<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
--------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES ACT OF 1934
For the transition period from to
---------------------- -----------------------.
Commission file number: 0-15347
--------------------------
IRT INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-2720096
- --------------------------------------------- -----------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
Suite 128, 2400 E. Las Olas Blvd., Ft. Lauderdale, FL 33301
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(954) 525-8815
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- ---------
As at March 12, 1997 the registrant had outstanding 10,303,313 shares of Common
Stock, which includes 16,667 Treasury Shares in the Company, par value $0.0001.
1
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Please see enclosed financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The Company's plan of operation for the twelve month period June 30,
1996, to June 30, 1997, is to continue Management's efforts to market
the existing casino operations in order to generate revenues for the
Company, and raise capital from the sale of capital stock, and continue
efforts with respect to the acquisition and/or establishment of revenue
generating businesses in Latin America. Specifically:
a. Management believes that, based upon current income and projected
income estimates, the Company can satisfy cash requirements through the
end of 1996, but anticipates a need to raise additional funds in 1997
for acquisitions and operational needs;
b. In summary, Management is researching and developing both marketing
strategies and acquisition strategies with respect to overseas business
development in Latin American countries through review of available
data concerning demographic, legal and other information as to these
types of countries, due diligence travel to these countries, and
pursuit of the establishment of legal business relationships with
foreign businesses and professionals in Latin America;
c. Management is pursuing, for 1996, the purchase of large quantities
of casino chips and related gaming equipment to lower the costs of such
items through volume purchases, with anticipated larger quantity
purchases of such items to occur in early 1997; and
d. Management is focusing on, also, the hiring and training of
additional employees for anticipated, with no assurance, acquisitions
or for newly established casino operations, with projected increases of
total employees up to a figure 100, by the end of 1996, and at least
200 by June 30, 1997.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
ITEM 2. CHANGES IN SECURITIES.
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
2
<PAGE> 3
Not Applicable.
ITEM 5. OTHER INFORMATION.
On September 5, 1996, the Company entered into an Agreement for Purchase
and Sale of Assets with Inmobiliaria La J Tres Sociedad de Responsabilidad
Limitada.(See Exhibit 99). In addition, the Company purchased the lease of the
Hotel Barcelo Playa Tambor ("Hotel") in Puntarenas, Costa Rica and all
furniture, fixtures, and equipment relating to the operation of same hotel,
including the use of the casino license within said Hotel.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a). EXHIBIT TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
ITEM NO. ITEM LOCATION
- -------------------------------------------------------------------------------
<S> <C> <C>
3(i) Articles of Incorporation *
3(ii) By-laws *
99 Additional Exhibits Enclosed as Exhibit 99
27 Financial Data Schedule (for
SEC use only). Enclosed as Exhibit 27
- -------------------------------------------------------------------------------
</TABLE>
*Previously filed with U.S. Securities and Exchange commission, File Number
0-15347
(b.) On October 23, 1996, the Company filed a Form 8-K, in which it noted
changes in its certifying accountant from Joel S. Baum, C.P.A. to Dohan and
Company, C.P.A., P.A. No financial statements were filed in conjunction with
this Form 8-K filing.
3
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IRT INDUSTRIES, INC.
(Registrant)
Date 3/ 10 /97 BY: /s/ Richard R. Rossi
-------------------------- ------------------------------
Richard R. Rossi, President and
Treasurer
(Principal Executive Officer and
Principal Financial Officer)
4
<PAGE> 5
IRT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER JUNE
30, 1996 30, 1996
(UNAUDITED) (AUDITED)
--------------- --------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash in Bank $ 57,372 $ 18,675
Prepaid Rent (Current Portion) 84,000 84,000
Other Current Assets 5,252 -
--------------- --------------
146,624 102,675
PROPERTY & EQUIPMENT
Net of accumulated depreciation of $7,256 and $3,486 440,297 291,278
OTHER ASSETS
Casino Interests, net of accumulated amortization of
$68,139 AND $31,222 2,429,511 1,913,778
Prepaid Rent - Long-term Portion 91,000 112,000
Security Deposits 12,898 248
--------------- --------------
2,533,409 2,026,026
--------------- --------------
TOTAL ASSETS $ 3,120,330 $ 2,419,979
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 95,350 $ 35,430
Accrued and Other Current Liabilities 42,016 65,001
--------------- --------------
TOTAL CURRENT LIABILITIES 137,366 100,431
SHAREHOLDERS' EQUITY
Common Stock 1,034 1,002
Capital in Excess of Par 7,740,569 7,040,581
Accumulated Deficit (3,570,255) (3,455,163)
Treasury Stock, at Par Value (60) (60)
Stock Subscription Receivable (1,188,324) (1,266,812)
--------------- --------------
TOTAL STOCKHOLDERS' EQUITY 2,982,964 2,319,548
--------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,120,330 $ 2,419,979
=============== ==============
</TABLE>
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.)
<PAGE> 6
IRT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS
ENDED
SEPTEMBER
30, 1996
(UNAUDITED)
--------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (115,092)
Adjustments to reconcile net loss from development stage
activities to net cash provided (used) by operating activities:
Amortization 36,917
Depreciation 3,770
Common stock issued for services -
Common stock issued for rent -
Increase in: -
Accrued Liabilities -
Accounts Payable 59,920
Other Current Assets (5,252)
Decrease in: -
Prepaid Rent 21,000
Accrued and Other Current Liabilities (22,985)
-------------
Net Cash used by operating activities (21,722)
CASH FLOWS FROM INVESTING ACTIVITIES
Disbursements:
Purchase of property and equipment (5,439)
-------------
Net cash provided used by investing activities (5,439)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipts:
Proceeds from issuance of common stock 78,508
Proceeds from note payable -
-------------
Receipts from financing activities 78,508
Disbursements:
Security Deposits (12,650)
Principal payments on long-term debt and notes payable -
-------------
Disbursements from financing activities (12,650)
-------------
Net cash provided by financing activities 65,858
-------------
NET INCREASE IN CASH AND EQUIVALENTS 38,697
CASH AND EQUIVALENTS - BEGINNING 18,675
-------------
CASH AND EQUIVALENTS - ENDING $ 57,372
=============
SUPPLEMENTAL DISCLOSURES:
Note payable Officer/Director contributed to capital $ -
Common stock issued for prepaid rent $ -
Common stock issued to acquire casino interest $ 552,650
Common stock issued to acquire casino license $ -
Common stock issued to acquire casino equipment $ 147,350
</TABLE>
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.)
<PAGE> 7
IRT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF LOSS
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
30, 1996 30, 1995
(UNAUDITED) (UNAUDITED)
-------------- -------------
<S> <C> <C>
INCOME
Income from Gaming Operations $ 358,374 $ -
Less Payment of Winnings (304,430) -
------------- ------------
Gross Income 53,944 -
OPERATING EXPENSES
Rent 46,098 4,994
Depreciation & Amortization 40,687 12,023
Operating Expenses 37,191
Professional Services 29,986 9,987
Wages & Bonus 24,146
Administrative Fees 15,000
Advertising & Promotion 12,835
Travel & Entertainment 12,403
Table Taxes 9,506
Employee Benefits & Taxes 5,695
Office Expense 2,876 760
Security 2,294
Licenses & Taxes 1,466 4,200
Telephone 1,456 1,450
Bank Charges 1,285 473
Computer Services 1,234
Miscellaneous 352 150
Transfer Agent Fees -
Legal Settlement - 22,173
Interest Expense - 8,743
------------- ------------
Total Expenses 244,510 64,953
OTHER INCOME
Interest 75,474 326
Reimbursed Costs - 1,760
Cancelled Expenses - 12,613
------------- ------------
75,474 14,699
------------- ------------
NET LOSS $ (115,092) $ (50,254)
============= ============
</TABLE>
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.)
<PAGE> 8
IRT INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON ADDITIONAL
NUMBER STOCK PAID-IN ACCUMULATED
OF SHARES AMOUNT CAPITAL DEFICIT
--------- -------- ----------- ---------------
<S> <C> <C> <C> <C>
Balance - June 30, 1995 - Audited 3,010,193 $ 301 $3,160,719 $(3,230,788)
Adjustment for issuance of prior year shares 440 - - -
Capitalization of note payable Officer/Director - - 56,737 -
Issuance of common stock for subscription receivable 4,000,000 400 1,499,600 -
Imputed interest on common stock subscription receivable - - (228,674) -
Issuance of common stock 20,000 2 4,998 -
Issuance of common stock for debt 2,380,000 238 594,762 -
Issuance of common stock for services 300,000 30 112,470 -
Issuance of common stock for casino 289,361 29 1,699,971 -
Issuance of common stock for casino furniture and equipment 23,289 2 139,998 -
Net Loss for 1996 - - - (224,375)
---------- -------- ---------- -----------
Balance - June 30, 1996 - Audited 10,023,283 1,002 7,040,581 (3,455,163)
Issuance of common stock pursuant to exercise of stock options 200,000 20 - -
Issuance of common stock for casino 116,666 12 699,988 -
Net Loss for the three months ended September 30, 1996 - Unaudited - - - (115,092)
Payments received on stock for subscription receivable - - - -
Imputed interest on common stock subscription receivable - - - -
---------- -------- ---------- -----------
Balance - September 30, 1996 - Unaudited 10,339,949 $ 1,034 $7,740,569 $(3,570,255)
========== ======== ========== ===========
<CAPTION>
TOTAL
STOCKHOLDERS'
STOCK EQUITY
TREASURY SUBSCRIPTION (DEFICIENCY
STOCK RECEIVABLE IN ASSETS
----------- ------------- ------------
<S> <C> <C> <C>
Balance - June 30, 1995 - Audited $ (60) $ - $ (69,828)
Adjustment for issuance of prior year shares - - -
Capitalization of note payable Officer/Director - - 56,737
Issuance of common stock for subscription receivable - (1,429,315) 70,685
Imputed interest on common stock subscription receivable - 162,503 (66,171)
Issuance of common stock - - 5,000
Issuance of common stock for debt - - 595,000
Issuance of common stock for services - - 112,500
Issuance of common stock for casino - - 1,700,000
Issuance of common stock for casino furniture and equipment - - 140,000
Net Loss for 1996 - - (224,375)
--------- ----------- ----------
Balance - June 30, 1996 - Audited (60) (1,266,812) 2,319,548
Issuance of common stock pursuant to exercise of stock options - - 20
Issuance of common stock for casino - - 700,000
Net Loss for the three months ended September 30, 1996 - Unaudited - (115,092)
Payments received on stock for subscription receivable - 153,962 153,962
Imputed interest on common stock subscription receivable - (75,474) (75,474)
--------- ------------ -----------
Balance - September 30, 1996 - Unaudited $ (60) $ (1,188,324) $ 2,982,964
========= ============ ===========
</TABLE>
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.)
<PAGE> 9
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
IRT Industries, Inc. (IRT) was incorporated in Florida in August 1986 under the
name Triumph Capital, Inc. (Triumph). Triumph was originally engaged in the
stock transfer business. In 1992, Triumph changed its name to IRT as part of a
reorganization in which it exchanged 2,900,000 of its common stock for all of
the issued and outstanding shares of IRT Industries, Inc., a company
incorporated in California on December 13, 1990, pursuing environmental
business opportunities. Triumph then merged into IRT and reincorporated in the
State of Florida. By the end of the fiscal year ended June 30, 1996, IRT had
discontinued most of its prior business activities. On March 1, 1996, the
management of the Company changed following the sale of a substantial amount of
outstanding shares of common stock. Under its new management, the Company has
actively sought international casino acquisition opportunities throughout Latin
America. During the fiscal year ended June 30, 1996, the Company acquired a
casino interest and licenses in Costa Rica including a leased facility
purchased by a recently formed wholly owned subsidiary, Juegos Ruro, S.A.
(Juegos). During the quarter ended September 30, 1996, the Company acquired
another casino interest and license in Costa Rica that is being operated by its
wholly owned subsidiary, Casino Bahia Ballena, S.A. (Ballena). The Company is
currently in the process of seeking other casino interests. The Company
currently owns and operates two casino businesses in Central America, which
together with South America, is the primary location in which it is focusing
its acquisition efforts.
CASH AND EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
CONCENTRATION OF CREDIT RISK
As of September 30, 1996, and June 30, 1996, the Company had outstanding stock
subscriptions receivable, from two separate individuals, that were assigned to
a corporation with the Company's consent. The carrying value of these
receivables was reduced to estimated fair market value by imputing interest.
<PAGE> 10
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of IRT, and its
wholly owned foreign subsidiaries, Juegos Ruro, S.A. and Casino Bahia Ballena,
S.A. All significant intercompany accounts and transactions of IRT and its
subsidiaries (the Company) have been eliminated in consolidation.
PROPERTY AND EQUIPMENT
Property and equipment, consisting of furnishings and casino equipment to be
used in its current and future casino operations, is stated at cost, less
accumulated depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets, which range from five to
ten years.
ORGANIZATION COSTS AND AMORTIZATION
Organization costs related to prior business operations, such as patent
related costs, consulting fees related to obtaining funding sources, etc., had
been capitalized, and were being amortized using the straight-line method
over a five year period. Upon the Company changing its focus from previous
activities, all such prior capitalized costs were charged to expense as of June
30, 1996.
LICENSES AND LEASEHOLD INTERESTS AND AMORTIZATION
The amount recorded in connection with the acquisition of a casino gaming
license has been capitalized and is being amortized over 180 months, while the
operating casinos and leasehold interests have been capitalized and are being
amortized over the initial term of the lease and the first expected extension
period, for a total of 150 months.
DEVELOPMENT STAGE ACTIVITIES
The Company was a development stage enterprise and had no revenues until the
grand opening of its first casino on July 12, 1996.
<PAGE> 11
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
NET LOSS PER SHARE
Net loss per share of common stock is based on the weighted number of shares
outstanding during the years presented and the dilutive effect of stock options
to purchase 200,000 shares of common stock at par value. There were no other
common stock equivalents.
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes, if
any, related primarily to differences between the bases of certain assets and
liabilities for financial and tax reporting. Deferred taxes, if any, represent
the future tax return consequences of those differences, which will either be
taxable when the assets and liabilities are recovered or settled.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of acquisitions,
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of expenses
during the reporting period. Actual results could differ from those estimates.
FOREIGN CURRENCY CONVERSION
The operating currency of the wholly owned subsidiary located in Costa Rica is
the colone. The financial statements at September 30, 1996, and June 30, 1996,
were converted to U.S. dollars based on the average monthly exchange rate.
Because there was little fluctuation in the rate of exchange, no gain or loss
from currency fluctuation has been reflected in these financial statements.
<PAGE> 12
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
NOTE B - ACQUISITIONS
In addition to the issuance of the 4,000,000 shares as described in Note F, the
Company has issued shares of its common stock as payment for the following
acquisitions:
ACQUISITION OF FLOATING GAMING CASINO LICENSE
In a series of transactions from March 14, 1996, to March 21, 1996, the
Company issued 2,400,000 shares of common stock, received $5,000 in cash and a
transfer of a floating license to operate a casino in the country of Costa Rica
valued at $595,000 from a related party. A "floating license" allows the
placement of one casino business at almost any location where business can be
legally conducted. This is one of only two such licenses believed to exist in
the country. Payment for this license was made by canceling the seller's
promissory note to the Company which resulted from issuance of common stock.
ACQUISITION OF CASINO
On May 3, 1996, the Company agreed to issue 289,361 shares of common stock and
received, by transfer, a license to operate a casino in the country of Costa
Rica as well as leasehold rights for the casino and related furniture, casino
equipment and improvements. The license and leasehold interest were valued at
$1,350,000, while the furniture, casino equipment and improvements were valued
at $140,000. In addition, $210,000 was recorded as prepaid rent.
On September 5, 1996, the Company agreed to issue 116,666 shares of common
stock and received, by transfer, a license to operate a casino in the country
of Costa Rica as well as leasehold rights for the casino and related furniture,
casino equipment and improvements. The license and leasehold interest were
valued at $560,000, while the furniture, casino equipment and improvements
were valued at $140,000.
AMORTIZATION OF CASINO LICENSES AND INTERESTS
For the three months ended September 30, 1996, and the year ended June 30,
1996, amortization related to the acquisition of the floating gaming casino
license and the casino was $36,917 and $31,222, respectively.
<PAGE> 13
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
ACQUISITION OF FURNITURE AND CASINO EQUIPMENT
In a separate transaction, on May 9, 1996, the Company issued 23,289 shares of
common stock and received furniture and casino equipment to be used in future
operations. The furniture and casino equipment have been valued at $140,000.
NOTE C - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of Financial
Accounting Standards No. 107. The fair value amounts have been determined
based on available market information and appropriate valuation methodology.
The carrying amounts and estimated fair values of the Company's financial
assets and liabilities as of September 30, 1996, and June 30, 1996, for cash
and accounts payable approximate fair value. The fair value of the stock
subscriptions receivable are estimated based on an annual interest rate of 18%
and the anticipated dates of payment and have been discounted accordingly for
the recorded carrying amount. Fair value estimates are subjective in nature
and involve uncertainties and matters of significant judgment; therefore, fair
value cannot be determined with precision.
NOTE D - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER JUNE
30, 1996 30, 1996
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
Furniture and fixtures $ 13,013 $ 7,742
Leasehold Improvements 7,350 -
Casino equipment 427,190 287,190
Accumulated depreciation (7,256) (3,654)
-------- --------
$440,297 $291,278
======== ========
</TABLE>
For the three months ended September 30, 1996, and for the year ended June 30,
1996, respectively, depreciation related to the above assets was $3,770 and
$2,641.
<PAGE> 14
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
NOTE E - RELATED PARTY TRANSACTIONS
DUE TO RELATED PARTIES
During the three months ended September 30, 1996 and the year ended June 30,
1996, various legal fees and costs of approximately $20,000 and $34,000,
respectively, were charged to the Company by a law firm whose principal is also
a shareholder and member of management of the Company. The outstanding balance
as of September 30, 1996, and June 30, 1996, respectively, was approximately
$40,000 and $20,000, and is included in accounts payable. Additionally,
reflected in Accrued and Other Current Liabilities at June 30, 1996, is $100
owed to the legal counsel for the advance of the initial deposit required to
open a bank account for the Company.
During the year ended June 30, 1996, the Company issued 300,000 shares of
common stock to parties related to the Company by virtue of a 40% ownership
interest in exchange for consulting services. The expense recorded was
$112,500 and is included in professional and consulting fees.
During the year ended June 30, 1996, the Company purchased a casino gaming
license in the amount of $595,000 from a party related to the Company by virtue
of a 44% ownership interest in the Company.
During the year ended June 30, 1996, the Company purchased a license to operate
a casino in the country of Costa Rica, as well as leasehold rights and related
furniture, casino equipment and improvements in the amount of $1,700,000 from a
party related to the Company by virtue of ownership. Additionally, the Company
purchased furniture and casino equipment in the amount of $140,000 from the
same related party.
<PAGE> 15
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
NOTE F - STOCKHOLDER'S EQUITY
COMMON STOCK
The Company has authorized 100,000,000 shares of common stock with a par value
of $.0001 per share. At September 30, 1996, and June 30, 1996, 10,303,313
shares and 9,710,663 shares, respectively, were issued and outstanding. The
Company has no other authorized or outstanding securities of any class.
Additional issuances of 289,361 and 23,289 shares are in the process of being
issued and documented and are included as issued and outstanding at June 30,
1996. The Company issued 300,000 shares of common stock in exchange for
consulting services.
STOCK SUBSCRIPTIONS RECEIVABLE
On March 13, 1996, the Company issued 2,400,000 of common stock in exchange for
$5,000 cash and a promissory note in the amount of $595,000. This promissory
note was subsequently canceled in payment of the purchase price of a floating
gaming license.
On March 14, 1996, the Company issued 4,000,000 shares of common stock to two
separate individuals under Stock Subscription Agreements, for an aggregate
purchase price of $1,500,000. Promissory notes, in the amount of $750,000,
were executed by each of these individuals. On June 4, 1996, the notes were
assigned to a third party corporation and the repayment terms were fixed to
provide for minimum monthly payments of $75,000 without interest until the end
of April 1997, at which time any remaining balance would be due. Management
believes that the full amount of these notes will be collected.
Interest in the amount of $228,674 has been imputed on this receivable based on
an annual percentage rate of 18%, and has been reflected in the financial
statements as a reduction in the value of the receivable. As a result,
interest of $75,474 and $66,171 was considered earned during the three months
ended September 30, 1996 and the year ended June 30, 1996, respectively.
<PAGE> 16
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
STOCK OPTIONS
On February 29, 1996, the Board of Directors granted an option to a former
officer/stockholder to purchase 200,000 shares of common stock at an exercise
price of $.0001 per share. The options may be exercised for a period of two
years between March 1, 1996, to March 1, 1998. On July 30, 1996, all options
were exercised.
NOTE G - INCOME TAXES
The Company and its subsidiary do not file consolidated income tax returns.
For the year ended June 30, 1996, the Company generated for U.S. income tax
purposes a net operating loss carryforward, of approximately $173,447, that
expires in the year 2011. The Company had a net operating loss carryforward of
approximately $575,000 as of June 30, l995. However, as of March l, l996, and
subsequent, there were ownership changes in the Company as defined in Section
382 of the Internal Revenue Code. As a result of these changes, the Company's
ability to utilize net operating losses and capital losses available before the
ownership change is restricted to a total of approximately $43,860 per year
(approximately 7% of the market value of the Company at the time of the
ownership change). Therefore, substantial net operating loss carryforwards
will be eliminated in future years due to the change in ownership. The
utilization of the remaining carryforwards is dependent on the Company's
ability to generate sufficient taxable income during the carryforward periods
and no further significant changes in ownership.
The Company computes deferred income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, which requires the use of an asset and
liability method of accounting for income taxes. Statement No. 109 provides
for the recognition and measurement of deferred income tax benefits based on
the likelihood of their realization in future years. A valuation allowance
must be established to reduce deferred income tax benefits if it is more likely
than not that a portion of the deferred income tax benefits will not be
realized. It is Management's opinion that the entire deferred tax benefit may
not be recognized in future years. Therefore, a valuation allowance equal to
the deferred tax benefit has been established, resulting in no deferred tax
benefits as of the balance sheet dates.
<PAGE> 17
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
NOTE H - COMMITMENTS AND CONTINGENCIES
LEASED PREMISES
Pursuant to the acquisition of the leasehold interest, the Company assumed a
lease for the operation of a casino in a hotel in Costa Rica. The lease was
executed on May 1, 1996, and has an initial term of thirty (30) months. Rent
for the initial lease term has been fully paid. At June 30, 1996, prepaid rent
is $196,000. The Company has reflected $84,000 as a current asset, while
$112,000 is classified as the long-term portion of prepaid rent.
The lease provides for options to renew for additional ten (10) year periods.
Management expects that the options will be exercised. Rental payments are
$7,000 per month with an eight percent (8%) escalation clause. The seller of
the leasehold interests to the Company agreed to pay the owner of the hotel
$900,000 in eight quarterly payments of $112,500 commencing on August 1, 1996,
which amounts were included in the original lease as rental payments. The
terms of the lease were such that the quarterly payments were guaranteed s
additional rents if not made to the hotel's owner by the seller. This
provision has since been rescinded by mutual agreement.
Minimum future lease expenses of all non-cancelable operating leases (currently
prepaid) for the next five years are as follows:
<TABLE>
<CAPTION>
SEPTEMBER JUNE
30, 1996 30, 1996
(UNAUDITED) (AUDITED)
----------- ---------
<S> <C> <C>
Year 1 $ 84,000 $ 84,000
Year 2 84,000 84,000
Year 3 7,000 28,000
Year 4 - -
Year 5 and thereafter - -
-------- --------
$175,000 $196,000
======== ========
</TABLE>
Rent expense for the three months ended September 30, 1996, and the year ended
June 30, 1996, was $46,098 and $14,000, respectively.
<PAGE> 18
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
GOVERNMENTAL REGULATIONS
The Company's casino facilities are subject to regulation by the Costa Rican
government. Compliance with government regulations has not had, nor does the
Company expect such compliance to have, any material effect upon capital
expenditures, expenses or the Company's competitive position. Management
believes that its practices for the control of its casino operations comply
with all Costa Rican requirements.
LITIGATION
A lawsuit against the Company was settled on March 13, 1995, to recover license
agreement royalties in the amount of $6,000. The legal action was initiated by
Herman J. Schellstede, licenser of certain patents included in the license
agreement. This amount plus accrued interest is included in accrued
liabilities at September 30, 1996 and June 30, 1996.
A lawsuit against the Company was settled on November 16, 1994, in the amount
of $22,173, plus interest, from IRT, formally known as Triumph Capital, Inc.,
and Steven Telsey, jointly and severally. The legal action was initiated by
Morton I. Singerman. This amount plus accrued interest is included in accrued
liabilities.
NOTE I - MANAGEMENT'S PLANS
The Company's financial statements for the three months ended September 30,
1996 and the year ended June 30, 1996 have been prepared on a going concern
basis, which contemplates the realization of assets and the settlement of
liabilities and commitments in the normal course of business. The Company has
suffered recurring losses from development stage activities, as a result of
which there is an accumulated deficit as of September 30, 1996. All of these
factors raised substantial doubt in prior years about the Company's ability to
continue as a going concern without achieving profitable operations, an
infusion of capital or additional financing. If the stockholders who received
shares for a receivable were to default, such a condition would again exist.
The financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
<PAGE> 19
IRT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 (UNAUDITED)
AND JUNE 30, 1996 (AUDITED)
Management recognizes that the Company must generate additional resources in
order to continue. Management's plans include continuing collections on the
subscriptions receivable as well as the proposed acquisition of additional
revenue producing casinos and the generation of additional net proceeds from a
potential private placement offering of shares or debt. Furthermore,
management anticipates continuing recently implemented operating activities and
generating funds from such activities during the year ending June 30, 1997, and
believes that casino operations will achieve profitability soon.
NOTE J - SUBSEQUENT EVENTS
Including payments received prior to September 30, 1996, the Company has
received approximately $415,494 as of March 14, 1997, from the Stock
Subscription Receivable described above.
As of September 10, 1996, the Company has filed an application to list the
Company's common stock for trading on the Philadelphia Stock Exchange. The
Company started trading on he exchange on February 28, 1997. The Company has
also started the process to change its business name to "Intercontinental
Gaming and Resorts" to more accurately reflect the new scope of the Company's
business activities.
<PAGE> 1
EXHIBIT 99
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT is dated effective September 5, 1996, and is entered into by
and between IRT Industries, Inc., a Florida corporation ("Purchaser") and
Inmobiliaria La J Tres Sociedad de Responsabilidad Limitada ("Seller").
R E C I T A L S :
1. Seller is the authorized user of a gaming license ("License") issued
by the government of Costa Rica for casino operations at the following
identified Hotel, furniture, fixtures and equipment related to the operation of
the casino under such Gaming License, and a lease with the Hotel Barcelo Playa
Tambor ("Hotel"), Puntarenas, Costa Rica all as to Casino Bahia Ballena, S.A., a
Costa Rican corporation (collectively the "Assets"); and
2. Seller wishes to sell, and Purchaser wishes to purchase the Assets,
with the exception of the License, of which Purchaser wishes to have exclusive
use, but which will be considered a part of the Purchase Price, upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, mutual promises,
covenants, terms and conditions herein, and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged by
the parties hereto, the parties hereby agree as follows:
1. RECITALS, EXHIBITS AND SCHEDULES. All of the above recitals are true,
correct and complete, as well as each exhibit and schedule attached hereto,
which are incorporated herein by reference.
2. PURCHASE AND SALE. Purchaser agrees to purchase from Seller, and Seller
agrees to sell and deliver to Purchaser (hereinafter the "Sale"), on the
"Closing" (hereinafter defined) the Assets with the exception of the License, of
which Purchaser shall have exclusive use. Seller represents and warrants that,
among other things, the Assets to be conveyed to Purchaser by Seller at Closing
will be free and clear of any and all liens, encumbrances, claims or demands,
except as both disclosed and otherwise provided for herein.
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<PAGE> 2
3. PURCHASE PRICE. The purchase price for the Assets is the sum of $700,000,
which will be paid by the Purchaser to the Seller as provided below ("Purchase
Price").
4. PAYMENT OF PURCHASE PRICE. The Purchase Price, shall be paid to Seller as
follows:
The purchase price of $700,000 shall be payable, and paid, in the form of
Common Stock to the Purchaser as follows: the parties agree that, based upon
the average recent trading sales price of the Common Stock of $6.00 per share, a
total of 116,666 shares of Common Stock are due to the Seller in connection with
the transaction. However, due to the pending issuance of 50,000 shares of
Common Stock in the Company to Humberto Jenkins Berenes, the Seller shall
receive 66,666 shares. The 66,666 "Shares" to be issued by Purchaser to Seller
shall be issued as soon as practicable to the Seller and shall be issued in
accordance with Regulation S of the U.S. Securities and Exchange Commission.
5. LICENSE. Seller represents to the Purchaser that the License shall permit
the Purchaser to operate and otherwise commercially exploit, a casino gaming
facility at the Hotel. Furthermore, Purchaser shall be entitled to the exclusive
use of said License for the aforementioned purposes for the duration of
occupation of the premises. Seller shall fully cooperate with the Purchaser in
the utilization by the Purchaser of the License including, without limitation,
the following: (i) Purchaser shall be deemed to have the exclusive right to use
said License and to exploit the same for commercial purpose, and Seller shall
not transfer any interest, place any lien, or otherwise encumber the License in
any way; (ii) Seller shall execute any and all documents requested by Purchaser
and legal counsel to Purchaser in connection with the License; and (iii) Seller
shall not conduct any business or other activities other than acting in full
cooperation with the Purchaser.
6. CLOSING AND CERTAIN RELATED MATTERS. A. Closing Date. The date for the
closing of the Sale (herein "Closing") shall be deemed effective the date first
written above, unless the parties agree otherwise in writing.
B. Instruments of Conveyance and Transfer. At Closing: (i) Seller
shall deliver to Purchaser a bill of sale and assignments for the Assets in
forms satisfactory to Purchaser and containing, among other things, full
warranties of title to vest in Purchaser good, absolute and marketable title to
the Assets, free and clear of all liens, charges and encumbrances whatsoever,
except as otherwise provided herein, and such
2
<PAGE> 3
other instruments required herein; (ii) Seller shall take and complete all such
requisite steps to put Purchaser in actual possession, operation and control of
the Assets; and (iii) Purchaser shall deliver to Seller the Shares.
C. Conditions Precedent to the Closing. (i) By Purchaser. The
obligation of Purchaser to consummate this Agreement shall be subject to, and
conditioned upon, the satisfaction, at or prior to Closing, of each of the
following conditions, and as otherwise provided in this Section, except to the
extent of any waiver by Purchaser in writing signed by Purchaser:
(1) Compliance with Agreement. Seller shall have
performed and complied with all covenants and
Agreements of Seller hereunder, and satisfied all
conditions hereunder, that Seller is required
by this Agreement to perform, comply with, or
satisfy before or at Closing, and all actions,
proceedings, instruments and documents required of
Seller to carry out the terms of this Agreement
shall have been duly delivered to Purchaser.
(2) Adverse Changes. No event shall have occurred
between the date of this Agreement and the Closing
date which has or might reasonably have a material
adverse affect on the Assets.
(3) Representations. The express and implied
representations of Seller hereunder, which shall
be deemed (i) to have been made as of the date of
this Agreement and also on the Closing date and
(ii) to continue and survive the Closing, shall be
true, complete and correct.
(4) Approval by Legal Counsel. All actions,
proceedings, instruments and documents required of
Seller to carry out the terms of this Agreement,
or incidental hereto, and all other related legal
matters, shall have been approved by legal counsel
of Purchaser.
(5) Errors, Etc. Purchaser shall not have discovered
any material error, misstatement or omission of
Seller
3
<PAGE> 4
hereunder or in any information, schedule or
exhibit delivered to Purchaser.
(6) Seller's Performance. All of the terms and
conditions of this Agreement to be complied with
and performed by Seller on or before the Closing
shall have been complied with and performed.
(G) Exhibits and Schedules. Except as otherwise provided herein,
Seller shall prepare and deliver all of the exhibits and
schedules, stated herein as attached hereto.
(ii) By Seller. The obligation of Seller to consummate this Agreement
shall be subject to and conditioned upon the satisfaction, at or prior to
Closing, of each of the following conditions, except to the extent of any
waiver by Seller in writing signed by Seller:
(A) Compliance with Agreement. Purchaser shall have performed and complied
with all covenants and agreements of Purchaser hereunder, and satisfied all
conditions hereunder, that Purchaser is required by this Agreement to
perform, comply with, or satisfy before or at Closing.
(B) Purchase Price. Purchaser shall have delivered the shares or confirmation
of the delivery authorization within 30 days of the date first written
above.
D. Transition. Seller shall aid and assist Purchaser in the transition
of ownership of the Assets.
7. CERTAIN REPRESENTATIONS OF SELLER. As a material inducement to Purchaser
to enter into this Agreement and perform hereunder, Seller hereby represents to
Purchaser, in addition to such other representations contained elsewhere herein,
the following:
A. Absence of Specified Changes. Except as provided herein, Seller has
not, and from the date hereof to and including the Closing, Seller will not have
(as to the Seller, and the Assets as the context permits): (i) mortgaged,
pledged, subjected to lien, charged, encumbered or granted a security interest,
tangible or intangible; (ii) suffered any damage, destruction or loss (whether
or not covered by insurance) or waived any rights of substantial value in
respect thereof; (iii) entered into any transaction other than in the ordinary
course of business; (iv) experienced any
4
<PAGE> 5
material adverse change or event; (v) incurred any obligations or liabilities,
except current liabilities in the ordinary course of business; (vi) made any
amendment or termination of any contract, agreement or license, except in the
ordinary course of business; or (vii) sold or transferred any of its assets.
B. Liabilities. Except as disclosed herein, Seller has no
debts, contracts, liabilities or obligations of any kind, character or
description, whether accrued, absolute, contingent or otherwise, or due or to
become due, for which Purchaser shall in any way be directly or indirectly
subject to or liable for. Seller represents that Purchaser shall not be liable
for any liabilities or obligations of Seller, and Seller hereby agrees to
indemnify and hold Purchaser harmless from all liabilities and obligations.
C. Taxes. Within the times and in the manner prescribed by law, Seller
has filed all government assessments and penalties due and payable. There are
no present disputes as to taxes, of any nature, payable by Seller.
D. Litigation. There is no suit, action, arbitration or legal,
administrative or other proceeding, or governmental investigation, pending or
threatened against or by (as the context permits) the Assets, or Seller; nor is
Seller aware of any facts which has or may result in any action, suit or
proceeding against Purchaser in respect of the Assets.
E. Title To and Condition of Assets. Seller has good, absolute and
marketable title to all property being sold to Purchaser pursuant to this
Agreement.
F. Compliance with Law and Other Instruments. Seller is a duly
organized, validly existing corporation in good standing in Costa Rica. Seller
is not in violation or default of any term or provision of any law, charter,
bylaw, mortgage, indenture, contract, agreement, lease, instrument, judgment,
decree, order, statute, rule, regulation or ordinance, and the execution,
delivery and performance of, and compliance with, this Agreement will not
result in the violation of, or be in conflict with, or constitute a default
under, any such term or provision or result in the creation of any mortgage,
lien, encumbrance, or charge upon any of the Assets pursuant to any such term
or provision.
G. Disclosure. To the best of Seller's knowledge, no representation or
warranty by Seller contained, reflected or referred to in this Agreement
contains, or will contain, any untrue statement of material fact or omits or
will omit to state any material fact (of which Seller has knowledge or notice)
otherwise required to make
5
<PAGE> 6
the statements herein not misleading. Seller has no knowledge of any materially
adverse matter or thing (threatened or existing) relative to the condition,
financial or otherwise, of the Assets or its prospects, not disclosed in this
Agreement.
H. Subsidiaries. Seller has no subsidiaries.
I. Regulation S. Seller agrees that Seller has received an offer to
receive the Shares identified herein, offshore of the U.S.A. and has purchased
the securities offshore of the U.S.A. Neither the Seller nor any officer,
Director, owner or controlling person is a resident or citizen of the U.S.A. The
Seller has received this document prior to purchasing the Securities, or any
negotiations in connection with same. The Seller has received a copy of, has
read, and understands Regulation S. The Seller understands that Regulation S
applies to this transaction and that the Seller has restrictions and limitations
applicable to the securities including, without limitation a restriction of
resale for at least 40 days from the Closing. The securities have not been
registered under the U.S. Securities Act of 1933, as amended, and may not be
offered or sold in the U.S.A. or to persons in the U.S.A. unless the securities
are registered under said Act or an exemption from the registration requirement
of the Act is available. The Seller understands and agrees that any requirement
to register these securities in Costa Rica are the responsibility of the Seller.
8. NATURE AND SURVIVAL OF REPRESENTATIONS. All statements herein, or in any
other document delivered by or on behalf of Seller for information or reliance
by Purchaser pursuant to this Agreement, shall be deemed representations by
Seller and incorporated herein. All such representations shall also be true,
complete and correct as of the Closing date as if made on that date and shall
survive the Closing, and any inspection or investigation made by Purchaser or
Purchaser's representatives.
9. INDEMNIFICATION. Seller hereby agrees to indemnify and hold harmless
Purchaser at all times from and after the Closing against and in respect of
110% of any damages, including any claims, actions, demands, losses, costs,
expenses, obligations, liabilities (joint or several), interest, penalties,
reasonable attorneys' fees through appeals (including without limitation,
attorneys' fees incurred in investigating or in attempting to avoid such
damages or in opposing the imposition thereof or in enforcing this
indemnification), resulting to the Purchaser from: (i) any inaccurate
representation of Seller made under this Agreement; (ii) breach by Seller of
any of Seller's representations; (iii) breach or default in the performance by
Seller of any of the covenants or agreements hereunder applicable to Seller, or
in any
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<PAGE> 7
agreement executed pursuant to this Agreement; (iv) any undisclosed debts,
liabilities or obligations of Seller whether accrued, absolute, contingent or
otherwise, or due or to become due; and (v) any actions, suits, appeals,
proceedings, demands, assessments, judgments, costs and expenses, including
reasonable attorneys' fees through appeals, incident to the foregoing.
10. ACCESS TO ASSETS AND RECORDS. From and after the date of this Agreement,
Seller shall afford to Purchaser, and Purchaser's legal counsel, accountant and
other authorized representatives, free and full access to the properties, books
and records of Seller and all such other items of Seller or within Seller's
control discussed herein in order for Purchaser to have a full opportunity to
make whatever inspections and investigations Purchaser shall desire of the
affairs of Seller, provided that such inspections and investigations shall not
unreasonably interfere with the operations of Seller. Any such inspections and
investigations shall not constitute a waiver or relinquishment by the Purchaser
of Purchaser's right to rely upon the (implied and express) covenants and
representations of Seller and Seller's affiliates as made herein or pursuant
hereto.
11. PUBLICITY. All notices to third parties and all other publicity concerning
the Sale prior to Closing, except as necessary to consummate this Agreement,
shall be jointly planned and coordinated by, and between, Purchaser and Seller
and following the Closing only Purchaser will be permitted to effect any
publicity, with Seller to cooperate.
12. EXCUSE OF PERFORMANCE - RISK OF DAMAGE. Prior to Closing, risk of damage,
loss, destruction or theft of any of the Assets shall be on Seller, and in the
event any material damage to the Assets occurs prior to Closing, Purchaser, at
Purchaser's discretion, shall be entitled to (i) cancel this Agreement, and (ii)
a return of any and all deposits made, and all parties shall thereupon be
relieved of all further obligations to each other hereunder.
13. MISCELLANEOUS PROVISIONS. A. Gender. Wherever the context shall require,
all words herein in the masculine gender shall be deemed to include the feminine
or neuter gender, all singular words shall include the plural, and all plural
shall include the singular.
B. Severability. If any provision hereof is deemed unenforceable by a
court of competent jurisdiction, the remainder of this Agreement, and the
application of such provision in other circumstances shall not be affected
thereby.
C. Further Cooperation. From and after the date of this Agreement, each
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<PAGE> 8
of the parties hereto agrees to execute whatever additional documentation or
instruments as are necessary to carry out the intent and purposes of this
Agreement or to comply with any law.
D. Waiver. No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the waiving party. The failure of any party at
any time to insist upon strict performance of any condition, promise, agreement
or understanding set forth herein, shall not be construed as a waiver or
relinquishment of any other condition, promise, agreement or understanding set
forth herein or of the right to insist upon strict performance of such waived
condition, promise, agreement or understanding at any other time.
E. Expenses. Except as otherwise provided herein, each party hereto
shall bear all expenses incurred by each such party in connection with this
Agreement and in the consummation of the transactions contemplated hereby and in
preparation thereof.
F. Amendment. This Agreement may only be amended or modified at any
time, and from time to time, in writing, executed by the parties hereto.
G. Captions. Captions herein are for the convenience of the parties and
shall not affect the interpretation of this Agreement.
H. Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
I. Assignment. This Agreement is freely assignable by Purchaser. On any
such assignment, Seller shall look solely to the assignee for the obligations of
Purchaser hereunder. Seller shall not assign this Agreement.
J. Parties in Interest. Provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by Purchaser and Seller,
their heirs, executors, administrators, other permitted successors and assigns,
if any. Nothing contained in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any right of subrogation over, or
action against, any party to this Agreement.
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<PAGE> 9
K. Entire Agreement. This Agreement and the exhibits attached hereto
constitute the entire agreement and understanding of the parties on the subject
matter hereof and supersede all prior agreements and understandings.
L. Construction. This Agreement shall be governed by the laws of the
State of Florida, U.S.A., without reference to conflict of laws and the venue
for any action, claim or dispute in respect of this Agreement shall be such
court of competent jurisdiction as is located in Broward County, Florida. The
parties agree and acknowledge that each has reviewed this Agreement and the
normal rule of construction that agreements are to be construed against the
drafting party shall not apply in respect of this Agreement given the parties
have mutually negotiated and drafted this Agreement.
M. Attorneys' Fees. In the event either party seeks to enforce this
Agreement, whether or not through litigation, the prevailing party shall be
entitled to receive reasonable attorneys' fees through appeals and all costs and
expenses incurred in connection with such enforcement, including fees, costs and
expenses of appeals.
N. Cooperation. The parties hereto agree to cooperate with one another
in respect of this Agreement, including reviewing and executing any document
necessary for the performance of this Agreement, to comply with law or as
reasonably requested by any party hereto, or legal counsel to any party hereto.
O. Independent Legal Counsel. The parties hereto agree that (i) each has
retained independent legal counsel in connection with the negotiation,
preparation and execution of this Agreement, (ii) each has been advised of the
importance of retaining legal counsel, and (iii) by the execution of this
Agreement, each party who has not retained independent legal counsel
acknowledges having waived such right. Notwithstanding the foregoing, it is
hereby acknowledged that the law firm of Rossi & Associates, Attorneys, P.A. has
acted as legal counsel to Purchaser only.
9
