thus allowing the Company to be paid
and make a return on its services.
The number of the Company's clients, the nature of services being
rendered and the type of compensation received from clients vary greatly. At a
given time, the Company may be actively providing consulting services to more
than 35 clients. Therefore, projecting the revenues that could be produced by
the Company's performance of these services is very difficult. The difficulty of
such projections is further enhanced because Company receives a majority of its
compensation in the form of equity payments which cannot be readily resold,
thereby limiting the Company's cash flow and reducing its liquidity. The Company
estimates that it will be able to obtain at least two additional clients per
quarter for a term of no less than one year.
During the first quarter of 1996, the Company continued efforts to
expand its client base through the addition of nine new clients who will utilize
the Company's consulting services. However, the Company cannot give any
assurances that its client base will continue to expand. In addition, because
the number of clients, the financial strength of clients, the types of payments
and the range of services provided can vary greatly from quarter to quarter, it
is difficult for the Company to project the revenue that can or is likely to be
produced by performing these services.
4
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The Company generates a substantial portion of its cash flow by
liquidating the non-cash assets received as fees for consulting services. As
most fees are paid in the form of equity, the Company's ability to generate cash
flows is somewhat tied to the price of its clients' equity. Therefore, material
fluctuations in the price of clients' equity may materially impact both the
short-term and long-term liquidity of the Company.
INTERNET SERVICES
In the first quarter of fiscal 1996, the Company began focusing on
providing Internet services and established an Internet Services Division. The
Company is involved in the preparation and development of Internet mall sites
within which organizations can advertise their products and services on
individual Internet locations. The Company is seeking to obtain sales and
marketing experts who will advertise and promote its various Internet mall
opportunities. Also under development is a new type of search engine that
approaches Internet use in a new manner. Sales from this new focus of the
Company are expected to constitute a substantial portion of future cash flows.
The Company is proposing a change of its name to CyberAmerica Corporation to
reflect its entry into the Internet and electronic commerce market.
REAL ESTATE HOLDINGS
Part of the Company's business operations include the acquisition,
management, lease and sale of real estate. The Company has acquired a variety of
commercial properties. While most of the Company's real estate holdings are in
Utah, the Company also owns several properties in other parts of the United
States. The Company hopes to increase revenues generated from these properties
and obtain additional real estate holdings. A key to the Company's success is
the ability of management to locate and acquire real estate with little or no
cash down and turn such properties into profitable assets.
There is a risk that the Company may lose control of the properties,
(e.g., through foreclosure), if enough funds are not derived from the rental
income for both the financing obligations and ongoing operations. Currently, due
to expanded acquisition activity and deficiencies in rental income from the
properties acquired, the Company does not have sufficient rental revenues to
cover the debt service and operating costs of all properties. The Company
currently has to use capital from other sources to fund this deficit. Although
management's goal is to increase the occupancy and rental rates and thus
increase the rental income so that such income will cover both operating costs
and debt service, no such assurances can be made. The Company's primary reason
for acquiring most of its real estate is for potential appreciation.
MATERIAL EVENTS
On December 27, 1995, the Company purchased approximately 1,100 acres
of land in Oasis, Nevada. Also included in the purchase were all improvements to
the property, consisting of a service station, small retail and food service
operations, and a mobile home park. Additionally, water rights of more than
sixteen hundred acre feet of water per year were purchased as part of the
transaction. On March 9, 1996, The Company entered into a Lease Agreement with
William and Pamela Wiegand (the "Wiegands"). Pursuant to the Lease Agreement,
the Wiegands will lease and maintain the operations of the service station,
small retail and food service operations and the mobile home park. The Wiegands
also purchased all inventory associated with the operations of the service
station, small retail and food service operations and the mobile home park.
TAC, Inc., a wholly owned subsidiary of the Company, filed suit on
January 25, 1995 against Ozora Corporation and Mark C. Hungerford seeking
recovery of a promissory note plus interest due and/or the recovery of the
note's collateral, 99,800 shares of class A common stock of Transcisco
Industries, Inc. On May 30, 1995, a Judgment against Ozora and Hungerford was
entered that included interest and associated costs. TAC pursued action to
enforce this judgement, and filed liens against Ozora and Hungerford's real
property in California and Montana. In November 1995, TAC, Ozora and Hungerford
entered into settlement discussions which continued until the parties reached a
settlement agreement that called for a total of $250,000 to be paid as follows:
an initial payment of $25,000 in November 1995; $60,000 on or before February 1,
1996; and the balance being due on or before March 15, 1996. The Agreement also
states that a penalty of $10,000 would be assessed against Ozora and Mr.
Hungerford if any of the payments were late. On February 13, 1996, Ozora and
Hungerford paid the balance due under the Agreement, including the $10,000 late
fee.
5
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A wholly owned subsidiary of the Company, Cyber Real Estate, Inc.
("CRE"), a Nevada corporation, purchased a dormitory building located at 830
Edgebrook Drive, in DeKalb, Illinois, on February 20, 1996, pursuant to a
Memorandum of Agreement. The property was purchased by CRE on that date for a
purchase price of $1,100,000. The purchase price was paid by CRE's issuance of
its preferred stock valued at $825,000 and a $275,000 Mortgage evidenced by a
Uniform Real Estate Contract, with an interest rate of 6% per annum payable to
the seller. Payments of interest only are due quarterly with the entire balance
due on or before February 20, 1997, with no penalties for prepayment.
On February 18, 1995, the Company entered into a Memorandum of
Understanding to purchase a 50% interest in a contract of sale on property
located in Huntsville, Alabama. On February 28, 1995, Homes for America
Holdings, Inc., a Nevada corporation ("Homes"), conducted a private placement
offering of its common stock pursuant to Rule 504 of Regulation D under the
Securities Act of 1933, as amended ("Rule 504"). The Company assisted in the
formation of Homes and it retained a fifty percent (50%) ownership interest.
Under this offering, Homes issued 500,000 shares of its common stock to the
Company for a $50,000 cash infusion; thereby increasing the Company's ownership
to fifty-six percent (56%). The Company has subsequently sold a portion of their
ownership in Homes that reduced its interest to forty-six percent (46%). The
contract for the purchase of the property was executed by the parties and
effective on February 29, 1996, and is scheduled to close on or before August
15, 1996. The closing may be extended to October 15, 1996 if the sellers are
delayed on their Internal Revenue Code Section 1031 exchange. The property
consists of two apartment complexes and the purchase price is $7,900,000 for
both properties. The Inducement Resolution Package, which contained $8,400,000
of tax exempt bonds for a subsidiary of Homes, was officially approved on April
16, 1996 by the Alabama Housing Finance Authority in a public board meeting.
On March 1, 1996, Oasis International Corporation, a Nevada corporation
and wholly owned subsidiary of the Company ("OIC"), entered into a Stock
Purchase Agreement with East-West Corporation, a corporation organized under the
laws of Nevis, West Indies ("East-West"). The Stock Purchase Agreement provided
for the East-West's purchase of 85,950 shares of the common stock of Oasis
Hotel, Resort & Casino I, Inc., a Nevada corporation ("OHRCI"), and 85,950
shares of the common stock of Oasis Hotel, Resort & Casino II, Inc., a Nevada
corporation ("OHRCII"). These shares were owned by OIC. In accordance with the
Stock Purchase Agreement and a Promissory Note, East-West will pay OIC $1.00 per
share or $171,900. OIC acquired the shares of both OHRCI and OHRCII as a result
of separate Real Estate Option Agreements each involving the sale of an option
to purchase a tract of land approximately ten (10) acres in size which the
Company is in the process of jointly developing.
On March 4, 1996, the Company declared a dividend consisting of either
common stock in both OHRCI and OHRCII or the cash equivalent of this stock. The
record date of this dividend was March 27, 1996. The Company's board of
directors has valued this dividend at $0.02 per 100 shares of Common Stock held
by shareholders of record ("Record Owners"). The Record Owners who do not live
in Arizona, Colorado, Iowa, Maine, Ohio, Rhode Island and Utah, will receive one
share of common stock in both OHRCI and OHRCII for every 100 shares of Common
Stock owned on the record date. Although Record Owners holding less than 100
shares of Common Stock on the record date will receive one share of common stock
in both OHRCI and OHRCII, all other fractions will be rounded down. The Company
will also give these Record Owners the option to receive the cash value of the
dividend instead of the stock, although the Company will not issue dividends of
fractional pennies (no dividends of less than one cent will be issued). Record
Owners whose record address is in Arizona, Colorado, Iowa, Maine, Ohio, Rhode
Island and Utah, will be given the option to receive the cash value of this
dividend, as stated above. The Company will not issue shares of OHRCI and OHRCII
in those states because thier securities laws do not allow stock dividends of
this nature. The Company has experienced delays in the distribution of this
dividend because it has expended additional efforts to ensure compliance with
all federal and state requirements. The Company expects to commence this
distribution within 30 days.
On March 21, 1996, the Company declared a similar dividend consisting
of either common stock of Zahav, Inc. ("Zahav") and Cyber Information, Inc.
("CI"), both of which are Nevada corporations, or the cash equivalent of this
stock. The dividend rate was declared to be one share in both Zahav and CI per
100 shares of the Common Stock of the Company owned by each shareholder of
record. The board of directors also valued this dividend at $0.02 per 100 shares
of Common Stock held by shareholders of record. The same option and distribution
formula as described in the immediately preceding paragraph will be employed for
this dividend. The Company also expects to commence this distribution within 30
days.
7
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RESULTS OF OPERATIONS
Consulting
Revenue from consulting services for the quarter ended March 31, 1996,
was $765,628 compared to $545,695 for the first quarter of 1995. The increase is
attributable to an increase in the number of clients for which the Company
provides services. Costs of providing services increased from $232,398 in 1995
to $342,162 primarily due to an increase in personnel to perform consulting
services.
Rental Properties
Revenue from rental of the Company's properties in the first quarter of
1996 increased to $105,218 from $55,586 for the same period of 1995. This
increase is primarily due to an increase in the number of properties under the
Company's control. This is also the reason for the increase in cost of rental
revenue from $57,933 in 1995 to $102,337 in 1996.
Other Revenue
Other revenue was $59,792 for the quarter ended March 31, 1996,
compared with $8,611 for the same period of 1995. This increase of $51,181 is
primarily due to the Company's operation of a retail complex in Oasis, Nevada
until March 9, 1996. The Company has leased this retail operation on a month to
month basis to an operator and therefore revenue from this source will not
continue, although the Company will receive rental revenue from this lease.
Net income for the quarter ended March 31, 1996, was $174,005 compared
with $179,941 in the first quarter of 1995.
During the first quarter of fiscal 1996, the Company expended
significant costs in developing its Internet Services Division. For more
information on this division, please see "Item 2 - Management's Discussion and
Analysis or Plan of Operation." The Company expects this increase in Internet
expenses to expand.
CAPITAL RESOURCES AND LIQUIDITY
The deficiency in working capital increased from $573,289 on March 31,
1995, to $924,310 at March 31, 1996, primarily as the result of the purchase of
a building utilizing short-term financing. The Company intends to refinance this
purchase with long-term financing. The Company had positive cash flows during
the first quarter of 1996. Operating cash flows are closely aligned with
consulting revenue and the cost of providing consulting services. The most
significant cost of providing consulting service is the payroll for the
Company's approximately 53 employees. The Company expects to increase payroll
expenses if its consulting services division is increased as a result of a
substantial influx of clients.
PART II
ITEM 1. LEGAL PROCEEDINGS
The following are legal proceedings that had material developments
during the first quarter of 1996. Other material legal proceedings are pending,
however, no developments occurred during the first quarter of 1996. (For further
information see "Part I, Item 3 - Legal Proceedings" in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1995).
TAC, Inc., vs. Ozora Corporation and Mark C. Hungerford. Filed on
January 25, 1995 in the United States District Court for the Central Division of
Utah, Case Number 95-C-75 G. TAC sought recovery of a promissory note plus the
interest due and/or the recovery of 99,800 shares of class A common stock of
Transcisco Industries, Inc. On May 30, 1995, the Court entered a Judgment
against Ozora and Hungerford which included interest and associated costs. TAC
pursued action to enforce the Judgement, including the filing of liens against
real property in California and Montana. In November of 1995, TAC, Ozora and
Hungerford entered into settlement discussions which continued until the parties
reached an agreement. The agreement calls for Ozora/Hungerford to make an
initial down payment to TAC in November 1995 and installment payments in
intervals thereafter. Full performance under the agreement was completed on
February 13, 1996.
8
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Canton Industrial Corporation and Canton Industrial of Salt Lake City
vs. Delmar A. Janovec and KLH Engineering Group, Inc. - Filed by the Company on
April 19, 1995, in the United States District Court, in the Central District of
Utah, Civil Case No. 2:95 CV 363G. The Company seeks enforcement of the August
31, 1994 Settlement Agreement and Mutual Release to which the Company, Janovec
and KLH were parties. That agreement required the delivery to the Company of
10,994,666 shares of KLH common stock as security for a promissory note. Mr.
Janovec has failed to file a response on a timely basis in the matter and the
court has entered a default against him. An answer and counterclaim has been
filed by KLH, the Company believes that all issues raised by the counterclaim
were either resolved by the Settlement Agreement or are groundless. In the first
quarter of 1996, the court ordered the case to mediation.
KMC Foods, Inc. vs. Potomac Engineering Management Systems Co. (PEMSCO)
- - KMC Foods, Inc., a subsidiary of the Company, has filed a Motion for Relief
from the Automatic Stay in PEMSCO's Chapter 11 bankruptcy case filed in the
United States Bankruptcy Court for the Eastern District of Virginia, Norfolk
Division, Case No. 95-23691-DHA. KMC holds a secured interest in certain real
property owned by PEMSCO. KMC seeks either payment of the obligation or the
right to foreclose its interest in the real property. KMC claims a debt of
approximately $600,000 with interest and PEMSCO has asserted a value of $1.7
million for the property. The Company has signed a settlement that will result
in payment of a substantial portion of the debt, an agreement to indemnify KMC
for any costs of environmental clean up of the property and payment of KMC's
attorney fees in the matter, or, in the alternative, the lifting of the
bankruptcy stay to permit foreclosure of KMC's interest in the property. On May
6, 1996, PEMSCO sought to have KMC extend the terms of the settlement to allow
it time to obtain the required financing. The Company agreed to extend the term
of the settlement until June 5, 1996, in consideration for 105 shares of DuPont
common stock and an increase in the total required payment to $600,000 from
$550,000.
Hi-Tech Mechanical Systems, Inc. vs. The Canton Industrial Corporation
- - Hi-Tech Mechanical Systems, Inc. (Hi-Tech") filed suit in the Third Circuit
Court, Salt Lake County, State of Utah, Civil Number 95-0009467. Hi-Tech seeks
recovery for heating and cooling systems repairs in the amount of $10,746. A
Settlement Agreement has been signed by both parties effective September 26,
1995 which provides for full settlement of the claims over a six month period.
The Company has complied with the terms of the Settlement Agreement and the suit
was dismissed in March 1996.
Canton Financial Services vs. David Dadon and Select Pictures, Ltd. -
Filed November 4, 1994 in the United States District Court for the Central
Division, State of Utah, Case Number 94-C-1080C. The Company seeks payment in
the amount of $225,000 for services rendered under a consulting agreement, two
promissory notes and fraud related to security provided toward payment. A
Default has been entered against Select Pictures after service of process and
its failure to file an answer. In January 1996, the Court signed an order
authorizing an attempt to serve Dadon by certified mail in England. Efforts to
secure personal service on Dadon continue.
Xeta Corporation vs. The Canton Industrial Corporation. Xeta originally
filed suit in the Northern District of Oklahoma, the suit was later dismissed
based on a lack of jurisdiction. The same suit was refiled on March 8, 1995, in
the United States District Court, in the Central District of Utah, Case Number
95CV-218G. Xeta seeks to recover $116,500 which it contends was fraudulently
transferred to the Company by ATC, a client of its subsidiary CFS, in order to
avoid payment of a judgment held by Xeta against ATC. Richard Surber and Gerald
Curtis, both former officers of ATC, are also named as individual defendants.
The Company has responded to the claims of Xeta by stating that it provided bona
fide services to ATC, and that the bulk of the funds were used for operating
expenditures of ATC. The Company also believes that the expenditures were
incurred in the best business interest of ATC. A Motion for Summary Judgment has
been filed by Xeta and was heard by the Court on April 16, 1996. The Court
announced its intention to grant a judgment against the Company at the hearing.
An objection to the entry of such a judgment has been filed and the Company
continues to dispute the allegations.
9
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Possible Actions by Governmental Authorities
State of Delaware vs. KMC Foods, Inc. KMC received a claim from The
Division of Revenue of the Department of Finance for the State of Delaware in
excess of $300,000. The claim is for alleged taxes due based upon the gross
revenues of KMC for the tax period April 1, 1989 through March 31, 1992. This
tax period is prior to the purchase of KMC by the Company. Prior management of
KMC has assured the Company that the tax does not apply as all sales of products
were outside of the state of Delaware, and thus the Delaware tax is not due.
Efforts continue to provide sufficient documentation to the Delaware authorities
to resolve the liability issue favorably to KMC.
State of Illinois vs. The Canton Industrial Corporation - This action
is pending in the Ninth Judicial Circuit, State of Illinois, County of Fulton,
Case No. 93MR45, filed in September of 1993 and amended on January 28, 1994. The
State of Illinois sought the cleanup of tires and toxic paint drums at the site.
The State has raised an issue that 3-5 drums are still located on the site and
is requesting certification of their contents and proper disposal. An Interim
Order for the cleanup of the property was entered and approved by the Court on
March 8, 1994. Pursuant to the Interim Order, the sum of $140,000 was to be
deposited in an escrow account within the State of Illinois by May 15, 1994, to
insure the complete removal of the tires. The Interim Order also required the
clean-up to be completed no later than December 31, 1995. The Company entered
into an agreement for the removal of all tires with Gardens, Inc., who then
sub-contracted with Eco-Systems Inc. Work began to bale the waste tires into
blocks for disposal and use by Eco-Systems, Inc. in August 1995. On September
28, 1995, the Company was informed by the IEPA that it had rejected the
Company's proposed plan for removal and had hired its own contractor to remove
the tires from the site. The Company sought relief from this decision from the
Circuit Court in Fulton County. The Court denied the Company any relief at a
hearing on October 10, 1995. On October 16, 1995, the Company filed an appeal
with the Director of the IEPA, which was also denied. Currently, the State has
concluded work believing that all waste tires have been removed from the site.
In April 1996, the State informed the Company of its intent to seek recovery of
its estimated costs of $325,000 incurred in removal of the tires. The Company
believes that the ultimate intent of the Interim Order, the complete removal of
the tires, has been met because either the tires had been completely removed or
reduced to the IEPA's control but not within the Court's exact specifications.
As a result of this technical non-compliance, the Court may impose penalties of
up to $50,000 for non-compliance with the order and $10,000 per day from the
date of the violation.
ITEM 5 OTHER INFORMATION
In 1986, Allen Z. Wolfson, a control person of the Company, was
convicted of violating 18 U.S.C. ss.ss.1001 and 1002; and 18 U.S.C. ss.ss.1014
and 1002 in the U. S. District Court for the Middle District of Florida (the
"Florida Court"). Mr. Wolfson was on probation for these violations until May
1995. In February 1995, a complaint was filed with the Court alleging that Mr.
Wolfson had violated the terms of the probation. The Florida Court changed
jurisdiction to the U. S. District Court for the District of Utah, Central
Division (the "Utah Court"). The Utah Court heard the matter in August 1995 and
on October 20, 1995, Bruce S. Jenkins, Senior U. S. District Court Judge, ruled
that a violation of the original terms of the probation had occurred. This
finding effectively revoked Mr. Wolfson's probation. On January 25, 1996, a
sentencing hearing was held before the Utah Court. At this hearing the Utah
Court imposed a three-year sentence, suspended, pursuant to additional terms of
probation. On April 11, 1996, the judge of the Utah Court signed a written order
containing new probation terms that are effective for three years. Mr. Wolfson
has filed an objection seeking clarification of the probation terms, which is
presently before the Utah Court. (For further information on Mr. Wolfson, see
"Part II, Item 12 - Certain Relationships and Related Transactions," in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1995).
10
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Change in Control
A change in the control of the Company occurred on May 6, 1996, when
Steven A. Christensen was discharged from his position as president of the
Company by the board of directors. The board of directors believed that this
change in control was in the best interest of the Company as it was not
satisfied with Mr. Christensen's general performance. On May 6, 1996, the
Company's board of directors appointed Richard D. Surber as the president of the
Company, a position he had held until Mr. Christensen's appointment in August
1995. Mr.
Surber is also a director and the chief executive officer of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 11 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. During the quarter ended March 31, 1996 the
Company filed two reports on Form 8-K. The first report on Form 8-K was
dated January 3, 1996 and reported on Item 1, Changes in Control of
Registrant and Item 4, Changes in Registrant's Certifying Accountant.
The second report on Form 8-K was dated January 11, 1996 and reported
on Item 2, Acquisition or Disposition of Assets.
11
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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, this 15th day of May 1996.
THE CANTON INDUSTRIAL CORPORATION
Date: May 15, 1996 By: /s/ Richard D. Surber
Name : Richard D. Surber
Title: President
Date: May 15, 1996 By: /s/ Susan S. Waldrop
Name: Susan S. Waldrop
Title: Chief Financial Officer,
Secretary/Treasurer
12
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INDEX TO EXHIBITS
EXHIBIT PAGE DESCRIPTION
NO. NO.
MATERIAL CONTRACTS
10(i)(a) 21 Lease Agreement dated March 9, 1996 between the Oasis Services
Management Corporation and William and Pamela Wiegand.
10(i)(b) 30 Security Agreement dated March 9, 1996, between Oasis Services
Management Corporation and William and Pamela Wiegand.
10(i)(c) 35 Promissory Note dated March 9, 1996, made by William and
Pamela Wiegand in favor of Oasis Services Management
Corporation.
27 37 Financial Data Schedule.
13
LEASE
This Lease is entered into on this 9th day of March, 1996, by and
between the Lessor and Tenant listed below, subject to the following terms and
conditions.
Lessor: Oasis Services Management Corporation
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Tenants: William & Pamela Wiegand, Husband & Wife
Oasis, Nevada 89835
1. PREMISES. Lessor hereby leases to Tenants the Store, Truck Stop, Restaurant,
Motel, and Laundry located at the intersection of Interstate 80 and SR 233, in
Oasis, Nevada, (the "Premises").
The Premises are provided to Tenants on an "as is" basis. Lessor makes
no representation or warranties to Tenants with regard to the condition of the
Premises and any improvements thereon. Tenants have inspected the Premises and
fully agrees to lease them in their current condition.
2. ALTERATIONS. Upon receiving approval of the Lessor, Tenants may make
alterations to the Premises. Prior to commencing any alterations, Tenants shall
deliver to Lessor a written summary of the alterations to be made, describing
the alterations in sufficient detail to enable Lessor to fully understand the
scope of the alterations. Lessor agrees that it will not unreasonably withhold
its approval of a proposed alteration. Lessor shall be deemed reasonable in
withholding its approval of any alterations if such alterations would impair the
structural integrity or exterior appearance of the buildings comprising the
Premises (the "Buildings"), or if they fail to comply with all applicable
building, zoning and safety codes and ordinances.
Tenants promise to take all measures necessary to ensure that all
repairs and alterations to the Premises are permitted by and comply with the
building, zoning and safety codes and ordinances of all local, state, and
federal authorities. Tenants are responsible for obtaining all permits,
licenses, bonds or other approval required by local, state and federal
authorities for any repairs or alterations.
14
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3. TERM. The term of this Lease shall be a tenancy from month to month. Either
party may terminate this lease by written notice as provided for herein, Tenants
shall be required to give no less than 60 days notice to terminate and Lessor
shall be required to give no less than 30 days notice to terminate.
4. RENT AND UTILITIES. Tenants shall pay rent on a weekly basis on the greater
of the following weekly amounts or a percentage of receipts as set forth below:
from the signing of this lease through June 8, 1996 in the amount of $500.00 due
each Saturday, for the period from June 9, 1996 through August 31, 1996 weekly
rental shall be due each Saturday in the amount of $625, from September 1, 1996
forward the rent shall be $750 per week or if greater the combined total of 10%
of gross sales (total receipts less sales tax), 10% of the gross profit from
fuel sales, 20% of room or property rentals and 15% of gross sales (total
receipts less sales tax) from the restaurant. An accounting of these figures is
to be submitted at the end of each four week period beginning 35 days after the
date of the lease. Lessor is granted the right, upon request and notice to the
Tenants, to audit and review the books and records of the Tenants to determine
the accuracy of the information provided. Tenants shall obtain and pay for all
utilities servicing the Premises. Tenants shall pay to the lessor all property
taxes charged to the Premises by any taxing authority, upon reasonable proof of
payment of such taxes being provided to Tenants.
5. INVENTORY. Tenants and Lessor hereby acknowledge that they have entered into
a separate agreement for the transfer of the inventory used in the present
operation of the premises. Tenants acknowledge that Lessor is not leaving or
lending any operating funds for Tenants operation of the premises.
6. REPAIRS AND MAINTENANCE. During the term of this Lease, Tenants agrees to
maintain the Premises and Equipment located thereon and to keep the immediate
surrounding area in good appearance and in substantial repair, subject to
reasonable wear and tear. Tenants agree that they will maintain the Premises and
Equipment and immediately surrounding area at their own expense. Tenants further
agree to pay to Lessor the costs of repairs incurred by Lessor from the signing
of this lease forward, upon reasonable proof of such repairs being provided to
Tenants.
15
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7. USE. The Premises shall be used and occupied by Tenants for the purpose of
operating the store, truck stop, motel, restaurant, and laundry as presently
located on the premises and for no other purpose without the prior written
consent of the Lessor. Lessor agrees that it will not withhold its consent
unreasonably. Tenants covenant that any use of the Premises will, at all times,
comply with all applicable local, state and federal laws and building, zoning
and safety codes and ordinances.
Tenants agree that they will not do or permit anything to be done in or
about the Premises nor bring or keep anything thereon which will adversely
affect the availability of or increase the premiums for any insurance policy
which may cover the Premises or the Building. Tenants will not cancel, or do or
permit anything to be done which will cause such insurance to be canceled.
Tenants agree they will not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights
of other tenants or occupants of the Building (if any) or injure or annoy other
tenants or use or allow the Premises to be used for any unlawful or
objectionable purpose. Tenants further agrees he will not cause, maintain or
permit any nuisance in, on or about the Premises. Tenants shall not commit or
permit any waste to be committed in or upon the Premises.
9. ENTRY BY LESSOR. Lessor reserves the right, without abatement of rent, to
enter onto and inspect the Premises. Lessor further reserves the right, without
abatement of rent, to enter the Premises thirty days before termination of this
Lease for purposes of: (i) showing the Premises to prospective purchasers or
tenants, (ii) posting notices and "for lease" signs, and (iii) altering,
improving or repairing the Premises and any portion of the Building.
10. LIENS. Tenants shall keep the Premises and the Building part free from any
liens arising out of work performed, materials furnished, or obligations
incurred by Tenants and shall indemnify, hold harmless and defend Lessor from
any liens and encumbrances arising out of work performed or materials furnished
by or at the direction of Tenants.
16
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11. INDEMNITY. Tenants shall indemnify and hold Lessor harmless for and against
any and all claims arising from Tenant's use of the Premises or the conduct of
its business or from any activity, work, or thing done, permitted or suffered by
Tenants in or about the Premises. Tenants shall further indemnify and hold
Lessor harmless from and against any and all claims arising from any breach or
default by Tenants in the performance of its obligations and covenants
hereunder, and from and against any and all costs, attorneys' fees, expenses and
liabilities incurred in connection with any such claim. Tenants further agree to
maintain property, fire and liability insurance covering the premises and for
all activities they conduct on the Premises in an amount sufficient to replace
the structures and equipment that presently exist.
12. DAMAGE AND DESTRUCTION. In the event of the total destruction of the
Premises or the Buildings either party shall have the right, upon ten (10) days
prior written notice, to terminate this Lease. In the event of the destruction
of less than 50% of the value of the Premises or Building and any improvements
thereon, Lessor may at its option, terminate this Lease upon thirty (30) days
prior written notice to Tenants unless, within said thirty (30) day period,
Tenants delivers written notice to Lessor that it intends to restore the
Premises to the condition they were in prior to the event causing the
destruction. For purpose of this Lease total destruction shall be deemed the
destruction of 50% or more of the value of the Premises or the Buildings.
If Tenants deliver such notice to Lessor, Tenants shall thereafter
diligently commence and complete the restoration, but in any event shall have
fully completed the restoration within one year from the date of the event
causing the destruction. Lessor shall not have any obligation whatsoever to
repair, reconstruct or restore the Premises. Tenants shall have no claim against
Lessor for any damage suffered by reason of any damage or destruction to the
Premises or the buildings of which they are a part.
13. CONDEMNATION. If all or any part of the Premises shall be taken or
appropriated for public or quasi-public use, either party shall have the right,
at its option, exercisable within thirty (30) days of receipt of notice of such
taking, to terminate this Lease as of the date possession is taken by the
condemning authority. Tenants reserves the right to apply to the condemning
authority for a separate award representing the value of all improvements made
by the Tenants and taken by the condemning authority.
14. ASSIGNMENT AND SUBLETTING. Tenants shall not assign, transfer, mortgage,
pledge, hypothecate or encumber this Lease or any interest therein, and shall
not sublet the Premises or any part thereof, without the prior written consent
of Lessor. Lessor agrees it will not unreasonably withhold its consent. Any
attempt to assign, transfer, mortgage, pledge, hypothecate or encumber this
Lease or any interest therein, without Lessor's consent shall be void and shall
constitute a breach of this Lease.
17
<PAGE>
15. DEFAULT/REMEDY.
(a) The occurrence of any of the following shall constitute a default
under this lease by Tenants:
(i) Any failure by Tenants to pay the rent or any other
monetary sums required to be paid hereunder where such failure
continues for five (5) days after notice by Lessor to Tenants;
(ii) The abandonment or vacation of the Premises by Tenants.
Tenants acknowledges that they have a duty to physically
occupy the Premises for the term of the lease and to comply
with all of the terms and conditions of this Lease;
(iii) A failure by Tenants to perform or otherwise comply with
any provision of this Lease where such failure continues for
thirty (30) days after Lessor notifies Tenants of such
failure; or
(iv) The making by the Tenants of any general assignment or
general arrangement for the benefit of creditors; the filing
by or against Tenants of a petition to have Tenants adjudged a
bankrupt or of a petition for reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a
petition filed against Tenants, the same is dismissed within
one hundred twenty (120 days); the appointment of a trustee or
receiver to take possession of substantially all of Tenants's
assets located on the Premises or of Tenant's interest in this
Lease, where possession is not restored to Tenants within
thirty (30) days; or the attachment, execution or other
judicial seizure of substantially all of Tenant's assets
located on the Premises or of Tenant's interest in this Lease,
where such seizure is not discharged within thirty (30) days.
18
<PAGE>
(b) In the event of any such default, Lessor may, at any time
thereafter, without limiting Lessor in the exercise of any right or
remedy at law or in equity which Lessor may have by reason of such
default or breach:
(i) Maintain this Lease in full force and recover the rent and
other monetary charges as they become due, without terminating
Tenant's right to possession irrespective of whether Tenants
shall have abandoned the Premises. By electing to maintain
this Lease, Lessor shall have the right to take any measures
reasonably necessary for re-letting the Premises on such terms
as Lessor deems reasonable, including removal of all persons
and property from the premises. The Lessor may remove and
store the property in a public warehouse or elsewhere at the
cost of and for the account of Tenants. By preparing to re-let
the Premises Lessor shall not be deemed to have elected to
terminate the Lease. This Lease will terminate automatically
when a new tenant takes possession of the Premises.
Notwithstanding that Lessor initially maintains this Lease in
full force after Tenants' default, Lessor may, at anytime
during the term of this Lease, elect to terminate this Lease
by virtue of Tenants' default; or
(ii) Terminate Tenants' right to possession by any lawful
means, in which case this Lease shall terminate and Tenants
shall immediately surrender possession of the Premises to
Lessor. In such event Lessor shall be entitled to recover from
Tenants all damages which Lessor incurs by reason of Tenants'
default, including, without limitation the following: (i) the
worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at
the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of
award exceeds the amount of the rental loss that is proved
could have been reasonably avoided; plus (iii) the worth at
the time of award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the
amount of the rental loss that is proved could have been
reasonably avoided; plus (iv) any other amount necessary to
compensate Lessor for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease
or which in the ordinary course of events would be likely to
result therefrom; plus (v) at Lessors election, such other
amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable State law. As used
in (i), (ii) and (iii) above, the phrase "worth at the time of
award" is computed by adding interest at the rate of eighteen
percent (18%) per annum from the date of default to the amount
of the damages provided for in this paragraph.
19
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(c) If any installment of rent or any other sum due from Tenants shall
not be received by Lessor or Lessor's assignee within ten (10) days
after such amount shall be due, Tenants shall pay to Lessor a late
charge equal to ten percent (10%) of such the amount overdue. The
parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of
Tenant's late payment.
16. COSTS OF SUIT. If Tenants or Lessor shall bring any action for any relief
against the other arising out of this Lease, the losing party shall pay the
successful party a reasonable sum for attorneys' fees and costs of collection,
which shall be paid whether or not such action is prosecuted to judgment.
17. HOLD OVER. If Tenants remains in possession of all or any part of the
Premises after the expiration of the term hereof, with or without the express or
implied consent of Lessor, such tenancy shall be from month to month only, and
not a renewal hereof or an extension for any further term, and in such case,
rent and other monetary sums due hereunder shall be payable at the time
specified in this Lease and in the amount of two (2) times the rent described in
paragraph 4 hereof, and such month to month tenancy shall be subject to every
other term, covenant and agreement contained herein.
18. ENTIRE AGREEMENT. This agreement, along with any exhibits and riders hereto,
constitutes the entire agreement between Lessor and Tenants regarding the
Premises. Lessor and Tenants agree that all prior or contemporaneous oral or
written agreements between and among themselves and their agents or
representatives regarding the leasing of the Premises are merged in or by this
agreement. This Lease may be altered, amended or revoked only by an instrument
in writing signed by both Lessor and Tenants.
19. BINDING EFFECT: CHOICE OF LAW. Subject to any provision hereof restricting
assignment or subletting by Tenants, all of the provisions hereof shall bind and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State of Nevada.
20. HEADINGS. The section and subsection headings in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of the text of this Lease.
21. NOTICES. All notices hereunder shall be sent by certified mail at the
address set forth at the beginning of this Lease (or such other address as may
be substituted therefor by written notice). Notice shall be deemed effective
upon return receipt, and/or within three business days from date of mailing of
certified mail notices.
22. Variations in Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
IN WITNESSETH HEREOF the Tenants and Lessor have caused this Lease to be
executed this 9th day of March, 1996.
Tenants: WILLIAM WIEGAND AND PAMELA WIEGAND
/s/ William Wiegand
WLLIAM WIEGAND
/s/ Pamela Wiegand
PAMELA WIEGAND
Lessor: OASIS SERVICES MANAGEMENT CORPORATION
/s/ Steven A. Christensen
By: STEVEN A. CHRISTENSEN
Title: PRESIDENT
20
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is entered into this 9 day of
March, 1996, by and between Oasis Services Management Corporation, a Nevada
corporation (the "Secured Party") and William Wiegand and Pamela Wiegand,
jointly and severally (the "Debtors").
RECITALS
Concurrently with the date hereof Debtors have acquired assets used in
the retail, laundry, motel and related business of the Secured Party. In
connection with such purchase, the Debtor has agreed to deliver a Secured
Promissory Note ("Note") in the principal amount of Forty Three Thousand, Eight
Hundred Fifty dollars ($ 43,850.00 ).
The parties intend that such Note shall be secured by a security
interest in all of the inventory located at the leased premises, including all
of the accounts, inventory, goods held for resale, instruments, chattel paper,
machinery, tools, equipment, furniture, furnishings, fixtures, vehicles, and all
other personal property and the proceeds thereof and any insurance proceeds
received with respect thereto (hereinafter referred to as "Collateral"). The
Collateral subject to this agreement does extend to any prior owned assets of
the Debtor or any later acquired assets, if the Debtor uses such assets at the
same locations as the Collateral.
AGREEMENT
ACCORDINGLY, the parties hereto, in consideration of the premises and
the representations, warranties and covenants contained herein, and subject to
terms and conditions hereof, agree as follows:
1. Definitions. The following definitions shall apply herein:
(a) The term "Collateral" means any and all property of Debtor that is
assigned to Secured Party as security or by which pursuant to this agreement
Secured Party acquires a security interest.
(b) The term "Accounts" means any right to payment for goods sold or
leased, or to be sold or to be leased, or for services rendered or to be
rendered, no matter how evidenced, including accounts receivable, contract
rights, notes, drafts, acceptances and other forms of obligations, general
intangibles and receivables.
(c) "Note" means the Secured Promissory Note of Debtor in favor of
Secured Party of even date herewith in the principal amount of $ 43,850 .
2. Creation of Security Interest. As security for the payment by the
Debtor of the Note and the performance of all obligations provided for therein
(collectively referred to herein as the "Secured Obligations"), the Debtor
assigns to Secured Party, all the Assets obtained by Debtor from Secured Party.
The Collateral subject to this agreement extends to any prior owned assets of
the Debtor or any later acquired assets, if the Debtor uses such assets at the
same locations as the Collateral.
21
<PAGE>
3. Further Assurance. As long as Debtor is indebted or otherwise
obligated to Secured Party pursuant to the Note, Debtor will execute to Secured
Party concerning the Collateral such assignments, notices and financing
statements, and such other documents and papers as Secured Party may require in
order to affirm, effectuate or further assure the assignment to Secured Party of
Collateral, or Secured Party's security interest in it, or to give any third
party, including the account debtors obligated on the Accounts, notice of
Secured Party's interest in the Collateral. Debtor will be using the name "
Oasis Bar and Grill " and agrees that the business operations will be at the
intersection of Interstate 80 and SR 233 in Oasis, Nevada and shall operate
under that name and at that location. All statements and charges for goods and
services shall be rendered under that name, and all payments therefor accepted
in that name. If Debtor desires to change the aforesaid name or address, Debtor
may do so providing Debtor gives fifteen (15) days advance written notice of the
change thereof to Secured Party and before commencing such use executes in the
required form an amended Financial Statement (UCC-1) and such other documents as
may be reasonably required by Secured Party in order to protect and preserve
Secured Party's interest hereunder.
4. Representations and Warranties. Debtor represents and warrants to
the Secured Party:
(a) Debtors are individual residents of the state of Nevada. The
execution, delivery and performance of this Agreement are within Debtors'
powers, and are not in conflict with law, or of any indenture, agreement or
undertaking to which Debtors are parties or by which Debtors are bound or
affected;
(b) Debtors are, or at the time Collateral comes into existence will
be, the true and lawful owners of, and have, or at the time it comes into
existence will have, good and clear title to the Collateral, subject to
Secured Party's rights in it;
(d) All financial information, including information relating to the
Collateral, submitted by Debtors to Secured party, whether previously or in
the future, is or will be true and correct.
5. Costs. All advances, charges, costs and expenses, including
reasonable attorney's fees incurred or paid by the Secured Party in exercising
any right, power, or remedy conferred by this security Agreement, or in the
enforcement thereof, shall become a part of the indebtedness secured hereunder
and shall be paid to the Secured Party by Debtors within thirty (30) day written
demand, with interest thereon at 10% per annum.
22
<PAGE>
6. Debtor's Affirmative Covenants. Debtors will (a) furnish Secured
Party from time to time, such financial statements and information as Secured
Party may reasonably request, and inform Secured Party immediately upon the
occurrence of a material adverse change in Debtors' financial condition; (b)
furnish Secured Party periodically, in such form and detail and at such times as
Secured Party may reasonably require, statements showing aging and
reconciliation of Accounts and collections and inventory balance; (c) permit
representatives of Secured Party to inspect Debtor's books and records and make
extracts at any reasonable time and arrange for verification of Accounts or
inventory, under reasonable procedures acceptable to Secured Party, directly
with the account debtors' or otherwise at Secured Party's expense; (d) promptly
notify Secured Party of any attachment or other legal process levied against any
of the collateral and any information received by Debtors about the collateral;
(e) reimburse Secured Party within thirty (30) days of an itemized written
demand for any and all legal costs, including reasonable attorney's fees, and
other expenses incurred in collecting any such sums payable by Debtor on
Debtor's obligations secured under this Security Agreement or in checking,
handling and collection of Collateral and the enforcement of this Agreement
about Collateral; and (f) notify Secured party of each office of Debtor where
Debtor keeps books and records about accounts; (g) at any time that the value of
the collateral is less than the then current obligation under the Secured
Promissory Note, Debtors will pay to Secured Party cash sufficient to reduce the
note obligation to the then current value of the collateral.
7. Covenant Against Further Encumbrances. Until Debtors' obligations
secured under this Agreement shall have been repaid in full, Debtors shall not,
except in the normal course of business, sell, dispose of, or grant a security
interest in any of the Collateral other than to Secured party, or execute any
financing statements covering Collateral in favor of any person other than
Secured party.
8. Waiver of Rights. Debtors waive any right to require the Secured
Party to (a) proceed against any person, (b) proceed against or exhaust any
Collateral, or (c) pursue any other remedy in Secured Party's Power; and waives
any defense arising by reason of any disability or other defense of Debtors or
any other person, or by reason of the cessation from any cause whatsoever of the
liability of Debtors or any other person. Debtors further waive the time period
within which Debtors must notify the Secured Party of any objections to any
proposal by Secured Party made under the Commercial Code, and Debtors agree that
any notification to Secured Party of objections by Debtors to any proposal by
Secured Party must be received within seven (7) days after notice of such
proposal was sent to them by Secured Party. Until all indebtedness shall have
been paid in full Debtors shall have no right of subrogation and waives any
right to enforce any remedy which the Secured Party now has or may hereafter
have against Debtors or against any other person and waives any benefit of any
right to participate in any Collateral or security whatsoever now or hereafter
held by Secured Party. Debtors authorized the Secured Party without notice or
demand and without affecting Debtors' liability hereunder, from time to time to:
(a) renew or extend the time for payment of the indebtedness or any part
thereof; (b) release or substitute any of the endorsers or guarantors of the
indebtedness or any party thereof, or any other parties thereto.
9. Default and Acceleration. If (a) default is made in the payment of
any obligations, or breach is made of any warranty, statement terms or
conditions contained in the Note, this Agreement or under any real property
lease in effect between Debtors and Secured Party; (b) any statement or
representation made for the purpose of obtaining credit under this Agreement
proves false; (c) Secured party considers Collateral unsafe or in danger of
misuse; (d) Debtors become insolvent or make an assignment of the benefit of
creditors; (e) any proceeding is commenced by or against Debtors under any
Bankruptcy, reorganization, arrangement readjustment of debt, or moratorium law
or statute; (f) any writ of attachment, garnishment, execution or other legal
process is issued against any of the collateral which after 10 days Debtors have
not cured or paid for; or (g) any assessment for taxes against Debtors
pertaining to Debtors' use of the collateral, other than real property, is made
by the federal or state government or any department of them, which after 90
days Debtors have not paid; then all obligations secured by this Agreement shall
immediately become due and payable without demand, presentments, protests,
notices or protest and notices of dishonor first made and without notice to
Debtors.
23
<PAGE>
10. Rights on Default. On the occurrence of an event specified in
Section 12, Secured Party may, at its option and with seven (7) day written
demand or notice to the Debtors, do any one or more of the following: (a)
immediately take possession of the Collateral wherever it may be found; (b)
proceed in the foreclosure of Secured Party's security interest and sale of
Collateral in any matter permitted by law, or provided for in this Agreement;
(c) sell, lease, or otherwise dispose of Collateral at a public sale
accomplished in a commercially reasonable manner, with or without having
Collateral at the place of sale; (d) retain Collateral in full satisfaction of
the obligations secured by it; (e) make an ex parte application for the
appointment of a receiver for the purpose of collecting the Collateral and
proceeds thereof; (f) exercise any remedy of a secured party under the Uniform
Commercial Code. Secured Party shall have the right to enforce one or more
remedies under this Agreement successively or concurrently, and any such action
shall not stop or prevent Secured Party from pursuing any further remedy that it
may have under this Agreement or by law. If sufficient sum is not realized by
this Agreement, Debtor promises and agrees to pay Secured Party any deficiency.
11. Effect on Other Agreements. Nothing in this Agreement shall in any
way limit the effect of the conditions set forth in any other security or other
agreement previously or later executed by Debtors for the benefit of Secured
Party, but each and every condition of this Agreement shall be in addition to
the others.
12. Notices. All notices, requests, demands and other communication
hereunder shall be in writing and shall be deemed to have been duly given upon
personal delivery thereof or within two days after mailing if mailed by
certified mail, return receipt requested with postage prepaid to the parties as
follows:
Debtor: William & Pamela Wiegand
Oasis, Nevada 89835
Secured Party: Oasis Services Management Corporation
268 West 400 South, Suite 300
Salt Lake City, UT 84101
Any of the parties may change the address to which communications are
to be addressed to such party by giving notice to the other parties in the
manner specified herein.
13. Successors and Assigns. This Security Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their heirs,
successors and assigns.
IN WITNESS WHEREOF, the undersigned have signed this Security Agreement
on the day and year first above written.
Debtors: Pamela Wiegand William Wiegand
/s/ Pamela Wiegand /s/ William Wiegand
Secured Party: Oasis Services Management Corporation
By: /s/ Steven A. Christensen
Steven A. Christensen, President
24
$ 43,850.00 Dated: March 9 , 1996
PROMISSORY NOTE
FOR VALUE RECEIVED, William Wiegand and Pamela Wiegand ("Makers"),
promise to pay to Oasis Services Management Corporation, a Nevada corporation
("Holder"), or order, Forty Three Thousand, Eight Hundred Fifty Dollars ($
43,850 ).
1. Payments. The principal and interest on the obligation represented
hereby shall be repaid in installments, with accrued interest paid first from
each payment, of $500.00 on the last day of each month commencing March 31,
1996; $600 on the last day of each month commencing June 30, 1996; $700 on the
last day of each month commencing September 30, 1996; $800 on the last day of
each month commencing December 31, 1996, with the entire unpaid principal and
interest to be paid in full on or before March 31, 1999.
2. Interest. The obligation shall bear simple interest which shall be
at the rate of 12% per annum.
3. Type and Place of Payments. Payments of principal and interest shall
be made in lawful money of the United States of America to the above-named
Holder at 268 West 400 South, Salt Lake City, Utah 84101, or order.
4. Prepayment. Advance payment or payments may be made on the
principal, without penalty or forfeiture. There shall be no penalty for any
prepayment.
5. Default. Upon the occurrence or during the continuance of any one or
more of the events hereinafter enumerated, Holder or the holder of this Note may
forthwith or at any time thereafter during the continuance of any such event, by
notice in writing to the Makers, declare the unpaid balance of the principal and
interest on the Note to be immediately due and payable, and the principal and
interest shall become and shall be immediately due and payable without
presentation, demand, protest, notice of protest, or other notice of dishonor,
all of which are hereby expressly waived by Makers, such events being as
follows:
(a) Default in the payment of the principal and interest of
this Note or any portion thereof when the same shall become due and
payable, whether at maturity as herein expressed, by acceleration, or
otherwise, unless cured within five (5) days after notice thereof by
Holder or the holder of such Note to Maker.
(b) Maker shall file a voluntary petition in bankruptcy or a
voluntary petition seeking reorganization, or shall file an answer
admitting the jurisdiction of the court and any material allegations of
an involuntary petition filed pursuant to any act of Congress relating
to bankruptcy or to any act purporting to be amendatory thereof, or
shall be adjudicated bankrupt, or shall make an assignment for the
benefit of creditors, or shall apply for or consent to the appointment
of any receiver or trustee for Maker, or of all or any substantial
portion of its property, or Maker shall make an assignment to an agent
authorized to liquidate any substantial part of its assets; or
(c) An order shall be entered pursuant to any act of Congress
relating to bankruptcy or to any act purporting to be amendatory
thereof approving an involuntary petition seeking reorganization of the
Maker, or an order of any court shall be entered appointing any
receiver or trustee of or for Maker, or any receiver of trustee of all
or any substantial portion of the property of Maker, or a writ or
warrant of attachment or any similar process shall be issued by any
court against all or any substantial portion of the property of Maker,
and such order approving a petition seeking reorganization or
appointing a receiver or trustee is not vacated or stayed, or such
writ, warrant of attachment, or similar process is not released or
bonded within 60 days after its entry or levy.
6. Attorneys' Fees. If this Note is placed with an attorney for
collection, or if suit be instituted for collection, or if any other remedy
permitted by law is pursued by Holder, because of any default in the terms and
conditions herein, then in such event, the undersigned agrees to pay reasonable
attorneys' fees, costs, and other expenses incurred by Holder in so doing.
7. Construction. This Note shall be governed by and construed in
accordance with the laws of the State of Utah.
8. Security. This Note is secured by the inventory of the store located
in Oasis, Nevada (the intersection of Interstate 80 and SR 233) as lease to the
makers by Oasis Services Management Incorporated, as set forth in the Security
Agreement between Maker and Holder of even date herewith.
Pamela Wiegand
/s/ Pamela Wiegand
William Wiegand
/s/ Willliam Wiegand
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S DECEMBER 31,
1995 ANNUAL REPORT ON FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000788738
<NAME> The Canton Industrial Corporation
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 30,356
<SECURITIES> 0
<RECEIVABLES> 967,757
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,018,632
<PP&E> 6,652,148
<DEPRECIATION> 693,881
<TOTAL-ASSETS> 9,497,737
<CURRENT-LIABILITIES> 1,942,942
<BONDS> 0
0
0
<COMMON> 5,954
<OTHER-SE> 3,569,476
<TOTAL-LIABILITY-AND-EQUITY> 9,497,737
<SALES> 0
<TOTAL-REVENUES> 930,638
<CGS> 0
<TOTAL-COSTS> 484,746
<OTHER-EXPENSES> 356,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71,859
<INCOME-PRETAX> 155,469
<INCOME-TAX> 0
<INCOME-CONTINUING> 155,469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 174,005
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
