<PAGE> 1
=====================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, for the fiscal year ended October 31,
1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT OF 1934, for the transition period from ______ to _____
Commission File Number: 000-19708
PHOENIX RESOURCES TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 84-1034982
(State of incorporation) (IRS Employer ID Number)
15945 Quality Trail North, Scandia, MN 55073
(Address of principal executive offices)
(888) 709-3975
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12 (g) of the Exchange Act
Title of each class Common Stock
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. YES [ x ] NO [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of the Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [ ]
State issuer's revenues for its most recent year. $0.00
State the aggregate market value of the voting stock held by non-
affiliates computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of a
specified date within the past 60 days, $22,927,380.00.
State the number of shares outstanding of the issuer's common equity as
of the latest practicable date: 9,092,400
Transitional Small Business Disclosure Format: YES [ ] NO [ ]
<PAGE> 2
TABLE OF CONTENTS
ITEM NUMBER PAGE
PART I
1. Description of Business . . . . . . 3
2. Properties . . . . . . . . 7
3. Legal Proceedings . . . . . . 8
4. Submission of matters to a Vote of
Security Holders . . . . . . . 9
PART II
5. Market for Registrant's Common Equity
and Related Stockholder Matters . . . . 10
6. Management's Discussion and Analysis
or Plan of Operations . . . . . . 13
7. Index to Financial Statements . . . . . 14
8. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure . . . 14
PART III
9. Officers and Directors . . . . . . 14
10. Executive Compensation . . . . . . 15
11. Security Ownership of Certain Beneficial
Owners and Management . . . . . . 15
12. Certain Relationships and Related Transactions . 16
13. Exhibits and Reports on Form 8-K . . . . 17
Signatures . . . . . . . . 18
Caution Regarding Forward-Looking Information
This annual report contains certain forward-looking statements
and information relating to the Company that are based on the
beliefs of the Company or management as well as assumptions made by
and information currently available to the Company or management. When
used in this document, the words "anticipate", "believe", "estimate",
"expect" and "intend" and similar expressions, as they relate to the
Company or its management, are intended to identify forward-
looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties
noted. Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may
vary materially from those described herein as anticipated, believed,
estimated, expected or intended. In each instance, forward-looking
information should be considered in light of the accompanying
meaningful cautionary statements herein.
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General
Phoenix Resources Technologies, Inc. ("Phoenix" or "Company")
formerly named Hughes Resources, Inc., was originally organized in the
State of Colorado ("Firma, Inc.") as a corporation organized to take
advantage of unspecified business opportunities in 1986. On June 3,
1991, its subsidiary pursuant to a reorganization agreement, Firma,
Inc. merged with Hughes Wood Products, Inc., ("HWP"), a Texas
Corporation, principally owned by Mr. James E. Hughes, Sr., whereby
Hughes Resources, Inc. became the named successor and parent
corporation and HWP became a wholly owned subsidiary.
From 1991 until August 12, 1996 the Company was in the business of
logging, milling, and testing wood products in Eastern Texas and
Western Louisiana through its subsidiaries. In 1996, the HWP business
was resold to Mr. James E. Hughes, Sr. as a part of settlement of a
suit commenced by the Company against Mr. Hughes.
1. Sale of Hughes Wood Products and Houston Woodtech, Inc., and
Settlement of suit involving James R. Hughes, Sr.
On January 22, 1996, at a Special Meeting of the Board of
Directors, James E. Hughes, Chairman of the Board of Directors of the
Company tendered his resignation as a Director and as Chairman of the
Board. The resignation was accepted by the Board. James R. Ray, who
was at that time President and Chief Executive Officer of the Company
was then elected as Chairman of the Board.
Subsequent thereto, the Company had acquired on January 31, 1996,
from James R. Hughes, 56 producing oil and gas wells. These properties
had been acquired from Mr. Hughes in a transaction to sell a Pole Mill
located in Quincy, LA and the office building and airplane and office
equipment associated therewith. Mr. Hughes had assumed certain
liabilities associated with the properties sold to him and had further
agreed to return approximately 400,000 shares of the Company's common
stock to the Company.
The above transaction was never consummated by Hughes and
consequently the Board of Directors authorized the filing of a
lawsuit against Mr. Hughes, certain employees of Hughes and the
Certified Public Accounting firm representing Hughes in the
transaction. This matter was settled on August 12, 1996 with the
Agreement that Phoenix would retain 46 of the producing wells, receive
a promissory note from Mr. Hughes in the amount of $1,000,000.00,
collateralized as agreed to by the parties, and would sell to Hughes
the entire Wood Products division of the Company known as Hughes Wood
Products, Inc. ("HWP") and Houston Woodtech, Inc. ("HWI"), a wholly
owned subsidiary of HWP.
Phoenix had returned the stock of HWP, subject to the performance
by Phoenix of certain guarantees relating to the obligations owed to
Agriculture Production Credit Association ("AgPCA"). Hughes agreed to
execute a liabilities undertaking whereby he agreed to assume and pay
all obligations and indebtedness of HWP or HWI owing to AgPCA and
Phoenix was to deliver the stock of WHP and HWI. This note, in
<PAGE> 4
original principal amount of $3,551,000.00 was dated September 10,
1993, signed by Hughes Wood Products (now Phoenix Resources
Technologies, Inc.), Hughes Wood Products, Inc. and Houston Woodtech,
Inc. and was related to the business of Hughes Wood Products, Inc. and
Houston Woodtech, Inc.
2. Judgment by Agricultural Production Credit Association against
Phoenix Settled
On December 31, 1996 an interlocutory Default Judgment was entered
against Phoenix, in the District Court, 11th Judicial District, Smith
County Texas by Agricultural Production Credit Association ("AgPCA")
in the principal amount of $3,045,140.35, together with pre-judgment
interest from October 1, 1996 to date of Judgment. The entire unpaid
principal and interest as of date of Judgment was $3,177,300.74
together with Attorney fees on $58,747.00.
This Judgment was also entered in Wood County Circuit Court,
Parkersberg, West Virginia on March 17, 1997, in the principal amount
of $3,236,048.24 and also filed in the District Court, County of
Arapaho, State of Colorado on September 26, 1997 in the principal
amount of $3,236,047.74.
This debt is one that the Company was indemnified from by Hughes
Wood Products, Inc. in the sale of Hughes Wood Products, Inc. and
Houston Woodtech, Inc. to James R. Hughes, Sr. in 1966. However in
the later part of 1996 Hughes Wood Products, Inc. ("HWP") filed for
bankruptcy in the United States Bankruptcy Court for the Eastern
Division of Texas, Beaumont Division. On May 22, 1997 the Court
approved HWP Third Amended Plan of Reorganization. The AgPCA debt of
$3,189,068.00, together with interest and other fees and expenses and
attorney fees, was allowed as a Class 4 Secured Claim in the
principal amount of $3,189,068.74, and constituted a lien on the
Debtors property as set out in the Loan document.
From that time to May 1998, AgPCA has reduced the amount of the
debt through foreclosures on HWP and HWI properties to approximately
$1,100,000.00. AgPCA is in the process of pursuing Guarantors of the
debt, including MVP Holdings, Inc., which assumed the debt in a
transaction as set out hereafter.
On August 21, 1998, AgPCA filed litigation titled "Petition to
Enforce Final Judgment" for collection of an unsatisfied balance of
approximately $1,092,100 as of May 6, 1998, in Texas District Court
against 17 named co-defendants, including the Company and its former
officers, including Racketeering, Influence and Corrupt Organization
(RICO) statute violations.
In March 1997 sale of the Company's assets to and assumption of
liabilities by MVP Holdings, Inc., the Company was specifically
indemnified in the sale document as follows: "The Purchaser [MVP] will
guarantee seller [Company] that all debts of any kind including but not
limited to amounts owed to the United States Treasury Department, the
State of Texas, Agricultural Production Credit Association and or
Community Bank, N.A., incurred or owed by the Phoenix Resources
Technologies, Inc. as of the closing date except the specific debts to
be retained by Seller under this agreement will be paid on a timely
basis." Accordingly, the Company vigorously pursued all avenues
available to it in order to cancel this judgment and related
litigation.
<PAGE> 5
On July 27, 1999, the Company entered into a Forbearance Agreement
with AgPCA whereby the Company will pay AgPCA the total sum of $100,000
cash prior to the effective date of its merger or combination with a
Private investor in full settlement of the Company's participation in
the litigation discussed above. In the event that a merger or
combination with a Private investor does not occur within one (1) year
of the execution of the Agreement, the Agreement shall immediately and
automatically terminate. The October 29, 1999, execution of the Stock
Acquisition Contract triggered the liability to pay the $100,000 in
settlement of this Forbearance Agreement and the amount was accrued at
the date of the Forbearance Agreement. The liability under this
Agreement is to be paid from the proceeds to be collected from the
Stock Acquisition Contract related to the sale of 9,000,000 shares of
the Company's common stock. Of the balance due on the settlement,
$50,000 has been paid by the Company subsequent to October 31, 1999.
3. Acquisition of Controlling Interest in Rocky Mountain Crystal
Waters, Inc.
On the 31st of January, 1997, Phoenix acquired controlling shares
of Rocky Mountain Crystal Water, Inc. ("RMCW") in a stock for stock
exchange wherein Phoenix issued 6,000,000 shares of Class B Preferred
stock, convertible into 60,000,000 shares of Phoenix common stock at
the option of RMCW. RMCW transferred to Phoenix 6,000,000 shares of
RMCW.
RMCW owned the rights to produce water from the aquifer located in
Ten Sleep, Wyoming and had a pilot plant in Ten Sleep for the
production and distribution of the spring water.
On the next day the Board of Directors of Phoenix consisting of
James R. Ray and George W. Smith resigned and a new Board of Directors
was appointed, consisting of Michael Puhr, Lorina Liang and Allen Wen
Jen Lan.
4. Sale of all Oil and Gas Operating Interests to MVP Holdings, Inc.
On March 10, 1997, Phoenix entered into an Agreement with MVP
Holdings, Inc. ("MVP"), a Nevada corporation. The Agreement
essentially called for Phoenix to sell to MVP all of its operating
assets excepting the RMCW operation. The properties being sold
consisted of the West Virginia Oil and Gas Properties, including the
pipeline systems known as Broad Run Pipeline, HPC Pipeline and Panther
Pipeline and the rights-of-way associated with these pipelines; the
Louisiana Oil and Gas Properties and miscellaneous other properties and
assets owned by Phoenix, including all accounts receivable and payables
incurred in the operation of the Oil and Gas properties, inventories of
Oil and Gas and Assignment of the Erin Oil Co. Contract to drill
wells; note receivable from James R. Hughes and note receivable from
Erin Oil; right title and interests in all Watermaker and Watermaker
projects.
The purchase price for these properties was $14,000,000.00 payable
by issuance of 4,000,000 shares of the common stock of MVP, a Public
Corporation. The stock price at the time of sale was approximately
$3.50 per share and was considered to be substantially equal to the
purchase price of $14,000,000.00. The Agreement also provided that if
the market price of the shares falls below $3.50 and remains there for
<PAGE> 6
a period of 90 days, Phoenix would be entitled to receive additional
shares of MVP needed to keep the value of such shares equal to
$14,000,000.00. No additional shares were issued pursuant to this
Agreement, and the stock was distributed to shareholders of the Company
in 1998.
MVP also agreed to indemnify and hold Phoenix harmless from all
liabilities that currently existed at the time of the transaction,
including the AgPCA Judgment and any IRS claims arising out of the
operation of HWP and HWI, that may be made.
On April 9, 19997, the above Agreement was modified to give MVP
the right of first refusal and a right to repurchase the shares issued
to Phoenix in the event that Phoenix desired to sell said shares.
5. Garnishee Judgment against Phoenix.
On March 20, 1997, the Company was named as a Garnishee in the
settlement of a Judgment rendered against James R. Ray, the Company's
former President and Chief Executive Officer. The Judgment placed
against the Company by the Superior Court of the State of Arizona,
Maricopa County, was in the amount of $266,205.91 plus interest at 10%
per annum until paid in full. On October 29, 1999, the garnishment was
settled for by agreement with the Company to pay the claimant $200,000
cash. Of the balance due on the settlement, $100,000 has been paid by
the Company subsequent to October 31, 1999.
6. Divestiture of Rocky Mountain Crystal Waters, Inc. and settlement
of claims against Phoenix.
On September 20, 1997 Phoenix Board of Directors determined that
it was in the best interests of the Company to rescind the acquisition
of RMCW. RMCW was not performing up to expectations and RMCW was
making a claim that Phoenix was unable to properly fund the operation
of RMCW due to the suppression of books and records of Phoenix; loss
of financing due to the inability of Phoenix to produce audits or
accurate in-house financial statements; loss of revenue by RMCW by
reason of the above. RMCW also claimed business interruption due to
actions of Phoenix and, in addition, that Phoenix failed to disclose
liabilities in excess of five million dollars, consisting of
AgPCA note and possible liabilities to the IRS.
RMCW had threatened to commence suit against Phoenix based on the
foregoing.
7. Adoption of New Business Plan and Actions Relating thereto.
To remedy this situation, and to get Phoenix back as a full
reporting company, the Board determined that specific actions
were required which had the possibility of returning value to the
shareholders of Phoenix. In conjunction therewith the Board of
Directors on September 20, 1997 entered into an Agreement with M. D.
Price, Jr., acting as Escrow Agent ("Price"), whereby the Board
authorized the issuance of fifteen million shares of restricted common
stock to Price. Price agreed to seek and obtain a suitable merger or
acquisition agreement with an on-going privately owned business;
engage a qualified public accounting firm to audit the corporate
financial records; validate the corporation's corporate status
and facilitate the filing of all delinquent reports with the U. S.
Securities and Exchange Commission. At the time of the stock being
<PAGE> 7
issued to the Escrow Agent the Company's stock was trading at
approximately $0.04 per share. Due to the restricted nature of the
stock the value for the Subscription Agreement was determined to be
$0.016 per share or $240,000.00 fair value. The Subscription Agreement
is to be settled upon the successful completion of a merger or
acquisition with an on-going private business.
As the next step, the Board of Directors, consisting of Michael
Puhr, Lorina Liang and Allen Wen Jen Lan, on September 22, 1997
appointed a new Board of Directors consisting of William C. Nichols,
Robert Eckman and Paula Nichols. The old Board members then resigned.
Concurrently therewith, the Company entered into an Agreement with
RMCW which essentially reversed the acquisition of RMCW on January 31,
1997. RMCW returned the 6,000,000 shares of Class B Preferred stock
and Phoenix returned the 6,000,000 shares of common stock of RMCW.
All liabilities of Phoenix relating to the operation of RMCW were
assumed by RMCW and RMCW indemnified Phoenix with respect to these
liabilities.
In settlement of RMCW claim against Phoenix, Phoenix agreed to
transfer to RMCW the stock of MVP Holdings, Inc. and the right to
any increases of MVP stock under that Agreement, and subject to MVP's
right of first refusal. MVP exercised the right of first refusal, and
in connection therewith reissued the 4,000,000 shares to Phoenix with
the Agreement that Phoenix would distribute the shares to its
shareholders. This was done on September 22, 1997, and the record date
for determining shareholders entitled to receive the MVP stock was set
as October 1, 1997. The stock was distributed shortly thereafter to
Phoenix shareholders.
Following the above actions, Phoenix had no assets and
undetermined liabilities. All known liabilities were assumed by MVP in
its transaction with Phoenix, and the AgPCA and IRS claim were also
subject to an indemnity from HWP, and was a part of AgPCA lien
granted by the Bankruptcy Court and had been substantially reduced
by foreclosure on properties and assets of HWP.
8. Sale of Assets to MVP Holdings, Inc.
On March 10, 1997, the Company sold all of its assets to MVP
Holdings, Inc. in exchange for 4,000,000 shares of MVP Holdings, Inc.,
and the assumption of all liabilities. In October, 1997 the Company
distributed all of its holdings in MVP Holdings, Inc. to its
shareholders as a property distribution.
9. Shell Corporation
On October 31, 1999, Phoenix Resources Technologies, Inc. was a
shell corporation.
10. Stock Acquisition Agreement
The Company entered into a Stock Acquisition Agreement on October
29, 1999, with Benjamin E. Traub, as agent for certain principals,
whereby a total of 9,000,000 Section 144 shares of common stock were
purchased for $300,000.00. A further 300,000 shares of restricted
stock were issued to M.D. Price, Jr., in connection with his role as
Escrow Agent to which the former Board of Directors determined that the
reasonable value of Mr. Price's services as Escrow Agent carried a
dollar value of $1,000.00.
<PAGE> 8
11. New Board of Directors Elected
The Company elected a new Board of Directors on October 30, 1999,
comprising of President: Mr. Benjamin E. Traub, Vice President: Robert
Seitz and Secretary - Treasurer: Judee Fayle.
12. Management Company's Services Engaged
Subsequent to the Company's October 31, 1999, fiscal year end, the
Company entered into a Management Agreement dated November 1, 1999,
with Cyclone Financing Group, Inc. ("Cyclone"), a Canadian corporation
located at 2nd Floor, 827 West Pender Street, Vancouver, British
Columbia, Canada V6C 3G8. Cyclone is an entity related through
common management personnel who are also shareholders of the Company.
A total of US$35,000.00 is payable to Cyclone, as a monthly management
fee, for the management of the Company's affairs including: locating
and negotiations for merger and/or acquisition prospects,
administration, bookkeeping, faxing, photocopying, telephone charges,
office space, supplies, news dissemination, filings with the SEC,
management of various professional services such as accounting and
legal work and other related operational costs.
13. Option to Purchase 100% of HHPN Development Corporation
Cyclone Financing Group, Inc., entered into an agreement on
October 26, 1999, with certain parties who control HHPN Development
Corporation, to purchase up to 100% of HHPN and associated products for
a total of one hundred and seventy five million dollars in three stages
as outlined in the Exhibits (HHPN Option Agreement). HHPN Development
Corporation is a Delaware corporation based in San Diego, California.
The owners of HHPN Development Corp., have created a suite of Web
development tools, code named DBPanacea, which are designed to increase
the flexibility while lowering the cost of developing Web sites that
require database functionality, i.e. internet based business
applications and Web sites used for e-commerce transactions.
Its developers believe DBPanacea has some significant and
noticeable advantages over competing products, especially in areas such
as reducing overall development costs and time-to-production.
Additionally, applications developed with DBPanacea are platform and
database independent. Once all planned functionality has been
implemented, sites developed with DBPanacea will run on NT, UNIX, LINUX
or MAC without recoding, using SQL, Sybase, Oracle and most other
database engines. DBPanacea will run on any webserver including Apache,
Microsoft's Information Server, Netscape Server or any other server
that supports servlets making DBPanacea potentially one of the most
flexible and user friendly web development tools worldwide.
Cyclone Financing Group, Inc. has assigned this agreement to
Phoenix Resources Technologies, Inc., under agreement dated November 3,
1999, at no charge to the Company. There is no guarantee that the
Company will exercise the option to acquire HHPN.
EMPLOYEES
Other than the Officers, the Company had no other employees in
1999.
<PAGE> 9
ITEM 2. PROPERTIES.
The Registrant has no assets and no properties as of October 15,
1999.
Executive and Administrative Offices
The Registrant offices are located at 15945 Quality Trail North,
Scandia, Minnesota 55073. The Company also uses office space in the
offices of Cyclone Financing Group, Inc., a company with which a
management agreement is in place as detailed in Item 12 of Part I
hereof.
ITEM 3. LEGAL PROCEEDINGS
Agricultural Production Credit Association
The Company was a co-maker on a loan payable to Agricultural
Production Credit Association (AG-PCA) along with its former
subsidiary, Hughes Wood Products, Inc. and Houston Woodtech, Inc. On
March 17, 1997, AG-PCA foreclosed on the underlying assets
collateralizing the loan and was subsequently granted an approximate
$3,236,048 judgment collectively against the Company, Hughes Wood
Products, Inc. and Houston Woodtech, Inc.
On August 21, 1998, AG-PCA filed litigation titled "Petition to
Enforce Final Judgment" for collection of an unsatisfied balance of
approximately $1,092,100, as of May 6, 1998, in Texas District Court
against 17 named co-defendants, including the Company and its former
officers. The litigation alleged various actions on behalf of the
Company, its former officers, including Racketeering, Influence and
Corrupt Organization (RICO)statute violations.
In the March 1997 sale of the Company's assets to and assumption
of liabilities by MVP Holdings, Inc., the Company was specifically
indemnified in the sale document as follows: "The Purchaser (MVP)
will guarantee seller (Company) that all debts of any kind including,
but not limited to amounts owed to the United States Treasury
Department, the State of Texas, Agricultural Production Credit
Association and or Community Bank, N. A., incurred or owed by the
Phoenix Resources Technologies, Inc. as of the closing date except the
specific debts to be retained by Seller under this Agreement will be
paid on a timely basis." Accordingly the Company vigorously pursued
all avenues available to it in order to cancel this judgment and
related litigation.
On July 27, 1999, the Company entered into a Forbearance Agreement
with AgPCA whereby the Company will pay AgPCA the total sum of $100,000
cash prior to the effective date of its merger or combination with a
Private investor in full settlement of the Company's participation in
the litigation discussed above. In the event that a merger or
combination with a Private investor does not occur within one (1) year
of the execution of the Agreement, the Agreement shall immediately and
automatically terminate. The October 27, 1999, execution of the Stock
Acquisition Contract triggered the liability to pay the $100,000 in
settlement of this Forbearance Agreement and the amount was accrued at
the date of the Forbearance Agreement. The liability under this
<PAGE> 10
Agreement is to be paid from the proceeds to be collected from the
Stock Acquisition Contract related to the sale of 9,000,000 shares of
the Company's common stock.
Garnishment Payable
On March 20, 1997, the Company was named as the Garnishee in the
settlement of a judgment rendered against Mr. James R. Ray, the
Company's former president and chief executive officer. The
garnishment placed against the Company by the Superior Court of the
State of Arizona, Maricopa County, was in the amount of $266,205.91,
plus interest at 10.0% per annum until paid in full. The Company
accrued this garnishment as a current liability and accrued the
requisite interest on the unpaid balance through October 27, 1999. On
October 27, 1999, the garnishment was settled for by agreement with the
Company to pay the claimant $200,000 cash. Of the balance due on
settlement, $100,000 was paid by the Company subsequent to October 31,
1999. The difference between the accrued amount and the $200,000 was
credited to operations as forgiveness of debt.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Amendment to the Company's Articles
On October 4, 1999, and pursuant to the Revised Corporate Statutes
of the State of Nevada, and by proper shareholder vote of 55.55%, the
Company adopted the following Articles of Amendment to the Articles of
Incorporation:
1. Statement of Amendment: The amendment alters Article VII of
the original Articles of Incorporation, filed with the State of Nevada
on July 7, 1995:
Article VII
The aggregate number of shares which this Corporation shall
have the authority to issue is One Hundred Million shares
(100,000,000) of $0.001 par value each, which shares shall be
designated "Common Stock" and ten million (10,000,000) shares of
$0.001 par value each, which shares shall be designated "Preferred
Stock" and which may be issued in one or series at the discretion
of the Board of Directors. In establishing a series, the Board of
Directors shall give to it a distinctive designation so as to
distinguish it from the shares of all other series and classes;
shall fix the number of shares in such series, and the
preferences, rights and restrictions thereof. All shares of any
one series shall be alike in every particular manner except as
otherwise provided by these Articles of Incorporation or the
Corporate Laws of Nevada.
The Amendment to Article VII of the original Articles of
Incorporation was approved, in accordance with Section 78.385 and
Section 78.390 of the Revised Corporate Statutes of the State of
Nevada, by proper shareholder vote on October 2, 1999.
Reverse Split
On October 15, 1999 the Company's shareholders, by a 55.5% vote,
authorized a 100 to 1 reverse-split of the common stock and authorized
the Directors and Officers of the Company to take such action as was
deemed necessary to carry out this action.
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS.
DESCRIPTION OF SECURITIES
General
The Registrant's Articles of Incorporation, as amended, authorize
the issuance of 100,000,000 shares of Common Stock of $0.001 par
value per share, with 9,272,400 shares outstanding as at fiscal year-
end, October 31, 1999, and 9,092,400 shares issued and outstanding as
at January 28, 2000.
The Registrants common stock, until April 24, 1996, was publicly
traded on the National Association of Securities Dealers, Inc.
Automated Quotation System under the symbol "PRTI", within the NASDAQ
Small Cap Market. In addition, the Registrants common stock was
crosslisted and traded under the symbol of "HRS", on the Boston Stock
Exchange until May 20, 1996, at which time it was deregistered
by the Exchange. The Registrants common stock which is registered
pursuant to Section 12(g) of the Securities Exchange Act, was
removed from listing and trading was suspended from the NASDAQ
Stock Market and the Boston Stock Exchange due to the company's
delinquency in filing its annual report and in preparing and submitting
LAS application forms with NASDAQ to list additional securities issued
in connection with its financing and acquisition activities during
the fiscal year 1996.
Cancellation of Preferred Stock
On October 4, 1999, through a Special Meeting of the Board of
Directors it was resolved that 6,000,000 Preferred shares issued to
Rocky Mountain Crystal Waters, Inc. were cancelled by contract between
Rocky Mountain Crystal Waters and the Company.
It was further determined that 1,200,000 shares of Class E
Preferred shares issued in the name of Pacific Corporate Equities LLC
("Pacific") in May of 1995, be cancelled. Mr. James Ray who was the
Company's President at the time the shares were issued to Pacific
stated that the shares were cancelled. Mr. Ray is trying to locate the
Partner of Pacific and stated that he had the shares in his possession
and thought that he had surrendered these shares to the transfer agent.
The transfer agent denies this.
It should also be noted that on October 4, 1999, as determined at
a Special Meeting of the Board of Directors, a former officer of the
Company and controlling party of an entity (Southwest Holdings, Inc.)
owning approximately 200,000 shares of Class A Preferred Stock, which
did not go through the transfer agent, tendered 100% of the issued and
outstanding shares of Class A Preferred Stock to the Company for
cancellation with no further consideration being due to the tendering
party. The par value of these issued and outstanding shares was
credited to additional paid-in capital upon their cancellation. On
October 15, 1999, through a Closing Resolution filed with Signature
Stock Transfer, Inc. all of the Company's preferred stock was
cancelled.
<PAGE> 12
Reissue of Section 144 Common Stock
On January 7, 2000, the Company returned 200,000 shares of Section
144 restricted common stock, formerly issued to Raven Capital Corp., to
the transfer agent for cancellation and subsequent reissue in another
party's name. These shares, which form part of the Stock Acquisition
Agreement of October 29, 1999, will be re-issued to another party at a
later date and will not affect the issued and outstanding capital of
the Company.
Reverse-Split (100:1) October 15, 1999
The Company, by way of a Special Meeting of the Board of Directors
held on October 15, 1999, approved and caused a 100 to 1 reverse-split
of the Company's common stock. The reverse-split was also authorized
at a shareholders meeting of same date.
Stock Acquisition Agreement
The Company entered into a Stock Acquisition Agreement on October
29, 1999, with Benjamin E. Traub, as agent for certain principals,
whereby a total of 9,000,000 Section 144 shares of common stock were
purchased for $300,000.00. A further 300,000 shares of restricted
stock were issued to M.D. Price, Jr., in connection with his role as
Escrow Agent to which the former Board of Directors determined that the
reasonable value of Mr. Price's services as Escrow Agent carried a
dollar value of $1,000.00.
Common Stock
Each outstanding share of common stock is fully paid and non-
assessable, and the holders thereof are entitled to one vote per
share at all meeting of shareholders. All shares are equal to each
other with regard to liquidation rights and dividends. The Articles
of Incorporation of the Registrant do not include preemptive rights to
purchase any additional shares of common stock and do not provide for
cumulative voting in the election of directors. In the event of
liquidation, dissolution or winding up of the Registrant, holders of
common stock will be entitled to receive on a pro rata basis all of
the assets of the Registrant after satisfaction of all liabilities.
The Company's common stock is presently traded on the Over the
Counter Bulletin Board, under the symbol "PRTI." The following table
sets forth, for the quarter indicated, the low and high bid prices per
share. Such quotations represent interdealer prices without retail
markup, markdown or commission, and do not represent actual
transactions.
Price Per Share
High Low
Fiscal Year 1998
First Quarter
(Nov 1/97 - Jan 31/98) $0.035 $0.01
Second Quarter
(Feb 1/98 - Apr 30/98) $0.02 $0.005
Third Quarter
(May 1/98 - Jul 31/98) $0.025 $0.015
Fourth Quarter
(Aug 1/98 - Oct 31/98) $0.0225 $0.01
<PAGE> 13
Price Per Share
High Low
Fiscal Year 1999
First Quarter
(Nov 1/98 - Jan 31/99 $0.03 $0.02
Second Quarter
(Feb 1/99 - Apr 30/99) $0.03 $0.02
Third Quarter
(May 1/99 - Jul 31/99) $0.045 $0.015
Fourth Quarter
(Aug 1/99 - Oct 31/99) $0.04 $0.02
As at October 31, 1999, there were 347 holders of common stock of
the Company. There have never been any dividends, cash or otherwise,
paid on the common shares of the Company.
Dividends
Holders of the common stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Registrant, out of funds legally available therefore. No dividend has
been paid on common stock since inception, and none is contemplated in
the foreseeable future.
Transfer Agent
The Registrant's Transfer Agent is Signature Stock Transfer, Inc.
located at 14675 Midway Road, Suite 221, Dallas, Texas 75244.
Recent Sales of Unregistered Securities
The Registrant's common stock, until April 24, 1996, was publicly
traded on the National Association of Securities Dealers, Inc.
Automated Quotation System under the symbol "PRTI", within the NASDAQ
Small Cap Market. In addition, the Registrants common stock was cross
listed and traded under the symbol of "HRS", on the Boston Stock
Exchange until May 20, 1996, at which time it was deregistered
by the Exchange. The Registrants common stock which is registered
pursuant to Section 12(g) of the Securities Exchange Act, was
removed from listing and trading was suspended from the NASDAQ
Stock Market and the Boston Stock Exchange due to the Companies
delinquency in filing its annual report and in preparing and submitting
LAS application forms with NASDAQ to list additional securities issued
in connection with its financing and acquisition activities during
the fiscal year 1996. However, the Registrant intends to reapply for
listing it's registered common stock on the NASDAQ Electronic
Bulletin Board, upon the filing of and becoming current with its
annual and periodic filing requirements. The range of high and low
bid quotations for the Company's common stock as provided by the
Electronic Bulletin Board and NASDQ for the past two years is
provided below. These over the counter market quotation reflect
inter-dealer prices without retail markup, markdown or commissions
and may not necessarily represent actual transactions.
In September 1997, the Company, in an effort to seek and obtain a
suitable merger or acquisition agreement with an on-going privately
owned business, issued 15,000,000 pre-split shares (150,000 post-
reverse split shares) of unregistered, restricted common stock into the
escrow account of the Company's former corporate attorney under a
subscription agreement. The attorney is responsible for securing the
Company's books and records, validating the Company's corporate status,
<PAGE> 14
procuring the services of a qualified independent certified accounting
firm to audit the Company's financial statements, facilitate the filing
of all delinquent reports with the US securities and Exchange
Commission and evaluate potential private companies for either merger
or acquisition. At the date of the execution of the subscription
agreement, the Company's common stock had an estimated market trading
price of approximately $0.04 per share on the date of the issuance of
these shares. Due to the restricted nature of the shares issued into
escrow, this Stock Subscription Agreement was valued at approximately
$0.016 per share, or approximately $240,000 in total, as the "fair
value" of this transaction. The Stock Subscription Agreement was to be
settled upon the successful merger with or acquisition of a suitable
private company.
In September 1999, in anticipation of a transaction involving a
change of control of the Company, the Company's Board of Directors and
the Company's former corporate attorney agreed to reprice the stock
subscription agreement to $0.001 per share, which equals the stated par
value of the common stock, as there had been a deterioration in the
quoted price of the Company's common stock and approximately two (2)
years of no operations in the Company. The final settlement of the
stock subscription agreement was a charge of approximately $15,000 to
operations for the various services performed by the Company's former
corporate attorney, as discussed above.
On October 29, 1999, the Company entered into a Stock Acquisition
Agreement with an unrelated third party for the purchase of 9,000,000
post-reverse split shares of restricted, unregistered common stock for
total proceeds of $300,000. The proceeds, when received, were
allocated to settle the outstanding judgment against the Company for
$200,000 and to pay $100,000 to retire the Forbearance Agreement with
the Agricultural Production Credit Association (AgPCA), which was
triggered by the execution of the Stock Acquisition Agreement.
Subsequent to October 31, 1999, the Company received $150,000 of the
amount due which was applied $100,000 to the payment of the outstanding
judgment and $50,000 to the Forbearance Agreement. In the event the
balance of $150,000 is not received by the Company then the unsold
portion of the 9,000,000 post-reverse split restricted shares will be
returned to the Company and the monies received to that point are non-
refundable.
In October 1999, in connection with the Stock Acquisition
Agreement, the Company agreed to issue 300,000 post-reverse split
shares of restricted, unregistered common stock in April 2000 to an
individual for services rendered in connection with the Stock
Acquisition Agreement. Pursuant to generally accepted accounting
principles, the Company will recognize a charge to operations for the
fair value of these shares, as calculated on the discounted (50.0%)
value of the quoted closing price of the Company's common stock on the
date of issuance as required in the Contract.
On December 17, 1999, the Company filed a Form S-8 Registration
Statement under the Securities Act of 1933 with the U.S. Securities and
Exchange Commission to register 900,000 post-reverse split shares of
common stock pursuant to the Company's 1999 Nonqualifying Stock Option
Plan (1999 Plan). As stated in the 1999 Plan document, "this [1999
Plan is] for persons employed or associated with the Company, including
without limitation any employee, director, general partner, officer,
attorney, accountant, consultant or advisor, is intended to advance the
<PAGE> 15
best interest of the Company by providing additional incentive to those
persons who have a substantial responsibility for its management,
affairs, and growth by increasing their proprietary interest in the
success of the Company, thereby encouraging them to maintain their
relationships with the Company."
On December 17, 1999, the Company granted options to purchase
200,000 shares of the Company's common stock at an exercise price of
$3.00 per share under the 1999 Nonqualifying Stock Option Plan to its
President. The options were granted in consideration of the value the
President and his Board brought to the Company since their takeover on
October 30, 1999. Additionally, the Company granted options to
purchase 100,000 shares each to board members, Judee Fayle and Robert
Seitz, at an exercise price of $3.00 per share. The decision of where
to set the exercise price was based on the pre-determined plan (prior
to takeover) to grant options to the board as close as possible to the
going rate for the Company's stock prior to takeover. The average
closing price of the Company's stock for the ten month period prior to
takeover was $2.27, after taking the reverse stock split into
consideration. On January 5, 2000, the President exercised 2,000
options for total proceeds to the Company of $6,000.00. The quoted
market price of the Company's stock at the date of exercise was
approximately $8.625. On January 24, 2000, both Robert Seitz and Judee
Fayle exercised 5,000 shares for total proceeds to the Company of
$30,000.00. The quoted market price of the Company's stock at January
24, 2000, was approximately $11.00. On January 28, 2000, both Robert
Seitz and Judee Fayle exercised a further 5,000 shares each for total
proceeds to the Company of $30,000.00. The quoted market price of the
Company's stock at January 28, 2000, was approximately $11.75. On
February 2, 2000, Ben Traub exercised 40,000 shares for total proceeds
to the Company of $120,000.00. The quoted market price of the
Company's stock at February 2, 2000, was $13.125. The differential
between the exercise price and the market price of the Company's stock
will be charged to operations on the exercise date.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
The Company has been newly reorganized, and its operations to date
have been in the areas of setting up the organization and financing.
The Company had no revenue in the last two years. During the same
period the Company had general and administrative expense in the amount
of $15,000, and some expense related to the settlement of its law suit.
The result is a loss of $21,689, or $0.05 per share.
The Company settled the interlocutory Default Judgment which was
filed against the Company on December 31, 1996, in the District Court,
11th Judicial District, Smith County Texas by Agricultural Production
Credit Association ("AgPCA") in the principal amount of $3,045,140.35,
together with pre-judgment interest from October 1, 1996 to date of
Judgment. The Judgment was also entered in Wood County Circuit Court,
Parkersberg, West Virginia on March 17, 1997, in the principal amount
of $3,236,048.24 and also filed in the District Court, County of
Arapaho, State of Colorado on September 26, 1997 in the principal
amount of $3,236,047.74. To May, 1998, AgPCA reduced the debt through
foreclosures on Hughes Wood Products, Inc. and Houston Woodtech, Inc.
<PAGE> 16
On July 27, 1999, the Company entered into a Forbearance Agreement
with AgPCA whereby the Company will pay AgPCA the total sum of $100,000
cash prior to the effective date of its merger or combination with a
Private investor in full settlement of the Company's participation in
the litigation discussed above. The October 29, 1999, execution of the
Stock Acquisition Agreement triggered the liability to pay $100,000 in
settlement of this Forbearance Agreement and the amount was accrued at
the date of the Forbearance Agreement. The liability is to be paid
from the proceeds collected from the Stock Acquisition Agreement
related to the sale of 9,000,000 shares of the Company's common stock.
Of the balance due on the settlement, $50,000 has been paid by the
Company subsequent to October 31, 1999.
On March 20, 1997, the Company was named as a Garnishee in the
settlement of a Judgment rendered against James R. Ray, the Company's
former President and Chief Executive Officer. The Judgment placed
against the Company by the Superior Court of the State of Arizona,
Maricopa county, was in the amount of $266,205.91 plus interest at 10%
per annum until paid in full. On October 29, 1999, the garnishment was
settled for by agreement with the Company to pay the claimant
$200,000.00 cash. Of the balance due on the settlement, $100,000 has
been paid by the Company subsequent to October 31, 1999.
Except for historical information, the matters discussed are
forward-looking statements which involve risks and uncertainties,
including, but not limited to economic, competitive, and technological
factors affecting the Company's operations, markets, products,
services, prices and other factors, which may cause results to differ
materially from the results discussed in the forward-looking
statements.
Liquidity and Capital Resources
The Company has plans to raise additional capital through private
placements, or otherwise, over the next 12 months in order to make it
possible to acquire a suitable business for the Company. This could
have an adverse effect on the balance sheet of the Company and make it
more difficult to issue other shares for cash to raise additional
capital.
Product Research and Development
The Company does not anticipate conducting any product research
and development during the next 12 months that would require
significant capital.
Purchases or Sale of Plan and Equipment
The Company anticipates that it will not need any purchase of
significant plant or equipment in the near future.
ITEM 7. INDEX TO FINANCIAL STATEMENTS
The required accompanying financial statements begin on the
following page:
<PAGE> 17
PHOENIX RESOURCES TECHNOLOGIES, INC.
CONTENTS
Page
Report of Independent Certified Public Accountants F-1
Financial Statements
Balance Sheets as of October 31, 1999 and 1998 F-2
Statements of Operations and Comprehensive Income
For the years ended October 31, 1999 and 1998 F-3
Statement of Changes in Stockholders' Equity
for the years ended October 31, 1999 and 1998 F-4
Statements of Cash Flows
for the years ended October 31, 1999 and 1998 F-5
Notes to Financial Statements F-6
<PAGE> 18
S. W. HATFIELD, CPA
certified public accountants
[letterhead]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Phoenix Resources Technologies, Inc.
We have audited the accompanying balance sheets of Phoenix Resources
Technologies, Inc. (a Nevada corporation) as of October 31, 1999 and
1998 and the related statements of operations and comprehensive income,
changes in stockholders' equity and cash flows for each of the years
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Phoenix
Resources Technologies, Inc. as of October 31, 1999 and 1998 and the
related statements of operations, changes in stockholders' equity and
cash flows for each of the years then ended, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note A
to the financial statements, the Company has no viable operations or
significant assets and is dependent upon significant shareholders to
provide sufficient working capital to maintain the integrity of the
corporate entity. These circumstances create substantial doubt about
the Company's ability to continue as a going concern and are discussed
in Note A. The financial statements do not contain any adjustments
that might result from the outcome of these uncertainties.
/s/ S. W. Hatfield
S. W. HATFIELD, CPA
Dallas, Texas
January 7, 2000
P.O. Box 820395 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7212
(214) 342-9635 (voice) Fax (214) 342-9601
(800) 244-0639 [email protected]
F-1
<PAGE> 19
PHOENIX RESOURCES TECHNOLOGIES, INC.
BALANCE SHEETS
October 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
<S> <C> <C>
Current assets
Cash on hand and in bank $ - $ -
------------- -------------
TOTAL ASSETS $ - $ -
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Forbearance agreement payable $ 100,000 $ -
Judgment garnishment payable 200,000 293,311
------------- -------------
Total liabilities 300,000 293,311
------------- -------------
Commitments and contingencies
Stockholders' equity
Preferred stock - $0.001 par value.
50,000,000 shares authorized.
Series A - 5.0% annual dividend, non-
cumulative. Convertible into 1,000,000
shares of common stock after March 29,
2000. -0- and 200,000 shares issued and
outstanding, respectively - 200
Common stock - $0.001 par value.
100,000,000 shares authorized.
9,272,400 and 272,400 shares issued
and outstanding, respectively 9,272 272
Additional paid-in capital 13,405,140 13,338,940
Accumulated deficit (12,681,012) (12,659,323)
------------- -------------
733,400 680,089
Stock subscription receivable (300,000) (240,000)
Treasury stock - at cost
(5,600 shares) (733,400) (733,400)
------------- -------------
Total stockholders' equity (300,000) (293,311)
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ - $ -
============= =============
</TABLE>
The accompanying notes are an integral part
of these financial statements. F-2
<PAGE> 20
PHOENIX RESOURCES TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net revenues $ - $ -
Operating expenses
General and administrative expenses 15,000 -
--------- ---------
Total operating expenses 15,000 -
--------- ---------
Loss from operations (15,000) -
Other (expense) income
Cost of settlement of
contingent liability (100,000) -
Interest expense on
judgment garnishment (27,181) (26,620)
Forgiveness of debt related to
judgment garnishment 120,492 -
--------- ---------
Loss from continuing operations
before income taxes (21,689) (26,620)
Income tax benefit (expense) - -
--------- ---------
Net Loss (21,689) (26,620)
Other comprehensive income - -
--------- ---------
Comprehensive Loss $ (21,689) $ (26,620)
========= =========
Loss per weighted-average share of
common stock outstanding computed on
net loss - basic and fully diluted $ (0.05) $ (0.10)
========= =========
Weighted-average number of common
shares outstanding 395,688 272,400
========= =========
</TABLE>
The accompanying notes are an integral part
of these financial statements. F-3
<PAGE> 21
PHOENIX RESOURCES TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
Additional
Preferred Stock Common stock paid-in
Amount Shares Amount Shares capital
<S> <C> <C> <C> <C> <C>
Balances at November 1,
1997, as reported 200,000 $ 200 27,000,000 $ 27,000 $13,312,212
Effect of 1 for 100
reverse stock split,
including rounding
of fractional shares,
on October 15, 1999 - - (26,727,600) (26,728) 26,728
-------- ----- ----------- -------- -----------
Balances at November 1,
1997, as restated 200,000 200 272,400 272 13,338,940
Net loss for the year - - - - -
-------- ----- ----------- -------- -----------
Balances at
October 31, 1998 200,000 200 272,400 272 13,338,940
Return of and
cancellation of Series
A Preferred Stock
by shareholder (200,000) (200) - - 200
Repricing and settlement
of stock subscription
agreement - - - - (225,000)
Private sale of common
stock - - 9,000,000 9,000 291,000
Net loss for the year - - - - -
-------- ----- ----------- -------- ------------
Balances at
October 31, 1999 - $ - 9,272,400 $ 9,272 $ 13,405,140
======== ===== =========== ======== ============
The accompanying notes are an integral part
of these financial statements. F-4a
<PAGE> 22
PHOENIX RESOURCES TECHNOLOGIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended October 31, 1999 and 1998
Stock subscription Agreement
and Treasury stock
------------------- Accumulated
Shares Amount deficit Total
<S> <C> <C> <C> <C>
Balances at November 1,
1997, as reported 15,560,000 $ (973,400) $ (12,632,703) $ (266,691)
Effect of 1 for 100
reverse stock split,
including rounding
of fractional shares,
on October 15, 1999 (15,404,400) - - -
----------- ------------ ------------- ----------
Balances at November 1,
1997, as restated 155,600 (973,400) (12,632,703) (266,691)
Net loss for the year - - (26,620) (26,620)
----------- ------------ ------------- ----------
Balances at
October 31, 1998 155,600 (973,400) (12,659,323) (293,311)
Return of and cancellation
of Series A Preferred
Stock by shareholder - - - -
Repricing and settlement
of stock subscription
agreement (150,000) 240,000 - 15,000
Private sale of common
stock 9,000,000 (300,000) - -
Net loss for the year - - (21,689) (21,689)
----------- ------------ ------------- ----------
Balances at
October 31, 1999 9,005,600 $(1,033,400) $ (12,681,012) $ (300,000)
=========== =========== ============= ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements. F-4b
<PAGE> 23
PHOENIX RESOURCES TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
Years ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities
Net loss for the year $ (21,689) $ (26,620)
Adjustments to reconcile net loss to net
cash provided by operating activities
Common stock issued for consulting fees 15,000 -
Increase in interest payable on judgment
garnishment payable 27,181 26,620
Forgiveness of debt related to
judgment garnishment (120,492) -
Accrual of forbearance agreement payable 100,000 -
---------- ---------
Net cash used in operating activities - -
---------- ---------
Cash flows from investing activities - -
---------- ---------
Cash flows from financing activities - -
---------- ---------
INCREASE (DECREASE) IN CASH - -
Cash at beginning of year - -
---------- ---------
Cash at end of year $ - $ -
========== =========
Supplemental disclosure of interest and
income taxes paid
Interest paid for the period $ - $ -
========== =========
Income taxes paid for the period $ - $ -
========== =========
</TABLE>
The accompanying notes are an integral part
of these financial statements. F-5
<PAGE> 24
PHOENIX RESOURCES TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Phoenix Resources Technologies, Inc. (Company) was originally
incorporated in 1986 as Firma, Inc. under the laws of the State of
Colorado as a corporation organized to take advantage of unspecified
business opportunities. In 1991, in accordance with a reorganization
agreement, the Company acquired 100% of the issued and outstanding
stock of Hughes Wood Products, Inc., a privately-owned Texas
corporation, and changed its corporate name to Hughes Resources, Inc.
Hughes Wood Products, Inc. became a wholly-owned subsidiary of the
Company.
Pursuant to a plan of merger and reorganization, the Company, as a
Colorado corporation, merged into Hughes Resources, Inc., a Nevada
corporation, on June 27, 1995. The purpose of this merger was to
redomicile the Company from Colorado to Nevada. The Nevada corporation
had been formed solely for this reorganization purpose and had no
assets, liabilities or operations prior to the merger. The Articles of
Incorporation of the surviving Nevada corporation were amended to
increase the authorized number of common shares to 100,000,000 with a
par value of $0.001 each and to increase the authorized number of
preferred shares to 50,000,000 with a par value of $0.001 per share.
The Company has had no operations since the year ended October 31, 1996
and no operating assets since the year ended October 31, 1997.
Accordingly, the Company is solely dependent upon management and/or
significant shareholders to provide sufficient working capital to
preserve the integrity of the corporate entity at this time. It is the
intent of management and significant shareholders to provide sufficient
working capital necessary to support and preserve the integrity of the
corporate entity.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
The Company considers all cash on hand and in banks,
including accounts in book overdraft positions, certificates
of deposit and other highly-liquid investments with
maturities of three months or less, when purchased, to be
cash and cash equivalents.
Cash overdraft positions may occur from time to time due to
the timing of making bank deposits and releasing checks, in
accordance with the Company's cash management policies.
F-6
<PAGE> 25
PHOENIX RESOURCES TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
2. Income taxes
The Company utilizes the asset and liability method of
accounting for income taxes. At October 31, 1999 and 1998,
the deferred tax asset and deferred tax liability accounts,
as recorded when material, are entirely the result of
temporary differences. Temporary differences represent
differences in the recognition of assets and liabilities for
tax and financial reporting purposes, primarily the allowance
for doubtful accounts, accumulated depreciation and certain
liability items. A 100% valuation allowance was provided
against deferred tax assets, where applicable.
Due to the liquidation and/or disposition of all of the
Company's assets, liabilities and operations as of
October 31, 1997, the Company will have no available net
operating loss carryforwards available for use in future
years.
3. Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the
net income (loss) by the weighted-average number of shares of
common stock and common stock equivalents (primarily
outstanding options and warrants). Common stock equivalents
represent the dilutive effect of the assumed exercise of the
outstanding stock options and warrants, using the treasury
stock method. The calculation of fully diluted earnings
(loss) per share assumes the dilutive effect of the exercise
of outstanding options and warrants at either the beginning
of the respective period presented or the date of issuance,
whichever is later. As of October 31, 1999 and 1998, the
Company has no outstanding warrants and options.
NOTE C - DISCONTINUED OPERATIONS
On March 10, 1997, the Company sold all remaining assets to MVP
Holdings, Inc. in exchange for 4,000,000 shares of MVP Holdings, Inc.
restricted, unregistered common stock issued pursuant to Rule 144 of
the US Securities and Exchange Commission and the assumption of all
liabilities, known and unknown, of the Company. The shares received by
the Company had a street value of approximately $3.50 per share or an
aggregate approximate $14,000,000. This transaction was valued by the
Company at approximately $10,300,000, which approximates the net book
value of the assets transferred less the value of the liabilities
assumed. In October 1997, the Company distributed 100.0% of its
holdings in MVP Holdings, Inc. to its shareholders as a property
distribution.
F-7
<PAGE> 26
PHOENIX RESOURCES TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE D - PREFERRED STOCK TRANSACTIONS
On October 4, 1999, a former officer of the Company and controlling
party of an entity owning approximately 200,000 shares of Class A
Preferred Stock tendered 100% of the issued and outstanding shares of
Class A Preferred Stock to the Company for cancellation with no further
consideration being due to the tendering party. The par value of these
issued and outstanding shares was credited to additional paid-in
capital upon their cancellation.
NOTE E - COMMON STOCK TRANSACTIONS
On October 15, 1999, at a Special Meeting of the Shareholders, a 100
for 1 reverse split of the issued and outstanding common stock was
approved. The effects of this action are reflected in the accompanying
financial statements as of the first day of the first period presented.
On October 27, 1999, the Company entered into a Stock Acquisition
Agreement with an unrelated third party for the purchase of 9,000,000
post-reverse split shares of restricted, unregistered common stock for
total proceeds of $300,000. The proceeds, when received, were
allocated to settle the outstanding judgment against the Company for
$200,000 and to pay $100,000 to retire the Forbearance Agreement with
the Agricultural Production Credit Association (AgPCA), which was
triggered by the execution of the Stock Acquisition Agreement.
Subsequent to October 31, 1999, the Company received $150,000 of the
amount due which was applied $100,000 to the payment of the outstanding
judgment and $50,000 to the Forbearance Agreement.
In September 1997, the Company, in an effort to seek and obtain a
suitable merger or acquisition agreement with an on-going privately
owned business, issued 15,000,000 pre-split shares (150,000 post-
reverse split shares) of unregistered, restricted common stock into the
escrow account of the Company's former corporate attorney under a
subscription agreement. The attorney is responsible for securing the
Company's books and records, validating the Company's corporate status,
procuring the services of a qualified independent certified accounting
firm to audit the Company's financial statements, facilitate the filing
of all delinquent reports with the US Securities and Exchange
Commission and evaluate potential private companies for either merger
or acquisition. At the date of the execution of the subscription
agreement, the Company's common stock had an estimated market trading
price of approximately $0.04 per share on the date of the issuance of
these shares. Due to the restricted nature of the shares issued into
escrow, this Stock Subscription Agreement was valued at approximately
$0.016 per share, or approximately $240,000 in total, as the "fair
value" of this transaction. The Stock Subscription Agreement was to
settled upon the successful merger with or acquisition of a suitable
private company.
F-8
<PAGE> 27
PHOENIX RESOURCES TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE E - COMMON STOCK TRANSACTIONS - Continued
In September 1999, in anticipation of a transaction involving a change
in control of the Company, the Company's Board of Directors and the
Company's former corporate attorney agreed to reprice the stock
subscription agreement to $0.001 per share, which equals the stated par
value of the common stock, as there had been a deterioration in the
quoted price of the Company's common stock and approximately two (2)
years of no operations in the Company. The final settlement of the
stock subscription agreement was a charge of approximately $15,000 to
operations for the various services performed by the Company's former
corporate attorney, as discussed above.
In October 1999, in connection with the Stock Acquisition Agreement,
the Company agreed to issue 300,000 post-reverse split shares of
restricted, unregistered common stock in April 2000 to an individual
for services rendered in connection with the Stock Acquisition
Agreement. Pursuant to generally accepted accounting principles, the
Company will recognize a charge to operations for the fair value of
these shares, as calculated on the discounted (50.0%) value of the
quoted closing price of the Company's common stock on the date of
issuance as required in the Contract.
NOTE F - LITIGATION
Agricultural Protection Credit Association
The Company was a co-maker on a loan payable to Agricultural Production
Credit Association (AgPCA) along with its former subsidiaries, Hughes
Wood Products, Inc. and Houston Woodtech, Inc. On March 17, 1997,
AgPCA foreclosed on the underlying assets collateralizing the loan and
was subsequently granted an approximate $3,236,048 judgment
collectively against the Company, Hughes Wood Products, Inc. and
Houston Woodtech, Inc.
On August 21, 1998, AgPCA filed litigation titled "Petition to Enforce
Final Judgment" for collection of an unsatisfied balance of
approximately $1,092,100, as of May 6, 1998, in Texas District Court
against 17 named co-defendants, including the Company and its former
officers. The litigation alleged various actions on behalf of the
Company, its former officers, including Racketeering, Influence and
Corrupt Organization (RICO) statute violations.
In the March 1997 sale of the Company's assets to and assumption of
liabilities by MVP Holdings, Inc., the Company was specifically
indemnified in the sale document as follows: "The Purchaser [MVP] will
guarantee seller [Company] that all debts of any kind including but not
limited to amounts owed to the United States Treasury Department, the
State of Texas, Agricultural Production Credit Association and or
Community Bank, N. A., incurred or owed by the Phoenix Resources
Technologies, Inc. as of the closing date except the specific debts to
be retained by Seller under this agreement will be paid on a timely
basis." Accordingly, the Company vigorously pursued all avenues
available to it in order to cancel this judgment and related
litigation.
F-9
<PAGE> 28
PHOENIX RESOURCES TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE F - LITIGATION - Continued
On July 27, 1999, the Company entered into a Forbearance Agreement with
AgPCA whereby the Company will pay AgPCA the total sum of $100,000 cash
prior to the effective date of its merger or combination with a Private
investor in full settlement of the Company's participation in the
litigation discussed above. In the event that a merger or combination
with a Private investor does not occur within one (1) year of the
execution of the Agreement, the Agreement shall immediately and
automatically terminate. The October 27, 1999 execution of the Stock
Acquisition Agreement triggered the liability to pay the $100,000 in
settlement of this Forbearance Agreement and the amount was accrued at
the date of the Forbearance Agreement. The liability under this
Agreement is to be paid from the proceeds to be collected from the
Stock Acquisition Agreement related to the sale of 9,000,000 shares of
the Company's common stock.
Garnishment payable
On March 20, 1997, the Company was named as the Garnishee in the
settlement of a judgment rendered against Mr. James R. Ray, the
Company's former president and chief executive officer. The
garnishment placed against the Company by the Superior Court of the
State of Arizona, Maricopa County, was in the amount of $266,205.91,
plus interest at 10.0% per annum until paid in full. The Company
accrued this garnishment as a current liability and accrued the
requisite interest on the unpaid balance through October 27, 1999. On
October 27, 1999, the garnishment was settled for by agreement with the
Company to pay the claimant $200,000 cash. Of the balance due on the
settlement, $100,000 was paid by the Company subsequent to October 31,
1999. The difference between the accrued amount and the $200,000 was
credited to operations as forgiveness of debt.
NOTE G - RELATED PARTY COMMITMENTS
The Company has executed a management agreement with Cyclone Financing
Group, Inc. of 2nd Floor, 827 West Pender Street, Vancouver, British
Columbia, Canada V6C 3G8, an entity related through common management
personnel who are also shareholders of the Company, at the amount of
$35,000 (US Dollars) per month, effective November 1, 1999. This
amount represents a management fee payable for the management of the
company's affairs including: acquisition of projects, raising monies,
administration (i.e. bookkeeping, photocopying, faxing, office space,
telephone charges, supplies, news dissemination) and other related
operational costs. Cyclone has billed the Company a total of $70,000
for the period from November 1, 1999 through December 31, 1999.
F-10
<PAGE> 29
PHOENIX RESOURCES TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE H - SUBSEQUENT EVENTS
On December 17, 1999, the Company filed a Form S-8 Registration
Statement under The Securities Act of 1933 with the U. S. Securities
and Exchange Commission to register 900,000 post-reverse split shares
of common stock pursuant to the Company's 1999 Nonqualifying Stock
Option Plan (1999 Plan). As stated in the 1999 Plan document, "This
[1999 Plan is] for persons employed or associated with the Company,
including without limitation any employee, director, general partner,
officer, attorney, accountant, consultant or advisor, is intended to
advance the best interest of the Company by providing additional
incentive to those persons who have a substantial responsibility for
its management, affairs, and growth by increasing their proprietary
interest in the success of the Company, thereby encouraging them to
maintain their relationships with the Company."
On December 17, 1999, the Company granted options to purchase 200,000
shares of the Company's common stock at an exercise price of $3.00 per
share under the 1999 Nonqualifying Stock Option Plan to its President.
The options were granted in consideration of the value the President
and his Board brought to the Company since their takeover on October
30, 1999. Additionally, the Company granted options to purchase
100,000 shares each to board members, Judee Fayle and Robert Seitz, at
an exercise price of $3.00 per share. The decision of where to set the
exercise price was based on the pre-determined plan (prior to takeover)
to grant options to the board as close as possible to the going rate
for the Company's stock prior to takeover. The average closing price
of the Company's stock for the ten month period prior to takeover was
$2.27, after taking the reverse stock split into consideration. On
January 5, 2000, the President exercised 2,000 options for total
proceeds to the Company of $6,000.00. The quoted market price of the
Company's stock at the date of exercise was approximately $8.625. The
differential between the exercise price and the market price of the
Company's stock will be charged to operations on the exercise date.
On November 3, 1999, the Company acquired an option to purchase up to
100% of HHPN Development Corporation ("HHPN"), an unrelated company
located in San Diego, California, HHPN has developed a software
program that is used to develop database applications on the internet.
F-12
<PAGE> 30
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
NONE
PART III
ITEM 9. OFFICERS AND DIRECTORS
New Board of Directors Elected
The Company elected a new Board of Directors on October 30, 1999,
comprising of President: Mr. Benjamin E. Traub, Vice President: Robert
Seitz and Secretary/Treasurer: Judee Fayle.
The officers and directors of Registrant are as follows:
Name Age Position
Benjamin E. Traub 36 President, Director
Robert Seitz 30 Vice President, Director
Judee Fayle 41 Secretary/Treasurer, Director
Benjamin E. Traub
Mr. Traub is the President and a Director of the Company. From
1991 to 1997, Mr. Traub was President of the Vancouver, British
Columbia based, Imagenation Media Corp., a marketing consulting firm
specializing in relationship and direct marketing. Mr. Traub presently
serves in his capacity as President and Chief Executive Officer of
Cyclone Financing Group, Inc., a Vancouver, British Columbia based
consulting firm specializing in corporate management and financial
marketing. Mr. Traub is responsible for developing corporate
strategies and overall business development.
Robert Seitz
Mr. Seitz is the Vice President and a Director of the Company.
From June of 1994 to October of 1996, Mr. Seitz provided customer
service, promotion and marketing skills to Host International Canada,
a Vancouver, British Columbia based company which provides airport
services. From November 1996 to February 1998, Mr. Seitz provided
customer service and event co-ordination services to the Vancouver
Trade and Convention Center. In April of 1998 until August of 1999,
Mr. Seitz designed and set up various web pages for the Vancouver based
company Public Image Inc., a company that provides contract labor for
client firms, including dissemination of information and development of
corporate overviews.
<PAGE> 31
Judee Fayle
Ms. Fayle is the Secretary/Treasurer, Chief Financial Officer and
a Director of the Company. From June of 1993 to April 1995, in her
capacity as Manager - Investor Relations, Ms. Fayle worked for the
Northair Group of Companies, a Vancouver, British Columbia based
management company to several Vancouver and/or Toronto Stock Exchange
publicly traded companies. From October 1996 to March of 1997, Ms.
Fayle worked for Image Power, Inc., a Vancouver Stock Exchange public
company, as Manager - Administration. From October 1997 to March of
1998, Ms. Fayle held the position of Manager - Administration for a
Toronto Stock Exchange publicly traded company, Napier International
Technologies, Inc. Ms. Fayle also worked for the Vancouver Stock
Exchange's Listings Department, for a three year period.
The directors of the Company are elected annually by the
shareholders for a term of one year or until their successors are
elected and qualified. The officers serve at the pleasure of the Board
of Directors.
ITEM 10. EXECUTIVE COMPENSATION
None of the Registrant's current officers or directors receives or
has received any salary from Registrant during the preceding five
years. Directors do not receive compensation for their services as
directors and are not reimbursed for expenses incurred in attending
board meeting.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
As of the Company's fiscal period ended October 31, 1999, there
were a total of 9,272,400 shares of the Company's common stock
outstanding and as at January 28, 2000, there are presently 9,092,400
outstanding shares of the Company's common stock.
The following table sets forth the information as to the ownership
of each person who, as of the date of this Form 10-KSB, owns of record,
or is known by the Company to own beneficially, more than five percent
(5%) of the Company's common stock, and the officers and directors of
the Company.
Shares of Percentage of
Name Common Stock Ownership
Wealthy Investor
Network Inc, [1] 7,292,000 78%
Robert Seitz 25,000 <1%
Judee Fayle 25,000 <1%
All officers and directors
as a group (3 persons) 7,362,000 79%
[1] Mr. Benjamin E. Traub is the beneficial owner of Wealthy Investor
Network, Inc.
<PAGE> 32
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Cyclone Financing Group, Inc., is the management company for
Phoenix Resources Technologies, Inc. Ben Traub is president of both
companies and 100% owner of Cyclone Financing Group, Inc.
Management Company's Services Engaged
Subsequent to the Company's October 31, 1999, fiscal year end, the
Company entered into a Management Agreement dated November 1, 1999,
with Cyclone Financing Group, Inc. ("Cyclone"), a Canadian corporation
located at 2nd Floor, 827 West Pender Street, Vancouver, British
Columbia, Canada V6C 3G8. Cyclone is an entity related through
common management personnel who are also shareholders of the Company.
A total of US$35,000.00 is payable to Cyclone, as a monthly management
fee, for the management of the Company's affairs including: locating
and negotiations for merger and/or acquisition prospects,
administration, bookkeeping, faxing, photocopying, telephone charges,
office space, supplies, news dissemination, filings with the SEC,
management of various professional services such as accounting and
legal work and other related operational costs.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K
On November 12, 1999, a Form 8-K disclosing a Stock Acquisition
Agreement dated October 29, 1999, and related change in control of the
Company.
Exhibits
10.1 Forbearance Agreement with AgPCA
10.2 Amended Forbearance Agreement with AgPCA
10.3 Assignment of HHPN Option to Phoenix Resources Technologies,
Inc.
23.1 Consent of Scott Hayfield.
27.1 Financial Data Schedule
99.1 Management agreement between Cyclone and Phoenix Resources
Technologies, Inc.
99.2 HHPN Option Agreement with Cyclone.
<PAGE> 33
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated this 7th date of February, 2000.
PHOENIX RESOURCES TECHNOLOGIES, INC.
By: /s/ Benjamin E. Traub
Benjamin E. Traub
President and Director
By: /s/ Judee Fayle
Judee Fayle
Chief Financial Officer
By: /s/ Robert Seitz
Robert Seitz
Vice President
<PAGE> 34
EXHIBIT 10.1
FORBEARANCE AGREEMENT
THIS AGREEMENT, made and entered by and between Agricultural
Production Credit Association ("AgPCA") and Phoenix Resources
Technologies, Inc. ("PRTI"):
WITNESS:
WHEREAS, AgPCA has entered and abstracted Judgment against
PRTI in several jurisdictions throughout the United States wherein
AgPCA obtained a Default Judgment against PRTI in the principal
amount of $3,177,300.74 in Cause No. 96-2451-B/A, Agricultural
Production Credit Association v. Phoenix Resources Technologies,
Inc., in the 114th Judicial District Court, Smith County, Texas, and
has commenced subsequent litigation under the same cause number and
court wherein PRTI is also a named Defendant related to the
collection of the Judgment (collectively referred to as the
"Lawsuit"), and
WHEREAS, the current Officers and Directors of PRTI, William
D. Nichols and Paula Nichols, have represented to AgPCA that they
are newly appointed, were not involved in or associated with or
responsible for PRTI at the time the Judgment was entered, and were
not officers or directors or associated with PRTI or responsible
for any of the actions of PRTI at the times referred to in the
pending suit, and
WHEREAS the current officers, directors and shareholders are
desirous of attempting to bring a new business into PRTI by way of
merger or combination with a Private Investor (as defined below)
but are unable to do so due to the current Judgment and pending
suit, without the relief as set out herein, and
WHEREAS, the parties have agreed that under the conditions and
limitations as set out hereafter, that AgPCA will not pursue any
post-merger assets that may be brought into PRTI.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the
receipt whereof is hereby acknowledged, the parties do agree as
follows:
1. PRTI agrees to pay AgPCA the total sum of ONE HUNDRED
THOUSAND DOLLARS ($100,000) prior to the effective date
of its merger or combination with a Private Investor (the
"Merger Date"). It is agreed that this payment is a
strict condition precedent to each and every promise made
by AgPCA in this Forbearance Agreement, and AgPCA shall
not be obligated in any way to perform any of the
promises contained in this Forbearance Agreement unless
PRTI makes full payment in a timely manner in accordance
with the terms of this paragraph.
<PAGE> 35
2. All assets of whatever nature ever owned by PRTI to the
Merger Date, including all proceeds, mutations,
accessions, and increases thereof, ("Prior Assets")
shall remain subject to the claims of AgPCA and nothing
contained in this Agreement shall prohibit, hinder or
otherwise defeat AgPCA's right of execution issued on
said Prior Assets, if any, to satisfy its current
Judgment or from obtaining any relief to which it may be
entitled under the pending Lawsuit with respect to such
Prior Assets that may be owned or that may have been
owned by PRTI.
The current officers and directors of PRTI agree to
cooperate with AgPCA in locating any Prior Assets of PRTI
that may exist or that may have existed and to provide
such information, as may be available to them, to AgPCA,
with respect to the Lawsuit. PRTI futher agrees to
provide to AgPCA copies of all documents and records
within its possession that relate to the Prior Assets and
the claims made by AgPCA in the Lawsuit within thirty
days of the execution of this Forbearance Agreement.
AgPCA agrees that it will limit its actions for recovery
of damages to only those Prior Assets of PRTI and that it
will not claim, attempt to lien, or otherwise interfere
with, or assert any claim to, any assets, of whatever
nature, of PRTI that may be or are actually brought into
PRTI, either by way of loan, capital contributions or
merger or other combination with a private group or
public company ("Private Investor") subsequent to the
Merger Date.
The parties agree that to the extent as may be required
by a Private Investor that they will furnish such other
documents as may reasonably be required to protect such
Private Investor from any current actions pending or
commenced by AgPCA.
The parties agree that PRTI shall have one year from the
date of this Forbearance Agreement to complete its merger
or combination with a Private Investor. In the event
that such merger or combination is not completed within
one year, the obligations of the parties set forth in
paragraphs 1 through 5 of this Forbearance Agreement
shall immediately and automatically terminate.
Nothing herein contained shall be construed to affect or
impair the validity of AgPCA's Judgment against PRTI,
AgPCA's rights to collect its Judgment against PRTI's
Prior Assets or its prior officers and directors, or
AgPCA's claims in the pending Lawsuit in Smith County,
Texas, referred to above. PRTI affirmatively
acknowledges and agrees that AgPCA retains
<PAGE> 36
all rights and claims to enforce or collect the Judgment
against PRTI's Prior Assets and PRTI's pre-merger officers
and directors (even if such pre-merger officers and
directors remain or become officers or directors of PRTI
after the Merger Date).
PRTI will provide AgPCA with an opinion letter from a
qualified securities attorney certifying that the
transaction contained in this Forbearance Agreement will
not result in any liability to AgPCA from any source
within thirty days of the execution of this Forbearance
Agreement. PRTI further agrees to release and fully
indemnify AgPCA as to any and all potential liabilities,
known or unknown, arising from this transaction.
The parties agree that there are no third party
beneficiaries of this Forbearance Agreement, that only
AgPCA and PRTI and their heirs, successors and assigns
possess the right to enforce or otherwise claim the
benefits of this Agreement, and that no other person or
entity may enforce or otherwise claim the benefits of
this Agreement.
IN WITNESS WHEREOF, the parties have set their signatures the
day and year written below:
AGRICULTURAL PRODUCTION CREDIT ASSOCIATION
BY: /s/ Stephen Ogletree, CEO
Stephen Ogletree, CEO
DATE: July 27, 1999
PHOENIX RESOURCES TECHNOLOGIES, INC.
BY: /s/ William C. Nichols
William C. Nichols, President
DATE: July 22, 1999
BY: /s/ Paula Nichols
Paula Nichols
Secretary
DATE: July 22, 1999
<PAGE> 37
EXHIBIT 10.2
M.D. PRICE, Jr.
ATTORNEY AT LAW
15945 Quality Trail N.
Scandia, MN 55073
Phone: (651) 433-3522
Fax: (651) 433-5735
October 12, 1999
Mr. Christopher M. Joe
McKool and Smith
300 Crescent Court, Suite 1500
Dallas, TX 75201
Re: PRTI-AgPCA
Dear Mr. Joe:
This is to follow up on our telephone conversation of this
morning.
We are currently negotiating with a Group to purchase the
PRTI "shell." We have a stumbling block as to the payment of the
$100,000.00 to AgPCA.
They have requested that we pay $50,000.000 upon closing
(which would be non-refundable) and $50,000 at then end of March
2000..
We believe that the Group is going to bring in a substantial
amount of assets, and that they will not default in the March
payment. I don't see any down side to your client, as the
$50,000.00 would not be refundable in event of default.
If this is agreeable to your client I think we can proceed
and close this with in the next 10 days. Please advise.
Sincerely,
M.D. Price, Jr.
MDP/hs
We accept the above terms and conditions Agriculture
Production Credit Association
By: /s/ Stephen R. Ogletree,
Stephen R. Ogletree CEO
Agriland, Farm Credit Services
FKA Agricultural Production Credit Assoc.
<PAGE> 38
EXHIBIT 10.3
ASSIGNMENT AGREEMENT
This Assignment Agreement is dated this 3rd day of November, 1999.
BY AND BETWEEN:
CYCLONE FINANCING GROUP INC., a Canadian corporation with a
business address located at 240 - 11948 207th Street, Maple Ridge,
British Columbia V2X 1X7
(herein called "Cyclone") OF THE FIRST PART
AND:
PHOENIX RESOURCES TECHNOLOGIES INC., a U.S. public company with a
business address located at 15945 Quality Trail N., Scandia, MN. 55073,
USA
(herein called "Phoenix") OF THE SECOND PART
WHEREAS:
Cyclone has entered into an agreement with John Carter and
Theodore Strout (herein referred to as "HHPN Option Agreement" a copy
of which is enclosed) to purchase up to 100% of their company, HHPN
Development Corporation.
NOW THEREFORE WITNESSETH,
THAT in consideration of the sum of $10.00 (ten dollars) and the
premises and the covenants, agreements, representations, warranties and
payments herein contained, the parties hereto covenant and agree as
follows:
Cyclone hereby transfers and assigns to Phoenix all of its rights,
benefits, obligations, duties and responsibilities, as outlined in the
HHPN Option Agreement.
This Assignment Agreement constitutes the entire agreement between
the parties and there are no representations or warranties, expressed
or implied, statutory or otherwise other than as expressly set forth or
referred to herein.
This Assignment Agreement shall enure to the benefit of and be
binding upon the parties hereto and their respective successors and
assigns.
This Assignment Agreement may be executed in several parts in the
same form and such parts as so executed shall together form one
original agreement, and such parts, if more than one, shall be read
together and construed as if all the signing parties hereto had
executed one copy of this Assignment Agreement.
<PAGE> 39
The parties acknowledge that the HHPN Option Agreement being
assigned was acquired solely at Ben Traub's expense. Ben Traub, as an
Officer of both Cyclone and Phoenix, has been induced to transfer the
HHPN Option Agreement to Phoenix, at no charge, with the expectation
that it will increase the future value of his ownership in Phoenix.
That future value is subject to many variables including potential
litigation and claims by former associates, directors, officers,
suppliers, debtors or any other significant or material relationships
with Phoenix and Ben Traub has agreed to transfer the HHPN Option
Agreement to Phoenix conditionally, in that, if there are material
deficiencies in the information that was supplied to him by the former
board or Phoenix ("Deficiencies") and those Deficiencies result in the
reduction of value of his ownership in Phoenix then Cyclone has the
right, at its discretion, to either cancel this Agreement or claim from
the Company restricted shares to make up the difference in value
enjoyed by Ben Traub ("Difference") that would have resulted had those
Deficiencies not existed. A mediator or arbitrator, who shall be
mutually acceptable or appointed by the courts, shall first attempt to
calculate any such Difference prior to the courts having to make that
calculation. If the Agreement is cancelled, the Company alone shall be
responsible to and agrees to return any monies received from investors
who participate in private or public offerings made by the Company
during the term of this Agreement. The Company hereby indemnifies
Cyclone and Ben Traub from all liability arising out of such an action,
or any claim whatsoever, related to this Agreement, including cost of
defense.
GOVERNING LAW AND DISPUTES: The parties hereto agree that any
disagreement or dispute between them shall first be attempted to be
remedied by mediation or arbitration. In the event that agreement
cannot be reached on the appointment of an independent mediator or
arbiter then the parties hereto agree to accept the appointment of a
mediator or arbiter who shall be appointed, following application for
such appointment by the court. If the dispute cannot be remedied by
mediation or arbitration then this agreement shall be governed for all
purposes by the laws of the province of British Columbia. For any
disputes arising among the parties hereto, venue shall lie with the
court of competent jurisdiction in Vancouver, British Columbia.
ASSIGNMENT: This Assignment Agreement may be assigned by either
party without the consent of the other parties.
This Agreement supersedes all previous assignment agreements
entered between Cyclone Financing Group, Inc. and Phoenix Resources
Technologies, Inc.
IN WITNESS WHEREOF, the parties hereto have agreed to and have
caused this agreement to be executed effective as of the date first
above written.
<PAGE> 40
Authorized Signatures:
SIGNED, SEALED & DELIVERED )
By Authorized signatory of )
CYCLONE FINANCING GROUP INC. )
) __________________________
___________________________________) Ben Traub
Witness
SIGNED, SEALED & DELIVERED )
By Authorized signatory of )
PHOENIX RESOURCES ) C/S
TECHNOLOGIES INC. )
)
)
) __________________________
___________________________________) Director
Witness
<PAGE> 41
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent the incorporation by reference in the Registration
Statement No. 333-92971 on Form S-8 of our report of independent
certified public accountants dated January 7, 2000 on the balance
sheets of Phoenix Resources Technologies, Inc. as of October 31,
1999 and 1998 and the related statements of operations and
comprehensive income, change in shareholders' equity and cash flows
for each of the two years then ended, which report appears in the
1999 Annual Report on Form 10-KSB of Phoenix Resources
Technologies, Inc.
/s/ S.W. Hatfield, C.P.A.
S.W. Hatfield CPA
Dallas, Texas
February 7, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 300,000
<BONDS> 0
0
0
<COMMON> 9,272
<OTHER-SE> (309,272)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 15,000
<OTHER-EXPENSES> (6,689)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,689)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
<PAGE> 42
EXHIBIT 99.1
MANAGEMENT AGREEMENT
This Management Agreement is dated this 1st day of November,
1999
BY AND BETWEEN:
PHOENIX RESOURCES TECHNOLOGIES INC., a U.S. public company
with a business address located at 15945 Quality Trail N., Scandia,
MN. 55073, USA
(herein called "Phoenix") OF THE FIRST PART
AND:
CYCLONE FINANCING GROUP INC., a Canadian corporation with a
business address located at 2nd Floor 827 West Pender Street,
Vancouver, British Columbia, Canada V6C 3G8
(herein called "Cyclone") OF THE SECOND PART
WHEREAS:
Phoenix wishes to engage the management services of Cyclone as
per the terms of this agreement.
NOW THEREFORE WITNESSETH,
THAT the premises and the covenants, agreements,
representations, warranties and payments herein contained, the
parties hereto covenant and agree as follows:
1. Cyclone will provide management services to Phoenix for a
monthly management fee of USD $35,000.00 and Phoenix will pay the
required fee in a timely manner.
2. Cyclone will provide, as required, the following
management services to Cyclone: acquisition of projects, raising
monies, bookkeeping services, news dissemination, faxing,
photocopying, paying telephone charges, purchasing supplies,
providing office space and paying for other related operational
costs and any other corporate requirements that Cyclone carries out
on behalf of Phoenix.
3. This Management Agreement constitutes the entire agreement
between the parties and there are no representations or warranties,
expressed or implied, statutory or otherwise other than as
expressly set forth or referred to herein.
<PAGE> 43
4. This Management Agreement shall enure to the benefit of
and be binding upon the parties hereto and their respective
successors and assigns.
5. This Management Agreement may be executed in several parts
in the same form and such parts as so executed shall together form
one original agreement, and such parts, if more than one, shall be
read together and construed as if all the signing parties hereto
had executed one copy of this Management Agreement.
1. GOVERNING LAW AND DISPUTES: The parties hereto agree that
any disagreement or dispute between them shall first be attempted
to be remedied by mediation or arbitration. In the event that
agreement cannot be reached on the appointment of an independent
mediator or arbiter then the parties hereto agree to accept the
appointment of a mediator or arbiter who shall be appointed,
following application for such appointment by the court. If the
dispute cannot be remedied by mediation or arbitration then this
agreement shall be governed for all purposes by the laws of the
province of British Columbia. For any disputes arising among the
parties hereto, venue shall lie with the court of competent
jurisdiction in Vancouver, British Columbia.
IN WITNESS WHEREOF, the parties hereto have agreed to and have
caused this agreement to be executed effective as of the date first
above written.
Authorized Signatures:
SIGNED, SEALED & DELIVERED )
By Authorized signatory of )
CYCLONE FINANCING GROUP INC. )
) ___________________________
_________________________________) Ben Traub, President
Witness
SIGNED, SEALED & DELIVERED )
By Authorized signatory of )
PHOENIX RESOURCES )
TECHNOLOGIES INC. )
)
)
) ___________________________
_________________________________) Judee Fayle,
Witness Secretary-Treasurer and
Director
<PAGE> 44
EXHIBIT 99.2
Agreement
THIS AGREEMENT is dated as of the 26th day of October, 1999
BY AND BETWEEN
CYCLONE FINANCING GROUP INC., a Canadian corporation with a
business address located at 240-11948 207th Street, Maple Ridge,
BC, Canada V2X 1X7,
(Herein called "Investor") OF THE FIRST PART
AND:
JOHN CARTER, business Man residing at 6215 Branting Street,
San Diego, CA, 92122 and THEODORE STROUT, Business man residing at
4629 Esther Street, San Diego, CA 92115 and HHPN DEVELOPMENT CORP.,
doing business at 2815 Camino Del Rio So., Suite 123, San Diego,
Ca., 92108
(Herein called the "Managers") OF THE SECOND PART
WHEREAS:
The Managers have developed a software program (Software) that
is used to develop database applications on the internet. The
program is currently known as DBPanacea' and offers significant
advantages over existing internet website database engines. In
addition, various other applications have been developed based on
the DBPanacea technology, including; an online auction template
system which can be duplicated worldwide without restriction, a
banner advertising management network, a sports game template, and
other back-end' template concepts and applications based on the
DBPanacea technology not herein disclosed and/or not yet developed.
(All versions of DBPanacea and all other applications developed
thus far and applications yet to be developed based on or
associated with DBPanacea technology and the intellectual property
of DBPanacea, including all patents, trademarks, copyrights and all
other associated assets, are herein jointly called the Products).
AND WHEREAS:
John Carter and Ted Strout have incorporated a company called
HHPN DEVELOPMENT CORPORATION, referenced herein, which is a
Delaware corporation, which has been created for the purpose of
commercially exploiting the Products and which has an existing
revenue stream derived from custom web development and consulting.
<PAGE> 45
AND WHEREAS:
The Managers are the sole owners of the Products and the sole
owners of the Company (jointly called the Projects') and desire to
sell up to 100% of the total ownership in the Projects to the
Investor for a total sum of $177,500,000.00.
NOW THEREFORE WITNESSETH,
THAT in consideration of the premises and the covenants,
agreements, representations, warranties and payments herein
contained, the parties hereto covenant and agree as follows:
1. WARRANTIES AND REPRESENTATIONS:
a) The following are the only warranties and representations
by and between the parties:
b) The Managers warrant and represent to the Investor as
follows:
c) That to the best of their knowledge, the business plan
attached hereto (Business Plan) previously supplied to
the Investor, is true and contains an accurate
representation of the commercialization potential for
the Projects;
d) That they are the sole and exclusive owners of the
Projects, free and clear of any encumbrances, liens and
other charges and no other party has licence to sell or
reproduce the software;
e) That they have the right and authority to grant to the
Investor an exclusive option to purchase up to 100% of
the Projects;
f) The Software has certain powerful advantages over
existing competitive applications (Cold Fusion, Visual
Studio, JDeveloper, etc) including but not limited to;
platform independence, ease of use, lower learning curve
for developers, speed of development and lower overall
development costs derived from quicker development with
less costly development staff;
g) That they have committed their professional lives for a
minimum of the next two years exclusively to commercially
exploiting the Projects and currently work full time at
the Company and all contracts which the Managers take on
directly or indirectly shall be exclusively fulfilled by
the Company;
h) The total liabilities in the Projects do not exceed
$100,000.00 which is primarily back wages for the
Managers;
i) They are in the process of fulfilling a $200,000.00
contract for website development of which approximately
90% is gross profit;
j) The Company has 21 million shares issued and outstanding
of which the Managers own 100%.
<PAGE> 46
k) The Investor warrants and represents to the Managers as
follows:
l) That it has the right and authority to enter into this
agreement;
m) That is has the ability to fulfill this Agreement once
Option1 has been exercised.
2. GRANTING OF THE OPTION TO PURCHASE AND PAYMENT SCHEDULE:
The Managers hereby unconditionally grant the Investor the
exclusive and irrevocable right to purchase up to 100% of the
Projects for the total purchase price of up to one hundred and
seventy seven million and five hundred thousand ($177,500,000.00)
US dollars (The rights to purchase as described in this clause
shall herein be called Options1/2/3 as described herein).
a) OPTION 1. The Managers hereby unconditionally grant the
Investor the exclusive and irrevocable right to purchase 50% of the
Projects for the total purchase price of two and a half million
($2,500,000.00) US dollars (the Investment). (The right to purchase
as described in this clause shall herein be called Option1).
1. The Investor may exercise Option1 by issuing a notice in
writing to the Managers.
2. Once Option1 has been exercised, (a) an additional
agreement shall be put in place without unreasonable
delay by either party outlining in more detail the
purchase of the Projects as described herein and which
shall contain a clause relating to default and other
terms and conditions pertaining to that agreement, none
of which shall conflict with the spirit and intent of
this Agreement and (b) the Investment shall be paid to
the Managers within a reasonable time based on a
pre-defined payment schedule mutually agreed upon by the
Parties but the Investor shall not be obligated to pay
more than $200,000.00 per month towards the Investment
until the full Investment has been paid and (c) it is
agreed that the payments shall not be less than
$17,000.00 per month and (d) the Investor may, solely at
its discretion, exceed the $200,000.00 monthly maximum
payments referenced above;
3. Prior to Option1 being exercised, the Investor shall pay
the Managers a development fee of $10,000.00 per month
(Development Fee) to further develop the software and
business plan. Payments of the Development Fee shall
begin on December 9, 1999 and shall continue monthly
until Option1 has been exercised or until this Agreement
is terminated. In the event that the Option1 is not
exercised prior to the termination of this Agreement all
<PAGE> 47
Development Fees paid to the Managers shall be forfeited
by the Investor as total liquidated damages and the
Managers shall not seek nor be entitled to any other
damages;
4. If Option1 is not exercised prior to the termination of
this Agreement, then the Managers have the right to
immediately cancel Option2 and Option3 by written notice.
b) Option 2 The Investor may acquire an additional 25%
ownership in the Projects for an additional investment of
$50,000,000.00.
5. The Investor may exercise Option2 by issuing a notice in
writing to the Managers along with a check for
$50,000,000.00 made out to the Managers personally to be
used at their discretion;
6. Option 2 is non-cancelable and shall expire 24 months
after Option1 has been exercised.
c) Option 3 The Investor may acquire the final 25%
ownership in the Projects for an additional investment of
$125,000,000.00.
7. The Investor may exercise Option3 by issuing a notice in
writing to the Managers along with a check for
$125,000,000.00 made out to the Managers personally to be
used at their discretion.
8. Option 3 is non-cancelable and shall expire 24 months
after Option1 has been exercised.
3. DUE DILIGENCE:
a) The Investor shall have up to 120 days from the execution
date of this Agreement to complete its due diligence in
the commercial viability of the Projects (Due Diligence).
b) At any time during the term of this Agreement, the
Investor may elect to exercise Option1.
4. TERM AND CANCELATION:
a) The term of this Agreement shall be three hundred and
sixty five (365) days from the execution date of this
Agreement
b) The Agreement may be cancelled by the Managers anytime
after the 120 day Due Diligence period with five days
written notice.
c) The Investor may cancel this Agreement at anytime during
the 365 day term.
<PAGE> 48
d) The Agreement may not be cancelled by either party once
Option1 has been exercised.
5. USE OF FUNDS:
100% of the Investment derived from Option 1 is for working
capital to be used in accordance with the requirements of the
Business Plan or a reasonably revised business plan and/or the
further development and world commercialization of the Projects, or
for previously incurred liabilities not to exceed $100,000.00.
6. CONFIDENTIALITY AND EXCLUSIVITY:
a) Whereas all parties agree that the improper or
unauthorized use or disclosure of the terms and
conditions of this Agreement or unauthorized contact with
parties involved directly or indirectly with the Investor
would be highly detrimental and damaging to the Investor.
b) The Managers agree that neither they nor any of their
subsidiaries, divisions, employees, agents,
representatives, independent contractors or other persons
or organizations over which they have control, will at
any time during the term of this Agreement directly or
indirectly use or disclose any information pertaining to
the terms and conditions thereof, for any purposes which
are not associated with the Agreement or disseminate or
disclose any information to any person or organization
who or which are not directly involved in the Agreement
without prior written approval from the Investor.
c) The Managers agree that neither they nor their
subsidiaries, divisions, employees, agents or
representatives, independent contractors, or other
persons or organizations over which they have control
will attempt to do business with or obtain funding from
any party which the Investor has introduced them to for
a period of one (1) year after the expiry or termination
of this Agreement without the written approval of the
Investor.
d) That prior to the expiration or termination of this
Agreement, no other party will be granted the right to
purchase any part of the Projects without the expressed
written approval of the Investor.
e) Clauses 6a and 6b relating to confidentiality shall
survive the term of this agreement for an additional five
years.
<PAGE> 49
7. GOVERNING LAW AND DISPUTES:
The parties hereto agree that any disagreement or dispute
between them shall first be attempted to be remedied by mediation
or arbitration. In the event that agreement cannot be reached on
the appointment of an independent mediator or arbiter then the
parties hereto agree to accept the appointment of a mediator or
arbiter who shall be appointed, following application for such
appointment by the court. If the dispute cannot be remedied by
mediation or arbitration then this agreement shall be governed for
all purposes by the laws of the province of British Columbia. For
any disputes arising among the parties hereto, venue shall lie with
the court of competent jurisdiction in Vancouver, British Columbia.
The additional agreement referred to in clause 2.a.b.a shall also
contain a clause regarding governing law but shall be negotiated
once Option1 has been exercised and the jurisdiction shall not
necessarily be the same as is written herein (the province of
British Columbia jurisdiction applies only to this Agreement and
not necessarily to further agreements).
8. DUTIES AND RESPONSIBILITIES:
a) The following are the only Duties and Responsibilities by
and between the Parties hereto:
b) The Duties and Responsibilities of the Managers shall be
as follows:
c) To be wholly responsible to manage and operate the day to
day affairs of the Managers on a best efforts basis
and/or to further develop and commercially exploit the
Projects as per the business plan for the mutual benefit
and profit of the Investor and the Managers.
d) The Duties and Responsibilities of the Investor shall be
as follows:
e) To provide 2.5 million US dollars to the Managers under
the terms of this agreement once Option1 has been
exercised.
9. NOTICES AND PAYMENTS:
Any notice, election, payment, consent or other writing
required or permitted to be given hereunder shall be deemed to be
sufficiently given if delivered or mailed by registered mail or fax
to the parties at the addresses set out in the beginning of this
Agreement and any such notice shall be sufficiently given when
delivered by mail, on the third business day following the date of
mailing, or if faxed, on the next succeeding day following the
faxing thereof.
<PAGE> 50
10. SCHEDULES:
This Agreement constitutes the entire agreement between the
parties and there are no representations or warranties, expressed
or implied, statutory or otherwise and no agreements collateral
hereto, other than as expressly set forth or referred to herein.
11. TIME shall be of the essence in this Agreement.
12. CURRENCY of all funds mentioned in this agreement shall be in
US dollars.
13. SUCCESSOR AND ASSIGNS:
This Agreement shall endure to the benefit of and be binding
upon the parties hereto and their respective successors and
assigns.
14. SEVERABILITY:
Should any part of this Agreement be declared or held invalid
for any reason, such validity shall not affect the validity of the
remainder which shall continue in full force and effect and be
construed as if this Agreement had been executed without the
invalid portion and it is hereby declared that the intention of the
parties hereto that this Agreement should have been executed
without reference to any portion of which may be for any reason
hereinafter declared or held invalid.
15. BREACH AND REMEDIES:
The parties agree that great loss and irreparable harm would
be suffered in the event that the Investor or the Managers breach
any of the terms and conditions of this agreement. In the event
that such breach appears to be an imminent possibility, the parties
shall be entitled to all legal and equitable remedies afforded to
them or it by law as a result thereof, including, but not limited
to a temporary restraining order and permanent injunction to
prevent a breach or contemplated breach of the agreement, and may,
in addition to any and all forms of relief, recover all reasonable
costs and attorney's fees incurred in seeking any such remedy(ies).
16. ASSIGNMENT:
This Agreement may be assigned by either party without the
consent of the other parties.
<PAGE> 51
17. SUPERSEDES.
This Agreement supersedes and replaces all previous agreements
between the parties, verbal or written.
18. EXECUTION AND AGREEMENT:
This Agreement may be executed in several parts in the same
form and such parts as so executed shall together form one original
agreement, and such parts, if more than one, shall be read together
and construed as if all the signing parties hereto had executed one
copy of this agreement.
19. ACCEPTANCE BY FACSIMILE:
The parties agree that receipt of a fully executed copy of
this Agreement via facsimile transmission shall be binding and may
be used as admissible evidence that the party transmitting intends
to be bound by the terms set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be executed effective as of the date first above
written and have agreed to and initialed each page:
Authorized Signatures:
SIGNED, SEALED & DELIVERED )
By the authorized signatory of )
CYCLONE FINANCING GROUP INC. )
)
)
_____________________________
) Ben Traub
________________________________ )
Witness
SIGNED, SEALED & DELIVERED )
In the presence of )
)
)
)
______________________________
) John Carter
________________________________ )
Witness
<PAGE> 51
SIGNED, SEALED & DELIVERED )
In the presence of )
)
)
)
______________________________
) Theodore Strout
________________________________ )
Witness
SIGNED, SEALED & DELIVERED )
By the authorized signatory of )
HHPN DEVELOPMENT CORP. )
)
)
)
_____________________________
) Theodore Strout
________________________________ )
Witness
SIGNED, SEALED & DELIVERED )
By the authorized signatory of )
HHPN DEVELOPMENT CORP. )
)
)
)
_____________________________
) John Carter
________________________________ )
Witness
