SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 000-31175
AFFILIATED RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
COLORADO 84-1045715
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3050 POST OAK BOULEVARD
SUITE 1080, HOUSTON, TEXAS 77056
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 355-8940
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
YES X NO
---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.
COMMON STOCK, $.003 PAR VALUE 29,046,260
(SHARES OUTSTANDING AS OF
SEPTEMBER 30, 2000)
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES NO X
-----
<PAGE>
AFFILIATED RESOURCES CORPORATION
QUARTERLY REPORT ON FORM 10-QSB FOR THE INTERIM
PERIOD ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
BALANCE SHEETS AT SEPTEMBER 30, 2000 AND
DECEMBER 31, 1999 1
STATEMENTS OF OPERATIONS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999 3
STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999 4
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2000 AND 1999 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 6
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 6. REPORTS ON FORM 8-K 11
SIGNATURES 12
<PAGE>
AFFILIATED RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, December 31,
2000 1999
------------- ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 1,363 $ 8,490
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . 790 6,900
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 606,100
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . - 7,823
----------- -------------
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . 2,153 629,313
----------- -------------
PROPERTY AND EQUIPMENT
Office equipment and furniture. . . . . . . . . . . . . . . . . . . 44,126 76,344
Leasehold improvements. . . . . . . . . . . . . . . . . . . . . . . 10,617 334,125
Oil and gas properties. . . . . . . . . . . . . . . . . . . . . . . 51,000 51,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 41,000
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 744,000
Warehouse equipment . . . . . . . . . . . . . . . . . . . . . . . . - 2,423,348
Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 39,784
----------- -------------
105,743 3,709,601
Less: Accumulated depreciation. . . . . . . . . . . . . . . . . . . 11,623 257,232
----------- -------------
94,120 3,452,369
----------- -------------
GOODWILL, net of accumulated amortization of $3,537 and $344,572
at September 30, 2000 and December 31, 1999, respectively. . . . . 67,213 3,264,546
DEPOSITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,201 3,201
----------- -------------
$ 166,687 $ 7,349,429
=========== =============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SEPTEMBER 30, December 31,
2000 1999
------------- ------------
(Unaudited) (Audited)
LIABILITIES
CURRENT LIABILITIES
Notes Payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 280,000 $ 395,000
Current maturities of long-term debt . . . . . . . . . . . . . . . - 9,300
Accounts payable:
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417,137 1,220,953
Related Parties . . . . . . . . . . . . . . . . . . . . . . . 60,906 106,888
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 731,703 626,236
Advances payable . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 40,000
------------- -------------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . 1,504,746 2,398,377
LONG-TERM DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000 343,561
------------- -------------
1,644,746 2,741,938
------------- --------------
STOCKHOLDERS' EQUITY
PREFERRED STOCK, $1 par value, 10,000,000 shares
authorized, no shares outstanding
COMMON STOCK, $.003 par value, 50,000,000 shares authorized,
29,046,260 and 17,947,743 shares issued and outstanding
at September 30, 2000 and December 31, 1999, respectively . . . 87,139 53,843
ADDITIONAL PAID-IN CAPITAL . . . . . . . . . . . . . . . . . . . . 19,806,326 16,957,480
ACCUMULATED DEFICIT . . . . . . . . . . . . . . . . . . . . . . . (20,355,020) (10,031,466)
UNAMORTIZED STOCK COMPENSATION . . . . . . . . . . . . . . . . . . (1,010,504) (2,366,366)
TREASURY STOCK, 641,026 shares at cost . . . . . . . . . . . . . . (6,000) (6,000)
------------- -------------
(1,478,059) 4,607,491
------------- --------------
$ 166,687 $ 7,349,429
============= ==============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
AFFILIATED RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE For the
NINE MONTHS Nine Months
ENDED Ended
SEPTEMBER 30, September 30,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
Selling, general and administrative expenses. $ 4,469,633 $ 604,262
Depreciation and amortization expenses. . . . 6,037 5,832
------------ ------------
Loss from Operations. . . . . . . . . . . . . (4,475,670) (610,094)
OTHER INCOME (EXPENSE)
Interest expense. . . . . . . . . . . . . . . (1,042) (3,627)
------------ ------------
LOSS FROM CONTINUING OPERATIONS (4,476,712) (613,721)
------------ ------------
DISCONTINUED OPERATIONS:
Loss from operations of ChemWay (845,126) (1,006,022)
Estimated loss on disposal of ChemWay (6,353,476) -
------------ ------------
(7,198,602) (1,006,022)
------------ ------------
NET LOSS. . . . . . . . . . . . . . . . . . $(11,675,314) $(1,619,743)
============ ============
Net Loss Per Share:
Continuing Operations . . . . . . . . . . . $ (.21) $ (.04)
Discontinued Operations . . . . . . . . . . (.34) (.07)
------------ ------------
Net loss per share - basic and diluted . . $ (.55) $ (.11)
============ ============
Weighted Average Shares Outstanding . . . . . 21,411,889 14,236,509
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
AFFILIATED RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE For the
THREE MONTHS Three Months
ENDED Ended
SEPTEMBER 30, September 30,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
Selling, general and administrative expenses. $ 3,108,509 $ 70,097
Depreciation and amortization expenses. . . . 2,429 2,144
------------ ------------
Loss from Operations. . . . . . . . . . . . . (3,110,938) (72,241)
OTHER INCOME (EXPENSE)
Interest expense. . . . . . . . . . . . . . . (1,042) (1,836)
------------ ------------
LOSS FROM CONTINUING OPERATIONS (3,111,980) (74,077)
------------ ------------
DISCONTINUED OPERATIONS:
Loss from operations of ChemWay (237,424) (312,970)
Estimated loss on disposal of ChemWay (6,353,476) -
------------ ------------
(6,590,900) (312,970)
------------ ------------
NET LOSS. . . . . . . . . . . . . . . . . . $ (9,702,880) $ (387,047)
============ ============
Net Loss Per Share:
Continuing Operations . . . . . . . . . . . $ (.14) $ (.00)
Discontinued Operations . . . . . . . . . . (.29) (.02)
------------ ------------
Net loss per share - basic and diluted . . $ (.43) $ (.02)
============ ============
Weighted Average Shares Outstanding . . . . . 22,741,826 16,521,765
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
AFFILIATED RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S> <C> <C>
FOR THE For the
NINE MONTHS Nine months
ENDED Ended
SEPTEMBER 30, September 30,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(11,675,314) $(1,619,743)
Adjustments to reconcile net loss to net cash used in operating
activities:
Loss on disposal of ChemWay. . . . . . . . . . . . . . . . 6,353,476 -
Depreciation and amortization expense. . . . . . . . . . . 360,277 350,567
Non-cash compensation expense . . . . . . . . . . . . . . 1,762,062 285,345
Non-cash consulting expense . . . . . . . . . . . . . . . 1,759,164 -
Non-cash legal expense . . . . . . . . . . . . . . . . . . 203,778 -
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . 225 (18,027)
Inventory. . . . . . . . . . . . . . . . . . . . . . . 124,805 253,296
Prepaid expenses. . . . . . . . . . . . . . . . . . . . 4,279 16,752
Accounts payable and accrued liabilities. . . . . . . . 445,220 (29,735)
------------ ------------
Net Cash Used in Operating Activities. . . . . . . . . . . . . . (662,028) (762,544)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment . . . . . . . . . . . . . . . . . . . . (1,503) (20,302)
Proceeds from sale of equipment.. . . . . . . . . . . . . . . - 30,204
Disposal of ChemWay . . . . . . . . . . . . . . . . . . . . . (12,926) -
------------ ------------
Net Cash Provided (Required) by Investing Activities . . . . . . (14,429) 9,902
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt . . . . . . . . . . . . . . . . . . . . . 590,000 400,000
Payments of debt . . . . . . . . . . . . . . . . . . . . . . (211,378) (26,752)
Sale of common stock . . . . . . . . . . . . . . . . . . . . 290,708 208,000
------------ ------------
Net Cash Provided by Financing Activities. . . . . . . . . . . . 669,330 606,248
------------ ------------
NET INCREASE (DECREASE) IN CASH EQUIVALENTS. . . . . . . . . . . (7,127) (415,399)
Cash and Cash Equivalents at Beginning of Period . . . . . . . . 8,490 144,123
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . $ 1,363 $ (1,271)
============ ============
Non-Cash investing and financing activities:
Common stock issued for payment of note and
interest payable. . . . . . . . . . . . . . . . . . . . . 197,292
Common stock issued for advances payable. . . . . . . . . . . . 25,000
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
AFFILIATED RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of Affiliated Resources Corporation
(formerly Synaptix Systems Corporation) (the "Company") included herein are
unaudited for all periods ended September 30, 2000 and 1999. They reflect all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary to fairly depict the results for the periods
presented. Certain information and note disclosures, normally included in
financial statements prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to rules and regulations of
the Securities and Exchange Commission. It is suggested that these financial
statements be read in conjunction with the audited financial statements for the
year ended December 31, 1999, which is included in the Company's annual report.
The Company believes that the disclosures made herein are adequate to make the
information presented not misleading.
NOTE 2 - EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share are based on the average
number of common shares and dilutive common share equivalents outstanding for
the nine months and three months ended September 30, 2000 and 1999,
respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended, and is subject to the
safe harbors created by those sections. These forward-looking statements are
subject to significant risks and uncertainties, including those identified in
the section of this Form 10-QSB and in the Company's Annual Report on Form
10-KSB, filed with the SEC on May 18, 2000, which may cause actual results to
differ materially from those discussed in such forward-looking statement. The
forward-looking statements within this Form 10-QSB are identified by words such
as "believes," "anticipates," "expects," "intends," "may" and other similar
expressions. However, these words are not the exclusive means of identifying
such statements. In addition, any statements which refer to expectations,
projections or other characterizations of future events or circumstances are
forward looking statements. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements which
may be made to reflect events or circumstances occurring subsequent to the
filing of this Form 10-QSB with the Securities and Exchange Commission. Readers
are urged to carefully review and consider the various disclosures made by the
Company in this report and in the Company's other reports filed with the
Securities and Exchange Commission, including its Form 10-KSB, that attempt to
advise interested parties of the risks and factors that may affect the Company's
business.
<PAGE>
INTRODUCTION
On December 30, 1998 the Company acquired all the outstanding stock of
ChemWay Systems, Inc., a corporation that blends and packages chemicals for the
automotive aftermarket. The Company commenced operations of ChemWay on January
7, 1999. The Company raised approximately $1,005,000 in private placements
during the fiscal year ended December 31, 1999, $754,385 of which was used to
pay ChemWay debt and other costs assumed pursuant to the Purchase Agreement. In
March 2000, ChemWay secured a mortgage in the amount of $510,000 on its
Cottonwood property in order to retire the first mortgage on the property and
thereby fulfill a covenant of the Purchase Agreement.
In June 1999, the Board determined to refocus the Company's efforts to grow
the ChemWay operation as well as seek additional opportunities to provide
immediate revenue and asset enhancement. By December 1999, the Company had
finalized negotiations with Michael R. Bradle to acquire an interest in Seneca
Energy Partners, L.P., and for Mr. Bradle to serve as the President, Chief
Operating Officer and a director of the Company. In order to create a
comprehensive business plan and facilitate planned expansion, in February 2000,
the Company hired Mr. Barry Goverman as Senior Vice President and Chief
Communications Officer and Ms. Catherine A. Tamme as Vice President and Chief
Financial Officer.
The resignation of Michael R. Bradle as President, Chief Operating Officer
and Director of the Company was accepted on July 6, 2000. Mr. Bradle still
serves as a consultant with the Company under an Agreement for Professional
Services. Peter C. Vanucci, Chief Executive Officer and Chairman of the Board,
will handle Mr. Bradle's former tasks until such time as a replacement is found.
On September 11, 2000, the Company executed a letter of intent to acquire
Modular Processing Technologies, Inc., a Nevada corporation. The acquisition is
subject to the completion of due diligence and execution of a definitive
acquisition agreement between the parties.
During the quarter, the Company entered into contingent contracts with RTB
Ventures, Inc., Jordan Grand Prix Limited and Tiger Trading Ltd. These
contracts were primarily for the marketing and licensing of certain ChemWay
products.
Effective on September 26, 2000, the Company entered into a Settlement and
Rescission Agreement with Evans Systems, Inc. and Way Energy, Inc., a Delaware
corporation. Under the terms of the Settlement Agreement, which has an
anticipated closing date of November 26, 2000, Evans and Way will terminate the
lawsuit against the Company currently pending in the State of Texas. In
addition, Evans will deliver to Affiliated an aggregate of 1,500,000 shares of
outstanding Affiliated common stock for retirement, and will deliver to an
escrow agent an additional 1,000,000 shares of outstanding Affiliated common
stock which may be retired upon payment in full of a promissory note from
Affiliated to Evans. The completion of this agreement is contingent upon the
Company acquiring Modular Processing Technologies, Inc., a similar asset, or
obtaining stockholder approval. In consideration of this agreement, the Company
recorded a write down of the ChemWay asset to its estimated net realizable
value. This write down amounts to $6,353,476 and is reflected in the third
quarter financials.
<PAGE>
The Company has entered into negotiations to purchase a 25% interest held
by Triasis Energy Partners, LLC in Triumph Energy Partners of Texas, LLP,
subject to the execution of complete and final documents. The purchase is
anticipated to be paid by the issuance of convertible preferred stock at a face
value of $10 per share, with each share of preferred stock convertible to 2
shares of common stock. The number of shares to be issued will be determined at
closing based on the final engineering report. Current engineering estimates
place the net equity value to be purchased at $15,000,000.
The Company's management plans to expand the Company by strategically
identifying, acquiring and managing energy and energy related businesses whose
products or services are technically innovative and market proven, and whose
market penetration can be expanded through enhanced marketing or additional
capitalization provided through a publicly traded corporation. Management
believes that current discussions with investors will yield additional capital
to pursue acquisitions and provide sufficient working capital for future
operations.
RESULTS OF OPERATIONS
ANALYSIS OF NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 1999
The following discussion is included to describe the Company's financial
position and results of operations for the nine months ended September 30, 2000
and 1999, respectively. The financial statements and notes thereto contain
detailed information that should be referred to in conjunction with this
discussion.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses were $4,469,633 and $604,262 for the
nine months ended September 30, 2000 and 1999, respectively. The increase in
expenses was primarily due to a settlement agreement entered into with an
ex-employee and non-cash compensation for consulting arrangements.
LOSS FROM CONTINUING OPERATIONS
The Company had a loss from continuing operations of $4,476,712 for the
nine months ended September 30, 2000 and $613,721 for the same period in 1999.
The loss for the period ended September 30, 2000 was more than the previous year
as a result of the increase in general and administrative costs as described
above.
<PAGE>
INCOME TAXES
The Company had no income tax expense. As of September 30, 2000, the
Company believes it has an operating loss carryforwards of over $10,000,000. The
utilization of net operating carryforwards will be severely limited as
determined pursuant to applicable provisions of the Internal Revenue Code and U.
S. Treasury regulations thereunder.
DISCONTINUED OPERATIONS
The Company had an operating loss of $845,126 from the ChemWay operations
for the nine months ended September 30, 2000, compared to $1,006,022 for the
nine months ended September 30, 1999. As a result of the Settlement and
Rescission Agreement with Evans Systems and Way Energy, the Company recorded a
write down of $6,353,476 to the estimated net realizable value of ChemWay.
NET LOSS
The Company had a net loss of $11,675,314 ($0.55 per share) for the nine
months ended September 30, 2000, compared with a net loss of $1,619,743 ($.11
per share) for the same period in 1999. The net loss for the nine months ended
September 30, 2000 was more than the previous year largely due to the disposal
and write down of the ChemWay operation.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2000, the Company maintained a negative liquidity position
which is evidenced by a current ratio of .001 to 1. Management will continue to
restructure the Company and seek to increase the Company's current ratio and
liquidity, and generate capital which would provide cash flow for future
operations and expansion.
At September 30, 2000, the Company had a working capital deficiency of
$1,478,059, compared to a working capital deficiency of $1,769,064 at September
30, 1999. The cash balance at September 30, 2000 was $1,363 and at September
30, 1999 was $8,490.
Cash used by operations totaled $662,028 for the nine months ended
September 30, 2000, compared to $762,544 for the same period in 1999. Cash
required by investing activities totaled $14,429 for the nine months ended
September 30, 2000, compared to $9,902 generated for the same period in 1999.
Cash provided by financing activities during the nine months ended September 30,
2000 totaled $669,330, which included the proceeds from the sale of stock.
FINANCIAL CONDITION
Management plans to expand the Company by introducing new products and by
developing strategic marketing alliances to promote its existing products in the
national market. In addition, expansion will also be achieved through selected,
related industry, acquisitions using leverage, stock of the Company, or a
combination of both. Management believes that current discussions with
investors will yield additional capital to pursue acquisitions and provide
sufficient working capital for future operations. There can be no assurance
that the Company will be able to raise sufficient additional capital to achieve
these objectives or meet its working capital needs.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may from time to time be involved in various claims, lawsuits, disputes
with third parties, actions involving allegations of discrimination, or breach
of contract actions incidental to the operation of our business. Currently, we
are defendants in four actions which, if we are unsuccessful in defending, could
have a material adverse effect on our results of operations.
1. We are currently a defendant in an action entitled Evans Systems,
Inc. and Way Energy, Inc. v. Affiliated Resources Corporation, et al; Cause No.
00-J-0443-C filed in the 130th Judicial Court of Matagorda County, Texas. The
plaintiff, former owners of our subsidiary ChemWay Systems, Inc., are suing to
foreclose alleged liens and recover the assets of our subsidiary ChemWay. Evans
and Way Energy have alleged claims for breach of contract alleging that we
failed to perform under the terms of our agreement to acquire ChemWay. We
adamantly dispute their claims and will vigorously defend the lawsuit. No
assurances can be made however, that we will be successful in defending the
action. Failure to successfully defend the action will result in a material
adverse effect on our results of operations. We have entered into a Settlement
and Rescission Agreement to terminate this lawsuit and sell ChemWay back to
Evans.
2. We are also currently a defendant in an action entitled Virginia
Lazar vs. Affiliated Resources Corporation et al; Cause No. 2000-32073 filed in
the 133rd Judicial District Court of Harris County, Texas. This is an action by
a former employee which seeks, among other things, back salary in the alleged
amount of $310,000 and options to purchase 500,000 shares of our common stock.
We dispute Ms. Lazar's claims and will vigorously defend the action. Failure to
successfully defend the action may result in a material adverse effect on our
results of operations.
3. We are also currently a defendant in an action entitled Wayne
Philips and Bob Limbaugh DBA Limbaugh, Rushmore Philips & Associates LLC vs.
Harris "Butch" Ballow and Affiliated Resources Corp.; Cause No. 2000-19099 filed
in the 164th Judicial District Court of Harris County, Texas. Plaintiffs in
this case claim that they had a contract with the our predecessor entitling them
to be directors of the Company. Plaintiffs also claim damages of $38,300 and up
to one million shares of our common stock. We plan to vigorously defend this
action. Failure to successfully defend the action may result in a material
adverse effect on our results of operations.
4. We have been named as a defendant in an action entitled Harry
Russell "Sandy" Stokes, III vs. Affiliated Resources Corporation f/k/a Synaptix
Corporation, Peter C. Vanucci and Virginia M. Lazar; Cause No. 2000-45414 filed
in the 165th Judicial District Court of Harris County, Texas. Plaintiffs in the
case allege that we refused to allow the sale of Plaintiff's stock on a timely
basis causing loss to him. Pursuant to numerous alleged courses of action,
actual damages are alleged to be $320,526.27 and Plaintiff also seeks treble
damages, punitive damages of $12 million, plus interest and attorneys fees. No
discovery has been taken. We dispute the claims made in this lawsuit, and plan
to vigorously defend this action. Failure to successfully defend the action may
result in a material adverse effect on our results of operations.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2 Settlement and Rescission Agreement by and among Evans
Systems. Way Energy, Inc. and Affiliated Resources Corporation,
dated September 26, 2000(1)
10 Settlement Agreement and Release by and between Michael R. Bradle
and Affiliated Resources Corporation, dated June 7, 2000
10.1 Agreement for Professional Services by and between The Bradle
Group, Inc. and Affiliated Resources Corporation, dated
June 7, 2000
10.2 Distribution and Compensation Agreement by and between RTB
Ventures, Inc. and Affiliated Resources Corporation, dated
August 1, 2000
10.3 Amendment No. 1 to Agreement for Professional Services and
Compensation dated December 27, 1999 by and among Seneca Energy
Partners L.P., Lonestar Investment Management, L.L.C. and
Affiliated Resources Corporation, dated August 29, 2000
10.4 Licensing Agreement by and between Jordan Grand Prix Limited
and Affiliated Resources Corporation, dated August 31, 2000
10.5 Letter of Intent in the Acquisition of Modular Processing
Technologies, Inc. by Affiliated Resources Corporation, dated
September 11, 2000(2)
10.6 Royalty Agreement by and between Tiger Trading, Ltd. and
Affiliated Resources Corporation, dated September 14, 2000
10.7 Promissory Note by and between Way Energy, Inc. and
Affiliated Resources Corporation, dated September 26, 2000
17 Resignation Letter of Michael R. Bradle
------------------
(1) Incorporated herein by reference in Registrant's Report on Form 8-K,
dated October 13, 2000
(2) Incorporated herein by reference in Registrant's Report on Form
8-K, dated September 28, 2000
<PAGE>
B. REPORTS ON FORM 8-K
1. A Form 8-K was filed on October 13, 2000 announcing the Settlement
and Rescission Agreement with Evans Systems, Inc. and Way Energy, Inc.
2. A Form 8-K was filed on September 28, 2000 announcing a Letter of
Intent with Modular Processing Technologies, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
AFFILIATED RESOURCES CORPORATION
Dated: November 14, 2000 By: /s/ Peter C. Vanucci
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Peter C. Vanucci, Chairman and CEO
