<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
FORM 10-SB
General Form For Registration of Securities
of Small Business Issuers Under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934
Golf Ventures, Inc.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Utah 87-0402088
- ---------------------------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
102 West 500 South, Suite 400
Salt Lake City, Utah 84101
- ---------------------------------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)
(801) 363-8961
-------------------------------------
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Not applicable Not applicable
- ------------------------------------------ ------------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
- --------------------------------------------------------------------------------
(Title of Class)
<PAGE>
PART I
FORM 10-SB ALTERNATIVE 3
ITEM 1. BUSINESS.
All information in this Form 10-SB gives effect to a 1-for-5 reverse stock
split effected on February 1, 1996.
GENERAL
Golf Ventures, Inc. ("GVI" or the "Company"), a Utah corporation, is
primarily engaged in developing certain residential and recreational real estate
projects. Substantially all of the Company's real estate holdings were
initially acquired by the Company's principal stockholder, Leasing Technology
Incorporated ("LTI"), and subsequently transferred to the Company. The
Company's business is currently comprised of a proposed recreational and
residential development, Red Hawk-Registered Trademark- International Golf &
Country Club ("Red Hawk-Registered Trademark-"), and two residential
developments, Cotton Manor and Cotton Acres.
Red Hawk-Registered Trademark-, a recreational and residential development
project located in Washington, Utah, was acquired by LTI in 1990 from an
unaffiliated third party. Cotton Manor and Cotton Acres, residential
developments located in St. George, Utah, consisting of condominiums, cottages,
and single family dwelling lots, were acquired by LTI in 1991 from a corporation
of which Duane H. Marchant, President and Chief Executive Officer of the
Company, was then affiliated.
In December 1992, the Company acquired LTI's rights in Red Hawk-Registered
Trademark-, Cotton Manor and Cotton Acres in exchange for 654,746 shares of GVI
common stock, which represented approximately 86% of the Company's total
outstanding shares. The Company further agreed to assume all obligations
related to the acquired real estate. On June 1, 1994, the Company acquired an
additional 54 acres of land adjacent to Red Hawk-Registered Trademark- for
future development. In July 1996, the Company commenced construction of Phase I
of Red Hawk-Registered Trademark-.
Subject to obtaining adequate financing, the Company intends to acquire and
develop additional golf courses and golf communities.
The Company was organized on March 2, 1983 under the name Gold-Water, Inc.
for the purpose of acquiring and developing mining properties, and changed its
name on September 27, 1989 to Sierra Tech, Inc. Due to the lack of adequate
funding, the Company discontinued its operations in 1992. The Company changed
its name to Golf Ventures, Inc. on February 4, 1993 following the acquisition of
LTI's real estate holdings described above. GVI's
<PAGE>
principal corporate offices are located at 102 West 500 South, Suite 400, Salt
Lake City, Utah 84101 and its telephone number is (801) 363-8961.
RED HAWK-REGISTERED TRADEMARK- INTERNATIONAL GOLF & COUNTRY CLUB
BACKGROUND
Red Hawk-Registered Trademark- is a master-planned residential golfing and
recreational community situated on 670 acres of land that, when completed, is
designed to include at least 945 building lots, a 27 hole golf course, tennis
courts, swimming pools, and other recreational amenities. To date, engineering,
land planning and general architecture for Phase I of the project have been
completed. Phase I is anticipated to 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. The Company has recently retained Granite
Construction Incorporated ("Granite") as its contractor for the construction and
management of Phase I of Red Hawk-Registered Trademark-. Granite commenced
construction in July 1996. The successful development of Red Hawk-Registered
Trademark- is subject to the Company's obtaining sufficient financing to fund
the cost of such project. See "--Plan of Red Hawk Operation for Next Twelve
Months."
Red Hawk-Registered Trademark- is located in southwest Utah, approximately
three miles southeast of St. George in Washington City, approximately 120 miles
from Las Vegas, Nevada, and within a short drive of several national parks
including Zion National Park, Bryce National Park and Grand Canyon National
Park. Red Hawk-Registered Trademark- is situated on rolling farm land
surrounded on three sides by a horseshoe of rolling hills. This land was used
for several years as a farm known as "Stucki Farms," where the principal crops
grown and harvested were apples, alfalfa and grapes.
Irrigation water for the Red Hawk-Registered Trademark- land is obtained
from two sources. First, from the Company's water rights owned in Hurricane
Canal Company, La Verkin Bench Canal Company, and St. George Washington Field
Canal Company. Irrigation rights are serviced by the St. George Washington
Field Canal Company. The source of supply is Navajo Lake and the North Fork of
the Virgin River in the Colorado River drainage. The second source of water is
from ten existing wells on the Red Hawk-Registered Trademark- property. These
wells have a history of water capability of 4,968.30 acre feet of water per
year. Management believes that sufficient water rights is available to
accomplish all of the Company's irrigation water needs.
Washington City recently completed construction of a storage tank for
culinary (drinking) water in close proximity to
-2-
<PAGE>
Red Hawk-Registered Trademark-, together with a water pumping station and
delivery lines which run through the Company's property. As a result,
management believes that Red Hawk-Registered Trademark- will have adequate
quantities of culinary water available.
On March 30, 1990, LTI purchased, pursuant to an option agreement (as
amended, the "Stucki Purchase Agreement") with Dr. Karl F. Stucki and Mrs.
Marcia C. Stucki, Trustees of the Karl F. and Marcia C. Stucki Income Trust (the
"Stuckis"), 487 acres of real property (the "Stucki Parcel") to be the site of
the proposed Red Hawk-Registered Trademark- project. The total purchase price
of the property was $3,000,000, payable (i) $25,000 in cash, (ii) $20,000
applied from LTI's prior purchase option payment, (iii) $90,000 from the
assumption by LTI of the sellers' sales commission obligation, (iv) $1,906,000
by assignment of certain assets of LTI to the Stuckis (the "Assigned Assets"),
and (v) $959,000 in the form of a trust deed note (the "Trust Deed Note"),
payable $20,000 per month with a balloon payment originally due in January 1994.
The Assigned Assets, comprised of certain notes receivable and other rights of
LTI to receive payments under certain contracts, were transferred with full
recourse to LTI. The combined $2,865,000 amount payable pursuant to the Trust
Deed Note and the Assigned Assets (the "Stucki Payable") bears interest at the
rate of 10% per annum and, under the terms of the Stucki Purchase Agreement, was
payable in full in January 1994.
A deed of trust in favor of the Stuckis securing the Company's obligations
to them under the Stucki Payable (the "Deed of Trust") encumbers the Company's
entire interest in the Stucki Parcel. However, pursuant to the terms of the
Modification Agreement described below, the Company may obtain partial
reconveyances of the Trust Deed with respect to approximately 200 acres, at a
cost of $6,500 per acre.
On December 31, 1992, pursuant to the terms of an Acquisition Agreement
with LTI (the "LTI Real Estate Acquisition Agreement"), the Company acquired all
of LTI's right, title and interest in and to the Stucki Purchase Agreement and
assumed LTI's obligations thereunder. Prior to entering into the Agreement, LTI
had entered into various modification agreements with the Stuckis to adjust the
payment terms under the Stucki Purchase Agreement.
Since May 1994, following its failure to satisfy the Stucki Payable in full
on January 31, 1994 in accordance with its terms, the Company has been making
monthly payments of $25,000, inclusive of principal and interest. In
consideration of accrued and unpaid interest on the Stucki Payable through June
1994, aggregating approximately $155,806, the Company issued 10,000 shares of
its Common Stock to the Stuckis. As of July 31, 1996, a balance of
approximately $2,385,000 remained outstanding on the Stucki Payable, inclusive
of principal and accrued interest.
-3-
<PAGE>
On July 5, 1996 the Company and LTI entered into a modification agreement
to the Stucki Purchase Agreement (the "Modification Agreement") whereby the
Company, in exchange for the Stuckis extending the term of the Stucki Payable,
paid the Stuckis a lump payment of $75,000 upon the execution of the
Modification Agreement and agreed to pay $25,000 per month through May 15, 1998
at which time the entire balance of the Stucki Payable, including all principal
and accrued interest, shall be due and payable.
The Company owns two additional parcels of land contiguous with the Red
Hawk-Registered Trademark- site which were not acquired from the Stuckis. One
parcel, approximately 129 acres, was acquired by LTI from an unaffiliated third
party and transferred to the Company in December 1992 under the LTI Real Estate
Acquisition Agreement. The purchase price for the parcel was paid in full by
delivery of 260,000 shares of LTI common stock.
On June 1, 1994, the Company directly purchased the second parcel from an
unaffiliated third party, comprised of an additional 54 acres, for a purchase
price of $500,000 and 600 shares of the Company's common stock. The terms of
the purchase were a $25,000 cash down payment, $25,000 payable 90 days from the
closing, and annual payments of $100,000, with interest accruing at a rate of 8%
per annum. The 54 acre parcel is intended to be used primarily for commercial
development.
PLAN OF RED HAWK-REGISTERED TRADEMARK- OPERATION FOR NEXT TWELVE MONTHS
During the fiscal year ending March 31, 1997, the Company has continued its
efforts to acquire financing for developing Phase I of Red Hawk-Registered
Trademark-. All projected dates set forth below are dependent upon the
Company's ability to secure the necessary funding, either through outside
financing or from the additional sale of securities.
Engineering, planning and architectural design of Phase I commenced on
October 1990 and is now completed. In addition, the initial 18 holes of the
golf course has been laid out.
In June 1996, the Company accepted a proposal of Granite for the
construction and management of Red Hawk-Registered Trademark-. Granite
commenced work on Phase I in July 1996 and has cleared and commenced excavation
of the property.
Phase I will consist of the development and sale of 102 estate lots, 7
cottages, 5 corporate villas, and construction of the initial 18 holes of the
golf course, a double driving range, irrigation, lakes and infrastructure for
utilities. Preliminary cost estimates for development of Phase I have been
obtained from engineers, architects and planners. Costs for Phase I are
projected at approximately $7,500,000 which are directly related to
-4-
<PAGE>
construction of the first 18 holes of a planned 27 hole golf course, 102 estate
lots, 7 cottages, 5 corporate villas, the double driving range, irrigation,
lakes and infrastructure for utilities, improvements, professional and
consulting fees, advertising and promotion, and overhead.
As Washington City owns and is responsible for sewer lines, the Company
must negotiate with the City for the construction and payment of an off-site
sewer for Red Hawk-Registered Trademark-. Washington City has recently
requested bids for construction of the off-site sewer. Management estimates
that its share of construction costs for the off-site sewer will not exceed
$30,000. The Company estimates that an additional $135,000 will be required for
construction of a gas line. There is a possibility that future expenditures for
on-site electric power will be necessary; however, this has not been determined
and no estimates of costs will be obtained until future demands are assessed.
Off-site and on-site water lines, as well as a water pumping station were
recently constructed by Washington City, for which the Company paid
approximately $130,000.
In order to complete the subdivision of the real estate, it is required
that the Company file with Washington City, for approval and recordation the
master plan of the project, including a master utility and land plan prepared by
a licensed engineer. Because the subdivision of the land will be in phases, it
is also required that the first phase master plan be filed with the City for
approval and recordation. Approval of the master plan was given on July 6, 1994
by the Washington City Planning and Zoning Commission. All requisite permits
have been issued or approved for issuance by the applicable municipality.
The final plat will be recorded upon installation of all improvements
and/or bonding of Phase I. No other permits or authorization are required until
after filing of the final plat for Phase I at which time building permits for
residential units will be obtained from Washington City.
Gene Bates, of Couples-Bates, golf course architects, has designed the
proposed 27-hole golf course for a total consulting fee of $250,000, to be paid
in installments until completion of the golf course. Revised plans of the
course were completed in May 1994, and construction of the course commenced in
July 1996. Completion time for the golf course is estimated at between fifteen
to eighteen months from the date construction commenced. Reservations are being
taken for residential lots in Red Hawk-Registered Trademark- and an intensive
sale program is currently being commenced.
As of August 15, 1996, the Company has received reservations for 22 estate
lots at Red Hawk-Registered Trademark-, at an average price of $80,000. For
each reservation, the Company obtains a $2,500
-5-
<PAGE>
refundable deposit which is placed in escrow pending issuance of a building
permit for the unit from Washington City. Following issuance of the permit, the
holder of the reservation has 30 days to enter into a binding purchase agreement
for the lot or to request a refund of the deposit. The Company expects to close
on initial sales by December 31, 1996.
COTTON MANOR AND COTTON ACRES
In September 1991, LTI purchased for an aggregate purchase price of
$2,592,050, two real estate developments located in St. George, Utah, consisting
of approximately 80 contiguous acres that included an existing condominium
development known as Cotton Manor, and a single family residence development
known as Cotton Acres. At the time of the acquisition, the two developments
consisted of both developed and undeveloped lots. One of the shareholders of
Property Alliance, Inc. ("Property Alliance"), the seller of the developments,
was Duane H. Marchant, who in January 1993 became President and Chief Executive
Officer of the Company.
Cotton Manor, a 19 acre development, currently includes 28 completed
condominiums (one two-story building with 16 units and three one-story four-
plexes). All twenty-eight of the completed units have been sold (15 by the
prior owner), except for two units which are used as sales offices by the
Company. Cotton Manor has several existing recreational facilities including
swimming pool, tennis courts, and a putting green.
The Company currently intends to build an additional 102 cottages as
marketing of the project develops. Each cottage is part of a single, detached
planned unit development (PUD). Three cottage models have been completed, one
of which has been purchased by Duane H. Marchant, President of the Company.
Approval to construct the first 19 cottages has been obtained from the City of
St. George. Water, sewer and power lines for the 19 units are currently being
constructed and are expected to be completed by June 30, 1996. The Company has
recently commenced marketing of the cottages and believes that the initial 19
cottages can be sold within approximately two years. All city utilities are
available to the property including sewer and water, electricity and natural
gas. Building permits will be obtained from the City of St. George as needed.
Following the sale of the 19 units, known as Phase IV, the Company intends to
commence marketing and developing additional Phases.
Cotton Acres is a 61 acre development consisting of 259 lots. All 200 lots
in Phases I-IX have been sold as of April 30, 1996 and dwelling units on such
lots have been completed. Phase X, consisting of 19 lots, is currently under
development. The Company intends to pre-sell these lots prior to actual
construction and
-6-
<PAGE>
believes that the lots can be sold within approximately one year.
The total purchase price for Cotton Manor and Cotton Acres under the Sales
Agreement between Property Alliance and LTI was $2,592,050, payable as described
below. LTI made an initial payment of $23,601 at the time of the acquisition
and assumed various obligations of Property Alliance related to the acquired
properties including, (i) a promissory note with an outstanding balance of
$277,304, payable $30,000 per year, (ii) a promissory note with an outstanding
balance of $101,145, which has been paid in full and (iii) a Special Improvement
District (SID) obligation estimated at $53,000, of which approximately $36,000
has been paid through June 30, 1996. LTI also delivered to Property Alliance a
trust deed note in the principal amount of $1,387,000, bearing interest at the
rate of 10% per annum, which note is secured by a trust deed covering the
conveyed properties. A portion of the principal on the trust deed note was
payable in six annual installments of $120,000 through February 1, 1997 and
interest is payable in shares of LTI common stock. In addition, the Sales
Agreement, as required mandatory prepayments of 75% of the gross proceeds from
the sale of the acquired assets plus $2,000 from the sale of each Red Hawk-
Registered Trademark- lot. Although LTI did not make payments on the trust deed
note on the foregoing terms, LTI and the Company have entered into a
modification agreement with Property Alliance, described below, with respect to
such payments.
On December 31, 1992, pursuant to the LTI Real Estate Acquisition
Agreement, the Company assumed all of LTI's right, title and interest in Cotton
Manor and Cotton Acres and assumed the related liabilities, including LTI's
outstanding obligations to Property Alliance described above. On June 30, 1994,
Property Alliance, LTI and the Company entered into a modification of the
original Sales Agreement under which, in consideration of Property Alliance
extending the due date of the first four annual payments on the Note
(aggregating $480,000) until July 31, 1995, the Company is obligated to make a
mandatory prepayment on the Note of $5,000 (rather than $2,000) for each Red
Hawk-Registered Trademark- lot sold by the Company. Although the Company has
not made any of said annual payments, Property Alliance has not made any demand
for such payment or otherwise pursued collection of the Note. In addition, the
Company is obligated to pay Property Alliance, as a mandatory prepayment on the
Note, $175,000 from the first $1,000,000 of financing proceeds the Company
secures for development of Red Hawk-Registered Trademark-. As of June 30, 1996
the principal balance of the trust deed note was $646,502 and accrued interest,
payable with common stock of the Company, was $426,618.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF PLAN OF OPERATION.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1996
COMPARED WITH QUARTER ENDED
JUNE 30, 1995
The Company's first quarter of fiscal year 1996 resulted in an increase of
sales and an increase in loss over the same period during 1995. Sales increased
from $87,800 to $133,000, a change of $45,200, or 51%. The net loss increased
from $23,466 to $95,227, or 306%.
Sales in the current period were comprised of five lots from the Cotton
Acres subdivision with an average sales price of $26,600. The average sales
price for the lots sold during the same period last year was $21,950. The cost
of lots sold during the current period on average was $12,270 compared to a cost
of $11,308 for the lot sold in the first quarter last year. Cost of sales as a
percentage of sales was 58% in the first quarter of 1996 compared with 54% in
the first quarter of 1995. Inventory levels of fully developed lots in the
Cotton Acres is low. Cash flow has been used for land payments in the Red Hawk-
Registered Trademark- development. This will most likely continue until
financing for Red Hawk-Registered Trademark- has been obtained.
Total general and administrative expenses increased $79,360, or 103%, from
$77,159 to $156,519 due primarily to an increase in legal costs of $52,015
related to the Company's private placement under Section 504, the Form 10 and
ongoing legal matters.
Management believes that the future viability of the Company depends on the
Company's ability to obtain long-term development financing for its real estate
projects, complete development of the projects, and to generate sales from these
projects.
FISCAL YEAR ENDED MARCH 31,
1996 COMPARED WITH FISCAL
YEAR ENDED MARCH 31, 1995
Total income for the fiscal year ended March 31, 1996 ("fiscal 1996")
increased $104,925, or 17%, to $734,675, compared with $629,750 for the fiscal
year ended March 31, 1995 ("fiscal 1995"). Income is comprised of the sale of
lots from Cotton Acres and condominiums from Cotton Manor. During fiscal 1996,
20 lots were sold at an average price of $24,000 and 3 condominiums were sold at
an average price of $84,700. During the comparable prior year period, 33 lots
were sold at an average price of $19,000 and no condominium units were sold.
-8-
<PAGE>
Cost of sales increased by $102,335, or 25%, to $512,528 for the fiscal
year ended March 31, 1996 from $410,193 for fiscal 1995. As a percentage of
total income, cost of sales increased to 70% from 65%. The increase is
principally due to the sales mix of lots versus condominiums. Gross profit
increased $2,590, or 1%, to $222,147 during fiscal 1996 from $219,557 during
fiscal 1995. Gross profit as a percentage of total income decreased to 30% from
35% in fiscal 1995.
General and administrative expenses increased $3,580,446, or 1,007%, to
$3,935,850 during fiscal 1996 from $355,404 during fiscal 1995. The increase
was principally attributable to: (i) the issuance of 567,000 shares valued at
$5.00 per share for financial services, (ii) the issuance of 70,000 shares
valued at $5.00 per share for promotional services, and (iii) to a lesser
extent, the cost of settling a legal matter. The foregoing share issuances for
services were recorded as an expense in the current financial period.
The Company had other income of $107,412 during fiscal 1996 compared with
$38,246 during fiscal 1995. Such income relates principally to the collection of
an account receivable previously written off, interest income from real estate
receivables and home owner association fees collected from Cotton Manor.
The Company experienced a net loss of $3,606,291 in fiscal 1996 compared
with a net loss of $97,601 in fiscal 1995.
FISCAL YEAR ENDED MARCH 31,
1995 COMPARED WITH FISCAL
YEAR ENDED MARCH 31, 1994
Total income for fiscal 1995 decreased $9,000 or 1% to $629,750, compared
with $638,750 for the fiscal year ended March 31, 1994 ("fiscal 1994"). Income
is comprised of the sale of lots from Cotton Acres and condominiums from Cotton
Manor. During fiscal 1995, 33 lots from Cotton Acres were sold at an average
price of $19,000. During fiscal 1994, 28 lots were sold at an average price of
$17,000, and three condominiums were sold at an average price of $53,000.
Cost of sales decreased by $127,062, or 24%, from $537,255 for fiscal 1994
to $410,193 for fiscal 1995. As a percentage of total income, cost of sales
decreased from 84% to 65%. This decrease is a result of the lots and
condominiums sold in fiscal 1994 being originally acquired in a partially
developed state, at a higher cost than the cost now incurred by the Company to
develop lots from raw ground, the latter being the case for lots sold in fiscal
1995. Correspondingly, gross profit increased from 16% of total income in
fiscal 1994 to 35% in 1995. The increase is $118,062, or 116%.
-9-
<PAGE>
General and administrative expenses increased 47%, or $114,095, to $355,404
in 1995 from $241,309 in 1994. The increase was principally due to an increase
in loan commitment fees and expenses related to investor relations and public
relations.
The Company had other income of $38,246 in fiscal 1995 compared with
$25,646 in 1994. The increase is due to minor increases in interest income from
real estate receivables and in home owner association fees collected from Cotton
Manor.
The Company experienced a net loss of $97,601 in fiscal 1995, compared with
a loss of $114,168 in fiscal 1994. The decreased loss of 416,567 or 15%, is due
primarily to the reduction in cost of sales as a percentage of sales.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had total assets of $9,210,199 and total
stockholders equity of $3,971,280 compared with total assets of $6,912,148 and
total stockholders equity of $3,341,453 at March 31, 1996. At June 30, 1996
cost increased $1,926,041 or 246% to $2,711,321 from $784,380 on March 31, 1996.
The increase in total assets was due primarily to a $2,000,000 loan and
capitalized interest and project costs for Red Hawk-Registered Trademark-.
Total liabilities at June 30, 1996 increased $1,668,224, or 47%, from $3,570,695
to $5,238,919 at March 31, 1996. The increase was due to an increase in long-
term debt of $2,000,000, related to a new loan from Miltex Industries, Geneva,
Switzerland for $2,000,000, offset somewhat by loan paydowns and a reduction in
accrued expenses.
As of June 30, 1996, the Company had total current assets of $3,508,755 and
total current liabilities of $1,828,387 which results in a current ratio of
1.92:1, compared with a current ratio of 0.75:1 as of March 31, 1996. The
current ratio increase was due to the substantial increase in year-end cash, as
explained above. Real estate inventory as of June 30, 1996 decreased to
$61,354, or 8% to $686,656 due primarily to the sale of five lots in the Cotton
Acres subdivision.
Current liabilities at June 30, 1996 decreased $331,776, or 15%, from March
31, 1996 due to loan paydowns and a reduction in accrued expenses.
The Company has historically satisfied its cash needs through the sale of
real estate and private placements of securities. During fiscal 1996, the
Company raised $968,666 from the sale of preferred stock and sold $734,675 of
real estate in Cotton Manor and Cotton Acres. In June 1996, the Company
completed an offering under Section 504 of the Securities Act of 1933 (the
-10-
<PAGE>
"Securities Act"). Net proceeds to the Company were $889,424. Also in June,
the Company borrowed $2,000,000 from Miltex Industries of Geneva, Switzerland, a
stockholder of the Company. With this cash, the Company has escrowed sufficient
funds to allow Granite to commence construction on Phase I of the Red Hawk-
Registered Trademark- project in July 1996. Such funds will be released to
Granite as scheduled work is completed.
The Company has substantial land and debt payments due during the current
year and liquidity for the coming year will be dependent on its ability to
secure additional financing for the Red Hawk-Registered Trademark- project, upon
the cash flow generated from the closing of lot sales in Red Hawk-Registered
Trademark-, and from sales related to Cotton Manor and Cotton Acres projects.
If Red Hawk-Registered Trademark- does not receive sufficient financing and the
Company should require additional cash during the year, the Company intends to
meet its obligations through private offerings of common and/or preferred stock
for cash.
ITEM 3. PROPERTIES.
The Company's principal place of business is an office located at 102 West
500 South, Suite 400, Salt Lake City, Utah 84101. This office facility consists
of approximately 2,150 square feet and is being leased pursuant to a 24-month
lease expiring on May 31, 1997 for a monthly lease payment of $2,407. The
Company shares this office space with LTI. The Company and LTI have an oral
agreement pursuant to which the Company pays the rent and certain related
overhead charges for both companies and LTI pays the salary of certain of LTI's
employees who provide part-time services to the Company. Historically, the
value of the rent and overhead charges paid by the Company attributable to LTI
has been approximately equal to the value of the services provided by LTI
employees on behalf of the Company.
The Company's real estate holdings are comprised of one recreational and
residential development consisting of approximately 670 acres near St. George,
Utah named Red Hawk-Registered Trademark- International Golf & Country Club, and
two residential developments in St. George, Utah aggregating approximately 80
acres known as Cotton Manor and Cotton Acres. See "Business."
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information, to the best knowledge of the
Company, as of August 9, 1996 with respect to the beneficial ownership of the
Company's Common Stock by (i) each person known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding Common Stock; (ii)
each director of the Company; (iii) the Chief Executive Officer of the Company;
and (iv) all current directors and executive officers as a group.
-11-
<PAGE>
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED(1) CLASS
Leasing Technology Incorporated 531,981(2) 29.0%
102 West 500 South, Suite 400
Salt Lake City, Utah 84101
Banque SCS Alliance SA 116,943(2) 6.4%
P.O. Box 880
1211 Geneva 3, Switzerland
Miltex Industries 179,000 9.8%
c/o Camille Froidevaux
Budinet & Associates
20 Rue Senebier, P.B. 166
1211 Geneva, Switzerland
Duane H. Marchant 6,989 *
102 West 500 South, Suite 400
Salt Lake City, Utah 84101
Bruce Frodsham 0 *
102 West 500 South, Suite 400
Salt Lake City, Utah 84101
Stephen B. Spencer 0(3) *
102 West 500 South, Suite 400
Salt Lake City, Utah 84101
All Officers and Directors as a 6,989(3) *
Group (3 persons)
* Less than 1%
- ---------------------------
(1) Unless otherwise indicated the individuals or entities identified herein
each own their respective shares and have sole voting and sole investment
powers regarding their disposition. The percentages are based upon
1,828,828 shares of GVI common stock outstanding as of August 12, 1996 and
are computed in accordance with Rule 13d-3 of the Securities Exchange Act
of 1934, as amended.
(2) Does not include 225,751 shares of Series B Preferred Stock held of record
by Banque SCS Alliance SA ("Banque SCS"), which shares as of August 12,
1996 had an aggregate of approximately 2,594,270 votes. See "Description
of Securities - Series B Preferred Shares." Banque SCS has appointed LTI
as proxy to vote such preferred shares. Giving effect to the Series B
Preferred Stock, LTI has the right to 3,026,251 votes at meetings of the
Company's stockholders.
(3) Mr. Spencer is an officer and director of LTI but disclaims beneficial
ownership of shares held by LTI.
-12-
<PAGE>
The Company intends to issue, for nominal consideration, an aggregate of
approximately 250,000 shares to officers, directors and consultants of the
Company within 30 days from the date hereof. The shares will have restrictions
on transferability as well as conditions for forfeiture upon termination of
employment.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PARTNERS AND CONTROL PERSONS.
All directors of the Company serve a term of one (1) year until the next
Annual Shareholders Meeting or until their death, resignation, retirement,
removal, disqualification, or until their successors have been elected and
qualified. Vacancies in the existing board are to be filled by a majority vote
of the remaining directors. Officers of the Company serve at the will of the
Board of Directors.
The following table sets forth the name and the office held by each
director and officer of the Company, followed by a brief resume of each
individual.
NAME AGE POSITION HELD
---- --- -------------
Duane H. Marchant 57 President, CEO and Director
Bruce Frodsham 31 Vice President and Director
Stephen B. Spencer 40 Secretary/Treasurer and Director
DUANE H. MARCHANT, President and Director of the Company, earned a B.S.
Degree in Business Management from Brigham Young University in 1956 and an
M.B.A. Degree from Utah State University in 1967. Mr. Marchant is a registered
real estate broker in the State of Utah and has over 25 years of experience in
real estate development and marketing. From 1985 to the present, Mr. Marchant
has been President and CEO of Property Alliance, Inc., a real estate development
company. From 1990 until August 1995, he served as a Director and President of
Leasing Technology Incorporated, a diversified publicly held company involved in
real estate development and the computer industry and which is the principal
stockholder in the Company. Mr. Marchant is the father-in-law of Mr. Frodsham.
BRUCE FRODSHAM, Vice President and a Director of the Company, earned a B.S.
Degree in Ornamental Horticulture from Brigham Young University in 1988. He is
also the sales manager of Cotton Acres and Cotton Manor. Mr. Frodsham was Vice
President of Frodsham Better Lawns from 1985 to 1991 and is a specialist in
professional grass management, weed control, ornamental design and
-13-
<PAGE>
landscaping. Mr. Frodsham was a main-frame computer operator for Brigham Young
University for three years and is a computer operator and consultant. Mr.
Frodsham is the son-in-law of Mr. Marchant.
STEPHEN B. SPENCER, Secretary/Treasurer and a Director of the Company,
earned a B.A. Degree in accounting from the University of Utah and is a
Certified Public Accountant. Prior to joining the Company, Mr. Spencer was the
Assistant Controller and then Controller of Mrs. Fields, Inc., from 1988 to
1990. He was Director of Operations for the Salt Lake Convention and Visitors
Bureau from 1985 to 1988. Since 1992, he has been an Officer and Director of
Leasing Technology Incorporated.
During the past five years, none of the officers and/or directors of the
Company, nor any of the affiliates or promoters of the Company filed any
bankruptcy petition, have been convicted in or been the subject of any pending
criminal proceedings, or the subject of any order, judgment or decree involving
the violation of any state or federal securities laws.
All directors of the Company serve a term of one (1) year until the next
Annual Shareholders Meeting or until their death, resignation, retirement,
removal, disqualification, or until their successors have been elected and
qualified. Vacancies in the existing board are to be filled by a majority vote
of the remaining directors. Officers of the Company serve at the will of the
Board of Directors.
ITEM 6. EXECUTIVE COMPENSATION.
The Company has not had a bonus, profit sharing, or deferred compensation
plan for the benefit of its employees, officers or directors.
The following sets forth a summary of cash and non-cash compensation for
each of the last three fiscal periods ended March 31, 1996, 1995, and 1994, with
respect to the Company's Chief Executive officer. No executive officer of the
Company has earned a salary greater than $100,000 annually for any of the
periods depicted.
SUMMARY COMPENSATION TABLE
NAME AND
PRINCIPAL POSITION YEAR SALARY
Duane H. Marchant,
President and CEO 1996 $72,000
1995 $72,000
1994 $72,000
-14-
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.
Except as set forth below, during the last two years, 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' immediately family where the amount involved in the transaction
exceeds $60,000.
On March 28, 1995 the Company sold 65,694 shares of its Series B Preferred
Stock for $328,401 to Banque SCS.
On January 23, 1996, Banque SCS accepted 567,000 shares of the Company's
common stock as payment for financial services that Banque SCS provided to the
Company.
ITEM 8. DESCRIPTION OF SECURITIES.
Pursuant to the Company's Articles of Incorporation, the Board of Directors
is expressly authorized at any time, and from time to time, to provide for the
issuance of preferred shares in one or more series, with such voting rights, if
any, and with such designations, preferences, and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions providing for the issue thereof adopted by the Board of Directors
and as are not expressed by the Articles of Incorporation or by amendment
thereto.
COMMON STOCK
The Company is presently authorized to issue 25,000,000 shares of common
stock, par value $.001 per share, of which 1,828,828 shares were issued and
outstanding on June 30, 1996. All shares of the common stock are of one class
with equal rights and
privileges with respect to voting, liquidation, and dividend rights.
Each shareholder of common stock is entitled: (i) to one non-cumulative
vote for each share owned at any Shareholder's Meeting; (ii) to participate
equally and to receive any and all such dividends as may be declared by the
Board of Directors out of funds legally available therefor; and (iii) to
participate, pro rata, in any distribution of assets available for distribution
to holders of common stock upon liquidation of the Company. Shares of common
stock do not carry cumulative voting rights and shareholders of the Company have
no pre-emptive rights to acquire additional shares of common stock or any other
securities. Common stock of
-15-
<PAGE>
the Company is not subject to redemption and carries no subscription or
conversion rights.
PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of preferred stock, par
value $.001 per share. Pursuant to action taken by the Company's Board of
Directors, a total of 350,000 shares of Series A Cumulative Convertible
Preferred Stock (the "Series A Preferred Shares") are authorized, of which
25,000 shares are issued and outstanding, 350,000 shares of Series B Cumulative
Convertible Preferred Stock (the "Series B Preferred Shares") are authorized, of
which 259,427 shares are issued and outstanding, and 136,093 shares of Series C
Preferred Stock (the "Series C Preferred Shares") are authorized, all of which
are issued and outstanding. The holders of Series A and B Preferred Shares are
entitled to receive a cumulative cash dividend of $.50 per share, per annum,
payable annually. No dividends are payable on the Common Stock if there are any
accrued dividends on the Series A or Series B Preferred Shares, which have not
been paid, or been declared and a sum set aside for payment. In addition,
holders of Series A Preferred Shares are entitled to a one-time 6% payment
payable from the first profits derived from the Company's real estate projects,
payable to holders at the time the profit is earned.
SERIES A PREFERRED SHARES
Except to the extent required by law, the Series A Preferred Shares do not
have any voting rights in the affairs of the Company.
In the event of liquidation or dissolution of the Company, holders of
Series A Preferred Shares are entitled only to a cash payment of Five Dollars
($5.00) per share, plus all accrued and unpaid dividends up to the date fixed
for distribution, whether or not earned or declared, and the one-time (6%)
payment referred to below.
Each of the Series A Preferred Shares may, at the option of the holder
thereof at any time on or before March 1, 1998, be converted into shares of the
Company's Common Stock based on the value of the Series A Preferred Shares being
converted as described below. For purposes of the conversion of the Series A
Preferred Shares, each Series A Preferred Shares shall be valued at $5.00 per
share, plus all accrued dividends and the 6% investment incentive payable from
the first profits derived from the Company's real estate projects and may be
exchanged for shares of Common Stock on the basis of an exchange price of 60% of
the average bid price of the Common Stock for the 90 days immediately prior to
conversion.
-16-
<PAGE>
The Company has the right to redeem the Series A Preferred Shares, by
paying the holder thereof $5.00 per Share plus all accrued dividends to the date
of redemption, by written notice mailed 30 days prior to the redemption date to
each holder of the Series A Preferred Shares. Upon notice of redemption, the
holder of the Shares may convert the Series A Preferred Shares into Common Stock
if prior to March 1, 1998, or the holder may surrender the Shares to the Company
for payment.
In addition to the fifty cents per share dividend and the 6% investment
incentive payable to the holder of the Series A Preferred Shares, holders of at
least 2,000 shares will be entitled to the following: (a) a 90-day right of
first refusal to purchase the lot of their choice in the first two phases of the
Red Hawk-Registered Trademark- project; (b) a discount on any lot purchased in
the first two phases of the Red Hawk-Registered Trademark- project, the amount
of discount to be based upon the amount of Series A Preferred Shares purchased
from the Company as follows: 2,000 shares purchased - 10% discount; 3,000 shares
purchased - 15%; 4,000 shares purchased - 20%; and 5,000 shares purchased - 25%;
(c) a discount on the purchase of a membership in the Red Hawk-Registered
Trademark- Country Club based upon the amount of Series A Preferred Shares
purchased from the Company as follows: 2,000 shares purchased - 10% discount;
3,000 shares purchased - 15%; 4,000 shares purchased - 20%; and 5,000 shares
purchased - 25%.
SERIES B PREFERRED SHARES
Each Series B Preferred Share has the right to a number of votes equal to
the number of common shares into which such Preferred Share may be converted as
of the record date for any given vote of stockholders of the Company. The
Series B Preferred Shares vote together with the Common Stock as a single class.
In the event of liquidation or dissolution of the Company, holders of
Series B Preferred Shares are entitled only to a cash payment of Five Dollars
($5.00) per share, plus all accrued and unpaid dividends up to the date fixed
for distribution, whether or not earned or declared. Such payment is junior and
subordinate to payments due to holders of Series A Preferred Shares, but are
senior to payments due to holders of Common Stock.
Each of the Series B Preferred Shares may, at the option of the holder
thereof at any time on or before March 31, 1998, be converted into shares of the
Company's Common Stock based on the value of the Series B Preferred Shares being
converted as described below. For purposes of the conversion of the Series B
Preferred Shares, each Series B Preferred Shares shall be valued at $5.00 per
share, plus all accrued dividends and may be exchanged for shares of Common
Stock on the basis of an exchange price of 40% of the low
-17-
<PAGE>
bid price of the Common Stock at any time during the eighteen month period
preceding exercise of the conversion option.
The Company has the right to redeem the Series B Preferred Shares, by
paying the holder thereof $5.00 per Share plus all accrued and unpaid dividends
to the date of redemption, by written notice mailed 30 days prior to the
redemption date to each holder of the Series B Preferred Shares. Upon notice of
redemption, the holder of the Shares may convert the Series B Preferred Shares
into Common Stock if prior to March 31, 1998, or the holder may surrender the
Shares to the Company for payment.
SERIES C PREFERRED SHARES
The Series C Preferred Shares were issued to Granite as partial payment for
the construction work being performed by Granite. See "Business." The Company
has the obligation to redeem the Series C Preferred Shares for $5.00 per share
(or an aggregate of $680,465) on or before October 30, 1996.
The Series C Preferred Shares do not have any voting rights or the right to
any dividends.
In the event of liquidation or dissolution of the Company, holders of
Series C Preferred Shares are entitled only to a cash payment of Five Dollars
($5.00) per share. Such payment is junior and subordinate to payments due to
holders of Series A and Series B Preferred Shares, but are senior to payments
due to holders of Common Stock.
-18-
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE
REGISTRANT'S COMMON EQUITY AND OTHER
STOCKHOLDER MATTERS.
The Company's common stock is currently traded on the over-the-counter
market on the OTC Bulletin Board under the symbol GVIM.
The following table represents the average range of high and low bid
quotations for the calendar quarters during the last two complete fiscal years.
Calendar Quarters High Bid Low Bid
- ----------------- -------- -------
Fiscal Year Ended March 31, 1995
- --------------------------------
1st Quarter ..................... 6.38 5.50
2nd Quarter ..................... 5.38 3.00
3rd Quarter ..................... 5.44 4.25
4th Quarter ..................... 4.50 3.25
Fiscal Year Ended March 31, 1996
- --------------------------------
1st Quarter ..................... 4.25 2.75
2nd Quarter ..................... 3.25 1.32
3rd Quarter ..................... 2.38 1.25
4th Quarter ..................... 7.50 3.75
The foregoing quotations were obtained from broker-dealers and market
makers who provide daily reports of the NASD Electronic Bulletin Board. The
above quotes reflect inter-dealer prices without retail mark-up, mark-down, or
commissions and may not necessarily represent actual transactions.
As of August 9, 1996, the Company had 1,828,828 shares of its common stock
issued and outstanding, and there were 792 record shareholders, which figures do
not take into consideration those shareholders whose certificates are held in
the name of broker-dealers.
As of the date hereof, the Company has not paid or declared any cash
dividends. The Company can give no assurance
-19-
<PAGE>
that it will generate future earnings from which cash dividends can be paid.
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 the business. Such a policy is likely to
be maintained as long as necessary to provide working capital for the Company's
operations.
ITEM 2. LEGAL PROCEEDINGS
Mid Valley Ventures, holder of a mortgage on certain of the Company's
properties, has recorded a notice of default in the Washington County recorder's
office claiming that the Company owes it approximately $436,000. The Company
disputes the claim that it has defaulted and has deposited approximately
$436,000 with the court so that the matter may be determined there.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
This item is not applicable.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Described below is information regarding all securities issued by the
Company during the past three years. The information herein gives retroactive
effect to the 1-for-5 reverse stock split effected February 1, 1996. Unless
otherwise indicated, all transactions described below were private transactions
not involving a public offering and were exempt from the registration
requirements of the Securities Act, pursuant to Section 4(2) thereof. No
underwriter was engaged in connection with the foregoing sales of securities.
Unless otherwise noted all shares sold were common stock.
On January 1, 1993, the Company, pursuant to the LTI Real Estate
Acquisition Agreement, acquired all of LTI's rights and interests in the Stucki
Purchase Agreement, Cotton Manor and Cotton Acres for 654,746 shares of stock.
On May 5, 1994 the Company repaid a $325,819 indebtedness owed to Olympus
Investments by issuing 52,131 shares of its stock to Olympus Investments.
On May 5, 1994 the Company repaid a $100,000 indebtedness owed to LaJuana
Badger, the wife of George Badger, President of LTI, by issuing 16,132 shares of
its common stock to Ms. Badger.
-20-
<PAGE>
On May 5, 1994 the Company repaid a $215,639 indebtedness owed to LTI by
issuing 34,662 shares of its common stock to LTI.
On May 5, 1994 the law firm of Harringan, Ruff, Rider & Spardellati,
accepted as full payment 323 shares of the Company's common stock for a $2,100
bill for legal services incurred by the Company.
On May 5, 1994 Williamsen & Associates, a corporate publicity firm accepted
4,000 shares of the Company's common stock as full payment for a then
outstanding $30,000 bill for services rendered to the Company.
On June 24, 1994 as part of an agreement with the Stuckis, the Stuckis
agreed to accept 10,000 shares of the Company's common stock in lieu of the then
outstanding unpaid interest on the Stucki Payable.
On June 1, 1994 pursuant to an agreement with Daniel C. Watson, the Company
purchased a 50 acre plot of land for a cash purchase price of $500,000 and 600
shares of its common stock.
On June 29, 1994, the Company repaid a $286,799 indebtedness owed to Banque
SCS, by issuing 81,943 shares of its common stock to Banque SCS. The shares
were exempt from registration under the Securities Act pursuant to Rule 903(c)
of Regulation S promulgated thereunder.
On March 28, 1995 the Company sold 65,694 shares of its Series B Preferred
Stock for $328,401 to Banque SCS. The shares were exempt from registration
under the Securities Act pursuant to Rule 903(c) of Regulation S promulgated
thereunder.
On June 30, 1995 the Company sold 33,676 shares of its Series B Preferred
stock for $168,382 to Olympus Investments Corp. The shares were exempt from
registration under the Securities Act pursuant to Rule 903(c) of Regulation S
promulgated thereunder.
On January 23, 1996, Banque SCS accepted 567,000 shares of the Company's
common stock as payment for financial services that Banque SCS has provided the
Company. The shares were exempt from registration under the Securities Act
pursuant to Rule 903(c) of Regulation S promulgated thereunder.
On January 31, 1996, Corporate Relations Group, Inc. in exchange for
providing promotional services to the Company valued at $350,000, accepted
70,000 shares of the Company's common stock.
On March 29, 1996 the Company sold 160,057 of its Series B Preferred Stock
to Banque SCS for $800,284. The shares were
-21-
<PAGE>
exempt from registration under the Securities Act pursuant to Rule 903(c) of
Regulation S promulgated thereunder.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of the Company provide that a director or officer of the
Company will not be personally liable to the Company or its shareholders for
monetary damages for acts or conduct of said officer or director performed for
or on behalf of the Company, except for liability arising out of his own
negligence or wilful misconduct.
The Company is entitled under its By-laws to purchase and maintain
insurance on behalf of any director of officer against any liability asserted
against him and incurred by him in any capacity.
PART F/S
Please see the Consolidated Financial Statements of the Company appearing
on pages F-1 to F-26.
PART III
ITEM 1. INDEX TO EXHIBITS.
See Index to Exhibits.
ITEM 2. DESCRIPTION OF EXHIBITS.
2.1 Certificate of Incorporation, as amended
2.2 By-Laws, as amended
6.1 Option Contract dated November 30, 1989 between Karl and Marcia
Stucki individually and as trustees (collectively the "Stuckis") and Palm Lakes
Development Corporation ("Palm Lakes"). Incorporated by reference to Exhibit
10.4 to the Registration Statement of LTI on Form 10 filed with the Commission
on October 16, 1990, File No. 0-18865.
6.2 Extension to Option Contract dated December 18, 1989 between the
Stuckis and Palm Lakes. Incorporated by reference to Exhibit 10.5 to the
Registration Statement of LTI on Form 10 filed with the Commission on
October 16, 1990, File No. 0-18865.
6.3 Further Amendment to Option Agreement dated March 30, 1990
between the Stuckis, Palm Lakes and Leasing Technology Incorporated ("LTI").
Incorporated by reference to Exhibit 10.6 to
-22-
<PAGE>
the Registration Statement of LTI on Form 10 filed with the Commission on
October 16, 1990, File No. 0-18865.
6.4 Modification Agreement dated May 28, 1991 between the Stuckis and LTI.
Incorporated by reference to Exhibit 10.18 to the Registration Statement of LTI
on Form 10 filed with the Commission on October 16, 1990, File No. 0-18865.
6.5 Further Modification Agreement dated July 5, 1996 between the Company
and the Stuckis.
6.6 Assignment of Contract and Assumption of Obligations dated July 5,
1996 among LTI, the Stuckis, and the Company.
6.7 Sales Agreement dated September 3, 1991 between LTI and Property
Alliance, Inc. Incorporated by reference to Exhibit 10.20 to Amendment No. 3
to the Registration Statement of LTI on Form 10 filed with the Commission on
November 13, 1991, File No. 0-18865.
6.8 Addendum to Sales Agreement dated as of June 30, 1994 between Property
Alliance, the Company and LTI.
6.9 Acquisition Agreement dated December 31, 1992 between the Company and
LTI. Incorporated by reference to Exhibit 10.23 the Annual Report of LTI on
Form 10-K for the fiscal year ended March 31, 1993 filed with the Commission,
File No. 0-18865.
6.10 Agreement dated June 11, 1996 between the Company and Bear River
Contractors (a wholly-owned subsidiary of Granite).
12. Consent of Jones, Jensen & Company.
-23-
<PAGE>
SIGNATURES
In accordance with the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
GOLF VENTURES, INC.
Date: September 6, 1996
By: /s/ Duane Marchant
-----------------------
Name: Duane Marchant
Title: President
-24-
<PAGE>
GOLF VENTURES, INC.
Financial Statements
March 31, 1996 and 1995
F-1
<PAGE>
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . 8
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . . . 9
F-2
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Golf Ventures, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheets of Golf Ventures, Inc., as of
March 31, 1996 and 1995, and the related statements of operations, stockholders'
equity and cash flows for the years ended March 31, 1996, 1995 and 1994. 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 audit 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 Golf Ventures, Inc., as of
March 31, 1996 and 1995 and the results of its operations and its cash flows for
the years ended March 31, 1996, 1995 and 1994, in conformity with generally
accepted accounting principles.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
May 30, 1996
F-3
<PAGE>
GOLF VENTURES, INC.
Balance Sheets
ASSETS
<TABLE>
<CAPTION>
March 31, March 31,
1996 1995
--------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash $ 784,380 $ 20,091
Accounts receivable, net (Note 1) 92,153 95,170
Inventory (Note 1) 748,010 596,195
---------- ----------
Total Current Assets 1,624,543 711,456
---------- ----------
LAND HELD FOR DEVELOPMENT (Note 3) 5,287,605 4,962,151
---------- ----------
TOTAL ASSETS $6,912,148 $5,673,607
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Construction loans payable (Note 1) $ 185,775 $ -
Current portion of long-term debt (Note 6) 942,574 898,886
Accrued expenses 1,031,814 634,668
---------- ----------
Total Current Liabilities 2,160,163 1,533,554
---------- ----------
LONG-TERM DEBT (Note 6) 1,410,532 1,225,778
---------- ----------
Total Liabilities 3,570,695 2,759,332
---------- ----------
CONTINGENCIES (Note 5, 9) - -
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock (10,000,000 shares authorized
at par value of $.001) 25,000 class "A" and 259,427
class "B"; and 27,000 class "A" and 65,694 class "B"
shares issued and outstanding, respectively 284 93
Common stock (25,000,000 shares authorized
at par value of $.001) 1,628,828 and 1,532,607
shares issued and 1,615,837 and 955,221
shares outstanding, respectively 1,629 1,533
Additional paid-in capital 7,173,573 3,140,391
Accumulated deficit (3,834,033) (227,742)
---------- ----------
Total Stockholders' Equity 3,341,453 2,914,275
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,912,148 $5,673,607
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
GOLF VENTURES, INC.
Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended March 31,
-----------------------------------------------------
1996 1995 1994
-------------- ------------- -----------
<S> <C> <C> <C>
REVENUE
Real estate sales $ 734,675 $ 629,750 $ 638,750
Cost of sales - real estate 512,528 410,193 537,255
----------- ---------- ----------
Gross Profit 222,147 219,557 101,495
GENERAL AND ADMINISTRATIVE EXPENSES 3,935,850 355,404 241,309
----------- ---------- ----------
NET INCOME (LOSS) FROM OPERATIONS (3,713,703) (135,847) (139,814)
OTHER INCOME (EXPENSE)
Interest income 5,535 10,107 8,391
Other income 101,877 28,139 17,255
----------- ---------- ----------
Total Other Income (Expense) 107,412 38,246 25,646
NET INCOME (LOSS) $(3,606,291) $ (97,601) $ (114,168)
----------- ---------- ----------
----------- ---------- ----------
EARNINGS (LOSS) PER SHARE $ (2.59) $ (0.11) $ (0.15)
----------- ---------- ----------
----------- ---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING 1,393,386 908,950 755,881
----------- ---------- ----------
----------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
GOLF VENTURES, INC.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
---------------------- ------------------------ Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
-------- --------- --------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 1993 5,000 $ 5 755,683 $ 756 $ 2,248,709 $ (15,973)
Preferred stock
issued for cash 22,000 22 - - 109,978 -
Common stock issued
for cash (Note 5) - - 102,996 103 643,176 -
Common stock issued
for services rendered - - 4,000 4 24,996 -
Stock offering costs - - - - (109,833) -
Income (loss) for the
year ended
March 31, 1994 - - - - - (114,168)
-------- --------- --------- ----------- -------------- ------------
Balance,
March 31, 1994 27,000 27 862,679 863 2,917,026 (130,141)
Common stock issued
for cash - - 10,000 10 125,676 -
Common stock issued
for debt - - 82,543 83 282,474 -
Class "B" preferred
stock issued for cash 65,694 66 - - 328,401 -
Distribution to parent
company - - - - (512,609) -
Common stock subscribed - - 577,385 577 (577) -
(Note 8)
Income (loss) for the
year ended
March 31, 1995 - - - - - (97,601)
-------- --------- --------- ---------- -------------- -----------
Balance,
March 31, 1995 92,694 $ 93 1,532,607 $ 1,533 $ 3,140,391 $ (227,742)
-------- --------- ---------- ---------- -------------- -----------
-------- --------- ---------- ---------- -------------- -----------
</TABLE>
F-6
<PAGE>
GOLF VENTURES, INC.
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
---------------------- ------------------------ Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
-------- --------- --------- ---------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 1995 92,694 $ 93 1,532,607 $ 1,533 $ 3,140,391 $ (227,742)
Class "A" preferred stock
converted to common
stock (2,000) (2) 1,221 1 1 -
Class "B" preferred stock
issued for cash (Note 4) 193,733 193 - - 968,473 -
Common stock issued for
services - - 95,000 95 424,905 -
Common stock subscriptions
paid in services (Note 8) - - - - 2,835,000 -
Distributor to parent
company - - - - (195,197) -
Income (loss) for the
year ended
March 31, 1996 - - - - - (3,606,291)
--------- -------- ---------- ---------- ------------- -----------
Balance,
March 31, 1996 284,427 $ 284 1,628,828 $ 1,629 $ 7,173,573 $(3,834,033)
--------- -------- ---------- ---------- ------------- -----------
--------- -------- ---------- ---------- ------------- -----------
</TABLE>
F-7
<PAGE>
GOLF VENTURES, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended March 31,
----------------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(3,606,291) $ (97,601) $ (114,168)
Items not requiring cash flow
during the current period:
Common stock issued for services 3,260,000 - 25,000
Changes in assets and liabilities:
(Increase) decrease accounts receivable 3,017 35,803 10,742
(Increase) decrease inventory 416,782 38,189 (158,711)
(Increase) decrease deposits - 50,000 (50,000)
Increase (decrease) accrued expenses 397,146 21,808 121,444
----------- ----------- ----------
Net Cash Provided (Used) by
Operating Activities 470,654 48,199 (165,693)
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Land held for development (708,276) (540,258) (83,854)
----------- ----------- ----------
Net Cash (Used) in Investing Activities (708,276) (540,258) (83,854)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term borrowings 355,000 670,000 -
Distribution to parent company (195,197) (512,609) -
Payment of stock offering costs - - (109,833)
Sale of common stock for cash - 125,686 426,640
Sale of preferred stock for cash 968,666 328,467 110,000
Note payable - related parties - - 123,739
Principal payments on long-term debt (126,558) (139,947) (278,838)
----------- ----------- ----------
Net Cash Provided by Financing Activities 1,001,911 471,597 271,708
----------- ----------- ----------
INCREASE (DECREASE) IN CASH 764,289 (20,462) 22,161
CASH AT BEGINNING OF YEAR 20,091 40,553 18,392
----------- ----------- ----------
CASH AT END OF YEAR $784,380 $20,091 $40,553
----------- ----------- ----------
----------- ----------- ----------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid For:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
NON CASH FINANCING ACTIVITIES
Acquisition of real estate for common
stock and assumption of debt,
recorded at predecessor cost $ - $ 475,000 $ -
Common stock issued for debt $ - $ 282,557 $ -
</TABLE>
The accompanying notes are an integral part of these financial statements
F-8
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are those of Golf Ventures, Inc., (the
Company). The Company has acquired real estate in St. George, Utah
and is engaged in the business of real estate development, primarily
golf courses with residential real estate. The following is a summary
of the more significant of its accounting policies:
A. INCOME TAXES
The Company has adopted SFAS 109, Accounting for Income Taxes. No
provision has been made for federal income taxes due to net operating
loss carryforwards, sufficient to offset any current tax liabilities.
No deferred tax asset is being recognized currently based on the
Company's past operating performance. The net operating losses are
expected to expire as summarized below.
Year ended
to expire Amount
--------- --------------
2007 $ 16,000
2008 114,000
2009 97,000
2010 3,623,000
--------------
Total $ 3,850,000
--------------
--------------
The Company has elected a March 31 fiscal year end for book and tax
purposes.
B. EARNINGS (LOSS) PER SHARE OF COMMON STOCK
The computation of net loss per share is based on the weighted average
number of shares outstanding during each period. There common stock
equivalents are anti-dilutive and accordingly not used in the loss per
share computation.
C. INCOME RECOGNITION
Income on real estate sales is recognized in accordance with the
provisions of FASB-66.
D. CONCENTRATION OF RISK
The Company maintains its cash in bank deposit accounts at high credit
quality financial institutions. The balances, at times, may exceed
federally insured limits. At March 31, 1996 and 1995, the Company
exceeded the insured limit by approximately $584,380 and $-0-,
respectively.
The Company builds and develops real property in Southern Utah. In
the normal course of business the Company extends secured credit to
its customers.
F-9
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and 1995
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
E. CONSTRUCTION LOANS PAYABLE
An officer and director of the Company has arranged for short term
loans to finance the construction of homes held in inventory for
resale. The loans are secured by the homes and accrue interest at
variable rates.
F. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
The changes in operating assets and liabilities are shown net of non
cash transactions.
G. INVENTORY
The Company carries in inventory the cost of the developed lots and
condominiums it has available for sale. The inventory is recorded at
the lower of cost or market.
H. ACCOUNTS RECEIVABLE
The Company's accounts receivable are from the sale of lots and condos
in its Cotton Manor and Cotton Acres projects. The Company has
recorded an allowance for doubtful accounts of $5,000. The Company
holds a trust deed on the properties sold and the Company expects that
its sales backlog would allow it to immediately resell any property
which it foreclosed upon.
NOTE 2 - REORGANIZATION, NAME CHANGE AND STOCK SPLITS
On December 28, 1992, at a meeting of the shareholders the name of the
Company was changed to Golf Ventures, Inc. Also a reverse stock split
was approved of one share for ten shares of the Company's outstanding
common stock. The financial statements have been restated to reflect
the reverse stock split on a retroactive basis.
On February 1, 1996, the Company reverse split its common stock on a 1
share for 5 shares basis. The financial statements reflect the
reverse stock split on a retroactive basis.
NOTE 3 - LAND HELD FOR DEVELOPMENT
On December 28, 1992 the Company purchased the Red Hawk real estate
development and the Cotton Manor/Cotton Acres real estate development.
The land was purchased for 3,273,728 shares of common stock and the
assumption of debt. The Red Hawk land is undeveloped and in order for
the Company to realize its investment it will need to obtain adequate
financing. The land was acquired from a company which ended up with
control of the Company as a result of the transaction, therefore the
land was recorded at predecessor cost.
F-10
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and 1995
NOTE 3 - LAND HELD FOR DEVELOPMENT (Continued)
The purchase of the Red Hawk property is recorded on a "cash basis"
whereby the cost in the financial statements reflects only the cash
invested in the land and debts assumed from the seller. The trust
deed note is excluded because of the uncertainty of obtaining adequate
development financing. The Company is not able to record its interest
in the property until the property is refinanced. The principal paid
on the trust deed note is added to the cost when it is paid.
For the years ended March 31, 1996, 1995 and 1994, the Company
capitalized $514,687, $432,700 and $419,855 in construction period
interest costs, respectively. The cost of the land is less than the
estimated net realizable value of the land.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the year ended March 31, 1994, the Company received $216,639
from LTI for which it issued 34,662 shares of its previously
authorized but unissued common stock, which is $6.25 per share.
On March 31, 1994, the Company issued 16,000 shares of common stock to
a shareholder for $6.25 per share. The total proceeds were $100,000.
During the year ended March 31, 1995, the Company issued 65,694 shares
of class "B" preferred stock to a shareholder for $328,467 advanced to
the Company. (See Note 6)
During the year ended March 31, 1996, the Company issued 193,733
shares of class "B" preferred stock to a shareholder for $968,666.
(See Note 6)
NOTE 5 - COMMITMENTS AND OBLIGATIONS
Commitments include a trust deed note not recorded for accounting
purposes (See Note 3) which the Company has committed to pay to
acquire the Red Hawk real estate development. The liability of
$2,390,725 and accompanying asset will be recorded when the Company
resolves the uncertainty described in Note 3.
The Company's condensed financial statements would appear as follows
if the real estate transaction were recorded.
March 31,
1996
--------------
Current assets $ 1,624,543
Land held for development 7,678,330
--------------
$ 9,302,873
--------------
--------------
Current liabilities $ 2,160,163
Long-term debt 3,801,257
Stockholders' equity 3,341,453
--------------
$ 9,302,873
--------------
--------------
F-11
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and 1995
<TABLE>
<CAPTION>
NOTE 6 - LONG-TERM DEBT
<S> <C> <C>
March 31, March 31,
1996 1995
Promissory note secured by land. Interest accrued ---------- ----------
at 10% per annum, payable in shares of the
Company's common stock. $120,000 principal plus
a percentage of the proceeds of lot sales payable
annually beginning on February 1, 1991 through
February 1, 1997 at which time the balance will
be due as a balloon payment. $2,000 from each
Red Hawk lot sale also applies to the note. $ 721,502 $ 778,916
Promissory note secured by land. Annual
payments through August 15, 2016 at $30,524
per year including interest at 10% per annum. 204,435 216,378
Promissory note secured by land, bearing
interest at 9.75% payable in full including
accrued interest on June 18, 1997. 355,000 -
Trust deed note secured by land. Interest accrued at
10% per annum, payable monthly at $5,000 per month
through January 30, 1996 at which time the balance
including accrued interest will be due. (See Note 9) 401,366 420,000
Trust deed note, secured by land and 50,000 shares
of the Company's common stock. Interest accrued at
15% per annum. Principal and interest were due May
31, 1995. However, the note holder has not demanded
full payment and is accepting partial payments. 211,433 250,000
Trust deed note payable, secured by land. Interest
accrued at 8% per annum. Payable $100,000 per
year plus the accrued interest for that year. 459,370 459,370
------------ -----------
Subtotal 2,353,106 2,124,664
Less Current Portion (942,574) (898,886)
------------ -----------
Long-Term Portion $ 1,410,532 $ 1,225,778
------------ -----------
------------ -----------
Maturities on long-term debt are as follows:
1996 $ 942,574
1997 585,752
1998 231,827
1999 196,884
2000 145,936
After 2000 250,133
-----------
$ 2,353,106
-----------
-----------
</TABLE>
F-12
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and 1995
NOTE 7 - PREFERRED STOCK
The Company has issued 27,000 shares of its Class "A" cumulative
convertible preferred stock through a private placement at $5 per
share. The preferred stock pays a cumulative dividend at the rate of
10% per annum and is convertible into common stock per terms of the
offering. The preferred stock also has certain preferences in
liquidation. In 1996, 2,000 shares were converted into 1,221 shares
of common stock. The Company has also issued 259,427 shares of class
"B" preferred stock. The class "B" preferred stock has a preference
upon liquidation of $5.00 per share, plus all accrued and unpaid
dividends, whether or not earned or declared. The preference is
secondary to the liquidation preference of the class "A" stock. The
class "B" preferred stock is convertible at anytime before March 31,
1998 at the rate of 1 share of common stock to be valued at 40% of the
low bid price for free trading shares at my time during the eighteen
months preceding the conversion. The Company may redeem the class "B"
preferred stock on or before March 31, 1998 at $5.00 per share plus
dividends accrued at 10% per annum.
NOTE 8 - COMMON STOCK SUBSCRIBED
On March 22, 1994 the Company entered into an agreement to issue
2,835,000 shares of common stock pursuant to Regulation S at $3.00 per
share. In May of 1994 the Company terminated the offering due to non
performance by the sales agent. In 1996 the shares were issued for
services rendered and valued at $1.00 per share.
The Company has issued an additional 51,932 shares which have been
offered to creditors in settlement of accrued expenses but the
creditors have not yet accepted the shares.
NOTE 9 - CONTINGENCIES
The Company has been named as a potential defendant in a complaint
against the Company's parent, LTI. No amount of damage has been
asserted and management believes the risk of loss to be remote.
The Company has defaulted on a trust deed note. The note holder has
sued for the balance owing and costs. The Company has escrowed with
its attorney the full amount of the claim pending its settlement.
NOTE 10- SUBSEQUENT EVENT
The Company has completed a private placement of 200,000 shares of its
common stock at $5.00 per share for net proceeds of approximately
$900,000.
In June of 1996 the complaint described in Note 9 was settled without
a loss being incurred by the Company.
On June 10, 1996 the Company signed a trust deed note which provided
for a $2,000,000 loan to be repaid after 36 months. The note is
secured by a trust deed on 616 acres of the Red Hawk property. The
note bears interest at 10.5% per annum which is payable monthly.
F-13
<PAGE>
GOLF VENTURES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND MARCH 31, 1996
F-14
<PAGE>
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations. . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Stockholders' Equity. . . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . . . . . 8
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . 9
F-15
<PAGE>
[JONES, JENSEN & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Golf Ventures, Inc.
Salt Lake City, Utah
The accompanying consolidated balance sheet of Golf Ventures, Inc. as of
June 30, 1996 and the related consolidated statements of operations,
stockholders' equity and cash flows for the three months then ended and for
the three months ended June 30, 1995 were not audited by us and, accordingly,
we do not express an opinion on them. This accompanying consolidated balance
sheet of Golf Ventures, Inc. as of March 31, 1996 was audited by us and we
expressed and unqualified opinion on it in our report dated May 30, 1996.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
August 1, 1996
F-16
<PAGE>
GOLF VENTURES, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
June 30, March 31,
1996 1996
----------- -----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 2,711,321 $ 784,380
Accounts receivable, net (Note 1) 110,778 92,153
Inventory (Note 1) 686,656 748,010
----------- -----------
Total Current Assets 3,508,755 1,624,543
----------- -----------
LAND HELD FOR DEVELOPMENT (Note 3) 5,701,444 5,287,605
----------- -----------
TOTAL ASSETS $ 9,210,199 $ 6,912,148
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Construction loans payable (Note 1) $ 185,775 $ 185,775
Current portion of long-term debt (Note 6) 730,631 942,574
Accrued expenses 911,981 1,031,814
----------- -----------
Total Current Liabilities 1,828,387 2,160,163
----------- -----------
LONG-TERM DEBT (Note 6) 3,410,532 1,410,532
----------- -----------
Total Liabilities 5,238,919 3,570,695
----------- -----------
CONTINGENCIES (Notes 5 and 9) - -
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock (10,000,000 shares authorized
at par value of $.001) 27,000 class "A"
and 259,427 class "B"; shares issued and
outstanding, respectively 284 284
Common stock (25,000,000 shares authorized
at par value of $.001) 1,828,828 and
1,628,828 shares issued and 1,815,837
and 1,615,837 shares outstanding,
respectively 1,829 1,629
Additional paid-in capital 7,898,427 7,173,573
Accumulated deficit (3,929,260) (3,834,033)
----------- -----------
Total Stockholders' Equity 3,971,280 3,341,453
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,210,199 $ 6,912,148
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-17
<PAGE>
GOLF VENTURES, INC.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Three Months Ended
June 30,
--------------------------------
1996 1995
------------- -------------
<S> (Unaudited) (Unaudited)
REVENUE <C> <C>
Real estate sales $ 133,000 $ 87,800
Cost of sales - real estate 76,582 45,234
------------- -------------
Gross Profit 56,418 42,566
GENERAL AND ADMINISTRATIVE EXPENSES 156,519 77,159
------------- -------------
NET INCOME (LOSS) FROM OPERATIONS (100,101) (34,593)
OTHER INCOME (EXPENSE)
Interest income 1,993 3,426
Other income 2,881 7,701
------------- -------------
NET INCOME (LOSS) $ (95,227) $ (23,466)
------------- -------------
------------- -------------
EARNINGS (LOSS) PER SHARE $ (0.06) $ (0.01)
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-18
<PAGE>
GOLF VENTURES, INC.
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
-------------------- ------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
--------- ------ --------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1995 92,694 $ 93 1,532,607 $ 1,533 $ 3,140,391 $ (227,742)
Class "A" preferred stock
converted to common
stock (2,000) (2) 1,221 1 1 -
Class "B" preferred stock
issued for cash (Note 4) 193,733 193 - - 968,473 -
Common stock issued for
services - - 95,000 95 424,905 -
Common stock subscriptions
paid in services (Note 8) - - - - 2,835,000 -
Distribution to parent
company - - - - (195,197) -
Income (loss) for the
year ended
March 31, 1996 - - - - - (3,606,291)
---------- --------- ---------- ---------- ---------- -----------
Balance, March 31, 1996 284,427 284 1,628,828 1,629 7,173,573 (3,834,033)
Distribution to parent
company (Unaudited) - - - - (174,946) -
Common stock issued
for cash (Unaudited) - - 200,000 200 999,800 -
Stock issuance costs
(Unaudited) - - - - (100,000) -
Income (loss) for the
three months ended
June 30, 1996
(Unaudited) - - - - - (95,227)
---------- --------- ---------- ---------- ---------- -----------
Balance,
June 30, 1996
(Unaudited) 284,427 $ 284 1,828,828 $ 1,829 $ 7,898,427 $(3,929,260)
---------- --------- ---------- ---------- ----------- -----------
---------- --------- ---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
F-19
<PAGE>
GOLF VENTURES, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Three Months
June 30,
--------------------------------
1996 1995
------------ -----------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (95,227) $ (23,466)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (18,625) 27,844
(Increase) decrease in inventory 61,354 42,360
Increase (decrease) in accrued expenses (119,833) 178,001
---------- -----------
Net Cash Provided (Used) by Operating Activities (172,331) 224,739
---------- -----------
INVESTING ACTIVITIES
Land held for development (413,839) (166,017)
---------- -----------
Net Cash Provided (Used) by Investing Activities (413,839) (166,017)
---------- -----------
FINANCING ACTIVITIES
Stock offering costs (100,000) -
Common stock issued for cash 1,000,000 -
Long-term borrowings 2,000,000 168,382
Distribution to parent company (174,946) (210,288)
Principal payments on long-term debt (211,943) (6,192)
---------- -----------
Net Cash Provided (Used) by Financing Activities 2,513,111 (48,098)
---------- -----------
INCREASE (DECREASE) IN CASH 1,926,941 10,624
CASH AT BEGINNING OF PERIOD 784,380 20,091
---------- -----------
CASH AT END OF PERIOD $2,711,321 $ 30,715
---------- -----------
---------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash Paid For:
Interest $ - $ -
Income taxes $ - $ -
NON CASH FINANCING ACTIVITIES
Preferred stock issued for debt $ - $ 168,382
</TABLE>
The accompanying notes are an integral part of these financial statements
F-20
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and June 30, 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include those of Golf Ventures,
Inc., (the Company). The Company has acquired real estate in St.
George, Utah and is engaged in the business of real estate
development, primarily golf courses with residential real estate. The
following is a summary of the more significant of its accounting
policies:
A. INCOME TAXES
The Company has adopted SFAS 109, Accounting for Income Taxes. No
provision has been made for federal income taxes due to net operating
loss carryforwards, sufficient to offset any current tax liabilities.
No deferred tax asset is being recognized currently based on the
Company's past operating performance. The net operating losses are
expected to expire as summarized below.
Year ended
to expire Amount
--------- --------------
2007 $ 16,000
2008 114,000
2009 97,000
2010 3,623,000
2011 350,000
--------------
Total $ 4,200,000
--------------
--------------
The Company has elected a March 31 fiscal year end for book and tax
purposes.
B. EARNINGS (LOSS) PER SHARE OF COMMON STOCK
The computation of net loss per share is based on the weighted average
number of shares outstanding during each period. There common stock
equivalents are anti-dilutive and accordingly not used in the loss per
share computation.
C. INCOME RECOGNITION
Income on real estate is recognized in accordance with the provisions
of FASB-66.
D. CONCENTRATION OF RISK
The Company maintains its cash in bank deposit accounts at high credit
quality financial institutions. The balances, at times, may exceed
federally insured limits. At March 31, 1996 and June 30, 1996, the
Company exceeded the insured limit by approximately $584,380 and
$2,511,321, respectively.
The Company builds and develops real property in Southern Utah. In
the normal course of business the Company extends secured credit to
its customers.
F-21
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and June 30, 1996
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
E. CONSTRUCTION LOANS PAYABLE
An officer of the Company has arranged for short term loans to finance
the construction of homes held in inventory for resale. The loans are
secured by the homes and accrue interest at variable rates.
F. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
The changes in operating assets and liabilities are shown net of non
cash transactions.
G. INVENTORY
The Company carries in inventory the cost of the developed lots and
condominiums it has available for sale. The inventory is recorded at
the lower of cost or market.
H. ACCOUNTS RECEIVABLE
The Company's accounts receivable are from the sale of lots and condos
in its Cotton Manor and Cotton Acres projects. The Company has
recorded an allowance for doubtful accounts of $5,000. The Company
holds a trust deed on the properties sold and the Company expects that
its sales backlog will allow it to immediately resell any property
which it foreclosed upon.
I. ESTIMATES
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of commitments and
contingencies, and the reported revenues and expenses.
J. UNAUDITED FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited statements of
operations, stockholders' equity (deficit) and cash flows for the
three months ended June 30, 1995 and 1996 include all of the
adjustments necessary for a fair statement of results. All such
adjustments are of a normal recurring nature.
NOTE 2 - REORGANIZATION, NAME CHANGE AND STOCK SPLIT
On December 28, 1992, at a meeting of the shareholders the name of the
Company was changed to Golf Ventures, Inc. Also a reverse stock split
was approved of one share for ten shares of the Company's outstanding
common stock. The financial statements have been restated to reflect
the reverse stock split on a retroactive basis.
On February 1, 1996, the Company reverse split its common stock on a 1
share for 5 shares basis. The financial statements reflect the
reverse stock split on a retroactive basis.
F-22
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and June 30, 1996
NOTE 3 - LAND HELD FOR DEVELOPMENT
On December 28, 1992 the Company purchased the Red Hawk real estate
development and the Cotton Manor/Cotton Acres real estate development.
The land was purchased for 3,273,728 shares of common stock and the
assumption of debt. The Red Hawk land is undeveloped and in order for
the Company to realize its investment it will need to obtain adequate
financing. The land was acquired from a company which ended up with
control of the Company as a result of the transaction, therefore the
land was recorded at predecessor cost.
The purchase of the Red Hawk property is recorded on a "cash basis"
whereby the cost in the financial statements reflects only the cash
invested in the land and debts assumed from the seller. The trust
deed note is excluded because of the uncertainty of obtaining adequate
development financing. The Company is not able to record its interest
in the property until the property is refinanced. The principal paid
on the trust deed note is added to the cost when it is paid.
For the year ended March 31, 1996, the Company capitalized $514,687,
in construction period interest costs. The cost of the land is less
than the estimated net realizable value of the land.
NOTE 4 - RELATED PARTY TRANSACTIONS
During the year ended March 31, 1996, the Company issued 193,733
shares of class "B" preferred stock to a shareholder for $968,666.
(See Note 6)
During the three months ended June 30, 1996 the Company completed a
private placement of 200,000 shares of its common stock at $5.00 per
share. The Company incurred $100,000 of costs in connection with the
stock offering for net proceeds of $900,000.
F-23
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and June 30, 1996
NOTE 5 - COMMITMENTS AND OBLIGATIONS
Commitments include a trust deed note not recorded for accounting
purposes (See Note 3) which the Company has committed to pay to
acquire the Red Hawk real estate development. The liability of
$2,385,375 and accompanying asset will be recorded when the Company
resolves the uncertainty described in Note 3.
The Company's condensed financial statements would appear as follows
if the real estate transaction were recorded.
June 30, March 31,
1996 1996
--------------- --------------
(Unaudited)
Current assets $ 3,508,755 $ 1,624,543
Land held for development 8,086,819 7,678,330
--------------- --------------
$ 11,595,574 $ 9,302,873
--------------- --------------
--------------- --------------
Current liabilities $ 1,828,387 $ 2,160,163
Long-term debt 5,795,907 3,801,257
Stockholders' equity 3,971,280 3,341,453
--------------- --------------
$ 11,595,574 $ 9,302,873
--------------- --------------
--------------- --------------
NOTE 6 - LONG-TERM DEBT
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
----------- ----------
(Unaudited)
<S> <C> <C>
Promissory note secured by land. Interest accrued
at 10% per annum, payable in shares of the
Company's common stock. $120,000 principal plus
a percentage of the proceeds of lot sales payable
annually beginning on February 1, 1991 through
February 1, 1997 at which time the balance will
be due as a balloon payment. $2,000 from each
Red Hawk lot sale also applies to the note. $ 646,502 $ 721,502
Promissory note secured by land. Annual
payments through August 15, 2016 at $30,524
per year including interest at 10% per annum. 204,435 204,435
Promissory note secured by land, bearing
interest at 9.75% payable in full including
accrued interest on June 18, 1997. 355,000 355,000
----------- -----------
Balance forward $ 1,205,937 $ 1,280,937
----------- -----------
</TABLE>
F-24
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and June 30, 1996
<TABLE>
<CAPTION>
NOTE 6 - LONG-TERM DEBT (Continued)
June 30, March 31,
1996 1996
------------ -----------
(Unaudited)
<S> <C> <C>
Balance forward $ 1,205,937 $ 1,280,937
Trust deed note secured by land. Interest accrued
at 10% per annum, payable monthly at $5,000 per
month through January 30, 1996 at which time the
balance including accrued interest will be due.
(See Note 9) 401,366 401,366
Trust deed note, secured by land and 50,000 shares
of the Company's common stock. Interest accrued
at 15% per annum. Principal and interest were due
May 31, 1995. However, the note holder has not
demanded full payment and is accepting partial
payments. 174,490 211,433
Trust deed note payable, secured by land. Interest
accrued at 8% per annum. Payable $100,000 per
year plus the accrued interest for that year. 359,370 459,370
Trust deed note, dated June 10, 1996, to be
repaid after 36 months. The note is secured
by a trust deed on 616 acres of the Red Hawk
property. The note bears interest at 10.5% per
annum which is payable monthly. 2,000,000 -
----------- -----------
Subtotal 4,141,163 2,353,106
Less Current Portion (730,631) (942,574)
----------- -----------
Long-Term Portion $ 3,410,532 $ 1,410,532
----------- -----------
----------- -----------
Maturities on long-term debt are as follows:
1996 $ 730,631
1997 585,752
1998 231,827
1999 2,196,884
2000 145,936
After 2000 250,133
-----------
$ 4,141,163
-----------
-----------
</TABLE>
F-25
<PAGE>
GOLF VENTURES, INC.
Notes to Financial Statements
March 31, 1996 and June 30, 1996
NOTE 7 - PREFERRED STOCK
The Company has issued 27,000 shares of its Class "A" cumulative
convertible preferred stock through a private placement at $5 per
share. The preferred stock pays a cumulative dividend at the rate of
10% per annum and is convertible into common stock per terms of the
offering. The preferred stock also has certain preferences in
liquidation. In 1996, 2,000 shares were converted into 1,221 shares
of common stock. The Company has also issued 259,427 shares of class
"B" preferred stock. The class "B" preferred stock has a preference
upon liquidation of $5.00 per share, plus all accrued and unpaid
dividends, whether or not earned or declared. The preference is
secondary to the liquidation preference of the class "A" stock. The
class "B" preferred stock is convertible at anytime before March 31,
1998 at the rate of 1 share of common stock to be valued at 40% of the
low bid price for free trading shares at my time during the eighteen
months preceding the conversion. The Company may redeem the class "B"
preferred stock on or before March 31, 1998 at $5.00 per share plus
dividends accrued at 10% per annum.
NOTE 8 - COMMON STOCK SUBSCRIBED
On March 22, 1994 the Company entered into an agreement to issue
2,835,000 shares of common stock pursuant to Regulation S at $3.00 per
share. In May of 1994 the Company terminated the offering due to non
performance by the sales agent. In 1996 the shares were issued for
services rendered and valued at $1.00 per share.
The Company has issued an additional 51,932 shares which have been
offered to creditors in settlement of accrued expenses but the
creditors have not yet accepted the shares.
NOTE 9 - CONTINGENCIES
The Company has been named as a potential defendant in a complaint
against the Company's parent, LTI. No amount of damage has been
asserted and management believes the risk of loss to be remote.
In June of 1996 the complaint described above was settled without a
loss being incurred by the Company.
The Company has defaulted on a trust deed note. The note holder has
sued for the balance owing and costs. The Company has escrowed with
its attorney the full amount of the claim pending its settlement.
F-26
<PAGE>
EXHIBIT INDEX
ITEM NO. DOCUMENT PAGE
- -------- -------- ----
2.1 Certificate of Incorporation, as amended
2.2 By-Laws, as amended
6.1 Option Contract dated November 30, 1989 between Karl and Marcia
Stucki individually and as trustees (collectively the "Stuckis")
and Palm Lakes Development Corporation ("Palm Lakes").
Incorporated by reference to Exhibit 10.4 to the Registration
Statement of LTI on Form 10 filed with the Commission on
October 16, 1990, File No. 0-18865.
6.2 Extension to Option Contract dated December 18, 1989 between the
Stuckis and Palm Lakes. Incorporated by reference to Exhibit
10.5 to the Registration Statement of LTI on Form 10 filed with
the Commission on October 16, 1990, File No. 0-18865.
6.3 Further Amendment to Option Agreement dated March 30, 1990
between the Stuckis, Palm Lakes and Leasing Technology
Incorporated ("LTI"). Incorporated by reference to Exhibit 10.6
to the Registration Statement of LTI on Form 10 filed with the
Commission on October 16, 1990, File No. 0-18865.
6.4 Modification Agreement dated May 28, 1991 between the Stuckis and
LTI. Incorporated by reference to Exhibit 10.18 to the
Registration Statement of LTI on Form 10 filed with the
Commission on October 16, 1990, File No. 0-18865.
6.5 Further Modification Agreement dated July 5, 1996 between the
Company and the Stuckis.
6.6 Assignment of Contract and Assumption of Obligations dated July
5, 1996 among LTI, the Stuckis, and the Company.
6.7 Sales Agreement dated September 3, 1991 between LTI and Property
Alliance, Inc. Incorporated by reference to Exhibit 10.20 to
Amendment No. 3 to the Registration Statement of LTI on Form 10
filed with the Commission on November 13, 1991, File No. 0-18865.
<PAGE>
6.8 Addendum to Sales Agreement dated as of June 30, 1994 between
Property Alliance, the Company and LTI.
6.9 Acquisition Agreement dated December 31, 1992 between the Company
and LTI. Incorporated by reference to Exhibit 10.23 the Annual
Report of LTI on Form 10-K for the fiscal year ended March 31,
1993 filed with the Commission, File No. 0-18865.
6.10 Agreement dated June 11, 1996 between the Company and Bear River
Contractors (a wholly-owned subsidiary of Granite).
12. Consent of Jones, Jensen & Company.
<PAGE>
Exhibit 2.1
ARTICLES OF INCORPORATION
OF
GOLD-WATER, INC.
WE, THE UNDERSIGNED natural persons of the age of twenty-one years or more,
acting as incorporators of a corporation under the Utah Business Corporation Act
adopt the following Articles of Incorporation for such corporation.
ARTICLE I
CORPORATE NAME
The name of this corporation is Gold-Water, Inc.
ARTICLE II
DURATION OF CORPORATION
The duration of this corporation is "perpetual".
ARTICLE III
CORPORATE PURPOSES
The purpose for which this corporation is organized is the installation and
development of irrigation systems for commercial and residential properties, and
all matters related or ancillary thereto and to do all things and engage in all
lawful transactions which a corporation organized under the laws of the State of
Utah might do or engage in, even though not expressly stated herein.
ARTICLE IV
CAPITALIZATION
The aggregate number of shares which this corporation shall have authority
to issue is FIFTY MILLION (50,000,000) shares of $0.001 par value Common stock.
All stock of the corporation shall be of the same class and shall have the same
rights and preferences. Fully paid stock of this corporation shall not be
liable to any further call or assessment.
ARTICLE V
PRE-EMPTIVE RIGHTS ABOLISHED
The authorized and treasury stock of this corporation may be issued at such
time, upon such terms and conditions and for such consideration as the Board of
Directors shall determine. Shareholders shall not have pre-emptive rights to
acquire unissued shares of the stock of this corporation.
<PAGE>
ARTICLE VI
COMMENCING BUSINESS
This corporation will not commence business until consideration of a value
of at least $1,000 has been received for the issuance of shares.
ARTICLE VII
INTERNAL AFFAIRS
The Directors shall adopt Bylaws which are not inconsistent with law or
these Articles for the regulation and management of the affairs of the
corporation. These Bylaws may be amended from time to time or repealed pursuant
to laws.
ARTICLE VIII
REGISTERED OFFICE AND AGENT
The address of this corporation's initial registered office and name of its
original registered agent at such address is:
David G. Badger
3335 South 2070 East, Apt. #26
Salt Lake City, Utah 84109
ARTICLE IX
DIRECTORS
The Board of Directors shall consist of not less than three (3) nor more
than nine (9) members as the Board of Directors may itself from time to time
determine. The names and addresses of persons who are to serve as Directors
until the first meeting of stockholders, or until their successors be elected
and qualify are:
NAME ADDRESS
David G. Badger 3335 South 2070 East, Apt. #26
Salt Lake City, Utah 84109
Jeff Soderberg 2558 Valley View Drive
Layton, Utah 84041
LeAnn Stamos 2831 Chadwick Avenue
Salt Lake City, Utah 84106
ARTICLE X
INCORPORATORS
The name and address of each Incorporator is:
<PAGE>
NAME ADDRESS
David C. Badger 3335 South 2070 East, Apt. #26
Salt Lake City, Utah 84109
Jeff Soderberg 2558 Valley View Drive
Layton, Utah 84041
LeAnn Stamos 2831 Chadwick Avenue
Salt Lake City, Utah 84106
ARTICLE XI
OFFICERS AND DIRECTORS CONTRACTS
No contract or other transaction between this corporation and any other
corporation shall be affected by the fact that a Director or officer of this
corporation is interested in or is a Director or officer of such other
corporation; and any Director, individually or jointly, may be a party to or may
be interested in any corporation or transaction of this corporation or in which
this corporation is interested; and no contract or other transaction of this
corporation with any person, firm or corporation shall be affected by the fact
that any Director of this corporation is a party to or is interested in such
contract, act or transaction or any way connected with such person, firm or
corporation, and every person who may become a Director of this corporation is
hereby relieved from liability that might otherwise exist from contracting with
the corporation for the benefit of himself or any firm, association or
corporation in which he may be in any way interested, provided said Director
acts in good faith.
DATED this 18th day of March, 1983.
/s/ David G. Badger
----------------------------
DAVID G. BADGER
/s/ Jeff Soderberg
----------------------------
JEFF SODERBERG
/s/ LeAnn Stamos
----------------------------
LEANN STAMOS
<PAGE>
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
1, THE UNDERSIGNED, a Notary Public, hereby certify that on the 18th day of
March, 1983, David G. Badger, Jeff Soderberg, and LeAnn Stamos, personally
appeared before me who being by me first duly sworn severally declared that they
are the persons who signed the foregoing document as incorporators and that the
statements therein contained are true.
DATED this 18th day of March, 1983.
/s/ Sharon E. Vance
----------------------------
Notary Public
My commission expires: Residing at:
September 10, 1986 Salt Lake City, Utah
<PAGE>
ARTICLES OF AMENDMENT
OF
GOLD-WATER, INC.
Pursuant to Section 16-10-57 of the Business Corporation Act of the State
of Utah, the undersigned hereby certify that at a duly constituted meeting of
the shareholders of the Corporation held July 22, 1987, the Articles of
Incorporation were amended as set forth hereinafter:
1. Article IV of the Articles of Incorporation is amended to read as
follows:
ARTICLE IV
CAPITALIZATION
(1) The aggregate number of shares which this Corporation shall have
authority to issue is SEVENTY FIVE MILLION (75,000,000) shares of common
stock, par value $.001 per share, and TWO HUNDRED MILLION (200,000,000)
shares of Class A Preferred Stock, par value $.001 per share. Fully paid
stock of this Corporation shall not be liable to any further call or
assessment.
2. The foregoing Amendment was duly adopted by the shareholders of the
Corporation at the Special Meeting of Shareholders held on July 22, 1987.
3. At the date of the shareholder's meeting, the Corporation had
16,226,200 shares of common stock issued and outstanding and entitled to vote:
(a) For the amendment increasing the authorized shares of the
Corporation to 75,000,000 shares of common stock, 9,353,295 shares voted for the
amendment, 13,840 shares voted against the amendment.
(b) For the amendment authorizing the issuance of 200,000,000 shares
of Class A Preferred Stock, par value $.001 per share, 9,355,795 shares voted
for the amendment, 11,340 shares voted against the amendment.
<PAGE>
IN WITNESS WHEREOF, this Articles of Amendment was executed this 22nd day
of July, 1987.
/s/ Mont L. Crosland
----------------------------
PRESIDENT
/s/ Thomas E. Stamos
----------------------------
SECRETARY
STATE OF UTAH )
: ss.
COUNTY OF SALT LAKE )
On the 22nd day of July, 1987, before me, a Notary Public, personally
appeared Mont L. Crosland and Thomas E. Stamos, being by me first duly sworn,
each declared that he is the person who signed the foregoing Articles of
Amendment of Gold-Water, Inc., and that the statements contained therein are
true.
/s/
----------------------------
NOTARY PUBLIC
Residing at: Salt Lake
My Commission Expires:
10/24/88
<PAGE>
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
GOLD-WATER, INC.
Pursuant to Section 16-10-57 of the Utah Business Corporation Act of the
State of Utah, the undersigned hereby certify that at a duly constituted meeting
of the shareholders of the Corporation held June 19, 1989, the Articles of
Incorporation are amended as set forth hereinafter:
1. Article I of the Articles of Incorporation is amended to read as
follows:
"ARTICLE I
The name of this Corporation shall be SIERRA TECH, INC."
2. The foregoing amendment was duly adopted by the shareholders of the
Corporation at the special meeting of shareholders held June 19, 1989.
3. At the date of the shareholders meeting, the Corporation had a total
of 17,555,181 shares of common stock issued and outstanding and entitled to
vote:
a. For the amendment to change the name of the Corporation to Sierra
Tech, Inc., 9,331,250 shares voted For the amendment (53. 15%), and 800
shares voted Against the amendment.
IN WITNESS WHEREOF, these Articles of Amendment are executed this 19th day
of June, 1989.
/s/ Mont L. Crosland
----------------------------
President
/s/ S. M. Bullard
----------------------------
Secretary (acting Secretary)
<PAGE>
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
On the 19th day of June, 1989, before me, a notary public, personally
appeared Mont L. Crosland and S.M. Bullard, being by me first duly sworn, each
declared that they are the persons that signed the foregoing Articles of
Amendment of Gold-Water, Inc. and that the statements contained therein are
true.
/s/ Gayle La Fortune
----------------------------
NOTARY PUBLIC
Residing at: Salt Lake City
My commission expires: 11/23/92
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SIERRA TECH, INC.
Pursuant to the provisions of section 16-10a-1003 of the Utah Revised
Business Corporation Act, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation:
1. The name of the corporation is Sierra Tech, Inc.
2. The number of shares of the corporation outstanding are 5,046,540; the
number of shares entitled to vote on the following changes to the Articles of
Amendment thereon is 5,046,540.
3. The current issued and outstanding shares of common stock are to be
effected by an reverse stock split on a one (1) share for ten (10) shares basis,
said reverse stock split to be effective January 1, 1993.
4. For the. proposal to effect the reverse split of the common shares of
the corporation on a 1:10 basis, 2,878,519 shares voted For, 17,140 shares voted
Against, and 289,880 shares abstained.
5. The following Amendment of the Articles of Incorporation was adopted
by a majority vote of the shareholders of the corporation on December 28, 1992,
in the manner proscribed by the Utah Revised Business Corporation Act:
ARTICLE I
CORPORATE NAME
"The name of the corporation shall be GOLF VENTURES, INC."
6. For the amendment to change the name of the Corporation to Golf
Ventures, Inc., 2,892,459 shares voted For the amendment and 3,200 shares voted
Against the amendment with 289,1880 shares abstaining.
<PAGE>
7. The following Amendment of the Articles of Incorporation was adopted
by a majority vote of the shareholders of the corporation on December 28, 1992,
in the manner proscribed by the Utah Revised Business Corporation Act:
"ARTICLE XII
LIMITATION ON DIRECTOR LIABILITY
The corporation shall indemnify and hold harmless each person who shall
serve at any time hereafter as a director of the corporation from and against
any and all claims and liabilities to which such person shall become subject by
reason of his having heretofore or hereafter been a director of the corporation,
or by reason of any action alleged to have been heretofore or hereafter taken or
omitted by him as such director, and shall reimburse each such person for all
legal and other expenses reasonable incurred by him in connection with any such
claim or liability; provided however, that no such person shall be indemnified
against or be reimbursed for, any expense incurred in connection with any claim
or liability arising out of his own negligence or wilful misconduct.
The rights accruing to any person under the foregoing provisions of this
article shall not exclude any other right to which he may be lawfully entitled,
nor shall anything herein contained restrict the right of the corporation to
indemnify or reimburse such person in any proper case even though not
specifically herein provided for. The corporation, its directors, officers,
employees, and agents shall be fully protected in taking any action or making
any payment under this Article XII, or in refusing to do so, in reliance upon
the advice of counsel."
8. For the amendment to limit the corporation Director
liability, 2,891,759 shares voted For, 3,400 shares voted Against the amendment
with 289,880 shares abstaining.
9. The following Amendment to the Articles of Incorporation was adopted
by a majority vote of the shareholders of the corporation on December 28, 1992,
in the manner proscribed by the Utah Revised Business Corporation Act:
"ARTICLE XIII
ACTION WITHOUT MEETING
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if one or
more consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take the action at
<PAGE>
a meeting at which all shares entitled to vote thereon were present and voted."
10. For the amendment to allow action without a shareholder meeting,
2,889,659 shares voted For, 6,000 shares voted Against the amendment with
289,880 shares abstaining.
11. The following Amendment to the Articles of Incorporation was adopted
by a majority vote of the shareholders of the corporation on December 28, 1992,
in the manner proscribed by the Utah Revised Business Corporation Act:
ARTICLE IV
CAPITALIZATION
"The aggregate number of shares which this corporation shall have authority
to issue is TWENTY FIVE MILLION (25,000,000) shares of $0.001 par value Common
stock and TEN MILLION (10,000,000) shares of $0.001 par value Preferred stock."
12. For the amendment to change the authorized capitalization of the
corporation, 2,892,259 shares voted For, 3,400 shares voted Against the
amendment with 289,880 shares abstaining.
IN WITNESS WHEREOF, these Articles of Amendment are executed this 15 day of
January, 1993.
/S/ THOMAS E. STAMOS
----------------------------
PRESIDENT
/s/ R. B. Williams
----------------------------
SECRETARY
<PAGE>
STATEMENT OF
RESOLUTION ESTABLISHING SERIES OF SHARES
OF
GOLF VENTURES, INC.
TO: THE DIVISION OF CORPORATIONS AND COMMERCIAL CODE STATE OF UTAH
Pursuant to the provisions of the Utah Business Corporation Act, the
undersigned corporation submits the following statement for the purpose of
establishing and designating a series of shares and fixing and determining the
relative rights and preferences thereof:
1. The name of the Corporation is GOLF VENTURES INC.
2. The attached resolution, establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof,
was duly adopted by the Board of Directors of the Corporation effective as of
March 1, 1993.
Dated: May 22, 1996
GOLF VENTURES INCORPORATED
By:/s/ Duane H. Marchant
----------------------------
Duane H. Marchant, President
By:/s/ Stephen B. Spencer
----------------------------
Stephen B. Spencer, Secretary
<PAGE>
STATE OF UTAH )
: ss
COUNTY OF SALT LAKE )
I, LaJuana I. Badger, a notary public, do hereby certify that on this 22nd
day of May, 1996, personally appeared before me, Duane H. Marchant and Stephen
B. Spencer, who, being by me first duly sworn, declared that they are the
President and Secretary of Golf Ventures Incorporated, respectively, that they
signed the foregoing document as President and Secretary of the Corporation, and
that the statements contained therein are true.
In witness whereof, I have hereunto set my hand and seal this 22nd day of
May, 1996.
My commission expires 8/31/99
/s/ LaJuana L. Badger
----------------------------
LaJuana L. Badger, Notary Public
<PAGE>
RESOLVED, that pursuant to the authority granted to the Board of Directors in
the Articles of Incorporation, as amended, of the Corporation, there is hereby
established out of the 10,000,000 authorized shares of Preferred Stock, par
value $.001 per share, a series consisting of 350,000 shares, designated as
Series A Preferred Stock.
The following are the powers, rights, qualifications and restrictions
regarding the Series A Preferred Stock ("A Preferred Stock"):
DIVIDENDS. The holders of A Preferred Stock are entitled to receive a
cumulative cash dividend of ten percent (10%), or $0.50 per share, per annum,
payable annually. No dividends are payable on the Common Stock if there are any
accrued dividends on the A Preferred Stock, up to and including the current
annual dividend period for such A Preferred Stock, which have not been paid, or
been declared and a sum set aside for payment. In addition the holders of A
Preferred Stock receive a one-time (6) payment payable from the first profits
derived from the Company's real estate projects, payable to holders at the time
the profit is earned.
VOTING. The holders of A Preferred Stock have no voting rights in the
affairs of the Company.
PAYMENTS ON LIQUIDATION OR DISSOLUTION. In the event of the liquidation or
dissolution of the corporation, the holders of the A Preferred Stock shall be
entitled only to a cash payment of Five Dollars ($5.00) per share, plus all
accrued and unpaid dividends up to the date fixed for distribution, whether or
not earned or declared, and the one-time (6%) payment.
CONVERSION. The A Preferred Stock shall be convertible, at the option of
the holders thereof, at any time on or before March 1, 1998 into that number of
shares of the Company's Common Stock equal to the value of the shares being
converted. For purposes of the conversion of the shares, each Share shall be
valued at $5.00 per Share plus all accrued dividends and the one-time 6%
payment, may be exchanged for shares of Common Stock on the basis of an exchange
price of 60% of the average bid price of the Common Stock for the 90 days
immediately prior to conversion.
REDEMPTION. The Corporation may, at the option of the Board of Directors,
at any time on or after March 1, 1994, redeem the Shares by paying the holder
thereof $5.00 per Share plus all accrued dividends to the date of redemption, by
written notice mailed 30 days prior to the redemption date to each holder of the
Shares at their address as it appears on the transfer records of the Company.
Upon notice of redemption, the holder of the Shares may convert the Shares into
Common Stock if prior to March 1,
<PAGE>
1998, or the holder may surrender the Shares to the Company for payment.
ADDITIONAL RIGHTS. Holders of at least 2,000 Shares will be entitled to the
following:
(a) A 90-day right of first refusal to purchase the lot of their choice in
the first two phases of the Red Hawk project.
(b) A discount on any lot purchased in the first two phases of the Red
Hawk Project, the amount of discount to be based upon the amount of Shares
purchased hereby as follows: 2,000 shares purchased - 10% discount; 3,000 shares
purchased - 15%; 4,000 shares purchased -20%; and 5,000 shares purchased - 25%.
(c) A discount on the purchase of a membership in the Red Hawk Country
Club based upon the amount of shares purchased. See (b) above.
<PAGE>
STATEMENT OF
RESOLUTION ESTABLISHING SERIES OF SHARES
OF
GOLF VENTURES, INC.
TO: THE DIVISION OF CORPORATIONS AND COMMERCIAL CODE STATE
OF UTAH
Pursuant to the provisions of the Utah Business Corporation Act,, the
undersigned corporation submits the following statement for the purpose of
establishing and designating a series of shares and fixing and determining the
relative rights and preferences thereof.
1. The name of the corporation is GOLF VENTURES, INC.
2. The attached resolution, establishing and designating a series of
shares and fixing and determining the relative rights and preferences
thereof, was duly adopted by the Board of Directors of the Corporation
effective as of June 30, 1995.
Dated: August 14, 1996
GOLF VENTURES INCORPORATED
By:/s/Duane H. Marchant
----------------------------
Duane H. Marchant, President
By:/s/Stephen B. Spencer
----------------------------
Stephen B. Spencer, Secretary
<PAGE>
STATE OF UTAH )
:
COUNTY OF SALT LAKE )
I, Lynette Loveland, a notary public, do hereby certify that on this 14th
day of August, 1996, personally appeared before me, Duane H. Marchant and
Stephen B. Spencer, who, being by me first duly sworn, declared that they are
the President and Secretary of Golf Ventures, Incorporated, respectively, that
they signed the foregoing document as President and Secretary of the
corporation, and that the statements contained therein are true.
In witness whereof, I have hereunto set my hand and seal this 14th day of
August, 1996.
My commission expires May 4, 1997.
/s/ Lynette Loveland
-------------------------------
Lynette Loveland, Notary Public
<PAGE>
RESOLVED, that pursuant to the authority granted to the Board of Directors
in the Articles of Incorporation, as amended, of the Corporation, there is
hereby established out of the 10,000,000 authorized shares of Preferred Stock,
par value of S.001 per share, a series consisting of 50,000 shares, designated
as Series B Preferred Stock.
The following are the terms of the Series B Preferred Stock ("B Preferred
Stock"):
DIVIDENDS. The holders of B Preferred Stock are entitled to receive a
cumulative cash dividend of ten percent (10%), payable annually. No dividends
are payable on the Common Stock if there are any accrued dividends on the B
Preferred Stock, up to and including the current annual dividend period for such
B Preferred Stock, which have not been paid, or been declared and a sum set
aside for payment.
VOTING. Each Class B Preferred Share has the right to a number of votes
equal to the number of common shares into which such Preferred Share may be
converted as of the record date for any given vote of stockholders of the
Company. The Class B Preferred Shares vote together with the Common Stock as a
single class.
PAYMENTS ON LIQUIDATION OR DISSOLUTION. In the event of the liquidation or
dissolution of the Corporation, the holders of the B Preferred Stock shall be
entitled only to a cash payment of Five Dollars ($5.00) per share, plus all
accrued and unpaid dividends up to the date fixed for distribution, whether or
not earned or declared. Such payment shall be made after any payment or
distribution is made to the holders of the Series A Preferred Stock, but before
any distribution of assets is made to the holders of Common Stock or an other
stock of the Corporation.
CONVERSION. The B Preferred Stock, or any portion thereof, shall be
convertible, at the option of the holders thereof, at any time on or before
March 31, 1998, at the rate of one (1) share of unregistered (restricted)
Common Stock to be valued at 40% of the low bid (market) price for free trading
common shares at any time during the eighteen (18) months preceding exercise of
the conversion option.
REDEMPTION. The Corporation may, at the option of the Board of Directors,
at any time on or before March 3 1, 1998, redeem the outstanding B Preferred
Stock. The redemption price shall be five Dollars ($5.00) per share plus ten
percent (10%) per annum, less all dividends that may have been paid previously.
<PAGE>
STATEMENT OF
RESOLUTION ESTABLISHING SERIES OF SHARES
OF
GOLF VENTURES INC.
TO: THE DIVISION OF CORPORATIONS AND COMMERCIAL CODE STATE OF UTAH
Pursuant to the provisions of the Utah Business Corporation Act, the
undersigned corporation submits the following statement for the purpose of
establishing and designating a series of shares and fixing and determining the
relative rights and preferences thereof.
1. The name of the Corporation is GOLF VENTURES, INC
2. The attached resolution, establishing and designating a series of
shares and fixing and determining the relative rights and preferences thereof,
was duly adopted by the Board of Directors of the Corporation effective as of
June 7, 1996.
Dated: June 21, 1996
GOLF VENTURES INCORPORATED
By:/s/ Duane H. Marchant
------------------------------
Duane H. Marchant, President
By:/s/ Stephen B. Spencer
------------------------------
Stephen B. Spencer, Secretary
<PAGE>
STATE OF UTAH )
:
COUNTY OF SALT LAKE )
I, Lynette Loveland, a notary public, do hereby certify that on this 21st
day of June, 1996, personally appeared before me, Duane H Marchant and Stephen
B. Spencer, who, being by me first duly sworn, declared that they are the
President and Secretary of Golf Ventures, Incorporated, respectively, that they
signed the foregoing document as President and Secretary of the corporation, and
that the statements contained therein are true.
In witness whereof, I have hereunto set my hand and seal this 21st day of
June, 1996.
My commission expires May 4, 1997.
/s/ Lynette Loveland
----------------------------------
Lynette Loveland, Notary Public
<PAGE>
RESOLVED, that pursuant to the authority granted to the Board of Directors
in the Articles of Incorporation, as amended, of the Corporation, there is
hereby established out of the 10,000,000 authorized shares of Preferred Stock,
par value of S.001 per share, a series consisting of 136,093 shares, designated
as Series C Preferred Stock.
The following are the terms of the Series C Preferred Stock("C Preferred
Stock"):
The C Preferred stock shall be redeemed and/or converted into 136,993)
shares of common stock that may be sold on or before October 30, 1996 for not
less than $5 per share or $680,465 net.
<PAGE>
AMENDMENT TO
STATEMENT OF
RESOLUTION ESTABLISHING SERIES OF SHARES
GOLF VENTURES, INC.
TO: UTAH DIVISION OF CORPORATION AND COMMERCIAL CODE
Pursuant to the provisions of the Utah Business Corporation Act, the
undersigned Corporation submits the following Amendment to its Statement of
Resolution establishing and designating a series of shares and fixing and
determining the relative rights and preferences thereof:
1. The name of the Corporation is GOLF VENTURES, INC.
2. On July 25, 1996, the Corporation filed a Statement of Resolution
establishing and designating a series of shares consisting of 136,039
shares designated as Series C Preferred Stock ("C Preferred Stock"),
and fixing and determining the relative rights and preferences
thereof.
3. The attached Amendment to the Statement of Resolution establishing and
designating the C Preferred Stock was duly adopted by the Board of
Directors of the Corporation on the 20th day of August, 1996.
DATED: August 20, 1996
GOLF VENTURES, INC.
By:/s/ Duane H. Marchant
-----------------------------
DUANE H. MARCHANT, President
By:/s/ Stephen B. Spencer
-----------------------------
STEPHEN B. SPENCER, Secretary
<PAGE>
STATE OF UTAH )
:
COUNTY OF SALT LAKE )
1, Lynette Loveland, a notary public, do hereby certify that on this 20th
day of August, 1996, personally appeared before me, Duane H. Marchant and
Stephen B. Spencer, who, being by me first duly sworn, declared that they are
the President and Secretary of Golf Ventures, Incorporated, respectively, that
they signed the foregoing document as President and Secretary of the
corporation, and that the statements contained therein are true.
In witness whereof, I have hereunto set my hand and seal this 20th day of
August, 1996.
My commission expires May 4, 1997.
/s/ Lynette Loveland
-------------------------------
Lynette Loveland, Notary Public
<PAGE>
RESOLVED, that pursuant to authority granted to the Board of Directors by
the Articles of Incorporation, as amended, of the Corporation, the Board of
Directors hereby unanimously consent to amend the description of the Series C
Preferred Stock ("C Preferred Stock") as set forth below:
DIVIDENDS. The holders of C Preferred Stock are entitled to no dividends.
VOTING. The holders of C Preferred Stock have no voting rights.
PAYMENTS ON LIQUIDATION OR DISSOLUTION. In the event of the liquidation or
dissolution of the Corporation, the holders of the C Preferred Stock shall be
entitled only to a cash payment of Five dollars ($5.00) per share. Such payment
shall be junior to payment or distribution made to the holders of Series A and
Series B Preferred, but shall be made before any distribution to holders of
common stock.
REDEMPTION. The Corporation is obligated to redeem the C Preferred Stock
for Five Dollars ($5.00) per share on or before October 30, 1996.
<PAGE>
Exhibit 2.2
BYLAWS
OF
GOLD-WATER, INC.
ARTICLE I
Office
SECTION 1.1 OFFICE. The Corporation shall maintain such offices,
within or without the State of Utah, as the Board of Directors may from time to
time designate. The location of the principal office may be changed by the
Board of Directors.
ARTICLE II
Shareholders' Meeting
SECTION 2.1 ANNUAL MEETINGS. The annual meeting of the shareholders
of the Corporation shall be held at such place within or without the State of
Utah as shall be set forth in compliance with these Bylaws. The meeting shall
be held on the second Wednesday of April of each year beginning with the year
1984 at 10:00 a.m. If such day is a legal holiday, the meeting shall be on the
next business day. This meeting shall be for the election of directors and for
the transaction of such other business as may properly come before it.
SECTION 2.2 SPECIAL MEETINGS. Special meetings of the shareholders,
other than those regulated by statute, may be called at any time by the
President, or a majority of the directors, and must be called by the President
upon written request of the record holders of not less than 10% of the issued
and outstanding shares entitled to vote at such special meeting. Written notice
of such meeting stating the place, the date and hour of the meeting, the purpose
or purposes for which it is called, and the name of the person by whom or at
whose direction the meeting is called shall be given. The notice shall be given
to each shareholder of record in the same manner as notice of the annual
meeting. No business other than that specified in the notice of meeting shall
be transacted at any such special meeting.
SECTION 2.3 NOTICE OF SHAREHOLDERS' MEETINGS. The Secretary shall
give written notice stating the place, day and hour of the meeting, and in the
case of a special meeting the purpose or purposes for which the meeting is
called, which shall be delivered not less than ten nor more than fifty days
before the day of the meeting, either personally or by mail to each shareholder
of record entitled to vote at such meeting. If
<PAGE>
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
books of the Corporation, with postage thereon prepaid.
SECTION 2.4 PLACE OF MEETING. The Board of Directors may designate
any place, either within or without the State of Utah, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting
may designate any place, either within or without the State of Utah, as the
place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the Corporation.
SECTION 2.5 RECORD DATE. The Board of Directors
may fix a date not less than ten nor more than fifty days prior to any meeting
as the record date for the purpose of determining shareholders entitled to
notice of and to vote at, such meetings of the shareholders. The transfer books
may be closed by the Board of Directors for a stated period not to exceed fifty
days for the purpose of determining shareholders entitled to receive payment of
any dividend, or in order to make a determination of shareholders for any other
purpose.
SECTION 2.6 QUORUM. A majority of the outstanding
shares of the Corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. If less than a majority
of the outstanding shares are represented at a meeting, a majority of the shares
so represented may adjourn the meeting from time to time without further notice.
At a meeting resumed after any such adjournment at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders in such number that less than a
quorum remain.
SECTION 2.7 VOTING. A holder of an outstanding share entitled to vote
at a meeting may vote at such meeting in person or by proxy. Except as may
otherwise be provided in the Articles of Incorporation, every shareholder shall
be entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the Articles of Incorporation otherwise
provided, all corporate action shall be determined by a majority of the votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
-2-
<PAGE>
SECTION 2.8 PROXIES. At all meetings of shareholders, a shareholder
may vote in person or by proxy executed in writing by the shareholder or by his
duly authorized attorney in fact. Such proxy shall be filed with the secretary
of the Corporation before or at the time of the meeting. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
SECTION 2.9 INFORMAL ACTION BY SHAREHOLDERS. Any action required to
be taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
Board of Directors
SECTION 3.1 GENERAL POWERS. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. The
Board of Directors may adopt such rules and regulations for the conduct of their
meetings and the management of the Corporation as they deem proper.
SECTION 3.2 NUMBER, TENURE, AND QUALIFICATIONS. The number of
directors for the initial Board of Directors of the Corporation shall be three.
Each director shall hold office until the next annual meeting of shareholders
and until his successor shall have been elected and qualified. Directors need
not be residents of the State of Utah or shareholders of the Corporation. The
number of directors may be changed by a resolution adopted by the Board of
Directors.
SECTION 3.3 REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than by this Bylaw, immediately
following after and at the same place as the annual meeting of shareholders.
The Board of Directors may provide, by resolution, the time and place for the
holding of additional regular meetings without other notice than this
resolution.
SECTION 3.4 SPECIAL MEETINGS. Special meetings
of the Board of Directors may be called by order of the Chairman of the Board,
the President or by one-third of the directors. The Secretary shall give notice
of the time, place, and purpose or purposes of each special meeting by mailing
the same at least two days before the meeting or by telephoning or telegraphing
the same at least one day before the meeting to each director.
SECTION 3.5 QUORUM. A majority of the members of the Board of
Directors shall constitute a quorum for the transaction
-3-
<PAGE>
of business, but less than a quorum may adjourn any meeting from time to time
until a quorum shall be present, whereupon the meeting may be held, as
adjourned, without further notice. At any meeting at which every director shall
be present, even though without any notice, any business may be transacted.
SECTION 3.6 MANNER OF ACTING. At all meetings o f the Board of
Directors, each director shall have one vote. The act of a majority present at
a meeting shall be the act of the Board of Directors, provided a quorum is
present. Any action required to be taken or which may be taken at a meeting of
the directors may be taken without a meeting if a consent in writing setting
forth the action so taken shall be signed by all the directors. The directors
may conduct a meeting by means of a conference telephone or any similar
communications equipment by which all persons participating in the meeting can
hear each other.
SECTION 3.7 VACANCIES. A vacancy in the Board of Directors shall be
deemed to exist in case of death, resignation or removal of any director, or if
the authorized number of directors be increased, or if the shareholders fail at
any meeting of shareholders at which any director is to be elected, to elect the
full authorized number to be elected at that meeting.
SECTION 3.8 REMOVALS. Directors may be removed
at any time, by a vote of the shareholders holding a majority of the shares
issued and outstanding and entitled to vote. Such vacancy shall be filled by
the directors then in office, though less than a quorum, to hold office until
the next annual meeting or until his successor is duly elected and qualified,
except that any directorship to be filled by reason of removal by the
shareholders may be filled by election, by the shareholders, at the meeting at
which the director is removed. No reduction of the authorized number of
directors shall have the effect of removing any director prior to the expiration
of his term of office.
SECTION 3.9 RESIGNATIONS. A director may resign at any time by
delivering written notification thereof to the President or Secretary of the
Corporation. Such resignation shall become effective upon its acceptance by the
Board of Directors; provided, however, that if the Board of Directors has not
acted thereon within ten days from the date of its delivery, the resignation
shall upon the tenth day be deemed accepted.
SECTION 3.10 PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the meeting or unless he
shall
-4-
<PAGE>
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
SECTION 3.11 COMPENSATION. By resolution of the Board of Directors,
the directors may be paid their expenses, if any, of attendance at each meeting
of the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 3.12 EMERGENCY POWER. When, due to a national disaster or
death, a majority of the directors are incapacitated or otherwise unable to
attend the meetings and function as directors, the remaining members of the
Board of Directors shall have all the powers necessary to function as a complete
Board and, for the purpose of doing business and filling vacancies, shall
constitute a quorum until such time as all directors can attend or vacancies can
be filled pursuant to these Bylaws.
SECTION 3.13 CHAIRMAN. The Board of Directors may elect from its own
number a Chairman of the Board, who shall preside at all meetings of the Board
of Directors, and shall perform such other duties as may be prescribed from time
to time by the Board of Directors.
ARTICLE IV
Officers
SECTION 4.1 NUMBER. The officers of the Corporation shall be a
president, one or more vice presidents, a secretary, and a treasurer, each of
whom shall be elected by a majority of the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. In its discretion, the Board of Directors
may leave unfilled for any such period as it may determine any office except
those of president and secretary. Any two or more offices may be held by the
same person, except the offices of president and secretary. Officers may or may
not be directors or shareholders of the Corporation.
SECTION 4.2 ELECTION AND TERM OF OFFICE. The officers of the
Corporation are to be elected by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the shareholders. If
the election of officers shall not be held at such meeting, such election shall
be held as soon thereafter as convenient. Each officer shall hold office
-5-
<PAGE>
until his successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been removed in the
manner hereinafter provided.
SECTION 4.3 RESIGNATIONS. Any officer may resign at any time by
delivering a written resignation either to the President or to the Secretary.
Unless otherwise specified therein, such resignation shall take effect upon
delivery.
SECTION 4.4 REMOVAL. Any officer or agent may be removed by the Board
of Directors whenever in its judgment, the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of
an officer or agent shall not of itself create contract rights. Any such
removal shall require a majority vote of the Board of Directors, exclusive of
the officer in question if he is also a director.
SECTION 4.5 VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, or if a new office shall be
created, may be filled by the Board of Directors for the unexpired portion of
the term.
SECTION 4.6 PRESIDENT. The President shall be the chief executive and
administrative officer of the Corporation. He shall preside at all meetings of
the shareholders and, in the absence of the Chairman of the Board, at meetings
of the Board of Directors. He shall exercise such duties as customarily pertain
to the office of President and shall have general and active supervision over
the property, business, and affairs of the Corporation and over its several
officers. He may appoint officers, agents, or employees other than those
appointed by the Board of Directors. He may sign, execute and deliver in the
name of the Corporation powers of attorney, contracts, bonds and other
obligations and shall perform such other duties as may be prescribed from time
to time by the Board of Directors or by the Bylaws.
SECTION 4.7 VICE PRESIDENT. The Vice Presidents shall have such
powers and perform such duties as may be assigned to them by the Board of
Directors or the President. In the absence or disability of the President, the
Vice President designated by the Board or the President shall perform the duties
and exercise the powers of the President. In the event there is more than one
Vice President and the Board of Directors has not designated which Vice
President is to act as President, then the Vice President who was elected first
shall act as President. A Vice President may sign and execute contracts and
other obligations pertaining to the regular course of his duties.
-6-
<PAGE>
SECTION 4.8 SECRETARY. The Secretary shall keep the minutes of all
meetings of the shareholders and of the Board of Directors and to the extent
ordered by the Board of Directors or the President, the minutes of meetings of
all committees. He shall cause notice to be given of meetings of shareholders,
of the Board of Directors, and of any committee appointed by the Board. He
shall have custody of the corporate seal and general charge of the records,
documents, and papers of the Corporation not pertaining to the performance of
the duties vested in other officers, which shall at all reasonable times be open
to the examination of any director. He may sign or execute contracts with the
President or a Vice President thereunto authorized in the name of the company
and affix the seal of the Corporation thereto. He shall perform such other
duties as may be prescribed from time to time by the Board of Directors or by
the Bylaws. He shall be sworn to the faithful discharge of his duties.
Assistant Secretaries shall assist the Secretary and shall keep and record such
minutes of meetings as shall be directed by the Board of Directors.
SECTION 4.9 TREASURER. The Treasurer shall have general custody of
the collection and disbursement of funds of the Corporation. He shall endorse
on behalf of the Corporation for collection checks, notes, and other
obligations, and shall deposit the same to the credit of the Corporation in such
bank or banks or depositories as the Board of Directors may designate. He may
sign, with the President, or such other persons as may be designated for the
purpose by the Board of Directors, all bills of exchange or promissory notes of
the Corporation. He shall enter or cause to be entered regularly in the books
of the Corporation full and accurate accounts of all monies received and paid by
him on account of the Corporation: shall at all reasonable times exhibit his
books and accounts to any director of the Corporation upon application at the
office of the Corporation during business hours; and, whenever required by the
Board of Directors or the President, shall render a statement of his accounts.
He shall perform such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws.
SECTION 4.10 GENERAL MANAGER. The Board of Directors may employ and
appoint a General Manager who may, or may not, be one of the officers or
directors of the Corporation. If employed by the Board of Directors he shall be
the chief operating officer of the Corporation and, subject to the directions of
the Board of Directors, shall have general charge of the business operations of
the Corporation and general supervision over its employees and agents. He shall
have the exclusive management of the business of the Corporation and of all of
its dealings, but at all times subject to the control of the Board of Directors.
Subject to the approval of the Board of Directors or the executive committee, he
-7-
<PAGE>
shall employ all employees of the Corporation, or delegate such employment to
subordinate officers, or such division officers, or such division chiefs, and
shall have authority to discharge any person so employed. He shall make a
report to the President and directors quarterly, or more often if required to do
so, setting forth the result of the operations under his charge, together with
suggestions looking to the improvement and betterment of the condition of the
Corporation, and to perform such other duties as the Board of Directors shall
require.
SECTION 4.11 OTHER OFFICERS. Other officers shall perform such duties
and have such powers as may be assigned to them by the Board of Directors.
SECTION 4.12 SALARIES. The salaries or other compensation of the
officers of the Corporation shall be fixed from time to time by the Board of
Directors except that the Board of Directors may delegate to any person or group
of persons the power to fix the salaries or other compensation of any
subordinate officers or agents. No officer shall be prevented from receiving
any such salary or compensation by reason of the fact that he is also a director
of the Corporation.
SECTION 4.13 SURETY BONDS. In case the Board of Directors shall so
require, any officer or agent of the Corporation shall execute to the
Corporation a bond in such sums and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his duties to
the Corporation, including responsibility for negligence and for the accounting
for all property, monies or securities of the Corporation which may come into
his hands.
ARTICLE V
Committees
SECTION 5.1 EXECUTIVE COMMITTEE. The Board of Directors may appoint
from among its members an Executive Committee of not less than two nor more than
seven members, one of whom shall be the President, and shall designate one or
more of its members as alternates to serve as a member or members of the
Executive Committee in the absence of a regular member or members. The Board of
Directors reserves to itself alone the power to declare dividends, issue stock,
recommend to shareholders any action requiring their approval, change the
membership of any committee at any time, fill vacancies therein, and discharge
any committee either with or without cause at any time. Subject to the
foregoing limitations, the Executive Committee shall possess and exercise all
other powers of the Board of Directors during he intervals between meetings.
-8-
<PAGE>
SECTION 5.2 OTHER COMMITTEES. The Board of Directors may also appoint
from among its own members such other committees as the Board may determine,
which shall in each case consist of not less than two directors, and which shall
have such powers and duties as shall from time to time be prescribed by the
Board. The President shall be a member ex officio of each committee appointed
by the Board of Directors. A majority of the members of any committee may fix
its rules of procedure.
ARTICLE VI
Contracts, Loans, Checks and Deposits
SECTION 6.1 CONTRACTS. The Board of Directors may authorize any
officer or officers, agents or agent, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 6.2 LOANS. No loan or advances shall be contracted on behalf
of the Corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated or transferred as security
for the payment of any loan, advance, indebtedness or liability of the
Corporation unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
SECTION 6.3 DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select, or as may be selected by any officer or agent authorized to do so by
the Board of Directors.
SECTION 6.4 CHECKS AND DRAFTS. All notes, drafts, acceptances,
checks, endorsements and evidences of indebtedness of the Corporation shall be
signed by such officer or officers or such agent or agents of the Corporation
and in such manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the Corporation in any of its duly
authorized depositories shall be made in such manner as the Board of Directors
from time to time may determine.
SECTION 6.5 BONDS AND DEBENTURES. Every bond or debenture issued by
the Corporation shall be evidenced by an appropriate instrument which shall be
signed by the President or a Vice President and by the Treasurer or by the
Secretary, and sealed with the seal of the Corporation. The seal may be
facsimile, engraved or printed. Where such bond or debenture is authenticated
with the manual signature of an authorized officer
-9-
<PAGE>
of the Corporation or other trustee designated by the indenture of trust or
other agreement under which such security is issued, the signature of any of the
Corporation's officers named thereon may be facsimile. In case any officer who
signed, or whose facsimile signature has been used on any such bond or
debenture, shall cease to be an officer of the Corporation for any reason before
the same has been delivered by the Corporation, such bond or debenture may
nevertheless be adopted by the Corporation and issued and delivered as though
the person who signed it or whose facsimile signature has been used thereon had
not ceased to be such officer.
ARTICLE VII
Capital Stock
SECTION 7.1 CERTIFICATE OF SHARE. The shares of the Corporation shall
be represented by certificates prepared by the Board of Directors and signed by
the President or the Vice President, and by the Secretary, or an Assistant
Secretary, and sealed with the seal of,the Corporation or a facsimile. The
signatures of such officers upon a certificate may be facsimiles if the
certificate is countersigned by a transfer agent or registered by a registrar
other than the Corporation itself or one of its employees. All certificates for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be cancelled and no new certificate shall be issued until the
former certificate for a like number of shares shall have been surrendered and
cancelled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefore upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
SECTION 7.2 TRANSFER OF SHARES. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares. The
person in whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.
SECTION 7.3 TRANSFER AGENT AND REGISTRAR. The Board of Directors
shall have power to appoint one or more transfer agents and registrars for the
transfer and registration of certificates of stock of any class, and may require
that stock certificates
-10-
<PAGE>
shall be countersigned and registered by one or more of such transfer agents and
registrars.
SECTION 7.4 LOST OR DESTROYED CERTIFICATES. The Corporation may issue
a new certificate to replace any certificate theretofore issued by it alleged to
have been lost or destroyed. The Board of Directors may require the owner of
such a certificate or his legal representatives to give the Corporation a bond
in such sum and with such sureties as the Board of Directors may direct to
indemnify the Corporation and its transfer agents and registrars, if any,
against claims that may be made on account of the issuance of such new
certificates. A new certificate may be issued without requiring any bond.
SECTION 7.5 CONSIDERATION FOR SHARES. The capital stock of the
Corporation shall be issued for such consideration, but not less than the par
value thereof, as shall be fixed from time to time by the Board of Directors.
In the absence of fraud, the determination of the Board of Directors as to the
value of any property or services received in full or partial payment of shares
shall be conclusive.
SECTION 7.6 REGISTERED SHAREHOLDERS. The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder thereof in fact, and shall not be bound to recognize any equitable or
other claim to or on behalf of the Corporation, any and all of the rights and
powers incident to the ownership of such stock at any such meeting, and shall
have power and authority to execute and deliver proxies and consents on behalf
of the Corporation in connection with the exercise by the Corporation of the
rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any other person or
persons.
ARTICLE VIII
Indemnification
SECTION 8.1 INDEMNIFICATION. No officer or director shall be
personally liable for any obligations arising out of any acts or conduct of said
officer or director performed for or on behalf of the Corporation. The
Corporation shall and does hereby indemnify and hold harmless each person and
his heirs and administrators who shall serve at any time hereafter as a director
or officer of the Corporation from and against any and all claims, judgments and
liabilities to which such persons shall become subject by reason of his having
heretofore or hereafter been a director or officer of the Corporation, or by
reason of any action alleged to have been heretofore or hereafter taken or
omitted to have been taken by him as such director or officer, and shall
reimburse each such person for all legal and other expenses reasonably incurred
by him in connection with any such
-11-
<PAGE>
claim or liability; including power to defend such person from all suits as
provided for under the provisions of the Utah Business Corporation Act;
provided, however that no such person shall be indemnified against, or be
reimbursed for, any expense incurred in connection with any claim or liability
arising out of his own negligence or willful misconduct. The rights accruing to
any person under the foregoing provisions of this section shall not exclude any
other right to which he may lawfully be entitled, nor shall anything herein
contained restrict the right of the Corporation to indemnify or reimburse such
person in any proper case, even though not specifically herein provided for.
The Corporation, its directors, officers, employees and agents shall be fully
protected in taking any action or making any payment or in refusing so to do in
reliance upon the advice of counsel.
SECTION 8.2 OTHER INDEMNIFICATION. The indemnification herein
provided shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any Bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of such a person.
SECTION 8.3 INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer or employee
of the Corporation, or is or was serving at the request of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against liability under the provisions of this Article VIII or of subsection
(o) of Section 16-10-4 of the Utah Business Corporation Act.
SECTION 8.4 SETTLEMENT BY CORPORATION. The right of any person to be
indemnified shall be subject always to the right of the Corporation by its Board
of Directors, in lieu of such indemnity, to settle any such claim, action, suit
or proceeding at the expense of the Corporation by the payment of the amount of
such settlement and the costs and expenses incurred in connection therewith.
ARTICLE IX
Waiver of Notice
Whenever any notice is required to be given to any shareholder or
director of the Corporation under the provisions of these Bylaws or under the
provisions of the Articles of Incorporation or under the provisions of the Utah
Business
-12-
<PAGE>
Corporation Act, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall
be deemed equivalent to the giving of such notice. Attendance at any meeting
shall constitute a waiver of notice of such meetings, except where attendance is
for the express purpose of objecting to the legality of that meeting.
ARTICLE X
Amendments
These Bylaws may be altered, amended, repealed, or added to by the
affirmative vote of the holders of a majority of the shares entitled to vote in
the election of any director at an annual meeting or at a special meeting called
for that purpose, provided that a written notice shall have been sent to each
shareholder of record entitled to vote at such meetings at least ten days before
the date of such annual or special meeting, which notice shall state the
alterations, amendments, additions, or changes which are proposed to be made in
such Bylaws. Only such changes shall be made as have been specified in the
notice. The Bylaws may also be altered, amended, repealed, or new Bylaws
adopted by a majority of the entire Board of Directors at any regular or special
meeting. Any Bylaws adopted by the Board may be altered, amended, or repealed
by a majority of the shareholders entitled to vote.
ARTICLE XI
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
ARTICLE XII
Dividends
The Board of Directors may at any regular or special meeting, as they
deem advisable, declare dividends payable out of the surplus of the Corporation.
ARTICLE XIII
Corporate Seal
The seal of the Corporation shall be in the form of a circle and shall
bear the name of the Corporation and the state of incorporation.
Adopted by resolution of the Board of Directors the
21st day of March, 1983.
-13-
<PAGE>
Exhibit 6.5
FURTHER MODIFICATION AGREEMENT
AGREEMENT made this 5th day of July, l996, by and between LEASING
TECHNOLOGY, INC. and GOLF VENTURES, INC. (hereinafter "Borrower") and KARL F.
STUCKI, MARCIA C. STUCKI, as Trustees of the Karl F. Stucki and Marcia C. Stucki
Revocable Trust, and KARL F. STUCKI and MARCIA C. as Trustees of the Karl F.
and Marcia C. Stucki Income Trust (a C.R.T. dated July 1, 1988) (hereinafter
"Lender").
R E C I T A L S:
1. The parties have previously entered into a series of Agreements wherein
the Borrower is purchasing certain property generally known as Stucki Farms
located in Washington, Utah. The obligations set forth in a certain Trust Deed
Note dated March 30, 1990 in the original amount of $959,000 and a recourse
obligation in the original amount of $l,906,000, plus interest, costs and
attorney's fees, as set forth in that certain Further Amendment to Option
Agreement dated March 30, l990 (hereinafter collectively referred to as the
"Purchase Contract and Note"). The parties understand that the total obligation
is currently $2,385,375 as of April 30, l996.
2. The parties desire to enter into a Further Modification Agreement to
provide for the payment of the obligations now due under the Purchase Contract
and Note, all on the terms and conditions hereinafter set forth.
3. The parties acknowledge that Golf Ventures, Inc. has been assigned the
rights of Leasing Technology, Inc. by Assignment of even date, and Golf
Ventures is therefore the buying party to the transaction.
NOW, THEREFORE, in consideration of the mutual covenants made herein, the
parties agree as follows:
1. The parties acknowledge that the balance owed on the Purchase Contract
and Note as of April 30, 1996, is $2,385,375. Said contract bears interest at
the rate of 10% per annum from that date.
2. The parties agree to extend the repayment terms on the overall
agreement to the following:
<PAGE>
a) $75,000 in cash shall be paid upon the execution of this
Agreement.
b) The balance of the contract shall be paid $25,000 per month
commencing on June 15, 1996, with the same amount paid on the 15th day of
each month thereafter, until May 15, 1998, at which time the entire
contract balance, including all principal and interest, shall be due and
payable.
3. The parties acknowledge that the Borrower has a plan to develop an 18-
hole golf course and first phase of the Red Hawk project, including
approximately 114 dwelling sites, as generally set forth in the map attached
hereto as Exhibit A. This property contains approximately 200 acres (subject to
exact survey to be provided by Borrower).
4. The parties agree that during the balance of the term of this contract,
the Borrower, at Borrower's option, may choose to obtain a partial reconveyance
of the Trust Deed securing the Purchase Agreement and Note for the payment of
$6,500 per acre for all, or any portion of the approximate 200 acres referred to
above. The precise final payment shall be determined by accurate survey of the
acreage by a qualified registered surveyor selected by Borrower, but shall
include the golf course and Phase I of Red Hawk. Upon payment of the $6,500 per
acre, the same shall be credited against the obligation of this contract, and
the said property shall be reconveyed.
5. In determining the final legal description of the leased premises, the
parties agree that accesses to the balance of Lender's secured property shall be
reserved for the benefit of any remaining property upon which the Lender has
security. In the event of such reserved accesses, and further in the event that
the Borrower desires to dedicate such accesses to the public, Lender agrees to
join in the dedication of such easements to the public.
6. The ability of Borrower to proceed with the agreement to release
property in paragraph 4 above, shall be dependent upon providing proof,
sufficient in the discretion of lender and Lender's counsel that Borrower is
proceeding with the development of the construction of the golf course and
offsite sewer with adequate evidence of the ability to complete these items.
-2-
<PAGE>
7. In all other respects, the parties affirm their prior agreements.
DATED this 5th day of July, l996.
LEASING TECHNOLOGY, INC.
By:/s/ George Badger
-----------------------------
Its:President
-----------------------------
KARL F. STUCKI and MARCIA C. STUCKI
REVOCABLE TRUST
By:/s/ Karl F. Stucki
-----------------------------
Karl F. Stucki, Trustee
By:
-----------------------------
Marcia C. Stucki, Trustee
KARL F. AND MARCIA C. STUCKI INCOME
TRUST (a C.R.T. dated July 1, 1988)
By:/s/ Karl F. Stucki
-----------------------------
Karl F. Stucki, Trustee
By:
-----------------------------
Marcia C. Stucki, Trustee
STATE OF UTAH )
) ss.
COUNTY OF WASHINGTON )
On the _____ day of ______________, l996, personally appeared before me
Karl F. Stucki and Marcia C. Stucki, Trustees of the Karl F. and Marcia C.
Stucki Income Trust (a C.R.T., dated July l, l988), the signers of the foregoing
document, who acknowledged to me that they executed the same, for and on behalf
of the trust.
-----------------------------
Notary Public
-3-
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
On the 5th day of July, l996, personally appeared before me George Badger,
President of Leasing Technology, Inc., the signer of the foregoing document, who
acknowledged to me that he executed the same pursuant to authority of the Board
of Directors of Leasing Technology, Inc..
Lynette Loveland
----------------------------
Notary Public
STATE OF UTAH )
) ss.
COUNTY OF WASHINGTON )
On the _____ day of ______________, l996, personally appeared before me
Karl F. Stucki and Marcia C. Stucki, Trustees of the Karl F. Stucki and Marcia
C. Stucki Revocable Trust, the signer of the foregoing document, who
acknowledged to me that they executed the same, for and on behalf of the trust.
----------------------------
Notary Public
-4-
<PAGE>
Exhibit 6.6
ASSIGNMENT OF CONTRACT AND
ASSUMPTION OF OBLIGATIONS
LEASING TECHNOLOGY, INC., Buyer under those certain agreements denominated
as Further Modification dated July 5, 1996 between itself and KARL F. STUCKI and
MARCIA C. STUCKI, Trustees of the Karl F. and Marcia C. Stucki Income Trust (a
C.R.T. dated July 1, 1988), and also Trustees of the Karl and Marcia Stucki
Revocable Trust under Agreement dated May 29, 1991, hereby assigns to GOLF
VENTURES, INC. (a partially owned subsidiary of Leasing Technology, Inc.), all
their right, title and interest to that certain Option Contract dated November
30, 1989, as modified by Further Amendment to Option Agreement dated March 30,
1990, subject to the released Trust Deeds and Notes dated March 30, 1990 and
released Agreements (the "Agreements"), which Assignment is made subject to Golf
Ventures, Inc.'s express agreement to assume all obligations associated with the
said contracts. In so making this Assignment, the parties agree as follows:
1. This Assignment is hereby approved by the Sellers of the property
as evidenced by their signatures below.
2. Golf Ventures, Inc. hereby agrees to assume any and all
obligations associated with the Agreements, and Leasing Technology, Inc.
acknowledges that they have previously conveyed the subject property to Golf
Ventures, Inc.
3. Leasing Technology, Inc. shall continue to be liable as a
principal on the original agreements.
DATED this 5th day of July, 1996.
LEASING TECHNOLOGY, INC.
By:/s/ George Badger
---------------------------------
Its:President
--------------------------------
GOLF VENTURES, INC.
By:/s/ Stephen B. Spencer
---------------------------------
Its:Secretary/Treasurer
--------------------------------
<PAGE>
KARL F. AND MARCIA C. STUCKI INCOME
TRUST (a C.R.T. dated July 1, 1988)
/s/ Karl F. Stucki
-----------------------------
Karl F. Stucki, Trustee
--------------------------------
Marcia C. Stucki, Trustee
KARL AND MARCIA STUCKI REVOCABLE
TRUST dated May 29, 1991
/s/ Karl F. Stucki
-----------------------
Karl F. Stucki, Trustee
--------------------------------
Marcia C. Stucki, Trustee
STATE OF UTAH )
) SS.
COUNTY OF SALT LAKE )
On the 5th day of July, 1996, personally appeared before me George Badger,
the President of Leasing Technology, Inc., the signer of the foregoing document,
who acknowledged to me that he executed the same pursuant to authority of the
Board of Directors of Leasing Technology, Inc.
/s/ Lynette Loveland
--------------------------------
Notary Public
2
<PAGE>
Exhibit 6.8
ADDENDUM TO SALES AGREEMENT
THIS ADDENDUM TO SALES AGREEMENT (hereinafter the "Addendum") is made
and entered into as of the 30th day of June, 1994, by and between PROPERTY
ALLIANCE, INC., a Utah corporation (hereinafter "Seller"); and GOLF VENTURES,
INC., a Utah corporation (hereinafter "Golf Ventures") and LEASING TECHNOLOGY
INCORPORATED, a Utah corporation (hereinafter "LTI"), jointly referred to as
"Buyers"; and is intended to become a part of the Sales Agreement dated
September 3, 1991 by and between Seller and LTI.
It is hereby acknowledged that the Sales Agreement has been assigned
by LTI to Golf Ventures as per an agreement dated December 28, 1992.
The parties hereby agree that in consideration of Seller allowing
Buyers to delay payments required under Section 2(g)(1)(C) of the Sales
Agreement of the sum of $120,000 per year commencing February 1, 1992 and
continuing each year thereafter on the same date with the remaining balance to
be paid by 1997, Buyers agree to pay Seller under Section 2(g)(1)(B) of the
Sales Agreement the sum of $5,000 instead of $2,000 from each sale of a Red Hawk
lot. Buyers further agree to pay Seller $175,000.00 from the first $1,000,000
of financing proceeds that Golf Ventures secures for development of the Red Hawk
Country Club project.
Therefore, it is hereby agreed to by the parties hereto that Section
2(g) of the aforementioned Acquisition Agreement is amended to read as follows:
Section 2(g)(1)(B) is amended to read as follows:
"5,000 from each sale of a Red Hawk (project being developed by
BUYER in Washington City) lot will be deposited into the
Account";
Section 2(g)(1)(C) is amended to read as follows:
"Commencing February 1, 1992, and continuing each year thereafter
on the same date with the remaining
Page 1 of 2
<PAGE>
balance to be paid by 1997, BUYER will commit to deposit into the
Account $120,000 from sources other than Paragraph 2(g)(1), 2(g)
(1)(A), or 2(g)(1)(B), with the provision that BUYER will have
until July 31, 1995 to make the first four deposits totaling
$480,000 into the Account. BUYER further agrees that it will pay
into the Account to be applied towards the satisfaction of this
$480,000 amount, the sum of $150,000 from the first $1,000,000 of
financing proceeds that Golf Ventures secures for development of
the Red Hawk Country Club project."
It is further agreed to by the parties hereto that all other
provisions, terms and conditions of the Sales Agreement shall remain in full
force and effect and shall not be altered or amended by the provisions of this
Addendum or otherwise.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Addendum to Acquisition Agreement in a manner legally binding upon them as
of the date first above written.
"Seller"
"PROPERTY ALLIANCE, INC."
ATTEST:
By/s/
----------------------- ----------------------------
Its: Vice President Secretary
"Buyers"
"Golf Ventures"
GOLF VENTURES, INC.
ATTEST:
By:/s/Duane H. Marchant /s/ Stephen B. Spencer
----------------------- ----------------------------
Its: President Secretary
"LTI"
LEASING TECHNOLOGY INCORPORATED
ATTEST:
By:/s/ George Badger /s/ Stephen B. Spencer
----------------------- ----------------------------
Its: President Secretary
Page 2 of 2
<PAGE>
Exhibit 6.10
BEAR RIVER CONTRACTORS Office: 4130 South 1630 East
ST. GEORGE, UTAH
HEAVY & HIGHWAY CONSTRUCTION Mall: P.O. Box 2680
St. George, Utah 84790
Phone: (801) 673-7774
Fax: (801) 673-7776
Proposal No.
------------------
Offer Date 6/06/96
--------------------
Project: Red Hawk Golf Course and Subdivision Phase I
Location: Washington City, Utah
Description: Construction & Construction Management
JOB SPECIFICATIONS: PRICE: (if unit prices, units will be measured upon
completion and invoiced at these rates):
Cost to construct and manage the referenced project --- $6,897,227.00
Description of work, pricing, and payment terms are attached:
Attachment "A"
Full and complete description of the contractual payment terms.
THIS QUOTATION IS SUBJECT TO ALL THE TERMS AND CONDITIONS LISTED ON THE
REVERSE SIDE HEREOF, WHICH TERMS AND CONDITIONS ARE INCORPORATED HEREIN BY
REFERENCE:
TERMS OF PAYMENT: Purchaser agrees to pay to seller the full quoted
or adjusted price for the work herein specified. Seller may invoice
purchaser monthly for work completed and each invoice shall be paid
within thirty (30) days from date of invoice. Unpaid invoice amounts
become delinquent thirty (30) days from date thereof and shall accrue
interest and be payable on delinquent amounts at the rate of 1.5% per
month which is an annual percentage rate of 18.0%. The purchaser
agrees to pay all costs of collecting past due accounts, including a
reasonable attorney's fee, whether or not suit is brought. Further,
should this contract be litigated, for any reason, it is agreed that
the laws of the State where the work is performed shall be used to
construe this contract.
BEAR RIVER CONTRACTORS
By:/s/ James H. Roberts 6/11/96
--------------------------------------
James H. Roberts President
ACCEPTANCE
The undersigned hereby accepts this proposal including
all items and conditions thereof.
Accepted By Duane H. Marchant
--------------------------
Date 10 June 96 Title CEO
---------- ---------------------------
For Golf Ventures Inc.
----------------------------
(Company Name)
<PAGE>
BEAR RIVER CONTRACTORS
General office - Evanston, Wyoming
MUNICIPAL & HIGHWAY CONSTRUCTION
ATTACHMENT "A"
Duane Marchant
Golf Ventures, Inc.
102 West 500 South, Suite 400
Salt Lake City, UT 84101
June 6, 1996
Re: Red Hawk Subdivision and Golf Course
Dear Duane;
We are pleased to present you with the following quotation for construction and
management of the Red Hawk Golf Course and Subdivision. We are submitting this
proposal in two schedules. Schedule I is a firm unit price quotation for work
to be performed by Bear River Contractors. Schedule II includes budgetary
prices for items of work not usually performed by Bear River Contractors or
items of work that can not be easily defined at this time. Schedule II also
includes the Construction Management Fee proposed by Bear River Contractors.
Schedule I - CONSTRUCTION SERVICES
This schedule includes work items to be performed by Bear River Contractors.
Attached please find a unit price schedule, and a scope and conditions narrative
of the unit prices. This package has been fully analyzed by Bear River
Contractors and represents our firm proposal for the work outlined. Bear River
Contractors is prepared to have these prices and conditions bound into a
contractual arrangement.
We will provide labor, equipment and materials to construct the items quoted.
The owner will be required to provide engineering, surveying, inspection, and
testing. The quantities used to estimate the construction costs are based upon
preliminary drawings prepared by Bush and Gudgell Engineering, a bid packet
prepared by Gene Bates Golf Design, and assumptions made regarding materials.
Since the drawings used for this quotation are only preliminary, we will need
the opportunity to reevaluate our prices based upon review of the final
construction documents. Unit prices are quoted, and quantities are subject to
change pending review of the final construction documents. Prices do not
include bonding.
SCHEDULE II - CONSTRUCTION MANAGEMENT
This schedule is strictly budgetary. The prices shown are derived from the best
information we have to date, and for the most part have been provided to us by
Golf Ventures Inc. We will provide an experienced construction manager, who is
familiar with projects of similar size and character. The construction manager
will be responsible for the bidding and contracting of subcontractors to perform
the construction. He will also coordinate the activities of Bear River
Contractors work outlined in Schedule I, the other subcontractors, suppliers,
utility companies, and the construction schedule. Acting as the owner's
representative, he will be able to insure that the owner's best interest is
maintained throughout the project. For this service Bear River
<PAGE>
Contractors will require a fee of 9% of the total revenues, this is broken out
into 5% management fee and 4% overhead expenses.
Every effort has been made to present the lowest prices possible, and provide an
aggressive schedule to have lots available for sale this year. With the
resources we have available, construction of the subdivision and golf course
will be done simultaneously. You can expect completion of the project in
approximately six months time.
Please review the enclosed documents: 1.) Summary of Construction Costs; 12.)
Estimate of Construction Costs: Red Hawk Subdivision, Phase I; 3.) Estimate of
Construction Costs: Red Hawk Golf Course. Once you have had time to become
familiar with them, we will be happy to discuss any questions you may have.
Sincerely,
/s/ John M. Burggraf
- --------------------
John M. Burggraf
Vice-president
cc: Scott Wolcott, Granite Construction
Mike Pack, Granite Construction
-2-
<PAGE>
ATTACHMENT "B"
1. Upon completion of signing the contract, but prior to beginning any
construction work on the project, GVI agrees to issue 136,093 shares of its
preferred stock, which GVI guarantees will be either redeemed and/or
converted into common shares that will be sold on or before October 30,
1996 for not less than five dollars ($5.00) per share or $680,465.00 net to
GCI. The $680,465.00 was calculated as follows:
A. Construction Management fee of nine percent for the total contract
value of schedules one and two:
$6,327,915.00 @ 9% = $569,312.00
B. BRC contractual items included in schedule one. Three percent of the
total value of schedule one:
$3,705,000.00 @ 3% = $111,150.00
TOTAL: $680,462.00 (rounded to nearest whole share)
Any changes to the value of either schedule one or schedule two for either
the construction management fee or the three percent on BRC work will be
paid in cash or credited to GVI as determined in the contract.
2. This contract is subject to GCI accepting a certificate of deposit from an
approved institution in the amount of $1.5 million to secure the first
payments as set forth in the contract, the above issued shares of GVI
stock, and GVI & GCI mutually agreeing on the number of cubic yards of
earth to be moved.
GCI will not start any construction activities until the above is
acceptable to GCI. If we are unable to come to terms on the above, the
contract will become null and void, and GCI will be reimbursed for any
expenditures to be pre-approved by GVI from the date of signing the
contract.
3. GCI may cease work and will be compensated on blue book standby rates if
payments are not paid per the contract.
4. GVI, upon GCI construction manager's approval, will pay all subcontractors
within schedule two directly and within any agreed upon contractual
agreements made.
-3-
<PAGE>
Summary of Construction Costs
RED HAWK GOLF COURSE AND SUBDIVISION, PHASE I
SCHEDULE I - BRC CONTRACTUAL ITEMS
SUBDIVISION, PHASE I
Mobilization $ 24,230.83
Excavation and Grading $ 395,696.77
Sewer System (On Site) $ 414,819.00
Water System (On Site) $ 216,790.00
Storm Drain System $ 36,290.00
Roads and Paving $ 378,490.40
Site Concrete $ 420,083.00
------------
$1,886,400.00
GOLF COURSE
Bear River Contractors Work Items
Mobilization $ 0.00
Clear and Grub $ 74,400.00
Remove and Stockpile Top Soil $ 125,800.00
Mass Excavation $ 963,489.25
Concrete Cart Paths $ 475,500.00
Cart Path Tunnel $ 161,770.75
Concrete Bridges $ 17,640.00
------------
$1,818,600.00
TOTAL SCHEDULE I
$3,705,000.00
Unit prices are quoted as outlined in the Estimate of Construction Costs. Bear
River Contractors reserves the right to review final construction documents for
changes from preliminary design Changes that effect the quoted prices will be
negotiated. Prices quoted do not include bonding, engineering, survey, layout,
testing, or inspection. Note the exclusion of gas and electric.
SCHEDULE II - BUDGETARY ITEMS
GOLF COURSE SUBCONTRACTOR ITEMS
Mobilization $ 11,000.00
Features Construction $ 384,556.00
Golf Course Drainage $ 105,130.00
Engineered Drainage System $ 25,000.00
Irrigation $ 775,000.00
Seedbed Preparation $ 89,125.00
Grassing $ 210,104.00
Bulkheading/Rock Wall $ 19,000.00
Lakes $ 250,000.00
Front Entrance $ 255,000.00
Extra Hole Along Villas $ 100,000.00
Waterfall $ 45,000.00
------------
$2,268,915.00
-4-
<PAGE>
Summary of Construction Costs
RED HAWK GOLF COURSE AND SUBDIVISION, PHASE I
SCHEDULE II - BUDGETARY ITEMS (CONTINUED)
UTILITIES, SURVEYING & MATERIALS TESTING
Electrical Services $ 253,000.00
Natural Gas $ 11,000.00
Survey & Layout $ 70,000.00
Materials Testing & Inspection $ 20,000.00
------------
354,000.00
TOTAL SCHEDULE II $2,622,915.00
TOTAL SCHEDULES I & II $6,327,915.00
CONSTRUCTION MANAGEMENT FEE $ 569,312.00
(9% of Revenue)
TOTAL PROJECT $6,897,227.00
General Notes;
1) All costs for all preliminary and final engineering design to be borne
by owner.
2) Water for dust control and construction purposes to be provided by the
owner at no cost.
3) It is the intention of both parties to enter into subsequent contracts
wherein Bear River Contractors will construct and manage all future
phases and additions to the Red Hawk project.
-5-
<PAGE>
Exhibit 12
JONES, JENSEN & COMPANY
Certified Public Accountants
CONSENT OF INDEPENDENT AUDITORS'
Board of Directors
Golf Ventures, Inc.
102 West 500 South, Suite 400
Salt Lake City, Utah 84101
We consent to the use in this Registration Statement of Golf Ventures, Inc. on
Form 10-SB, of our report dated May 30, 1996, of Golf Ventures, Inc.f or the
year ended March 31, 1996, which is part of this Registration Statement, and to
all references to our firm included in this Registration Statement.
Jones, Jensen & Company
/s/ Jones, Jensen & Company
- ----------------------------
Salt Lake City, Utah
September 4, 1996
