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, 1997.
[ ] 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
CYBERAMERICA CORPORATION
(Exact name of small business issuer as specified in its charter)
Nevada 87-0509512
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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 12, 1997 was 10,384,213.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS .............................................. 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS .............................. 3
PART II
ITEM 1. LEGAL PROCEEDINGS ................................................. 6
ITEM 5. OTHER INFORMATION ................................................. 7
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .................................. 7
SIGNATURES ................................................................. 8
INDEX TO EXHIBITS .......................................................... 9
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to CyberAmerica Corporation,
a Nevada corporation, and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended March 31, 1997
and statements of operations, statements of shareholders equity and statements
of cash flows for the interim period up to the date of such balance sheet and
the comparable period of the preceding year are attached hereto as Pages F-1
through F-7 and are incorporated herein by this reference.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
Consolidated Unaudited Condensed
Balance Sheet March 31, 1997 ............................................. F-2
Consolidated Unaudited Condensed
Statements of Operations March 31, 1997 and 1996 ........................ F-4
Consolidated Unaudited Condensed
Statements of Shareholder's Equity March 31, 1997 ....................... F-5
Consolidated Unaudited Condensed
Statements of Cash Flows March 31, 1997 and 1996 ........................ F-6
Notes to Consolidated Unaudited Condensed
Financial Statements March 31, 1997 ..................................... F-7
F-1
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS
March 31, 1997
ASSETS
CURRENT ASSETS
<S> <C>
Cash ..................................................... $ 27,212
Accounts receivable - trade .............................. 411,054
(Net of allowance for bad debt of $189,097)
Accounts receivable - related parties .................... 439,361
Accounts receivable - other .............................. 125,960
------------
Note receivable - current ................................ 12,000
Prepaid expenses ......................................... 39,065
Securities available for sale ............................ 591,322
------------
TOTAL CURRENT ASSETS ........................................ 1,645,974
PROPERTY AND EQUIPMENT
Buildings and structures ................................. 3,675,374
Land ..................................................... 3,792,227
Leasehold improvement .................................... 47,604
Machinery and Equipment .................................. 619,785
Furniture and Fixtures ................................... 330,837
Less: accumulated depreciation ........................... (1,013,462)
------------
NET PROPERTY AND EQUIPMENT .................................. 7,452,365
OTHER ASSETS
Investment securities at cost ............................ 466,559
Notes receivable - net of current ........................ 36,000
Investments - other ...................................... 227,681
Deposits ................................................. 41,728
Trade credits ............................................ 193,180
- ------------------------------------------------------------- ------------
TOTAL OTHER ASSETS .......................................... 965,148
TOTAL ASSETS ................................................ $ 10,063,487
============
F-2
See notes to consolidated unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEETS(Continued)
March 31, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
<S> <C>
Accounts payable - trade .................................. $ 407,287
Accounts payable - related parties ........................ 61,974
Accrued liabilities
Interest ................................................ 44,504
Real estate taxes and assessments ....................... 373,098
Payroll and related taxes payable ....................... 141,056
EPA liabilities ......................................... 325,398
Refundable deposits ..................................... 32,556
Refund to investors ..................................... 122,117
Other ................................................... 216,453
Debenture payable ......................................... 280,000
Current maturities of long-term debt ...................... 1,401,764
Current maturities of capitalized lease ................... 20,106
------------
TOTAL CURRENT LIABILITIES .................................... 3,426,313
LONG-TERM LIABILITIES
Long-term debt, less current portion ...................... 3,141,979
Long-term capitalized lease, less current portion ......... 352,671
TOTAL LONG-TERM LIABILITIES .................................. 3,494,650
CONTINGENCIES ................................................ --
MINORITY INTEREST ............................................ 322,991
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; 9,780,649 shares issued .............. 9,781
Additional paid-in capital ................................ 14,116,706
Accumulated deficit ....................................... (10,764,143)
Unrealized loss from securities available for sale ........ (542,811)
------------
TOTAL SHAREHOLDERS' EQUITY ................................... 2,819,533
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................... $ 10,063,487
============
F-3
See notes to consolidated unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For The Three Months Ended March 31, 1997 and 1996
1997 1996
--------------- ---------
REVENUE
<S> <C> <C>
Consulting revenue ............................. $ 84,632 $ 765,628
Rental revenue ................................. 143,980 105,218
Other revenue .................................. -- 59,792
---------- ----------
TOTAL REVENUE ..................................... 228,612 930,638
COSTS OF REVENUE
Costs associated with consulting revenue ....... 44,265 342,162
Costs associated with rental revenue ........... 91,986 102,337
Interest expenses associated with rental revenue 45,916 27,482
Costs associated with other revenue ............ -- 40,247
----------- ----------
TOTAL COSTS OF REVENUE ............................ 182,167 512,228
----------- ----------
GROSS PROFIT ...................................... 46,445 418,410
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ...... 445,367 336,379
Computer development costs ..................... 121,720 --
Environmental cleanup .......................... -- 20,000
----------- ----------
TOTAL SELLING, GENERAL AND ADMINISTRATIVE ......... 567,087 356,379
OPERATING INCOME (LOSS) ........................... (520,642) 62,031
----------- ----------
OTHER INCOME (EXPENSE):
Interest income ................................ -- 554
Interest expense ............................... (78,004) (44,377)
Gain (loss) from investment securities ......... (59,309) 116,873
Other income (expense) ......................... (17.960) 20,388
----------- ----------
TOTAL OTHER INCOME (EXPENSES) ..................... (155,273) 93,438
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES,
EXTRAORDINARY ITEMS, AND MINORITY INTEREST ....... (675,915) 155,469
MINORITY INTEREST IN LOSS ......................... 24,932 18,536
----------- ----------
NET INCOME (LOSS) ................................. $ (650,983) $ 174,005
=========== ==========
INCOME (LOSS) PER COMMON SHARE
Income before minority interest ................ $ (.07) $ .03
Minority interest in loss ...................... .00 .00
----------- ----------
Net income (loss) per weighted average
common share outstanding ..................... $ (.07) $ .03
=========== ==========
Weighted average number of common
shares outstanding ........................... 9,746,712 5,902,546
=========== ==========
F-4
See notes to consolidated unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
For The Three Months Ended March 31, 1997
Net
Unrealized loss Total
Common Stock Paid-in On securities Shareholders'
Shares Amount Capital Deficit Available for Sale Equity
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1996 .................. $ 9,484,557 $ 9,485 $ 14,058,256 $(10,113,160) $(606,234) $3,348,347
Common Stock Activity:
Issued for services .......................... 130,162 130 35,136 -- -- 35,266
Issued for debts ............................. 65,930 66 8,414 -- -- 8,480
Issued for assets ............................ 100,000 100 14,900 -- -- 15,000
Realized loss on securities available for sale -- -- -- -- 63,423 63,423
Net loss for the period ended March 31, 1997 . -- -- -- (650,983) -- (650,983)
---------------- ------------ ----------- ------------- --------- ---------
BALANCES AT MARCH 31, 1997 ..................... $ 9,780,649 $ 9,781 $ 14,116,706 $(10,764,143) $ (542,811) $2,819,533
F-5
See notes to consolidated unaudited condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For Three Months Ended March 31, 1997 and 1996
1997 1996
-----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) .............................. $ (650,983) $ 174,005
Adjustments to reconcile net income (loss)
to net cash provided
(Gain) loss from sale of investments ......... 59,309 (116,873)
Minority interest in loss .................... (24,973) (18,536)
Depreciation and Amortization ................ 50,043 54,337
Services paid with common stock .............. 35,266 30,611
Common stock issued for assets and debt ...... 23,480 --
Decrease (increase) in assets:
Receivables ................................ 632,458 (504,234)
Inventories ................................ -- 36,371
Prepaid expenses and other ................. (16,589) 16,218
Investments - other ........................ 27,972 (22,980)
Increase (decrease) in liabilities:
Accounts and notes payable ................. 91,283 513,351
Accrued liabilities ........................ (7,596) 44,706
Deferred income ............................ -- (5,991)
-----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES . $ 219,670 $ 200,985
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ......................... (719,211) (1,143,184)
Proceeds from sales of investments ........... 179,673 194,187
Minority interest in subsidiary .............. -- 825,000
----------- -----------
NET CASH FLOWS (USED) IN INVESTING ACTIVITIES .... $ (539,538) $ (123,997)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long term debt .................... 627,413 --
Reduction of long term debt ................... (358,701) (65,237)
- -------------------------------------------------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........ $ 268,712 $ (65,237)
----------- -----------
INCREASE (DECREASE) IN CASH ...................... $ (51,156) $ 11,751
CASH AT BEGINNING OF YEAR ........................ 78,368 18,605
-----------
CASH AT END OF YEAR .............................. $ 27,212 $ 30,356
=========== ===========
F-6
See notes to consolidated unaudited condensed financial statements.
</TABLE>
<PAGE>
CYBERAMERICA CORPORATION
(FORMERLY KNOWN AS THE CANTON INDUSTRIAL CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 on Form 10-KSB for the fiscal year
ended December 31, 1996. These statements do include all normal recurring
adjustments which the Company believes necessary for a fair presentation of the
statements. The interim operations results are not necessarily indicative of the
results for the full year ended December 31, 1997.
2. Refund to Investors
During the second and third quarter of 1996, CyberConnect, Inc. ("CC")
and CyberDimensions, Inc. ("CD"), both majority owned subsidiaries of the
Company, conducted offerings of their common stock in the amount of $269,704.
The Company later became aware that these offerings might have been conducted
outside the requirements of the offerings. As a result, CC and CD began to
rescind the offerings starting fourth quarter of 1996 and agreed to refund the
investments made by the shareholders by January 15, 1997; however, due to cash
shortages, CC and CD were unable to repay each individual investor in full. CC
and CD then agreed to refund 10% of the investments plus accrued interest to
each investor every 45 days until the debts are paid in full. As of March 31,
1997, CC and CD were indebted to their investors in the amount of $122,117.
3. Termination of the business of CyberMalls, Inc.
CyberMalls, Inc., a Nevada corporation, was incorporated by the Company
on February 15, 1996, for the purpose of preparing, developing, and marketing
Internet virtual malls. On February 25, 1997, the Company decided to permanently
discontinue the operations of CyberMalls. Please see the Company's Form 10-KSB
for the fiscal year ended December 31, 1996 for more detail on this decision.
The Company recorded a loss of $121,720 on its financial statements for the
quarter ended March 31, 1997 to account for its investment in CyberMalls.
4. Reacquisition of Ownership in Certain Subsidiaries
On February 19, 1997, the Company reacquired stock ownership in its
majority-owned subsidiaries, including 294,000 shares of common stock in
Canton's Commercial Carpet Corporation, 294,000 shares in Canton Industrial
Properties Management Corporation of Salt Lake City, and 475,750 shares in
Canton Industrial Corporation of Salt Lake City, from an unaffiliated
corporation. The Company also acquired 57,250 shares in Oasis International
Hotel & Casino I, Inc., an affiliate of the Company. In exchange for the stock
ownership in the subsidiaries and the affiliate, the Company transferred
investment securities in another entity that it had owned to the unaffiliated
corporation.
5. Additional footnotes included by reference
Except as indicated in Notes 1-5 above, there have been no other
material changes in the information disclosed in the notes to the financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996. Therefore, those footnotes are included herein by
reference.
F-7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has two main divisions of operations. Through its wholly
owned subsidiaries Canton Financial Services Corporation and Hudson Consulting
Group, Inc., the Company provides a variety of financial consulting services to
various clients. These services primarily involve assisting clients in the
preparation of corporate documentation including private placement offering
documentation, corporate business plans and paperwork necessary to effect
mergers and acquisitions. The remainder of the Company's operations involve the
acquisition, management, lease and sale of real estate holdings. During the
first quarter the Company discontinued the operations of a third business
division related to the development and sale of Internet virtual malls. For more
information on this division and its discontinuation, see the Company's Form
10-KSB for fiscal year ended December 31, 1996.
Financial Consulting
The Company's consulting subsidiaries generate revenues through
consulting fees payable in the client's equity, cash, other assets or some
combination of the three. The primary form of compensation received is the
equity securities of clients. When payment is made in the form of equity, the
number of shares to be paid is dependent upon the price of the client's common
stock (if such price is available) and the extent of consulting services to be
provided. The typical value used to determine the number of shares to be paid is
one-half of the stock's bid price, which accounts for the fact that most of the
equity received as payment by the Company is restricted as to resale. The
Company accepts equity with the expectation that its services will assist in the
stock's appreciation, thus allowing the Company to be compensated and to make a
return on the payments for its services.
Revenues from the Company's financial consulting operations decreased
during the quarter ended March 31, 1997. The Company recorded quarterly revenues
of $84,632 from its financial consulting operations as compared to $765,628 for
the same period of 1996. This substantial decline was largely attributable to
the cancellation of consulting contracts by several of the Company's clients
during the first quarter and the Company's decision to focus its operations
primarily on real estate activities during the quarter.
One of the services rendered by the Company's financial consulting
subsidiaries involves assisting corporations in effecting stock offerings
pursuant to certain statutory exemptions. Such offerings require strict
adherence to the statutory exemptions upon which the offerings are premised. The
Company notifies its clients of the restrictions and provisions specified in the
exemptions and relies upon the clients to ensure compliance with the exemptions.
Because the Company cannot control the actions of its clients, it is possible
that in the event an offering is conducted outside the requirements of
appropriate exemptions, the Company could be included in claims by investors.
CyberConnect, Inc. ("CC") and CyberDimensions, Inc. ("CD") are majority owned
subsidiaries of the Company that conducted offerings of their common stock
during the second and third quarters of 1996. The Company has become aware that
problems may exist with the manner of these offerings which may require the
rescission of the entire offerings. CC and CD have begun to rescind these
offerings and are in the process of refunding investments made by shareholders
pursuant to these offerings. Approximately $122,117 remained to be paid to those
investors as of March 31, 1997.
The Company has made limited advancements to CC and CD, which are no
longer operating entities, to help those subsidiaries rescind their previously
conducted offerings and settle any potential claims which the shareholders of CC
and CD may have against those companies. It will continue to assist these
subsidiaries to the extent that it has the cash resources to do so. In addition,
the Company has engaged a consultant to assist in refunding investments to CC's
and CD's shareholders. To facilitate this process, the Company transferred
$68,988 in investment securities to the consultant for purposes of settling
potential claims. If a determination is made that the offerings were conducted
outside the parameters of the appropriate offering exemptions, CC and CD could
face potential liability. A possibility exists that the Company could be obliged
to cover such shortfalls if CC and CD cannot cover the expenses.
This potential uncertainty could have a material effect upon the Company's
liquidity.
<PAGE>
Real Estate Holdings
The Company owns and manages properties in Utah, Nevada, West Virginia,
Virginia, Florida, Illinois, and Arizona. The Company's goal has been to locate
and acquire undervalued real estate with little or no cash expenditure. The
Company looks for property that can be purchased by assuming the existing
financing or by paying the balance of the purchase price with nominal cash
expenditures and/or the issuance of shares of the Company's common stock. The
amount the Company is willing to pay for a property is determined by management.
The criteria for purchasing properties are broad and management's determination
of value and the terms of financing are the main factors weighed by management
in making a decision to invest in a property.
The Company leases its properties to commercial tenants and applies the
rental income toward its fixed obligations on the properties. Currently, there
are insufficient rental revenues to cover the debt service and other expenses
related to the Company's real estate operations, and the Company therefore has
to use capital from other sources to fund this deficit. The deficit has been
primarily attributable to the Company's recent investments in raw land and
vacancies in the Company's commercial properties. The Company seeks to decrease
vacancies in its commercial properties to eliminate losses from real estate
operations. However, the Company's primary objective is to acquire real estate
which will substantially appreciate in value and for which the Company can
realize a substantial gain upon disposition. Accordingly, the Company has
continued to invest in real estate holdings despite negative cash flows.
The Company recorded rental revenues of $143,980 from its real estate
operations for the first quarter as compared to $105,218 for the same period of
1996. This was largely due to an increase in the number of properties and
decrease in the percentage of vacancies in those properties.
During the first quarter of 1997, two subsidiaries of the Company
executed separate contracts to sell commercial real estate holdings to
unaffiliated purchasers. In February 1997, TAC Inc., a consolidated subsidiary
of the Company, executed a contract to sell its 60,000 square foot commercial
warehouse located at 5280 West Wells Park Road in West Jordan, Utah. On May 1,
1997 and subsequent to the end of the first quarter, TAC closed on the sale of
the warehouse. TAC sold the warehouse for $1.335 million, $200,000 of which was
paid in cash and the remainder of which will be seller financed for a period of
90 days after closing. TAC previously acquired the warehouse in June 1996
through its exercise of an option to purchase the property by paying $293,394 in
cash and assuming a mortgage of $306,456. For more information on the TAC
Warehouse see the Company's Form 10-KSB for the fiscal year ended December 31,
1996.
In January 1997, Canton Industrial Properties Management Corporation of
Salt Lake City ("CIPMC"), a consolidated subsidiary of the Company, executed a
contract to sell its 18,000 square office building located at 202 West 400
South, Salt Lake City, Utah. The sale price of the property under the contract,
as amended, is $950,000 which is to be delivered in cash at the July 10, 1997
closing date. Pursuant to the contract, the purchaser loaned $150,000 to CIPMC,
interest-free, until closing. The sale is subject to the completion of due
diligence by the purchaser and no earnest money was paid. For more information
on this property see the Company's Form 10-KSB for the fiscal year ended
December 31, 1996.
On May 9, 1997 and subsequent to the end of the first quarter, Oasis
International Hotel & Casino, Inc. and Oasis International Corporation, both
wholly owned subsidiaries of the Company, executed a real estate purchase
agreement for the sale of real property located in Oasis, Nevada. The agreement
was executed with Cimarron Enterprises, Inc., an unaffiliated purchaser. The
Oasis property consists of 49.96 acres and all improvements thereupon including
a service station and a small retail and food service operation. The total
purchase price of the property is $1,250,000 to be paid in cash at the time of
closing. Closing is scheduled for August 7, 1997 and may be extended for an
additional 90 days. Cimarron is required to make a deposit of $85,000, none of
which shall be at risk for the first 90 days. After the first 90 days, the
deposit shall become non-refundable incrementally and shall be 100%
non-refundable 60 days after August 7, 1997. The transaction is contingent upon
the purchaser's completion of a due diligence investigation.
<PAGE>
The agreement also provides that Cimarron will be granted options to
purchase a total of 1,076 additional acres of nearby real estate for a minimum
of $25,000 per acre through December 1999 with a potential for extension of the
option date through December 2001. The options contain a provision that 160
acres of such property may be purchased at $10,000 per acre if such property is
designated for development of a golf course. These options are effective only
after the sale of the initial 49.96 acres is closed. All of the property subject
to the sales agreement and the options is presently on the books of the
Company's two subsidiaries for an aggregate of $1,682,535. For more information
on the Oasis property see the Company's Form 10-KSB for the fiscal year ended
December 31, 1996.
The Company executed these transactions because the aforementioned
properties had appreciated significantly since they were acquired by the
Company's subsidiaries, and the Company believed that the prices offered by
potential purchasers represented the high end of the market value for each
property. As discussed above, the Company is generally compensated for its
consulting services through the issuance of its clients' equity, much of which
is restricted as to resale. The Company therefore experiences occasional cash
flow shortages and needs to raise capital to meet the debt obligations on its
properties. While the Company generally does not sell real estate holdings to
meet these needs, it believed that these transactions were in the Company's best
interest based upon current real estate market conditions. Accordingly, it chose
to use a portion of the proceeds generated from the sale of the properties to
meet short term obligations in lieu of obtaining financing. The Company does not
intend to rely upon sales of real estate holdings to meet future cash needs but
will instead likely satisfy its cash requirements with debt or equity financing
in addition to its cash flow from operations.
The Company intends to sell further real estate holdings on a case by
case basis provided that it believes that local market conditions make such
sales in the best interest of the Company and its subsidiaries. At the same
time, the Company is continually searching for additional properties which
management believes have appreciation potential.
During the first quarter of 1997, two subsidiaries of the Company
acquired either title to, or the right to acquire title to, substantial amounts
of undeveloped land in Box Elder County, Utah. In February 1997, Diversified
Land and Cattle Corporation, a Nevada corporation and wholly owned subsidiary of
the Company ("DLCC"), acquired 1,280 acres for a total purchase price of
$104,200. DLCC paid $10,560 at closing with the remainder represented by a
$89,612 trust deed note executed in favor of the seller and two additional notes
of $2,084. Also in February 1997, DLCC acquired an additional 2,240 acres for a
total purchase price of $156,800. DLCC paid $15,755 at closing for this latter
property with the remainder represented by a $127,080 trust deed note executed
in favor of the seller and two additional notes of $7,060.
In March 1997, Canton Properties I, Inc., a Utah corporation and wholly
owned subsidiary of the Company ("CPI"), executed an agreement pursuant to which
it acquired an option to purchase approximately 45,000 acres of additional
undeveloped land in Box Elder County, Utah at a price of $41 per acre. Included
in the option were all of the oil, gas and other mineral rights to the property.
As consideration for the option, CPI agreed to pay $3,000 upon the execution of
the agreement, an additional $10,000 within one month of the execution and ten
monthly instalments of $3,000. The Company acquired this raw land with the
intention of either developing such property or selling to a developer
interested in improving the land or extracting the land's natural resources.
Results of Operations
Gross revenues for the quarter ended March 31, 1997 were $228,612
compared to $930,638 for the same period in 1996, a decline of 75%. This
dramatic decrease is attributable to the decline in consulting revenues, which
were $84,632 during the first quarter of 1997 compared to $756,628 for the same
period in 1996. Rental revenue, on the other hand, improved by 37% from $105,218
during the quarter ended March 31, 1996 to $143,980 for the comparable period in
1997.
Costs of revenues were $182,167 for the first quarter of 1997 compared
to $512,228 for the quarter ended March 31, 1996. The decrease in the costs of
revenues is primarily due to the fact that the Company significantly reduced
personnel providing consulting services during the fourth quarter of 1996.
Gross profit was $46,445 for the first three months of 1997 and
$418,410 for the quarter ended March 31, 1996. Gross profit as a percentage of
revenues was 20% and 45%. This deterioration is primarily attributable to the
Company's salary expenses incurred for its consulting services division, which
remained relatively fixed despite the drop in its consulting revenue.
<PAGE>
Selling, general, and administrative expenses were $567,087 for the
first quarter of 1997 and $356,379 for the period ending March 31, 1996. During
the first three months of 1997, the Company incurred computer development costs
associated with CyberMalls' operations in the amount of $121,720 and salary
expenses in the amount of $177,058. In addition, consulting, depreciation and
amortization, and building lease expenses collectively accounted for $193,556.
Operating loss was $520,642 during the first quarter of 1997 compared
to an operating gain of $89,513 for the three months ending March 31, 1996. The
deterioration is the result of significantly lower revenues combined with a high
level of selling, general, and administrative expenses. The Company is presently
working to reduce selling, general, and administrative expenses.
During the quarter ended March 31, 1996, the Company realized other
income in the amount of $65,956; however, during the same period in 1997, the
Company incurred other expenses in the amount of $155,273. The major difference
is in the gain (loss) from investment securities account. The Company recognized
$116,873 in gain from investment securities during the first quarter of 1996
compared to $59,309 in loss from investment securities in 1997. The primary
factor behind this loss is the fact that some of Company's equity investments
were sold during the first quarter of 1997 for substantial losses.
Capital Resources and Liquidity
The Company had a net working capital deficiency of $1,780,339 as of
March 31, 1997, compared to $924,310 at the end of March 1996. The main reason
behind this increase in deficiency is the fact that the Company has three
mortgage payables totaling $1,055,770 maturing within a year. The Company is
currently working on refinancing these mortgages with long-term loans.
Net stockholders' equity in the Company was $3,575,430 at the end of
March 1996 compared to $2,819,533 at the end of March 1997. The major factor
behind the decrease is the net loss between April 1, 1996 and March 31, 1997 in
the amount of $2,874,401. This loss was partially mitigated by the increase in
common stock and additional paid in capital through the issuance of stock for
debt, assets, services, and cash during the same period.
PART II
ITEM 1. LEGAL PROCEEDINGS
CyberAmerica Corporation vs. MJMC, Inc., Lanco International, Inc. and
Mi-Jack Products, Inc. - Suit was filed by the Company in the United States
District Court, Central District of Utah, Civil Case Number 2:95 CV 651S on July
14, 1995. The Utah court dismissed the case based upon jurisdictional issues. A
suit seeking the same recovery was filed on January 10, 1997 in the Circuit
Court of Cook County, Law Division as file no. 97L 000369. The claim is based
upon Canton Tire Recycling Corporation's contractual relationship related to the
lease of tire shredding equipment from the defendants which the Company believes
did not perform according to the warranties and representations made by the
defendants at the time. Canton Tire was a wholly owned subsidiary of the Company
which assigned its cause of action to the Company in July of 1995. The complaint
seeks damages for (1) breach of contract, (2) intentional misrepresentation, (3)
negligent misrepresentation, (4) breach of express warranty and (5) breach of
implied warranty. The Company is seeking damages in an amount of not less than
$1 million. Defendant has filed a motion to dismiss and memorandum in support
thereof and the Company's response is due May 28, 1997.
Canton Financial Services Corporation v. Pacific Stock Transfer
Company. Suit has been filed by CFSC against Pacific Stock Transfer in the
District Court of Clark County, Nevada, Case Number A365081. CFSC seeks to
secure the lifting of the restrictive legend on 325,214 shares of stock in Air
Vegas Enterprises, Inc. Pacific has responded contending that the shares were
previously canceled by the unilateral action of the board of directors of Air
Vegas. CFSC seeks relief under ss.104.8403(2) of the Nevada statutes and all
fees and costs incurred in the suit. Local counsel has been retained in Las
Vegas and a motion for summary judgment has been prepared for submission to the
trial court.
<PAGE>
Canton Financial Services Corporation v. The Renno Group, Inc. Suit has
been filed by CFSC in the United States District Court for the Middle District
of Florida, Tampa Division, Case Number 96-2367-CIV-T-24-E. CFSC seeks recovery
of funds and stock due to CFSC pursuant to the terms of a consulting agreement
between the parties. The agreement sought the services of CFSC in the merger of
a third party with an existing corporation. This merger was completed and Renno
refused to convey to CFSC the $15,000 cash and 355,029 shares of the common
stock of Network Systems International, Inc. the surviving corporation after the
merger, as required under the agreement. Shares in Network were trading at $1.25
a share on March 5, 1997. Pre-trial mediation ordered by the trial court
resulted in an award to CFSC in the amount of $192,500, but Renno has requested
that this award be set aside and that a trial on the merits be conducted.
Renno's request has been granted and pre-trial discovery is proceeding.
CyberAmerica Corporation v. Steven A. Christensen. This action was
filed by the company on April 7, 1997 in the United States District Court of
Utah, Central Division as Case Number 2:97 CV 0258J. This action seeks the
recovery of $13,123.22 in short swing profits realized by Christensen in sales
of the companies stock within six months of leaving his position as President of
the Company. After service, Christensen filed a counterclaim seeking $250,000 in
damages and unpaid compensation. The company intends to contest the claim and
seek recovery of the short swing profits under ss.16b of the Exchange Act.
ITEM 5. OTHER INFORMATION
In January 1997, the Company accepted the resignation of Susan Waldrop
as its secretary-treasurer and chief financial officer. Ms. Waldrop resigned for
personal reasons and did not express any disagreements with the management or
policies of the Company at the time of her resignation.
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 9 of this Form 10-QSB, and
are incorporated herein by this reference.
(b) Reports on Form 8-K. On March 12, 1997, the Company filed a Form 8-K
disclosing its decision to discontinue the operations of its wholly
owned subsidiary CyberMalls, Inc.
<PAGE>
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 20TH day of May 1997.
CYBERAMERICA CORPORATION
/s/ Richard Surber May 20, 1997
------------------
Richard Surber
President, Chief Executive Officer and Director
/s/ Wayne Newton May 20, 1997
----------------
Wayne Newton
Controller
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. PAGE NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company (note
that these were amended by the Articles of
Merger constituting Exhibit 2 to this Form
10-KSB). (Incorporated herein by reference
from Exhibit No. 3(i) to the Company's Form
10-KSB for the year ended December 31, 1993).
3(ii) * By-Laws of the Company, as amended.
(Incorporated herein by reference from Exhibit
3(ii) of the Company's Form 10 KSB for the
year ended December 31, 1995.) MATERIAL
CONTRACTS
10(i)(a) * Real Estate Purchase Contract dated January
28, 1997, between the Company and Durband
Properties, LC. (Incorporated herein by
reference from Exhibit No 10(i)(a) to the
Company's Form 10 KSB for the year ended
December 31, 1996.
10(i)(b) * Real Estate Purchase Agreement, dated February
7, 1997, between the Company and ANA
Development, LC. (Incorporated herein by
reference from Exhibit No. 10(i)(b) to the
Company's Form 10 KSB for the year ended
December 31, 1996.
10(i)(c) 10 Option Agreement, dated March 25, 1997,
between Canton Properties, a Nevada
corporation and one of the Company's wholly
owned subsidiaries and Chournos Land &
Livestock.
10(i)(d) 19 Real Estate Purchase Agreement dated May 9,
1997, between the Company's wholly owned
subsidiary Oasis International Hotel & Casino,
a Nevada corporation and Cimarron Enterprises,
Inc.
OPTION
KNOW ALL MEN BY THESE PRESENTS:
That Chournos Land & Livestock, a Utah Limited Partnership of Roy,
Utah, hereinafter referred to as "Seller", hereby agrees for an in consideration
of SEE ATTACHED PAYMENT SCHEDULE paid by Canton Properties, or its assignee of
Salt Lake City, Utah, hereinafter referred to as "Buyer", as follows:
1.PROPERTY: Seller hereby gives and grants to Buyer and to his heirs
and assigns for a period of 12 months from the date hereof, hereinafter referred
to as "First Option Period", the exclusive right and privilege of purchasing the
following described real property located at See Exhibit A-1, A-2, A-3, A-4, A-5
- - 0, County of Box Elder, State pf Utah, and more ,articularly described as
follows SEE EXHIBIT - A-1, A-2, A-3, A-4, A-5
This exhibit contains approximately 47,000 acres. There is actually
three sections that should not be included.
Together with all of the oil, gas and other mineral rights now owned in an
under, and that may be produced from, the property, together with the right of
ingress and egress at all times exploring, drilling, operating, producing,
staving, storing, treating, transporting and owning the same. Together with all
water rights appurtenant thereto or used in conjunction therewith. (Said real
property and improvements, if any, shall hereinafter be referred to as "The
Property")
2. PRICE. The total purchase price for said property is Forty one
dollars per acre ($41.00/acre) Dollars, payable in lawful money of the United
States, strictly within the following times, to-wit. All sums paid for this
option and any extension thereof as herein provided, shall be first applied on
the purchase price, and the balance shall be paid as follows:
THE ACTUAL NUMBER OF ACRES WILL BE DETERMINED AT CLOSING. THERE IS
APPROXIMATELY FORTY FIVE THOUSAND ACRES. THE OPTION PERIOD WILL END AT 12
O'CLOCK MID-DAY (noon)) MARCH 25, 1995. THERE ARE NO EXTENSIONS. THE
BALANCE OF THE PURCHASE WILL BE PAID IN CASH ON THE DATE OF CLOSING.
3. EXTENSION OF OPTION. Upon payment by Buyer to Seller of an
additional sum of NONE Dollars, cash or by cashier's check prior to the
expiration of the first option period, this option shall be extended for NONE
months, hereinafter referred to as "Second Option Period". Upon Buyer's payment
to Seller of a further sum of _______$ Dollars, prior to the expiration of the
second option period, this shall be extended for a third period of NONE
additional months.
4. EXERCISE OF OPTION. This option shall be exercised by written notice to
Seller on or before the expiration of the first option period, or if extended,
the expiration of the second or third option periods as the case may be. Notice
to exercise this option or to extend the option for a second or third option
period, whether personally delivered or mailed to Seller at his address as
indicated after Seller's signature hereto, by registered or certified mail,
postage prepaid, and postmarked on or before such date of expiration, shall be
timely and shall be deemed actual notice to Seller.
5. EVIDENCE OF TITLE.
(a) Promptly after the execution of this option, Seller shall deliver
to Buyer for examination such abstracts of title, title policies, and other
evidences of title as the Seller may have. In the event this option is not
exercised by Buyer, al such evidences of title shall be immediately returned
without expense to Seller.
(b) In the event this option is excersided as herein provided, Seller
agrees to pay all abstracting expense or at Seller's option to furnish a policy
of title insurance in the name of the Buyer.
(c) If an examination of the title should reveal defects in the title,
Buyer shall notify Seller in writing thereof, and Seller agrees to forthwith
take all reasonable action to clear the title. If the Seller does not clear
title within a reasonable time, Buyer may do so at Seller's expense. Seller
agrees to make final conveyance by Warranty Deed or Warranty Deed in the event
of sale of other that real property. If either party fails to perform the
provisions of this agreement, the party at fault agrees to pay all costs of
enforcing this agreement, or any right arising out of the breach thereof,
including reasonable Attorney's fee.
<PAGE>
6. CLOSING ADJUSTMENTS. All risk of loss and destruction of property and
expenses of insurance shall be borne by Seller until date of possession/. At
time of closing of sale, property taxes, rents, insurances, interest and other
expenses of property shall be prorated as date of possession. All other taxes,
including documentary taxes, and all assessments mortgage liens and other liens,
encumbrances or charges against the property of any nature, shall be paid by
Seller except. The seller is not responsible for any roll-back tax because of
the GREEN BELT AMENDMENT.
7. POSSESSION. Seller agrees to surrender possession of the property on or
before on the date of closing following written notice of the exercising of this
option by Buyer.
8. The Seller recognizes Palmer & Associates Real Estate Company (Broker and
Agent) through its salesman Richard M. Palmer as the Real Estate Broker with
whom Seller listed this property for sale, and Seller agrees to pay a commission
to said Broker equal to one % of the gross sale price, and Seller hereby
authorizes the agent to withhold such commission from the proceeds of sale at
time of closing/
9. If this option be not exercised on or before the dates specified herein for
exercise of same, the option shall expire of its own force and effect and the
Seller may retain such option monies as have been paid to the Seller as full
consideration for the granting of this option.
IN WITNESS WHEREOF, the Seller hereunto has set his name this 25 day of
March 1998.
SIGNED IN PRESENCE OF:
_______________________ /s/BonnieJean E. Tippetts
Buyer
/s/Chournos Land & Livestock
by Helen Chournos Harper, General Partner
Seller
Address of Seller 5425 South 3675 West
Roy, Utah 84067
<PAGE>
OPTION PAYMENT SCHEDULE
This option payment schedule is part of the option agreement between Chournos
Land & Livestock and Canton Properties dated March 25, 1997
All of the following option payments must be made by their respective due dates
as there is no grace period. The dollar amounts and the due dates are as
follows:
1. $3,000.00 (three thousand dollars) due upon signing this option
agreement
2. $50,000.00 (fifty thousand dollars) due on or before April 20, 1997.
3. $3,000.00 (three thousand dollars) due on or before June 1, 1997.
4. $3,000.00 (three thousand dollars) due on or before July 1, 1997.
5. $3,000.00 (three thousand dollars) due on or before August 1, 1997.
6. $3,000.00 (three thousand dollars) due on or before September 1, 1997.
7. $3,000.00 (three thousand dollars) due on or before October 1, 1997.
8. $3,000.00 (three thousand dollars) due on or before November 1, 1997.
9. $3,000.00 (three thousand dollars) due on or before December 1, 1997.
10. $3,000.00 (three thousand dollars) due on or before January 1, 1998.
11. $3,000.00 (three thousand dollars) due on or before February 1, 1998.
12. $3,000.00 (three thousand dollars) due on or before March 1, 1998.
This option will expire on noon (twelve o'clock mid-day) March 25, 1998 if all
payments are received on time. If the payments are not received on time, this
option will terminate at midnight (twelve o'clock evening) on their respective
due date. The option payments must be received at the seller's address by their
due date.
This agreement may be recorded. If the payments are not received on time, a
notice of default will be recorded by the seller, whereas this agreement will no
longer be in force. If this option is assigned to another party, the seller must
be notified within 24 hours.
TIME IS OF THE ESSENCE
/s/ BonnieJean C. Tippetts Chournos Land & Livestock
Buyer /s/ Helen Chournos Harper, General Partner
Seller
3-25-97 3-25-97
Date Date
<PAGE>
EXHIBIT A-1
LEGAL DESCRIPTION AND THE ACREAGE CONTAINED IN THIS EXHIBIT IS DEEMED RELIABLE
BUT IS NOT GUARANTEED. THE ACTUAL ACREAGE ILL BE DETERMINED BY PRELIMINARY TITLE
REPORT.
TOWNSHIP 7 NORTH, RANGE 17 WEST
SECTION 1 ALL
SECTION 3 ALL
SECTION 11 ALL
SECTION 1 ALL NORTH OF RAILROAD
SECTION 1 ALL NORTH OF RAILROAD
TOWNSHIP 8 NORTH, RANGE 15 WEST
SECTION 6 ALL
TOWNSHIP 8 NORTH, RANGE 16 WEST
SECTION 1 ALL
SECTION 3 ALL
SECTION 5 ALL
SECTION 7 ALL
SECTION 9 ALL
SECTION 11 ALL
SECTION 13 ALL
SECTION 15 ALL
SECTION 17 ALL
<PAGE>
EXHIBIT A-2
TOWNSHIP 8 NORTH, RANGE 17 WEST
SECTION 1 ALL
SECTION 3 ALL
SECTION 6 N 1/2
SECTION 9 ALL
SECTION 11 ALL
SECTION 13 ALL
SECTION 15 ALL
SECTION 22 ALL
SECTION 23 ALL
SECTION 25 ALL
SECTION 27 ALL
SECTION 34 ALL
SECTION 35 ALL
TOWNSHIP 8 NORTH, RANGE 18 WEST
SECTION 1 N 1/2
TOWNSHIP 9 NORTH, RANGE 15 WEST
SECTION 5 ALL
SECTION 7 ALL
SECTION 8 ALL
SECTION 17 ALL
SECTION 19 ALL
SECTION 20 ALL
<PAGE>
EXHIBIT A-3
TOWNSHIP 9 NORTH, RANGE 15 WEST
SECTION 21 ALL
SECTION 29 N 1/2 NE 1/2; NW
SECTION 30 ALL
SECTION 31 ALL
TOWNSHIP 9 NORTH, RANGE 16 WEST
SECTION 1 ALL
SECTION 3 ALL
SECTION 9 ALL
SECTION 11 ALL
SECTION 13 ALL
SECTION 15 ALL
SECTION 17 ALL
SECTION 19 ALL
SECTION 21 ALL
SECTION 23 ALL
SECTION 25 ALL
SECTION 27 ALL
SECTION 29 ALL
SECTION 31 ALL
SECTION 33 ALL
SECTION 35 ALL
<PAGE>
EXHIBIT A-4
TOWNSHIP 9 NORTH, RANGE 17 WEST
SECTION 1 ALL
SECTION 3 N 1/2; SW 1/4
SECTION 5 ALL
SECTION 7 ALL
SECTION 9 ALL
SECTION 15 S 1/2; NW 1/4
SECTION 17 ALL
TOWNSHIP 9 NORTH, RANGE 17 WEST
SECTION 19 ALL
SECTION 21 ALL
SECTION 25 ALL
SECTION 29 ALL
SECTION 31 ALL
SECTION 35 ALL
TOWNSHIP 9, NORTH, RANGE 18 WEST
SECTION 1 ALL
SECTION 13 ALL
SECTION 25 ALL
TOWNSHIP 10 NORTH, RANGE 15 WEST
SECTION 18 S 1/2
SECTION 19 ALL
<PAGE>
EXHIBIT A-5
TOWNSHIP 10 NORTH, RANGE 15 WEST
SECTION 29 ALL
SECTION 30 ALL
SECTION 31 ALL
TOWNSHIP 10 NORTH, RANGE 16 WEST
SECTION 25 ALL
SECTION 26 S 1/2 SW 1/4
SECTION 34 S1/2SW 1
SECTION 35 S1/2; NE 1/4;
S1/2NW 1/4
REAL ESTATE PURCHASE AGREEMENT
PARTIES: Cimarron Enterprises, Inc. - Buyer, a Nevada Corporation with its
offices located at 26 Princeville Lane, Las Vegas, Nevada, 89113 or assignee.
Oasis International Hotel & Casino, Inc - Seller, a Nevada Corporation with its
offices located at 268 West 400 South, Suite 300, Salt Lake City, Utah 84101.
PROPERTY: Real property, including all improvements located thereon,
located at the Northeast corner of the intersection of I-80
and Nevada state Highway 233 in the county of Elko, State of
Nevada and commonly known as Oasis, consisting of 49.96 acres
more or less and more specifically described in the legal
description as attached hereto and labeled as Exhibit "A."
Unless excluded herein, this sale shall include all fixtures presently
attached to the Property: plumbing, heating, air-conditioning and venting
fixtures and equipment, water heater, built-in appliances, light fixtures and
bulbs, bathroom fixtures, curtains and draperies and rods, window and door
screens, storm doors, window blinds, awning, installed television antenna,
satellite dishes and systems, wall-to-wall carpets, fences, trees and shrubs,
inventory, trade fixtures, permits, and licenses. No items have been
specifically excluded from the sale of the Property. Buyer will grant to Seller
an easement for free access to Seller's property, the easement to be determined
during Buyer's due diligence period and is moveable at the mutual agreement of
the parties. Water rights granted by the sale are still to be determined and
agreed upon. Water rights shall be determined during Buyer's due diligence and
Seller agrees to full disclosure of all information in its possession and
control regarding water rights on the property.
Seller agrees to sell to Buyer and Buyer agrees to buy from Seller the
property as set forth above upon the following terms and conditions:
Deposit: $85,000 in cash to be deposited within 3 days of
acceptance hereof, the deposit to be with interest
and escrow opened with Stewart Title Company of Elko,
Nevada.
Price: Total purchase price shall be $1,250,000 for the
property as described herein above, to which the
deposit may be applied, the purchase price to be paid
in cash at the time of closing
DEPOSIT: Within 90 calendar days of this agreement, both parties shall deposit
with the above designated Escrow Holder, all funds and instruments necessary to
complete the sale in accordance with the terms hereof. Escrow fees to be paid by
Buyer. A one time 90 day extension of the closing date may be exercised by Buyer
not less than 10 days prior to first scheduled closing date. Upon the extension
of the closing date beyond the first 90 day period $30,000 of the deposit of
Buyer becomes non-refundable, after 30 days of the extension another $30,000 of
the deposit shall become non-refundable and after 60 days the remainder of the
deposit shall become non-refundable, prior to the times set forth above if Buyer
shall decide not to complete the purchase, for any reason, the remaining deposit
with interest shall be refunded to Buyer.
<PAGE>
CLOSING: This transaction shall be closed on or before 90 days from the date
hereof, or thereafter if extended by the terms of this Agreement. Closing shall
occur when: (a) Buyer and Seller have signed and delivered to the escrow/title
company all documents required by this Contract, by written escrow instructions
and by applicable law; and (b) the monies required to be paid under these
documents, have been delivered to the escrow/title company in the form of
cashier's check, collected or cleared funds. Seller and Buyer shall each pay
one-half (1/2) of the escrow Closing fees. Taxes and assessments for the current
year, rents, and interest on assumed obligations shall be prorated as set forth
in this Section. Unearned deposits on tenancies shall be transferred to Buyer at
Closing.Prorations set forth in this Section shall be made as of the date of
Closing.
POSSESSION: Seller shall deliver possession to Buyer upon closing.
BROKER & AGENTS: Seller has contracted with Oldham & Associates, Home Solution
and Connie Oldham and is responsible for payment of any commission to them as
its broker or agent. Buyer shall be responsible for any commissions to agents or
brokers that it has contracted with.
EVIDENCE OF TITLE: (a) Seller has, or shall have at Closing, fee title to the
Property and agrees to convey such title to Buyer by general warranty deed, free
of financial encumbrances as warranted herein; (b) Seller agrees to pay for and
furnish Buyer at Closing with a current standard form owner's policy of title
insurance in the amount of the Purchase Price; ( c) the title policy shall
conform with Seller's obligations under (a) and (b) above.
SELLER'S DISCLOSURES: Seller will deliver to Buyer the following Seller
Disclosures; (a) a commitment for the policy of title insurance to be issued by
the title company chosen by Seller, including copies of all documents listed as
Exceptions on the Commitment; (b) a copy of all loan documents relating to any
loan now existing which will encumber the Property after Closing; and ( c) a
copy of all leases affecting the Property not expiring prior to Closing, (d)
Seller also agrees to grant access to the engineers with information regarding
the water rights on the property and to instruct those engineers to provide
information, including copies of any relevant documents requested by Buyer, to
Buyer during the period from signing hereof to closing . Seller agrees to pay
any title commitment cancellation charges.
GENERAL CONTINGENCIES: Buyer's approval of the content of items referenced in
Seller's Disclosures and Buyer's inspection of the Property. Any inspection
shall be paid for by Buyer and shall be conducted by an individual/company of
Buyer's choice. Seller agrees to fully cooperate with such inspection and a
walk-though inspection of the Property as reasonably requested by the Buyer.
Buyer shall have 30 days after receipt of the content of Seller's
Disclosures to determine, if, in Buyer's sole discretion, the content of all
Seller Disclosures is acceptable.
<PAGE>
If Buyer does not deliver a written objection to Seller regarding a
Seller Disclosure or the Property Inspection within the time provided above,
that document or inspection will be deemed approved or waived by Buyer.
If Buyer objects, Buyer and Seller shall have 21 calendar days after
receipt of the objections to resolve Buyer's objections. Seller may, but shall
not be required to, resolve Buyer's objections. If Buyer's objections are not
resolved within the 21 calendar days, Buyer may void this Contract by providing
written notice to Seller within the same 21 calendar days. The Escrow/Title
Company, upon receipt of a copy of Buyer's written notice, shall return to Buyer
the Deposit without the requirement of any further written authorization from
Seller. If this contract is not voided by Buyer, Buyer's objection is deemed to
have been waived. However, this waiver does not affect any other matters
warranted by Seller.
CHANGES DURING TRANSACTION: Seller agrees that no changes in any existing leases
shall be made, no new leases entered into, and no substantial alterations or
improvements to the Property shall be made or undertaken without the written
consent of the Buyer.
AUTHORITY OF SIGNERS: The persons executing this Contact on behalf of the Buyer
and the Seller warrant that each has the authority to do so and to bind the
named Buyer and Seller corporations.
COMPLETE CONTRACT: This instrument together with its addenda, any attached
exhibits, and Disclosures constitute the entire Contract between the parties and
supersedes and replaces any and all prior negotiations, representations,
warranties, understandings, term sheets or contracts between the parties. This
Contract cannot be changed except by written agreement of the parties.
DISPUTE RESOLUTION: The parties agree that any dispute or claim relating to this
Contract, including but not limited to the disposition of the Deposit, the
breach or termination of this Contract, or the services related to this
transaction, shall first be submitted to mediation in accordance with the Rules
of the American Arbitration Association. Disputes shall include representations
made by the parties, any broker or other person or entity in connection with the
sale, purchase, financing, condition or other aspect of the Property to which
this Contract pertains, including without limitation, allegations of
concealment, misrepresentation, negligence and/or fraud. Each party agrees to
bear its own costs of mediation. Any agreement signed by the parties pursuant to
the mediation shall be binding. If mediation fails, the procedures applicable
and remedies available under this Contract shall apply. Nothing in this
paragraph shall prohibit any party from seeking emergency equitable relief
pending mediation. The parties agree that mediation under this paragraph is not
mandatory, but is optional upon agreement of all parties.
DEFAULT: If Buyer defaults, Seller may elect to either retain the Deposit as
liquidated damages or to return the Deposit and sue Buyer to enforce Seller's
rights. If Seller defaults, in addition to the return of the Deposit, Buyer may
elect to either accept from Seller as liquidated damages, a sum equal to the
Deposit, or to sue Seller for specific performance and/or damages. If Buyer
elects to accept the liquidated damages, Seller agrees to pay the liquidated
damages to Buyer upon demand. Where a section of this Contract provides a
specific remedy, the parties intend that the remedy shall be exclusive
regardless of rights which might otherwise be available under common law.
<PAGE>
ATTORNEY'S FEES: In any action arising out of this Contract, the prevailing
party shall be entitled to costs and reasonable attorney's fees.
APPLICABLE LAW AND VENUE DESIGNATION: The parties agree that the Law of the
State of Nevada shall apply to any issue arising under this Agreement and the
parties further agree and stipulate that the Courts located in the County of
Elko, Nevada have jurisdiction to hear and rule upon any dispute arising under
this Agreement.
ABROGATION: Except for express warranties made in this Contract, the provisions
of this Contract shall not apply after Closing.
RISK OF LOSS: All risk of loss or damage to the Property shall be borne by
Seller until Closing.
ADDITIONAL PROPERTY OPTION: Buyer is granted the right to purchase an additional
15 acres of real property contiguous to the property described in Exhibit "A"
hereto for a period of 12 months from the acceptance hereof at a price of
$25,000 per acre, to be paid in either cash or to be financed by the Seller at
8% per annum, monthly payments of principal and interest amortized over a 15
year period with the balance due in a balloon payment five years from the
exercise of the option.
At the closing of this transaction additional Options to Purchase Real
Estate, as set forth in detail in Exhibit "B" and Exhibit "C" as attached
hereto, shall be granted and delivered to Buyer hereunder.
TIME IS OF THE ESSENCE: Time is of the essence regarding the dates set forth in
this transaction. Extensions must be agreed to in writing and by all parties.
Performance under each section and paragraph of this Contract which references a
date shall be required absolutely by 5:00 p.m. Pacific Time on the stated date.
ZONING: The parties agree to cooperate in the zoning of any of the property,
including the development of a master plan for the area in support of any
application by either party for zoning change applications.
HEADINGS AND CAPTIONS: The headings or captions of paragraphs are included
solely for convenience. If a conflict exists between any heading or caption and
the text of this Agreement, the text shall control.
SEVERABILITY: If any of the terms or provisions of this Agreement are determined
to be invalid, such invalid term or provision shall not affect or impair the
remainder of this Agreement, but such remainder shall continue in full force and
effect to the same extent as though the invalid term or provision were not
contained herein.
<PAGE>
EXECUTION IN COUNTERPARTS: This Agreement may be executed in two or more
counterparts, each of which may be executed by one of the parties, with the same
force and effect as though all of the parties executing such counterparts have
executed but one instrument.
FACSIMILE (FAX) DOCUMENTS: Facsimile transmission of any signed original
document, and retransmission of any signed facsimile transmission, shall be the
same as delivery of an original.
SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, legal representatives,
successors and permitted assigns.
ACCEPTANCE: Acceptance occurs when Seller or Buyer, responding to any offer or
counteroffer, (if any) (a) signs the offer or counter where noted to indicate
acceptance; and (b) communicates to the other party or the other party's agent
that the offer or counteroffer has been signed as required.
BUYER'S SIGNATURE: /s/ Marvin G. Lipschultz
------------------------------
By: Marvin G. Lipschultz, President May 9, 1997
Print name and Title Date
SELLER'S SIGNATURE: /s/ Richard D. Surber
-------------------------------
By: Richard D. Surber, President May 9, 1997
Print name and Title Date
<PAGE>
EXHIBIT "A"
REAL PROPERTY DESCRIPTION
Real property located in the County of Elko, State of Nevada, described
as follows:
TRACT ONE:
A parcel of land located in Sections 2 and 3, T 36 N, R 66 E, MDB & M,
Elko County, Nevada, more particularly described as follows:
Beginning at the South 1/4 corner of said Section 2, a point begin
corner no. 1, the true point of beginning.
Thence N 88 56'46" W, 624.62 feet along the South line of said Section
2, to corner no. 2, a point being on the Northeasterly Right of Way of
Interstate Route 80,
thence N 49 01'38" W, 957.24 feet along the said Northeasterly Right
of Way of Interstate Route 80 to corner no. 3, a point being on the
East line of the SW1/4 of the SW1/4 of said Section 2,
thence N 02 47'03" W, 661.90 feet along the said East line the SW1/4
of the SW1/4 of Section 2 to corner no. 4, a point being the Northeast
corner of the said SW1/4 of the SW1/4 of Section 2,
thence N 89 26'47" W, 1041.89 feet along the North line of the said
SW1/4 of the SW1/4 of Section 2 to corner no. 5, a point on the said
Northeasterly Right of Way of Interstate Route 80,
thence from a tangent bearing N 45 17'44" W on a curve to the right
with a radius 4018.00 feet through a central angle of 02 50'36" for an
arc length of 199.39 feet along the said Northeasterly Right of Way of
Interstate Route 80 to corner no.6,
thence N 42 27'08" W, 233.99 feet along the said Northeasterly Right
of Way of Interstate Route 80 to corner no. 7, a point also being on
the West line of said Section 2,
thence N 02 59'54" W, 118.81 feet along the said West line of Section
2 to corner no. 8,
thence N 38 15'31" W, 268.12 feet to corner no. 9, a point also being
on the Southeasterly Right of Way of Nevada State Route 233,
<PAGE>
thence N 44 03'49" E, 624.37 feet along the said Southeasterly Right
of Way of Nevada State Route 233 to corner no. 10,
thence S 49 01'38" E, 3675.82 feet to corner no. 11, a point also
being on the South line of said Section 2,
thence N 88 58'42" W, 320.00 feet along the said South line of Section
2, to corner no. 1, the point of beginning, containing 43.50 acres
more or less.
TRACT TWO:
TOWNSHIP 36 NORTH, RANGE 66 EAST, MDB&M
Section 2: SW1/4SW1/4
EXCEPTING THEREFROM that portion of said land conveyed to the STATE OF
NEVADA by deed recorded July 18, 1950, in Book 58, Page 287, Deed
Records, Elko County, Nevada.
FURTHER EXCEPTING THEREFROM that portion of said land condemned to the
STATE OF NEVADA described in the Final Order of Condemnation recorded
December 13, 1973, in Book 188, Page 495, Official Records, Elko
County, Nevada.
<PAGE>
EXHIBIT "B"
OPTION TO PURCHASE REAL ESTATE
Contingent upon the closing of the real estate purchase set forth in
the Real Estate Purchase Agreement executed May 9, 1997 between Cimarron
Enterprises, Inc. and Oasis International Hotel & Casino, Inc., Oasis
International Corporation, a Nevada Corporation with office located at 268 West
400 South, Suite 300, Salt Lake City, Utah 84101 (hereinafter referred to as
"Optionor") grants to Cimarron Enterprises, Inc. a Nevada Corporation with
offices located at 26 Princeville Lane, Las Vegas, Nevada 89113 (hereinafter
referred to as "Optionee") an option to purchase real property situated in
Oasis, County of Elko, State of Nevada in an amount not to exceed 50 acres
located on the Northwest corner of I-80 and Nevada State Highway 233, the exact
boundaries of which are to be mutually agreed upon by the Optionor and Optionee
for a PURCHASE PRICE of $1,250,000 (One million two hundred fifty thousand and
no/100 dollars) until January 10, 1999, with six (6) one month extensions
thereafter available upon payment of $6,000 for each month prior to the
expiration of the preceding option period, any such payment for extensions shall
be credited to the final purchase price only upon closing and subject to the
following terms and conditions:
ENCUMBRANCES: In addition to any disclosures referred to above, Optionee shall
take title to the property subject to: 1) Real Estate Taxes not yet due and 2)
Covenants, conditions, restrictions, reservations, rights, rights of way and
easements of record, if any, which do not materially affect the value or
intended use of the property. The amount of any bond or assessment which is a
lien shall be paid at the time the option is exercised.
EXAMINATION OF TITLE: Twenty-one (21) days from date of exercise hereof are
allowed the Optionee to examine the title to the property and to report in
writing any valid objections thereto. Any exceptions to the title, which would
be disclosed by examination of the records, shall be deemed to have been
accepted unless reported in writing within said twenty-one (21) days. If
Optionee objects to any exceptions to the title, Optionor shall use all due
diligence to remove such exceptions at his own expense within 60 days and the
option payment shall be returned to Optionee, unless he elects to purchase the
property subject to such exceptions.
EVIDENCE OF TITLE: shall be in the form of a policy of title insurance.
CLOSE OF ESCROW: Within 90 days from exercise of the option, or upon removal of
any exceptions to the title by the Optionor, as provided above, whichever is
later, both parties shall deposit with an authorized escrow holder, to be
selected by the Optionee, all funds and instruments necessary to complete the
sale in accordance with the terms and conditions hereof.
POSSESSION: Possession shall be delivered to Optionee at the time of Close of
Escrow.
PRORATIONS: rents, taxes, premiums on insurance acceptable to Optionee, interest
and other expenses of the property to be prorated as of Close of Escrow.
Security deposits, advance rentals or consideration involving future lease
credits shall be credited to Optionee.
<PAGE>
MAINTENANCE: Until possession is delivered Optionor agrees to maintain the
property and maintain it in its normal and customary condition. NOTICE: By
acceptance hereof, Optionor warrants that he has no notice of violations
relating to the property from City, County, State or Federal agencies.
TIME: Time is of the essence of this agreement.
EXPIRATION OF OPTION: If not exercised or extended pursuant to the terms hereof,
this option shall expire on January 10, 1999 and Optionor shall be released from
all obligations hereunder and all of Optionee's rights hereunder, legal or
equitable, shall cease and the consideration hereinabove receipted for by
Optionor shall be retained by Optionor.
EXERCISE OF OPTION: The option shall be exercised by mailing or delivering
written notice to the Optionor, at the above stated address, prior to the
expiration of this option and by an additional payment, on account of the
purchase price, in the amount of $25,000 (Twenty-five thousand and no/100
dollars) and in the event the option is exercised, Optionee agrees to pay
Optionor the additional sum of $1,225,000 (One million two hundred twenty-five
thousand and no/100 dollars) as the balance of the option price.
ADDITIONAL OPTION: Upon exercise of the option granted hereinabove, Optionor
will grant to Optionee the right to purchase any portion of the remaining land
held by Optionor in Sections 2 or 3, T 36 N, R 66 E, MDB & M, located in Elko
County, Nevada at the option price of $25,000 (twenty-five thousand and no/100
dollars) per acre for a period through December 31, 1999. Extensions of this
additional option shall be granted upon payment of $50,000 (Fifty thousand and
no/100 dollars) for each year (December 2000 and December 2001) at least fifteen
(15) days prior to the expiration of the existing option period. Payments for
any extensions shall be credited to the purchase price when the option is
exercised. The option price on this additional property during the extension
periods shall be as follows:
January 1, 2000 through December 31, 2000, the greater of:
$26,250 per acre or
$26,250 per acre plus an amount equal to one-half of the difference
between the appraised value and $26,250 per acre.
January 1, 2001 through December 31, 2001, the greater of:
$27,550 per acre or
$27,550 per acre plus an amount equal to one-half of the difference
between the appraised value and $27,550 per acre.
CIMARRON ENTERPRISES, INC. "OPTIONEE"
Marvin G. Lipschultz
- -----------------------
By:Marvin G. Lipschultz, President May 9, 1997
Print name and title: Date
OASIS INTERNATIONAL CORPORATION "OPTIONOR"
Richard D. Surber
- ----------------------
By: Richard D. Surber, President May 9, 1997
Print name and title: Date
EXHIBIT "B"
<PAGE>
EXHIBIT "C"
OPTION TO PURCHASE REAL ESTATE FOR GOLF COURSE DEVELOPMENT
Contingent upon the closing of the real estate purchase set forth in
the Real Estate Purchase Agreement executed May 9, 1997 between Cimarron
Enterprises, Inc. and Oasis International Hotel & Casino, Inc., Oasis
International Corporation, a Nevada Corporation with office located at 268 West
400 South, Suite 300, Salt Lake City, Utah 84101 (hereinafter referred to as
"Optionor") grants to Cimarron Enterprises, Inc. a Nevada Corporation with
offices located at 26 Princeville Lane, Las Vegas, Nevada 89113 (hereinafter
referred to as "Optionee") an option to purchase real property situated in
Oasis, County of Elko, State of Nevada in an amount not to exceed 160 acres
located on the Southwest corner of I-80 and Nevada State Highway 233, the exact
boundaries of which are to be mutually agreed upon by the Optionor and Optionee
for a PURCHASE PRICE of $10,000 (Ten thousand and no/100 dollars) per acre until
December 31, 1999 and subject to the following terms and conditions:
ENCUMBRANCES: In addition to any disclosures referred to above, Optionee shall
take title to the property subject to: 1) Real Estate Taxes not yet due and 2)
Covenants, conditions, restrictions, reservations, rights, rights of way and
easements of record, if any, which do not materially affect the value or
intended use of the property. The amount of any bond or assessment which is a
lien shall be paid at the time the option is exercised.
EXAMINATION OF TITLE: Twenty-one (21) days from date of exercise hereof are
allowed the Optionee to examine the title to the property and to report in
writing any valid objections thereto. Any exceptions to the title, which would
be disclosed by examination of the records, shall be deemed to have been
accepted unless reported in writing within said twenty-one (21) days. If
Optionee objects to any exceptions to the title, Optionor shall use all due
diligence to remove such exceptions at his own expense within 60 days and the
option payment shall be returned to Optionee, unless he elects to purchase the
property subject to such exceptions.
EVIDENCE OF TITLE: shall be in the form of a policy of title insurance.
CLOSE OF ESCROW: Within 90 days from exercise of the option, or upon removal of
any exceptions to the title by the Optionor, as provided above, whichever is
later, both parties shall deposit with an authorized escrow holder, to be
selected by the Optionee, all funds and instruments necessary to complete the
sale in accordance with the terms and conditions hereof.
POSSESSION: Possession shall be delivered to Optionee at the time of Close of
Escrow.
PRORATIONS: rents, taxes, premiums on insurance acceptable to Optionee, interest
and other expenses of the property to be prorated as of Close of Escrow.
Security deposits, advance rentals or consideration involving future lease
credits shall be credited to Optionee.
MAINTENANCE: Until possession is delivered Optionor agrees to maintain the
property and maintain it in its normal and customary condition.
<PAGE>
NOTICE: By acceptance hereof, Optionor warrants that he has no notice of
violations relating to the property from City, County, State or Federal
agencies.
TIME: Time is of the essence of this agreement.
EXPIRATION OF OPTION: If not exercised, this option shall expire on December 31,
1999 and Optionor shall be released from all obligations hereunder and all of
Optionee's rights hereunder, legal or equitable, shall cease and the
consideration hereinabove receipted for by Optionor shall be retained by
Optionor.
EXERCISE OF OPTION: The option shall be exercised by mailing or delivering
written notice to the Optionor, at the above stated address, prior to the
expiration of this option and by an additional payment, on account of the
purchase price, in the amount of $25,000 (Twenty-five thousand and no/100
dollars) and in the event the option is exercised, Optionee agrees to pay
Optionor the additional sum of $10,000 (Ten thousand and no/100 dollars) per
acre on the portion of the property on which the option is exercised as the
balance of the option price.
COVENANT ON USE OF PROPERTY: Any property obtained by Optionee under the terms
and conditions of this Option to Purchase Real Estate shall be used only and
exclusively for the development of a golf course and supportive uses to the golf
course and for no other purpose for a period of twenty years from the date of
exercise hereof. If the property should be used for any other use or development
this covenant may be released by Optionor upon payment of $15,000 (Fifteen
thousand and no/100 dollars) per acre for each acre, or portion thereof, to be
released from this exclusive use covenant.
CIMARRON ENTERPRISES, INC. "OPTIONEE"
/s/ Marvin G. Lipschultz
- ----------------------
By: Marvin G. Lipschultz, President May 9, 1997
Print name and title: Date
OASIS INTERNATIONAL CORPORATION "OPTIONOR"
/s/ Richard D. Surber
- -------------------------------
By: Richard D. Surber May 9, 1997
Print name and title: Date
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S MARCH 31,
1997, QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 27,212
<SECURITIES> 591,322
<RECEIVABLES> 1,165,472
<ALLOWANCES> 189,097
<INVENTORY> 0
<CURRENT-ASSETS> 1,645,974
<PP&E> 8,465,827
<DEPRECIATION> 1,013,462
<TOTAL-ASSETS> 10,063,463
<CURRENT-LIABILITIES> 3,426,313
<BONDS> 0
0
0
<COMMON> 9,781
<OTHER-SE> 2,809,752
<TOTAL-LIABILITY-AND-EQUITY> 10,063,487
<SALES> 0
<TOTAL-REVENUES> 228,612
<CGS> 0
<TOTAL-COSTS> 182,617
<OTHER-EXPENSES> 567,087
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,004
<INCOME-PRETAX> (650,983)
<INCOME-TAX> 0
<INCOME-CONTINUING> (650,983)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (650,983)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
