U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the fiscal year ended March 31, 1997, or
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Transition period from _______ to ____________
Commission file number 0-18865
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
(Name of Small Business Issuer in Its Charter)
Utah 87-0401400
(State or Other Jurisdiction of Incorporation or (I.R.S. Employer
Organization) Identification No.)
102 West 500 South, Suite 318, Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801)363-8961
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Act:
Title of each class Name of each Exchange on which Registered
None ------
Securities registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
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 is not contained in this form, and no disclosure will
be contained, to the best of 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. [ ]
Issuer's revenues for its most recent fiscal year was $274,000.
The aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the average bid and asked prices
of such stock, as of October 21, 1997, was $2,543,212.
The number of shares outstanding of the issuer's common equity, as of
October 21, 1997, was 1,841,486 shares.
Transitional Small Business Disclosure Format: Yes No X
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TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS....................................1
ITEM 2. PROPERTIES.................................................6
ITEM 3. LEGAL PROCEEDINGS..........................................6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........6
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS....................................................6
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION...............................................7
ITEM 7. FINANCIAL STATEMENTS .....................................11
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.......................12
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT..............................................12
ITEM 10. EXECUTIVE COMPENSATION....................................13
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................14
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............15
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K..........................16
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PART I
Item 1. Description of Business.
GENERAL
American Resources and Development Company ("ARDCO" or the "Company")
was incorporated under the laws of the State of Utah on March 13, 1983, under
the name of Leasing Technologies, Incorporated. In March, 1997 the Company
changed its name to American Resources and Development Company. The Company,
through various subsidiaries, owns an interest in (i) a master-planned
residential golfing and recreational community situated on approximately 670
acres of land near St. George, Utah, (ii) a franchisor and owner of retail
entertainment and sports stores, and (iii) the development and sale of vacation
interests in resorts, located in Fairfield Bay, Arkansas. When used throughout
this report, the Company shall include the subsidiaries unless the context
indicates otherwise. In addition to the above businesses, the Company is
actively reviewing other acquisition possibilities wherein the Company could
acquire an interest in products, properties, technologies and/or businesses
believed by management to hold potential for profit. The nature of any
acquisition and the manner of any acquisition cannot be determined at the
present time and will be subject to the business judgment of management of the
Company. There is no assurance that the Company will be able to acquire any
interest in any other product, property, technology, or business.
The Company's present executive offices are located at 102 West 500
South, Suite 318, Salt Lake City, Utah 84101 and its telephone number is (801)
363-8961. As of September 30, 1997 the Company had two fulltime equivalent
employees. On March 27, 1997, the Company effected a 1 for 20 reverse stock
split of its common stock.
GOLF VENTURES, INC.
As of October 15, 1997, the Company owned 594,309 shares of common
stock of Golf Ventures, Inc. (hereinafter "GVI"), a publicly held Utah
corporation. Such shares represent approximately 28% of the issued and
outstanding common stock of GVI. In addition, in connection with the settlement
of all intercompany transactions between the Company and GVI since 1992, GVI has
agreed to issue the Company 715,000 shares of common stock.
GVI owns the Red Hawk International Golf & Country Club (hereinafter
"Red Hawk"), Cotton Manor, and Cotton Acres, real estate developments located
near St. George, Utah. Information regarding these projects as well as GVI has
been obtained from GVI and the Company has not made any effort to verify the
information provided by GVI. The Company hereby incorporates by reference the
Amended Annual Report on Form 10-KSB of GVI for the fiscal year ended March
31st, 1997, and all other reports filed by GVI pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 since March 31st, 1997.
On August 26, 1997, GVI announced that it had entered into a definitive
merger agreement with U.S. Golf Communities, Inc. ("U.S. Golf Communities"), an
Orlando based group of affiliated companies principally engaged in the
acquisition, development and operations management of public, private and resort
golf properties and adjacent residential real estate throughout the United
States. The transaction is being structured as a reverse merger with the assets
of U.S. Golf Communities being merged into GVI in exchange for the issuance by
GVI of common stock to the current owners of U.S. Golf Communities. It is
presently anticipated that GVI would issue sufficient shares of common stock to
the shareholders of U.S. Golf Communities so that such shareholders own
approximately 81% of the outstanding common stock of GVI. The transaction, which
is subject to various conditions including GVI shareholder approval, is expected
to close before the end of 1997. However, there can be no assurance that such
acquisition will occur. If the acquisition is not consummated, GVI will need to
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obtain additional capital in order to development its properties and to satisfy
its obligations. There is no assurance that GVI would be able to do such.
Red Hawk is a master-planned residential golfing and recreational
community situated on approximately 670 acres of land which, when fully
completed, will include more than 945 building lots, a 27-hole golf course,
tennis courts, swimming pools and other recreational amenities. Red Hawk is
located in southwest Utah, approximately 3 miles southeast of St. George, Utah,
in the city of Washington.
The final plat for Red Hawk will be recorded upon installation of all
improvements and/or bonding for the same for Phase I. GVI believes that no other
permits or authorization are required until after filing of the final plat for
Phase I, at which time building permits will be obtained from Washington City.
Nine (9) reservations have been taken for residential lots in Red Hawk to date.
In late 1996, Washington City completed construction of a storage tank
for culinary (drinking) water in close proximity to Red Hawk, together with a
water pumping station and delivery lines which run through Red Hawk. As a
result, GVI believes that Red Hawk will have an adequate supply of culinary
water available. The cost to GVI for this water line was $130,000, which has
been paid.
In July 1996, Granite Construction broke ground on Phase I at Red Hawk.
Phase I will consist of the development and sale of 102 estate lots, 7 cottages,
5 corporate villas, and construction of the first 18 holes of the golf course, a
double driving range, irrigation, lakes and infrastructure for utilities. By the
end of November 1996, Granite had moved approximately 900,000 cubic yards of
dirt, excavated eight (8) lakes, roughed in eighteen holes of the golf course,
graded the sites for the 102 residential lots, installed sewer laterals to the
lots and graded the major roads in Phase I of the project. Granite was paid
$1,981,681 for its work, and GVI called an end to Granite's efforts in November
1996 as a result of lack of funds.
GVI contracted with Crown Golf to do the finish grading on the golf
course. Crown has been paid $35,817 and is owed approximately $235,000 as of
September 30, 1997. Crown was called off this project in February, 1997, when
GVI stopped construction at Red Hawk until additional funding can be obtained on
terms and conditions satisfactory to GVI.
While management of GVI looks to the U.S. Golf Communities transaction
as a source of improved funding capabilities for GVI at Red Hawk, there is no
assurance that the U.S. Golf Communities transaction will close or that it will
yield the benefits hoped for by GVI. GVI will continue its efforts to obtain
sufficient long term financing to complete development of Phase I at Red Hawk,
and thus to begin cash flow from sales of interests in the development. Assuming
adequate financing can be obtained on satisfactory terms and conditions, GVI
believes that Phase I construction at Red Hawk could be completed within six
months of the start of that financing at a total cost of approximately
$5,700,000. additionally, a sewer line will need to be brought to the property.
Washington City owns and is responsible for sewer lines, and GVI must negotiate
with Washington City with respect to the construction of and payment for the
sewer line. Construction costs are estimated to be approximately $1,000,000 for
the off-site sewer, as per independent bids received by GVI. GVI estimates that
an additional $135,000 will be required for construction of a gas line based on
preliminary estimates received from the gas company. There is a possibility that
future expenditures for on-site electric power will be necessary, although this
has not been determined and no estimates of costs will be obtained until future
demands are assessed. There can be no assurance that additional development
costs will not be incurred or that such additional costs will not be material.
GVI has estimated the future development costs just recited based upon the prior
real estate development experience of management. This experience and business
judgment may not prove accurate as actual results invariably deviate from
estimates.
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GVI is in default with respect to payments due which are secured by the
Red Hawk property. GVI believes that the various lenders will forego any legal
action until the U.S. Golf Communities transaction has had an opportunity to
close. Following the closing, GVI expects that it will be able to raise
sufficient funds to satisfy its obligations. There can be no assurance that GVI
will be able to maintain its assets.
Cotton Manor, a 19-acre development, currently includes 28 completed
condominiums (one two-story building with 16 units and three one-story
four-plexes) and recreational facilities including swimming pool, tennis courts,
and a putting green.
Cotton Acres is a 61 acre development consisting of 259 lots. 200 lots
in Phases I-IX have been sold and dwelling units on such lots have been
completed. Development of Phase X, consisting of 19 lots has been completed at a
cost of approximately $165,000. The contractor making the improvements on the
Phase X lots financed GVI's cost at 12% interest. The balance of principal and
interest due the contractor has been paid in full from the proceeds from the
first Phase X sales. All Phase X lots have been sold or pre-sold with a deposit
and should close during the first six months of 1998.
GVI currently intends to build an additional 102 cottages as marketing
of the Cotton Manor project develops. Each cottage is part of a single, detached
planned unit development (PUD). In Phase III, two cottages have been completed.
One Phase III cottage has been sold while the other, built and financed by GVI,
is being used as a model, sales office and, since the end of August, 1997, as
the executive offices of GVI. Development of the 19 lots in Phase IV has been
completed at a cost of approximately $11,700 per lot. Two Phase IV lots have
been sold and cottages have been built. One lot was purchased by Bruce Frodsham,
GVI Vice President, at GVI's offer price of $15,000. Mr. Frodsham has built a
home on the lot at his cost. The other Phase IV lot was transferred to George
Badger, the former President of the Company, to enable Mr. Badger to get a loan
to finance a home on the site for entry by GVI in a home show. GVI's entry won
the show award. Currently, Mr. Badger is paying the indebtedness on the property
and lives there from time to time.
GVI is actively marketing its Cotton Manor cottages and believes that
the initial 19 cottages can be sold within approximately two years. Building
permits will be obtained from the City of St. George as needed. Following the
sale of the 19 units in Phase IV, GVI intends to commence developing and
marketing additional Phases.
Management of GVI anticipates that the development and sale of the lots
from all of the reaming phases of Cotton Acres should be completed within two
years, although there can be no assurance that market conditions will allow for
this schedule.
GVI is in default with respect to payments due which are secured by the
Cotton Acres and Cotton Manor property. GVI looks to the U.S. Golf Communities
transaction as a source of improved financial resources to meet its obligations
and to preserve its rights in its real properties. There can be no assurance
that GVI will be able to satisfy its obligations and avoid losing its
development in foreclosure. GVI's main business plan is focused on Red Hawk, and
the loss of Cotton Manor and/or Cotton Acres, while material adverse events,
would not necessarily toll the end of GVI or its operations.
FINALLY COMMUNITIES, INC.
The Company owns 100% of the outstanding stock of Finally Communities,
Inc., an Arkansas corporation (hereinafter "Finally"). On May 20, 1997, the
Company entered into an agreement with William R. Vowell to organize and operate
Finally. Finally was organized in order to develop and sell vacation ownership
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interests in various type resorts initially located in Fairfield Bay, Arkansas.
Initially it is anticipated that Finally will market an upgrade package of
vacation products and travel services. In addition it is anticipated that
Finally will market membership interests in Fairfield Bay Outdoors, a 27 acre
campshare resort RV park located at Fairfield Bay, Arkansas. The project will
consist of approximately 500 camp sites that will be subdivided into 4 distinct
categories designed to fit the needs of the individual purchaser. It is expected
that Fairfield Bay Outdoors will become an affiliate member of Camp Coast to
Coast, a national RV park exchange network with over 500 member resort parks.
Finally has made a down payment on the purchase of the 27 acres from the
proceeds of a loan made to Finally and arranged by the Company, but is in
default on subsequent principal payments in the approximate amount of $100,000.
This property is being purchased from an entity owned by Mr. Vowell.
Fairfield Bay is a self-contained resort/vacation community offering
panoramic views of Greers Ferry Lake located on approximately 14,000 acres. It
includes golf, tennis, boating, fishing, swimming pools, private club,
restaurants, full service marina, convention center, and a shopping mall.
Fairfield Bay has a permanent population of approximately 3,000.
Mr. Vowell, who is president of Finally, received 500,000 shares of the
Company's Series E convertible preferred stock. 25,400 shares of the Series E
preferred stock was immediately convertible into common stock. The remaining
shares of Series E preferred stock are convertible into the Company's common
stock after June 30, 1999, and upon completion of the March 31st, 1999 audit of
Finally with a conversion rate based on a 2 year pre-tax income of Finally and
the average trading price of the Company's common stock. There can be no
assurance that Finally will be able to sell sufficient membership interests in
order to finance its obligations for the purchase of property and to develop
other recreational facilities to be marketed.
FAN-TASTIC, INC.
In March, 1997, the company acquired 80% of the outstanding shares of
Fan-Tastic, Inc., (Fan-Tastic) a Utah Corporation. Fan-Tastic is a franchiser
and owner of retail entertainment and sports stores, dba Fan-A-Mania, based in
regional shopping malls. As of September 30, 1997, Fan-Tastic owned 5 of its own
stores (2 in Utah and 3 in Oregon) and 7 franchisees (Utah, Oregon,
Pennsylvania, Kansas, Texas and Barbados). Fan-Tastic opened its first
Fan-A-Mania store in October, 1995, with the purpose of taking advantage of the
high growth and popularity of licensed entertainment and sports products.
Fan-A-Mania stores carry a broad range of sports and entertainment
products purchased from national vendors who are licensed with the following
entertainment and sports companies: Disney, Warner Brothers, Public Television
(Sesame Street), National Football League, National Basketball Association,
Major League Baseball, and National Hockey League. Products carried range from
apparel for ages ranging from toddlers to adults, collectibles and souvenirs for
fans of entertainment and sports.
In May, 1997, Fan-Tastic initiated a national marketing campaign to
promote the Fan-A-Mania stores primarily through advertising in national
magazines. Limited additional marketing will also be done at specific
entrepreneur shows held in strategic regions of the United States and through
direct marketing.
With the sales of each franchise unit, Fan-Tastic receives a franchise
fee of $19,500, and a royalty fee on ongoing sales of 3 1/2%. Principal services
Fan-Tastic provides to its franchisees are as follows:
- Site evaluation and selection and lease negotiation.
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- Store design and merchandising and display plans.
- Lower inventory costs from negotiated volume pricing and
simplified buying through a consolidated buying program.
- Inventory control through a consolidated point of sale
software and chain wide identification of hot selling
products.
- Three days of initial training at the corporate office
covering all phases of store operations; product purchasing,
store promotions, etc. using the proprietary Fan-A-Mania
operations manual. This initial training is followed closely
with three days of training at the opening of the store and
on-going follow-up training.
International Franchising
Fan-Tastic's marketing efforts have also resulted in international
interest in the concept, with a first store opening in Bridgetown, Barbados in
December, 1996, and the signing of a master franchise agreement with a Japanese
company that is expected to open its first store in December 1997. Management of
Fan-Tastic believes a strong area of growth will be in the international market
due to the growing interest in American entertainment and sports in the global
marketplace.
Seasonality
Approximately 36% of annual Fan-Tastic sales have occurred in the
months of November and December.
Competition
The entertainment and sports products industry is quite competitive.
Most mass merchants carry entertainment and sports products and thus provide
competition on an indirect basis. However, management believes service and
atmosphere differentiate Fan-A-Mania products from mass merchant products.
Direct competition in malls where Fan-A-Mania stores are located comes primarily
from national chains such as Disney, Warner Brothers, and Champs. Currently,
there are no Fan-A-Mania stores in locations with these stores, although direct
competition exists with smaller sports stores. Management believes that
Fan-A-Mania has differentiated itself by selling both entertainment and sports
products and by having a more attractive look which includes an interactive
shopping experience.
Fan-Tastic also receives indirect competition from other franchisers
for prospective franchisees. However, there is very little direct competition
for prospective franchisees since Fan-A-Mania is currently the only
entertainment and sports concept on the market. Fan-Tastic also has competition
from suitable store locations from a wide variety of retailers.
Trademarks
Fan-Tastic owns the registered mark, "Fan-A-Mania".
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
No information is presented as to industry segments. The Finally
acquisition occurred in May, 1997 and the Fan-Tastic acquisition occurred in
March, 1997. The assets, equity, and operations of Fan-Tastic are each
respectively less than 10% of the Company's, and not material for separate
industry segment disclosure. Reference is made to the statements of operations
included herein in response to Part II, Item 7 of this Form 10-KSB/A for a
statement of the Company's revenues and operating profit (loss) for the past two
fiscal years.
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Item 2. Properties.
The Company's executive offices are located at 102 West 500 South,
Suite 318, Salt Lake City, Utah 84101. This office facility consists of
approximately 1,100 square feet. The Company is paying $800 per month for the
space on a month-by-month basis.
GVI's real estate holdings are comprised of one recreational and
residential development consisting of approximately 670 acres near St. George,
Utah named Red Hawk International Golf & Country Club, and two residential
developments in St. George, Utah aggregating approximately 80 acres known as
Cotton Manor and Cotton Acres. See "Item 1. Business." for the related
encumbrances on these properties.
Fan-Tastic leases an office and warehouse space in Salt Lake City, Utah
and leases retail space for it's six stores. Lease commitments from fiscal 1998
through fiscal 2001 are $77,721, $59,653, $35,256 and $20,566.
On May 22, 1997 Finally purchased from Finally Computers, approximately
27 acres in Fairfield Bay, Arkansas. The total purchase price of this property
is $246,000. Finally Computers is owned by William Vowell, President of Finally
Communities. The purchase agreement provides that the balance of the purchase
price, $231,000, is to be paid, together with interest at the rate of 9.5% per
annum, in periodic payment with the final payment due January 31, 1998. Finally
is in default with respect to approximately $100,000 of principal payments.
Item 3. Legal Proceedings.
No material legal proceeding is pending at this time.
Item 4. Submission of Matters to a Vote of Security Holders.
On February 20, 1997, an amendment to the Articles of Incorporation of the
Company was approved by written consent of shareholders owning 1,219,331 shares
(66%) in lieu of a meeting, changing the name of the corporation to American
Resources and Development Company. A one-for-twenty reverse split of the
Company's common stock was also approved. These changes became effective on
March 27, 1997.
PART II
Item 5. Market for Common Equity & Related Stockholder Matters.
The Company's common stock is currently traded in the over-the-counter
market on the Electronic Bulletin Board under the symbol ADCO. The following
table sets forth for the respective period indicated, the high and low bid
quotations, as adjusted for stock splits of the Company's common stock, as
reported by the National Quotation Bureau and represents prices between dealers,
does not include retail markups, markdowns or commissions, and may not represent
actual transactions:
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Calendar Quarters High Bid Low Bid
1995
1st Quarter 3.80 2.60
2nd Quarter 10.00 5.00
3rd Quarter 2.60 1.20
4th Quarter 3.80 1.20
1996
1st Quarter 3.80 1.20
2nd Quarter 3.80 1.20
3rd Quarter 3.00 1.20
4th Quarter 2.50 0.60
1997
1st Quarter 6.50 2.50
2nd Quarter 5.50 2.75
3rd Quarter 5.25 2.00
As of September 30, 1997, the Company had 1,841,486 shares of its
common stock issued and outstanding, and there were approximately 1,425
shareholders of record.
As of the date hereof, the Company has not paid or declared any cash
dividends. Future payment of dividends by the Company, if any, is at the
discretion of the Board of Directors and will depend, among other criteria, upon
the Company's earnings, capital requirements, and its financial condition as
well as other relative factors. Management has followed the policy of retaining
any and all earnings to finance the development of its business. Such a policy
is likely to be maintained as long as necessary to provide working capital for
the Company's operations.
RECENT SALES OF UNREGISTERED SECURITIES
On March 17, 1997 the Company acquired 80% of the outstanding shares of
Fantastic for 100,000 shares of the Company's Series D Convertible Preferred
Stock. These shares were issued to the shareholders of Fan-Tastic, each of which
signed an investment letter. The issuance of these shares was exempt from
registration pursuant to Section (4)(2) of the Securities Act of 1933.
On May 20, 1997 the Company entered into an agreement with William R.
Vowell to form Finally Communities, Inc. In consideration of Mr. Vowell's time
and effort to develop the Finally business, the Company issued Mr. Vowell
500,000 shares of Series E Convertible Preferred Stock. The issuance of these
shares was exempt from registration pursuant to Section (4)(2) of the Securities
Act of 1933.
Item 6. Management's Discussion & Analysis of Financial Condition &
Results of Operations.
The following information is derived from the consolidated financial
statements of the Company. Such financial statements include the Company, GVI,
Fan-Tastic and Finally.
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RESULTS OF OPERATIONS
For the Year Ended March 31, 1997, Compared to the Year Ended March 31, 1996.
Total revenue for the fiscal year ended March 31, 1997 ("fiscal 1997")
decreased $460,675, 63%, to $274,000, compared with $734,675 for the fiscal year
ended March 31, 1996 ("fiscal 1996"). Income is comprised of the sale of lots
from Cotton Acres and condominiums from Cotton Manor. During fiscal 1997, 9 lots
were sold at an average price of $30,400. During the comparable prior year
period, 20 lots were sold at an average price of $24,000 and 3 condominium units
were sold at an average price of $84,700. The sales volume is dependent upon the
number of completed lots and condominiums in inventory. During the past year
GVI's available capital was used to develop Red Hawk and no funds were made
available to Cotton Manor or Cotton Acres for development and therefore no new
inventory was available for sale and sales decreased.
Cost of sales decreased by $354,462, 69%, to $158,066 for the fiscal
year ended March 31, 1997 from $512,528 for fiscal 1996. As a percentage of
total revenue, cost of sales decreased to 58% in the current year from 70% in
the prior year. Gross profit decreased $106,213, 48%, to $115,934 during fiscal
1997 from $222,147 during fiscal 1996. Gross profit as a percentage of total
revenue increased to 42% from 30% in fiscal 1996.
General and administrative expenses decreased $2,859,610, or 68%, to
$1,377,082 during fiscal 1997 from $4,236,692 during fiscal 1996. The decrease
was principally attributable to $2,835,000 in financial advisory and referral
expenses incurred by GVI in 1996 and $350,000 for advertising and promotional
services incurred by GVI, both of which were settled by the issuance of GVI
common shares. The decrease was offset somewhat by increases in legal fees of
$197,730, 202%.
The Company had other income of $241,863 during fiscal 1997 compared
with $232,173 during fiscal 1996 an increase of $9,690, 4%.
The Company experienced a net loss of $1,024,802 in fiscal 1997
compared with a net loss of $3,786,145 in fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had total current assets of
$1,336,961 and total current liabilities of $3,486,633 which results in a
current ratio of 0.38:1, compared to a current ratio of 0.68:1 as of March 31,
1996. The current ratio decrease was due to the decrease in year end cash of
$742,894, 94%, from $790,744 at year end 1996 to $47,850 at March 31, 1997. The
decrease in cash reflects the slow down in real estate sales in GVI and the
decrease in borrowings during the fourth quarter of FY 1997. The decrease in
cash was offset somewhat by the increase in real estate inventories of $184,429,
25%, from $748,010 to $932,439 due primarily to the completion of an additional
townhome in the Cotton Manor development and the construction of an additional
19 lots in Phase X of Cotton Acres.
Current liabilities at March 31, 1997 increased $1,012,677, 41%, over
the prior year due to an increase in accounts payable of $385,938, 50%, and an
increase in interest payable of $556,649, 100%, related to the ongoing interest
accrual for notes payable and an adjustment for prior periods.
The Company has historically satisfied its cash needs through the sale
of real estate in GVI and private placements of securities and secured
borrowings. During 1997, the Company's subsidiary GVI sold $274,000 of real
estate in Cotton Manor and Cotton Acres. This figure is substantially lower than
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prior years due to the inability to raise sufficient funds to complete lot
development in Cotton Acres and Cotton Manor and make sales. During the year GVI
borrowed $3,238,805 from Miltex Industries of Geneva, Switzerland. (Miltex).
Approximately $2,000,000 of these funds were used to pay Granite Construction
Co. to start the rough grading on the golf course and the first phase of
residential lots in Red Hawk. Additionally, the Miltex funds were used to keep
the Stucki land note out of default and to pay overhead expenses. The
construction at Red Hawk has now stopped until further development money is
raised.
Completion of Phase I in Red Hawk and the subsequent sale of lots in
Phase I will depend largely on GVI, being able to raise additional funds,
preferably long term financing on acceptable terms and conditions. GVI is
pursuing development loans in the $10,000,000 to $14,000,000 range. GVI will
also continue to develop and sell lots and townhomes in the Cotton Manor/Cotton
Acres developments as financing becomes available. These sales will not be
sufficient to financially support GVI's Red Hawk project.
The Company currently plans to meet its obligations by liquidating from
time to time, its shares in GVI and through private or public offerings of
common and/or preferred stock for cash and additional borrowings. No assurance
can be given that the Company will raise sufficient cash to meet its obligations
through the sale of securities or additional borrowings.
PLAN OF OPERATIONS
Statements made or incorporated in this report include a number of
forward-looking statements within the meaning of Section 27(a) of the Securities
Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934.
Forward-looking statements include, without limitation, statements containing
the words anticipates, believes, expects, intends, future, and words of similar
import which express management's belief, expectations or intentions regarding
the Company's future performance or future events or trends. Reliance should not
be placed on forward-looking statements because they involve known and unknown
risks, uncertainties and other factors, which may cause actual results,
performance or achievements of the Company to differ materially from anticipated
future results, performance or achievements expressly or implied by such
forward-looking statements. In addition, the Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a result of
new information, future events or otherwise.
In addition to the development of its existing businesses, management
of the Company intends to investigate with a view to acquiring interests in
products, properties, technologies and businesses believed by management to hold
potential for profit. The nature of any acquisition and the manner of
acquisition cannot be determined at the present time and will be subject to the
business judgment of management. The Company presently intends to find a
product, property, technology or business in which an interest can be acquired
by the Company in exchange for the Company's securities, where the Sellers will
play the major role in the development of such product, property, technology or
business, and the primary function of the Company would be providing the
corporate structure for the business operations.
The Company's acquisitions, if any, may be owned by a joint venture
between the Company and the developer or by a partnership organized by the
Company. If the Company becomes a partner in a joint venture or partnership,
under certain circumstances risks may be involved not otherwise present,
including, for example, risks associated with the possibility that the Company's
co-venturer in an investment might become bankrupt, that such co-venturer may at
any time have economic or business interests or goals which are inconsistent
with the business interests or goals of the Company, or that such co-venturer
may be in a position to take action contrary to the instructions or the requests
of the Company or contrary to the Company's policies or objectives.
-9-
<PAGE>
Management believes that products, properties, technologies and
businesses will become available to it for acquisition due to a number of
factors, including, among others: (a) The Company's status as a publicly held
Company; (b) Management's willingness to enter into unproven, speculative
ventures; (c) Management's contacts and acquaintances; and (d) The Company's
flexibility with respect to the manner in which it may structure potential
acquisitions. However, there is no assurance that the Company will be able to
structure any partnership, or acquire an interest in any product, property,
technology or business.
Due to the factors described in the preceding paragraph, the Company
believes that it may be attractive to individuals and entities which wish to
take advantage of the benefits of a public corporation. Management believes that
a public trading market for the Company's common stock will be attractive to
corporations and other firms, due to (a) The Company's ability to issue stock in
acquisition transactions rather than paying cash thus providing an opportunity
to the seller to structure the transaction as a "tax free" event under the
Internal Revenue Code; (b) The liquidity (ability to turn investment into cash)
provided to shareholders of a publicly traded corporation not available in a
privately held company, as a result of the ability to sell shares in the open
market; and (c) a potential trading market in the Company's common stock which
may be at a premium over shares which cannot be publicly traded since shares of
a privately held company are often valued at the Company's book value for
purposes of a sale while shares of a publicly traded company often trade at an
increased value.
Possible Methods of Business Opportunity Acquisition
The Company proposes to seek out persons and firms holding interest in
products or businesses who are seeking to transfer such products or businesses
to a public entity.
In implementing its proposed business, the Company will consider a
number of alternative methods for the acquisition of an interest in products or
business. The primary method of acquisition will most likely be a merger,
reorganization or joint venture with a corporation or other entity holding the
rights to such product, business or process. There can be no assurance that the
Company will be able to enter into any arrangements on terms favorable to the
Company.
Evaluation of Potential Business, Property, Technology or Product Acquisitions
It is anticipated that preliminary information with respect to any
potential business, property, technology or product acquisition by the Company
will be obtained primarily through the personal contacts of management in the
business community.
Management of the Company will conduct the review and evaluation of any
potential business, property, technology or product acquisitions. Such
evaluation will be based generally upon management's knowledge and expertise. In
seeking products, businesses or processes, the Company will consider a number of
factors, including the soundness of the idea, service or product to be developed
or being developed, the market for such product, the effect of economic
conditions and governmental policies on such product, the nature and extent of
competition, the cost of developing and marketing the product, and other factors
deemed relevant by management. To the extent applicable, management will
consider other factors including the following, none of which will be
controlling:
1. The management and personnel of the proposed acquisition
who will be involved with the Company following such acquisition;
2. The capital requirements and anticipated availability of
required funds for the operation of the acquisition;
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<PAGE>
3. The cost to the Company of participating in the potential
acquisition as compared to the potential benefit of such acquisition;
4. The competitive position which the proposed acquisition has
in the market-place;
5. The potential growth of the business, property, technology
or product in the industry; and
6. Other factors deemed relevant in the specific
circumstances.
In evaluating a potential business, property, technology or product
acquisition, the Company will consider the results of operations of such
business to date. However, since the Company may seek to acquire new businesses,
properties, technologies or products which are in the development state, it
recognizes that the results of operations of such businesses, properties,
technologies or products may not be indicative of its potential future
operations.
Prior to conducting an evaluation of a prospective acquisition, the
Company will generally require that it be provided with reports, documents,
agreements, financial information and other information deemed relevant in the
particular circumstances. The Company will also conduct a personal investigation
and review the books and records of the potential acquisition as it may deem
appropriate, including interviews with management and key personnel, independent
analysis of information provided, and other similar activities. However, due to
the limited capital of the Company, it must be recognized that the Company's
investigation of a potential acquisition may not be as thorough or complete as
would be desirable under the circumstances. It is not likely that any "fairness
opinion" will be obtained in connection with any acquisition.
Business Acquisitions: Special Considerations
If the Company decides to acquire a business, the following
considerations exist. It cannot be predicted at this time the manner in which
the Company may participate in a potential business acquisition. Such
determination will depend upon a number of factors, including the nature of the
particular business, the respective needs of the parties to the transaction, and
the relative negotiating strengths of such parties. The manner of participation
will include, but not be limited to, joint ventures, licensing arrangements,
purchase and sale of assets, purchase and sale of stock, partnerships, leases,
mergers, consolidations, and other contractual transactions. The precise nature
of any of such transactions cannot be predicted at the present time.
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation or reorganization with
another corporation or entity. Upon the consummation of such a transaction, the
present management and shareholders of the Company may not be in control of the
Company. For example, a majority or all of the Company's directors may, as a
part of the terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders.
It can be anticipated that the Company may effect a business
acquisition through the issuance of its securities. While the precise terms of
such transaction cannot be predicted, it may be expected that the parties to the
business acquisition will find it desirable to avoid the creation of a taxable
event and thereby structure the acquisition in a so-called "tax free"
reorganization under Section 368(a)(1) of the Internal Revenue Code.
Item 7. Financial Statements and Supplementary Data.
See Item 13. Exhibits and Reports on Form 8-K.
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<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
This item is not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
Directors and Executive Officers
The following table sets forth the name, age and office held by each
director and officer of the company, followed by a brief resume of each
individual.
NAME AGE POSITION HELD
Karl F. Badger 42 President, Chief Executive Officer and Director
Barry L. Papenfuss 37 Vice President and Director
Timothy Papenfuss 38 Secretary/Treasurer, Chief Financial Officer and
Director
KARL F. BADGER, has been with the Company since 1992 working as the
Director of Shareholder Relations. He was appointed President, CEO and Director
of the Company upon resignation of George H. Badger, his father in December
1996. Prior to 1992, Mr. Badger was a licensed broker/principle for Rocky
Mountain Securities and Investments.
BARRY L. PAPENFUSS, Vice President and Director of the Company, is the
President of Fan-Tastic, which position he has held since 1994, and has been
with the Company since Fan-Tastic was acquired by ARDCO in March, 1997. From
1990-1994, Mr. Papenfuss was the controller of The Pro Image, a sports apparel
company and from 1985-1990, was a consultant with Deloitte and Touche, an
international accounting firm. Mr. Papenfuss graduated from Brigham Young
University. Mr. Barry Papenfuss is the brother of Mr. Timothy Papenfuss,
Secretary/Treasurer, Chief Financial Officer and a director of the Company.
TIMOTHY M. PAPENFUSS, chief financial officer and director of the
Company, is chief financial officer of Fan-Tastic, Inc., which position he has
held since April, 1994. Mr. Papenfuss was appointed chief financial officer and
a director of the Company in August, 1997. From 1990 to April, 1994, Mr.
Papenfuss was a manager and senior manager with Ernst and Young. Mr. Papenfuss
has 13 years of professional accounting experience. Mr. Papenfuss graduated from
Brigham Young University in 1983 with a bachelors degree in accounting. Mr.
Papenfuss is the brother of Barry Papenfuss, vice president and a director of
the Company.
Significant Employees and Consultants
The following individuals are officers and/or directors of the
Company's subsidiaries, or in the case of Mr. George Badger, a consultant to the
Company.
DUANE H. MARCHANT is the President, Chief Executive Officer, Treasurer
and a director of GVI, which positions he has held since January, 1993 except
for the office of Treasurer which position he assumed in August, 1997. From 1990
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<PAGE>
until 1995 he was a Director and President of the Company. Mr. Marchant directly
supervises all real estate activities in GVI. He has been involved in real
estate development for over twenty years.
WILLIAM VOWELL is President of Finally Communities, Inc., a position he
has held since its incorporation in 1997. Mr. Vowell began his career in real
estate development in 1960 with the John A. Cooper Company. In 1966 Mr. Vowell
was a co-founder of Fairfield Communities, Inc. which began developing the
Fairfield Bay resort community. From 1975 to 1989 Mr. Vowell designed, built and
sold two timeshare resort projects, one in Myrtle Beach, South Carolina, and one
in Harrisonburg, Virginia. In 1992 Mr. Vowell returned to Fairfield Bay and has
been involved with the revitalization and development of projects in the area
since then.
GEORGE H. BADGER, resigned as President, Chief Executive Officer and a
Director of the Company on December 31, 1996. Mr. Badger served as a director
since June 1992, and was President since 1995. Mr. Badger is currently providing
consulting services to the Company primarily in providing background information
on transactions which took place or were begun when he was president of the
Company and in locating possible acquisitions. Mr. Badger was indicted on a
number of charges and was arraigned in the U.S. Federal District Court for the
Southern District of New York on October 9, 1996. The Company has been advised
that the indictment related to alleged unlawful and undisclosed compensation to
securities brokers and promoters to induce them to cause customers to purchase
securities issued by GVI and the Company. The Company has been advised that Mr.
Badger has pleaded guilty to counts of: (i) conspiracy to commit securities
fraud; (ii) securities fraud; (iii) criminal contempt; and (iv) perjury.
Compliance with Section 16(a) of the Securities Act of 1934 by Company Officers,
Directors and 10% Shareholders.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities to file with the Commission initial reports of beneficial ownership
and reports of changes in beneficial ownership of Common Stock and other equity
securities of the Company. The rules promulgated by the Commission under Section
16(a) of the Exchange Act require those persons to furnish the Company with
copies of all reports filed with the Commission pursuant to Section 16(a).
Messrs. Badger, Papenfuss and Papenfuss did not file Forms 3 within ten
days of becoming officers and/or directors of the Company. Based solely upon a
review of Forms 3, Forms 4 and Forms 5 and amendments thereto furnished to the
Company pursuant to Rule 16a- 3(e) during the fiscal year ended March 31, 1997,
and written representations of certain of its directors and executive officers
that no Forms 5 were required to be filed, all other directors and executive
officers have filed with the Commission on a timely basis all reports required
to be filed under Section 16(a) of the exchange Act.
Item 10. Executive Compensation.
The Company has not had a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers of directors.
The following table sets forth the annual compensation paid and accrued
by the Company for services rendered during the fiscal years ended March 31,
1997, 1996 and 1995 to (i) the Company's Chief Executive Officer and (ii) each
other executive officer of the Company or its subsidiary serving at the end of
the last completed fiscal year whose salary and bonus exceeded $100,000 during
the last fiscal year ("Named Executive Officer").
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards Payouts
Name and Principal Other Restricted All Other
Position Annual Stock Options/ LTIP Compen-
Year Salary Bonus Compensation Award(s) SARs Payouts sation
($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Karl Badger, Chief 1997 $73,058 -0- -0- -0- -0- -0- -0-
Executive Officer 1996 $73,058 -0- -0- -0- -0- -0- -0-
1995 $73,058 -0- -0- -0- -0- -0- -0-
George Badger 1997 $50,400 -0- -0- -0- -0- -0-
1996 $50,400 -0- -0- -0- -0- -0-
1995 $50,400 -0- -0- -0- -0- -0-
========================= ====== ======== ======= ============ ========= ============= ========== ===========
</TABLE>
Employment Agreements.
None of the Company's officers or directors has any written employment
agreement with the Company. Messrs. Barry and Timothy Papenfuss have employment
agreements with Fan-Tastic.
Director Compensation
Directors of the Company have been partially reimbursed for expenses
incurred by them on behalf of the Company. No salary or fee has been paid to
directors. It is anticipated that the Company may establish some fees for
directors at such time as the Company has sufficient funds to pay fees to
directors.
Stock Options
In October, 1997 the Board of Directors ratified options for the three
officers of the Company. Pursuant to this action, Mr. Karl Badger holds an
option to purchase 100,000 shares of the Company's common stock at $2.00 per
share. The option vests as to 10,000 shares at the end of each fiscal year if
Mr. Badger is still an officer of the Company and the option may be exercised
for a three year period following its vesting. Both Mr. Barry Papenfuss and Mr.
Timothy Papenfuss hold an option to purchase 20,000 shares of the Company's
common stock at $2.00 per share. The options vest as to 5,000 shares at the end
of each fiscal year if the individual holding the option is still an officer of
the Company. On the date of the Board of Directors' meeting the average between
the bid and asked price of the Company's common stock was approximately $4.00.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information, to the best knowledge of
the Company, as of September 30, 1997, with respect to the beneficial ownership
of the Company's Common Stock by (i) each person known by the Company to be the
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beneficial owner of more than 5% of the Company's outstanding Common Stock; (ii)
each director; and (iii) all current directors and executive officers as a
group.
NAME AND ADDRESS OF NUMBER OF PERCENT
BENEFICIAL OWNER SHARES OWNED OF CLASS
Banque SCS Alliance SA 948,336(1) 51.50%
P.O. Box 880
12111 Geneva 3, Switzerland
George H. Badger 131,487 7.14%
102 West 500 South, Suite 318
Salt Lake City, UT 84101
Don Pickett, agent for 125,860 6.83%
Mindon Investment and The Stella Trust
P. O. Box 58548
Salt Lake City, UT 84101
Karl F. Badger 58,605 3.2%
102 West 500 South, Suite 318
Salt Lake City, UT 84101
Barry L. Papenfuss 0(2) *
3855 South 500 West #R
Salt Lake City, UT 84115
Timothy M. Papenfuss 0(3) *
3855 South 500 West #R
Salt Lake City, UT 84115
All Officers and Directors as 58,605 3.2%
a Group (3 persons) *Less than 1%
- --------------------------
1 Banque SCS Alliance SA disclaims beneficial ownership.
2 Mr. Barry Papenfuss is the owner of 37,012 shares of the Company's Series
D Convertible Preferred Stock. After June 30, 2000 and before September 30, 2000
the D Preferred is convertible at the option of the holder into shares of the
Company's common stock or the common stock of Fantastic at a conversion rate to
be determined based on net income of Fantastic at the time of conversion and the
trading price of the Company's common stock. Additionally Mr. Papenfuss has
received options to acquire 56,903 shares of the Company's common stock valued
at $2.00 per share. The options become available on June 1, 1999 if certain
income related performance goals have been met.
3 Mr. Timothy Papenfuss is the owner of 19,786 shares of the Company's Series
D Convertible Preferred Stock. Mr. Timothy Papenfuss also owns options to
purchase 30,418 shares of common stock. The Series D Preferred Stock and the
options are convertible and exercisable upon the same terms as set forth in
footnote 2 above.
Item 12. Certain Relationships and Related Transactions.
Since the beginning of the Company's last fiscal year, there have been
no transactions between the Company and any officer, director, nominee for
election as director, or any shareholder owning greater than five percent (5%)
of the Company's outstanding shares, nor any member of the above referenced
individuals' immediate family.
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<PAGE>
Item 13. Exhibits and Reports on Form 8-K.
The following financial statements, schedules, reports and exhibits are
filed with this Report:
(a) FINANCIAL STATEMENTS
(1) Report of Jones, Jensen & Company, Independent Public
Accountants.
(2) Consolidated Balance Sheet as of March 31, 1997.
(3) Consolidated Statements of Operation for the years ended
March 31, 1997 and 1996.
(4) Statement of Stockholders' Equity for the period March 31,
1996 through March 31, 1997.
(5) Consolidated Statements of Cash Flows for years ended
March 31, 1996 and 1997.
(6) Notes to Financial Statements.
(b) FINANCIAL STATEMENT SCHEDULES
(1) Schedule VIII - Valuation and Qualifying Accounts.
(2) Schedule X - Supplementary Income Statement Information.
(3) Schedule XI - Real Estate and Accumulated Depreciation.
(d) Exhibits
The following exhibits are filed herewith or are incorporated by
reference to exhibits previously filed with the Securities and Exchange
Commission. The Company shall furnish copies of exhibits for a reasonable fee
(covering the expense of furnishing copies) upon request.
Exhibit No. Exhibit Name
3.1 (1) Articles of Incorporation
3.2 (2) Amendment to Articles of Incorporation
3.3 (1) By-Laws
3.4 (7) Amendment on name change
3.5 (7) Amendment on Series D designation
3.6 (7) Amendment on Series E designation
10.1 (1) Agreement with TechKNOWLOGY, Inc.
10.2 (1) Financing Agreement
10.3 (1) Exchange of Shares Agreement
10.4 (1) Option Contract
10.5 (1) Extension to Option Contract
10.6 (1) Further Amendment to Option Agreement
10.7 (1) Purchase Agreement
10.8 (1) Amendment to Purchase Agreement
10.9 (1) Addendum to Purchase Agreement
10.10 (1) Purchase Agreement (Stella Trust)
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<PAGE>
10.11 (2) Agreement of Joint Project
10.12 (2) Amendment to Agreement of Joint Project
10.13 (2) Dynamic American Option
10.14 (2) Land Sale Agreement
10.15 (2) Assignment of Trust Deed and Trust Deed Note
10.16 (2) Promissory Note (Johnson)
10.17 (3) TKI Dealer Agreement
10.18 (4) Modification Agreement
10.19 (4) Land Sales Agreement (Mindon)
10.20 (4) Sales Agreement (Property Alliance)
10.21 (5) Assignment Agreement
10.22 (6) Agreement with The Stella Trust and Mindon Investments
(Pickett Group)
10.23 (6) Acquisition Agreement with Golf Ventures, Inc.
10.24 (6) Settlement Agreement and General Release (TKI)
10.25 (7) Stock Purchase Agreement (Fantastic)
10.26 (7) Agreement (Vowell/Finally)
16.1 (2) Letter Regarding Change in Certifying Public Accountant
21. Subsidiaries
23. Consent of Independent Auditor
99.1 (2) List of Third Party Loans to TechKNOWLOGY, Inc.
(28.1)*
99.2 (2) Lease of LTI Office
(28.2)*
99.3 (2) Financial Statements for years ended March 31, 1989, 1988 and
(28.3)* 1987, and quarter ended June 30, 1989, as prepared by Dale K.
Barker Co., P.C.
99.4 (4) Class "A" Preferred Stock
(28.4)*
99.5 (4) Debenture
(28.5)*
(1) Incorporated by reference to the Form 10 Registration Statement filed
with the Commission October 16, 1990, File No. 0-18865.
(2) Incorporated by reference to Amendment No. 1 to Form 10 Registration
Statement filed with the Commission May 23, 1991, File No. 0-18865.
(3) Incorporated by reference to Amendment No. 2 to Form 10 Registration
Statement filed with the Commission August 12, 1991, File No. 0-18865.
(4) Incorporated by reference to Amendment No. 3 to Form 10 Registration
Statement filed with the Commission November 13, 1991, File No.
0-18865.
(5) Incorporated by reference to Amendment No. 4 to Form 10 Registration
Statement filed with the Commission February 13, 1992, File No.
0-18865.
(6) Incorporated by reference to Form 10-K for the year ended
March 31, 1993
(7) Incorporated by reference to form 10-KSB for the year ended
March 31, 1997.
(*) Exhibits previously filed as Exhibits 28.1 through 28.5 are now
depicted as 99.1 through 99.5.
(b) The Registrant filed a report on Form 8-K on March 17, 1997 outlining the
acquisition by the Company of Fan-Tastic, Inc. on March 17, 1997, identifying
the Company's name change from Leasing Technology, Inc. to American Resources
and Development Company and a one for twenty (1:20) reverse stock split effected
on the Company's common stock.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN RESOURCES AND DEVELOPMENT COMPANY
(Registrant)
By: /s/ Karl F. Badger
-----------------------
Karl F. Badger
Dated: October 28, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ Karl F. Badger President, Chief October 28, 1997
------------------- Executive Officer and
Karl F. Badger Director (Principal
Executive Officer)
/s/ Barry L. Papenfuss Vice President and October 28, 1997
---------------------- Director
Barry L. Papenfuss
/s/ Timothy M. Papenfuss Secretary/Treasurer and October 28, 1997
------------------------ Director (Chief Financial
Timothy M. Papenfuss Officer, Chief Accounting
Officer and Controller)
and Director
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