U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended
December 31, 1996.
Commission file number: 0-18565
SEMPER RESOURCES CORPORATION
(Name of small business issuer in its Charter)
Nevada 93-0947570
(State or other jurisdiction (IRS Employer
of incorporation) Identification Number)
340 East Warm Springs Road, Suite 1A
Las Vegas, Nevada 89119
(Address of Principal Executive Offices)
Registrant's Telephone Number: (702) 260-4900
RESOURCES OF THE PACIFIC CORPORATION
-----------------------------------------
(Former Name of the Registrant)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------
Title of Class
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the
past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes: No: X
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form, 10-KSB or any
amendment to this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year: $0
The number of shares of Common Stock outstanding as of November 30,
1997 was 25,413,600. As of such date, the aggregate market value
of the voting stock of the registrant held by non-affiliates was
approximately $1,500,000 based on the average high and low bid
prices for such common stock as reported on the NASD Bulletin
Board.
DOCUMENTS INCORPORATED BY REFERENCE
No annual reports to security holders, proxy or information
statements, or prospectus filed pursuant to Rule 424(b)or (c) are
incorporated by reference in this report.
Transitional Small Business Disclosure Format (Check One):
Yes No X
----- -----
<PAGE>
PART I.
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Resources of the Pacific Corporation (the "Company") was organized
under the laws of the State of Nevada in April of 1987, under the
name "10 Minute Pit Stop USA, Inc." The Company was formed for the
purpose of acquiring and operating automotive oil change service
centers. On April 30, 1987, the Company merged with Value Funding
Corporation, a publicly-owned corporation that owned a chain of oil
change and lubrication centers. In 1990, the Company changed its
name to Pit Stop Auto Centers, Inc.
From inception through late 1991, the Company and its various
subsidiaries operated automotive oil change, lubrication and fluid
maintenance service centers in Phoenix, Oklahoma City and various
locations in Texas. On December 31, 1991, the Company sold all of
its properties, inventories and other assets used in the operation
of its service centers and ceased to operate in the automotive
service center business. Since the sale of its assets and
discontinuance of its automotive service business in December of
1991, the Company's operations have been limited to efforts in
identify and acquire an operating business.
Pursuant to its efforts to acquire an operating business, on
September 7, 1995 the Company entered into an Acquisition Agreement
(the "Acquisition") with Resources of the Pacific, Inc. ("ROP")
pursuant to which:
(1) The Company acquired all of the issued and outstanding
shares of ROP in exchange for the issuance of 22,219,000
shares of common stock of the Company;
(2) The Articles of Incorporation of the Company were amended
by effecting a reverse split of the common stock on a
ratio of one for twenty; and
(3) The Company changed its name to "Resources of the Pacific
Corporation."
Following the Acquisition, on October 7, 1995 the Company acquired
from Resources of the Pacific Ltd. ("ROP Ltd"), a subsidiary of
ROP, all of its rights, title and interest in certain joint venture
timber concessions (the "Timber Rights") for the development of
timber located in Fiji (the "Timber Acquisition") in exchange for
1,350,000 shares of the Company's common stock and ROP divested its
entire interest in ROP Ltd.
Semper intends to operate as an active timberland manager, while
seeking competitively higher returns on investment as a producer of
hardwoods. The Company believes it is good business to be proactive
in maintaining the environmental integrity and sustain ability of
the timberlands under its control. It is intended that the
concessions that Semper Resources acquire will utilize selective
cutting and reforestation techniques.
Semper's strategic objective is to start with the acquisition of
undeveloped or under-developed hardwood timber concessions.
Although it is not adverse to exploring softwood timber concessions
in countries where the Company already has a presence, Semper has
targeted a segment of the lumber market which currently has
significant shortage of high quality tropical hardwood timber.
Tropical hardwoods typically have higher margins than the highly
competitive and larger softwood segment.
The Company intends to utilize joint venture concepts
wherever possible in which the timber on the stump is the partner
contribution to the venture. This approach provides for the
partnering with the landowner in selective harvesting of timber and
sharing operating margin with the landowner, or procuring raw material
at favorable allocations or price. Such is the structure of
the Romanian Joint Venture and for the Fijian concessions.
The Brazilian acquisition is an outright purchase of
the land utilizing mostly Company shares for the first phase
purchase; however, the exercise of the three options call for
significant amounts of cash. For the Philippines, timber
contributing joint ventures, land purchase, and log purchase
methods will be utilized.
Eventually Semper would like to develop into a vertically
integrated hardwood supplier.
Romania
The Company has just entered into a Joint Venture Agreement with
S.C. ARM S.A. ("ARM") , a Romanian corporation, to form a new
Romanian corporate subsidiary of the Company ("New Corp."). ARM
agrees to supply New Corp. with at least 10,000 m3 per month of
green rough sawn timber within 6 months after Closing. The
Agreement calls for the Company to assist New Corp. in obtaining
financing and procurement of kiln equipment in the drying and
remanufacturing of green sawn timber for distribution domestically
and internationally. The Company would be granted an 80% stock
interest in New Corp. and ARM a 20% stock interest. ARM is to
receive a quarterly payment of 20% of earnings before taxes
("EBITDA"). ARM agrees to supply such timber at the lowest most
favorable price. The Company has the First Right of Refusal to
purchase all of ARM's timber and wood products operations as well
as its interests in timber logging and milling concessions, and its
20% interest in New Corp. As additional consideration, the Company
agreed to issue at Closing 500,000 five (5) year Warrants of the
Company at the exercise price of $2.00 per share. The Agreement is
subject to the Company's due diligence.
New Corp. which would be chartered to be a timber products
manufacturing and marketing company with its Romanian partner, S.C.
ARM S.A. ("ARM") which holds a 20% minority interest. ARM owns
interests in certain timber operators which log and produce
primarily pine and beech green rough sawn timber.
New Corp. will be responsible for the procurements of kiln
equipment, semi-finished and finishing equipment for use by the new
subsidiary in its drying and remanufacturing of green sawn timber.
The Romanian operation intends to procure logging and mill
equipment for lease to ARM's timber concession operators. New
Corp. will response for advancing deposit money to RAMSILVA, the
Romanian forestry department, for semi-annual cutting allowances to
ensure and capture sources of supply.
ARM will be required to provide rough sawn timber equal to the
Company's annual kiln capacity. ARM agrees to supply at least
10,000 m3 per month by the sixth month after start up from three of
its timber concession joint ventures. The Company's Romanian
subsidiary shall have the first right of refusal on future timber
project development and opportunities developed by ARM.
Germany and Egypt are the main buyers of Romanian pine and beech.
The Company intends to market to these established markets as well
as to others which have expressed interest in these woods as
additional capacity is developed. The Company's Romanian plans
center on assisting existing concessionaires in increasing logging
and rough milling capacity as well as increasing kiln and value
added manufacturing in the Romanian subsidiary to match. The
Company intends to reach 500,000 m3 per year within three to five
years.
Romania is a country about the size of the state of Oregon and
which is approximately one third forests. The government is active
in auctioning cutting rights and is responsible for after logging
site clean up and reforestation in order to ensure perpetual
regrowth of the country's forests.
FIJI
The Company's Fiji project was to be a series of nine initial joint
venture timber concessions (approximately 40,000 acres) in which
nine tribes of indigenous people contribute the standing timber to
be selectively harvested after the Company pays some governmental
fees. The tribes would be paid a percentage of the after milling
net profit. Other opportunities that the Company has could
generate positive cash flow and profits sooner and in a greater
magnitude. Therefore this project will not likely receive attention
until sometime in 1998.
BRAZIL
Semper Resources consistent with its long term strategy to
horizontally develop hardwood timber properties has sought and
found timber properties in Brazil. In November, 1996 the Company
reached an agreement to purchase approximately 454,000 acres of
timberland in the State of Amazonas. The transaction includes
options to acquire up to 6.6 million additional acres and mill
facilities in other Brazilian states.
Upon successful acquisition, of which there is no assurance, the
Company intends to selectively harvest tropical hardwoods from the
initial acreage. Plans call for the acquisition of two sawmills,
kiln and power generation facilities to produce rough sawn lumber
for distribution into US and European markets. A determination to
add value-added manufacturing, veneering or pulp operations will be
made at a later date after consideration of market and logistic
conditions and other Company acquisition plans.
This project will require extended due diligence, operations and
infrastructure planning and environmental permitting and license
verification during 1998 in order to determine the extent of which
or all of the available options are appropriate. Management feels
that there will be little, if any, impact upon results or cash
utilization during 1998. This project should require a separate
financing depending upon the scope of properties acquired under the
various options.
PHILIPPINES
The Company has entered into a letter of intent to acquire certain
hardwood timber concessions, timberlands and mills in the
Philippines. As the operating and market aspects of the Philippine
transaction could produce near term positive cash flow, the Company
decided to aggressively pursue the Philippine opportunity in the
near term and put the Fijian and Brazilian projects into Phase Two
(late 1998) subject to financing and other risk factors previously
described. The Company may explore opportunities to sell its
position or enter into joint venture arrangements with its Fijian
and Brazilian projects.
In 1993, President Ramos of the Philippines awarded to the
indigenous peoples native lands which contain various natural
resources including original and regrowth hardwood timber. The
concept was to allow native Filipinos the right to use natural
resources and agricultural land to develop self sufficient business
enterprises providing income for infrastructure development,
medical and health services, education funding and wealth
development.
SRCR has entered into a Letter of Intent to acquire certain timber
interests controlled by Bentley House International Corporation ("BHIC").
Philippine Sales and Marketing
Due to the inability of domestic mills in the Philippines to supply
the growing domestic market, believes that Company, imported logs
and rough sawn timber has been increasingly important to the
Philippine market. It is the Company's intention to primarily
focus on marketing its timber products domestically through
relationships developed by the management of BHIC. The Company
intends to develop export sales as excess capacity is developed.
1. Plywood/veneer: Construction grade plywood demand is high as
plywood is required for concrete forming, usually a one-time use.
Concrete is the most widely used construction material used in the
Philippines. The Company plans to initially concentrate in selling
directly to developer/contractors in Cebu and later into Manilla.
Sales are also intended to be accomplished through distributors.
Japan also has a significant demand for plywood and the Company
intends to utilize a distributor in Japan. Furniture grade veneers
are intended to be marketed to Cebu's furniture manufacturers.
2. Poles and piling: Treated and untreated poles and pilings can
be sold directly to utility cooperatives, power companies and
telephone companies. Currently, there is a significant demand for
utility poles.
3. Lumber: The Company intends to acquire an S4S machine which
produces various molding and finished lumber products. Output from
this process can be utilized for architectural molding, flooring
and furniture wood products. The Company will sell directly to
contractors and furniture manufacturers in Cebu and Manilla, as
well as to distributors for small account activity. In Cebu, near
Mindanao, there are several large furniture operations which have
indicated that they will buy significant quantities from BHIC.
Rough sawn and finished dimensional lumber products will be marketed
to distributors and wholesalers in Cebu and Manilla.
Competition
Competition in Romania is in the export of green rough sawn pine and
beech timber as there is very little kiln drying in the country.
It is the Company's intent to kiln dry (pine) or steam dry (beech)
the timber and sell the value added products into existing markets.
There are three large wood product producers in Romania two of
which manufacture end products which the Company does not intend to
enter into the manufacturing or marketing of such products.
The Philippines is a net importer of timber products as there has
been limited production and financial capability as well as a
restricted availability of logs. The competition is from
international (regional) sources. Management feels that its
available supply of logs, its production facilities, its access to
the domestic market and most important transportation costs will
allow the Company to effectively and prosperously compete with
international sources on a price and performance basis.
This Form 10-KSB contains forward looking statements. The actual
results might differ materially from those projected in the forward
looking statements. Additional information concerning factors that
could cause actual results to materially differ from those in
forward looking statements is contained in the Company's filings
with the Securities and Exchange Commission, including periodic
reports under the Securities Exchange Act of 1934, as amended.
Litigation
The Company is not a party to any material litigation and is
currently not aware of any threatened litigation that could have a
material adverse effect on the Company's business, results of
operations or financial condition.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's only property (not counting the Brazil, Romania and
Phillippines Letter of Intent and Agreements)and assets are Timber
Rights from nine joint ventures covering approximately 40,000 acres
of timberland in Fiji and the exclusive rights to market wood
products internationally. (See "Business").
ITEM 3. LEGAL PROCEEDINGS
The Company is not the subject of any material pending legal
proceedings; and to the knowledge of management, no material
proceedings are presently contemplated against the Company by any
federal, state or local governmental agency/ Further, to the
knowledge of management, no director or executive officer is party
to any action which any has an interest adverse to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's stockholders
through the solicitation of proxies or otherwise, during the fourth
quarter of the Company's fiscal year ended December 31, 1996; and
none have been submitted prior to November 30, 1997.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's common stock was previously listed on the NASDAQ
Stock Market. Since February of 1992, the Company's common stock
has been listed on the O-T-C Bulletin Board. However, the market
for these securities is extremely limited and sporadic.
On December 12, 1997, the closing bid price of the common stock was
$0.56.
HOLDERS
The number of record holders of the Company's common stock as of
November 30, 1997 was 494. This number does not include an
indeterminate number of stockholders whose shares are held by
brokers in street name.
DIVIDENDS
The Company has not paid any dividends with respect to its common
stock, and does not intend to pay dividends in the foreseeable
future.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
PLAN OF OPERATION
Prior to the acquisition of Resources of the Pacific, the Timber
Rights, and the marketing rights, the Company had not engaged in
any material operations since 1991. The Company intends to
commence timber operations in Romania subject to sufficient
financing of which there is no assurance; and the Phillipines is
subject to due diligence, a definitive agreement and sufficient
financing.
RESULTS OF OPERATIONS
The Company received no revenue in either the calendar year ended
December 31, 1996, or the calendar year ended December 31, 1995.
The Company has a net loss of $406,818 in calendar 1996 from
ongoing search for acquisitions and $405,042 in calendar 1995
arising from general and administrative expenses incurred in
connection with the Acquisition and the Timber Acquisition.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Company had a deficit working capital of
($144,341), and as of September 30, 1997, the Company had a deficit
working capital of ($262,072).
Management estimates that the Company will require a minimum of
$3,000,000 to begin the proposed timber operations in Romania after
which time management believes that timber operations will be self
supporting except for expansion purposes. As of September, 1997,
the Company had borrowed an aggregate of $50,000 from a shareholder
and $50,000 from outside parties. These loans are repayable on
demand with interest at twelve percent per annum.
ITEM 7. FINANCIAL STATEMENTS.
The Company's financial statements are presented under Item 13 of
this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Peterson, Siler & Stevenson, Certified Public Accountants, of Salt
Lake City, Utah, audited the financial statements of the Company
for the calendar year ended December 31, 1994. Following the
Acquisition in April of 1996, Peterson, Siler & Stevenson was
changed and H.J. Swart & Co., P.A., Certified Public Accountants,
were retained as the Company's principal auditors. There were no
disagreements between the Company and Peterson, Siler & Stevenson
with regard to accounting and financial disclosure.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following are the Officers and Directors of the Company as of
December 31, 1996:
Name Age Position Held with Company
- ----- ----- ----------------------------
Robert A. Dietrich 52 President, CEO, Treasurer and
Director
John B. Brebbia 67 Secretary and Director
Ray Besharaty 58 Managing Director (Fiji) and Director
Wayne Walters 49 Director
Directors and Executive Officers
Semper Resources has established a Management Team to maximize the
opportunities offered to Semper Resources world wide and to
guarantee optimal probability of long term corporate success. For
the most part, individuals have been selected based on their proven
abilities to produce and succeed.
Robert A. Dietrich - Chairman, President & CEO
Mr. Dietrich background includes hands-on executive management,
investment banking and financial consulting experience. He has
more than thirteen years experience as vice president (finance and
operations) or president of middle market manufacturing and/or
distribution companies and thirteen years with CPA and investment
banking firms providing financial and operations consulting and
merger/acquisition and financial structuring for clients. Mr.
Dietrich is a CPA with a B.B.A. from Notre Dame and an MBA from U.
of Detroit.
John B. Brebbia - Secretary & Corporate Counsel
Mr. Brebbia is Secretary to the Board of Directors and Corporate
Counsel. He is Chairman of Composite Power Corp. and former Vice
Chairmen of First Western Corp. of Las Vegas. Previously he was
with Alston & Bird, Atty of Washington and Atlanta and served as
managing partner of Alston & Bird, Washington. He holds an A.B.
from Stonehill College and a LL.B. from Boston College. Mr. Brebbia
has been an active participant in several professional legal, civic
and political commissions.
Ray Besharaty - Board Member and Managing Director - Fiji
Mr. Besharaty, with a B.S. Accounting degree, has been involved in
the formation and development of Resources of the Pacific since its
inception in 1992. Mr. Besharaty has contributed both as
international marketing and sales manager with numerous countries
including Saudi Arabia, Taiwan and Europe, and as director of
Aircraft Support Services. He has lived in the Middle East and has
developed strong ties in the international marketplace.
Wayne Walters - Board Member and Consultant
Mr. Walters' background runs the gamut from electrical engineer in
the aerospace industry to business consultant for natural resource
companies. Mr. Walters has successfully managed multi-year
projects as large as $50 million directing a staff of over 80
professionals, to small six week time critical projects utilizing
a staff of well over 200. As a result of Mr. Walter's proposal and
management skills, programs totaling over $200 million have been
won. Mr. Walter's management skills have been recognized and
valued such that his last assignment, within a $300+ million in
sales per year organization, was considered by management to be the
single project most critical to future business for the
organization.
Mr. Walters was a self-employed consultant for several years,
providing management expertise and resource allocation technical
expertise to both aerospace and natural resource companies. Mr.
Walters is a published poet, has a B.S. in Electrical Engineering
from Georgia Tech; two masters degrees: an MS in Operations
Research from U.S.C. and an MBA from UOP; and was granted the
Degree of Engineer in Operations Research and Systems Engineering
by U.S.C.. Mr. Walters obtained a certificate in business
management from UCLA and continues his training by recently
completing numerous UCLA courses in Total Quality Management.
Chief Operating Officer
The Company intends to recruit a COO by the Spring of 1998 who will
responsible for world wide logging and mill operations as well as
marketing and sales management.
ITEM 10. EXECUTIVE COMPENSATION
There is no fixed amount or formula determining the amount of
salaries which officers will be paid for the services they render
to the Company. These salaries will be paid, notwithstanding the
profitability of the Company. In addition, these salaries will be
set and, from time to time changed, at the sole discretion of the
Board of Directors, which is made up partly of these officers.
Robert A. Dietrich, President & CEO has a base salary of $120,000
per annum and has been awarded five year incentive options in the
amount of 100,000 common shares exercisable at $2.00 per share.
During fiscal 1996 and fiscal 1997, no officer or director was paid
more than $100,000.
Director Compensation
Non-employee directors of the Company receive no cash compensation
for their services to the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT RECORD AND BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON
STOCK
The following table sets forth, as of November 30, 1997, certain
information regarding the ownership of voting securities of each
person known by the Company to be a beneficial owner of five
percent or more of the outstanding voting securities, each of the
Directors of the Company and all Officers and Directors as a group.
Name and Address of Shares of Common Stock Percentage of Shares
Beneficial Owner Beneficially Owned (1) of Common Stock
Beneficially Owned
International Bell, Inc 12,569,000 49.6%
Carol S. Lewis 9,170,000 36.2%
Robert A. Dietrich 100,000(1) 0.004%
Ray Besharaty 790,048 3.1%
John H. Brebbia 0 0%
Wayne M. Walters 57,143 0.002%
All executive officers and
directors as a group ---------- ------
(4 persons) 947,191 3.3%
========== ======
(1) Five year stock options exercisable at $2.00 per share.
(C) CHANGE IN CONTROL
None.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
International Bell, Inc., the Company's largest shareholder,
has loaned the Company $50,000 in the form of a 12% per annum
promissory note, payable on demand. Interest on the loan has been
accrued but unpaid as of September 30, 1997. International Bell,
Inc. and Ms. Lewis have made cash advances to the Company
totaling $4,265.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(A) The following documents are filed as a part of this Form
10-KSB at the page indicated.
Page Number
(a)(i) Financial Statements
Auditor's Report as of October 29,1997.............F1
Consolidated Balance Sheets - December 31, 1996 and
1995...............................................F2
Consolidated Statement of Operations - For the years
ended December 31, 1996 and 1995...................F3
Statement of Shareholder's Equity - For the years
ended December 31, 1996 and 1995...................F4
Statement of Cash Flows - For the years ended
December 31, 1996 and 1995.........................F5
Consolidated Notes to Financial Statements.........F6-F10
(a)(ii) Consolidated Schedules - None.
All schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable
and, therefore, have been omitted.
(a)(iii) Exhibits
Sequential
NUMBER DESCRIPTION Page Number
2.2 Acquisition Agreement dated September 7, 1996
between Resources of the Pacific Corporation
and the shareholders of Resources of the
Pacific, Inc. **
3.1 Articles of Incorporation of Resources of the
Pacific Corporation, as amended - incorporated
by reference to the exhibits filed with the
Company's Current Report on Form 8-K dated
July 28, 1995 . *
3.2 Bylaws of Resources of the Pacific Corporation,
as amended - incorporated by reference to the
exhibits filed with the Company's Form 8-A. *
10.4 Acquisition Agreement dated April 1, 1996
between Resources of the Pacific Corporation
and Resources of the Pacific Ltd. **
10.5 Agreement dated September 7, 1995 between
Resources of the Pacific Corporation and
International Bell, Inc. **
10.6 Amendment to Agreement dated September 7, 1995
between Resources of the Pacific Corporation
and International Bell, Inc. **
10.7 Agreement dated March 12, 1996 between Resources
of the Pacific Corporation and International
Bell, Inc. **
10.9 Amendment to Acquisition Agreement between
Resources of the Pacific Corporation and the
Shareholders of Resources of the Pacific, Inc. **
10.10 Definitive Agreement between Semper Resources
Corporation and the Romanian Joint Venture 31
21 Subsidiaries of the Registrant 43
- ---------------
* Incorporated by reference pursuant to Exchange Act Rule 12b-23.
** Incorporated by reference from previous filings.
(b) Reports on Form 8-K
None.
<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
INDEX TO
Consolidated Financial Statements
December 31, 1996 and 1995
PAGE NUMBER
----------
Auditor's Report as of October 29,1997.............F1
Consolidated Balance Sheets - December 31, 1996 and
1995...............................................F2
Consolidated Statement of Operations - For the years
ended December 31, 1996 and 1995...................F3
Statement of Shareholder's Equity - For the years
ended December 31, 1996 and 1995...................F4
Statement of Cash Flows - For the years ended
December 31, 1996 and 1995.........................F5
Consolidated Notes to Financial Statements.........F6-F10
(a)(ii) Consolidated Schedules - None.
<PAGE>
Independent Auditors Report
Board of Directors and Stockholders
Semper Resources Corporation
We have audited the accompanying consolidated balance sheets of
Semper Resources Corporation (formerly Resources of the Pacific
Corporation)(a development stage company) and its subsidiary as of
December 31, 1996 and 1995, and the related consolidated statements
of operations, stockholders' equity (deficit) and cash flows for
the years then ended and for the cumulative period from January 1,
1992 through December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits. The financial statements
of Semper Resources Corporation as of December 31, 1994 were
audited by other auditors whose report dated April 5, 1995
expressed an unqualified opinion including an explanatory paragraph
stating a concern about the Company continuing as a going concern.
The financial statements of Semper Resources Corporation as of
December 31, 1993 and 1992 were audited by other auditors whose
report dated October 16, 1994 expressed an unqualified opinion
including an explanatory paragraph stating a concern about the
Company continuing as a going concern. We conducted our audits in
accordance with generally accepted auditing standards. Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Semper
Resources Corporation and its subsidiary as of December 31, 1996
and 1995, and the results of their operations and their cash flows
for the years then ended and for the cumulative period from January
1, 1992 through December 31, 1996 in conformity with generally
accepted accounting principles.
October 29, 1997
H.J. SWART & COMPANY, P.A.
Certified Public Accountants
Kissimmee, Florida
<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
Consolidated Balance Sheet
December 31, 1996 and 1995
Assets
------
1996 1995
---- ----
Current assets
Cash $ 16,046 $ 151
Property and equipment, net -0- -0-
Other assets
Advances to joint venture partners 109,995 -0-
Deposits 57,316 -0-
Joint venture timber concessions 7,098,948 7,098,948
Goodwill, net 101,219 108,626
Marketing contract 1,350 -0-
---------- ----------
Total other assets 7,368,828 7,207,574
---------- ----------
$7,384,874 $7,207,725
========== ==========
The accompanying notes are an integral part of these financial
statements.<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
Consolidated Balance Sheet
December 31, 1996 and 1995
Liabilities and Stockholders' Equity
- ------------------------------------
1996 1995
---- ----
Current liabilities
Accounts payable $ 105,613 $ 10,000
Accrued expenses 674 2,670
Advances from related parties 4,100 5,100
Notes payable due related parties 50,000 70,000
----------- -----------
Total current liabilities 160,387 87,770
Stockholders' equity
Series A 12% convertible preferred
stock, $.001 per value, 15,000
shares authorized, 130 shares
issued and outstanding, stated
at liquidation value 130,000 -0-
Common stock, $.001 and $.005
par value, 100,000,000 and
25,000,000 shares authorized,
25,257,965 and 23,737,964 issued
and outstanding at December 31,
1996 and 1995, respectively 25,258 118,690
Additional paid in capital 10,497,425 10,022,643
Accumulated deficit ( 2,471,991) ( 2,471,991)
Deficit accumulated during the
development stage ( 956,205) ( 549,387)
----------- -----------
Stockholders' equity 7,224,487 7,119,955
----------- -----------
$ 7,384,874 $ 7,207,725
=========== ===========
The accompanying notes are an integral part of these financial
statements.<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
Consolidated Statement of Operations
Years ended December 31, 1996 and 1995 and
the period January 1, 1992 through December 31, 1996
Cumulative from
Jan. 1, 1992
through
1996 1995 Dec. 31, 1996
---- ---- --------------
Revenues
Sales $ -0- $ -0- $ 6,264
Expenses
General and administrative 310,229 99,626 859,493
Forfeited acquisition costs 80,000 -0-
Amortization 7,407 2,469 9,876
Depreciation -0- 281 3,501
--------- -------- ----------
Total expenses 397,636 102,376 952,870
--------- -------- ----------
Loss from operations (397,636) (102,376) (946,606)
Other income (expense)
Interest income 55 4 14,320
Interest expense ( 9,237) ( 2,670) ( 71,309)
Gain (loss) on sale of asset -0- -0- ( 3,613)
Other income -0- -0- 41,728
--------- -------- ----------
Total other income (expense) ( 9,182) ( 2,666) ( 18,874)
--------- -------- ----------
Loss from operations before
income taxes and extraordinary
items (406,818) (105,042) (965,480)
Current income tax -0- -0- -0-
Deferred income tax -0- -0- -0-
--------- -------- ----------
Loss from operations before
extraordinary items (406,818) (105,042) (965,480)
Extraordinary items
Gain on discharge of debt
obligations (no tax effect) -0- -0- 9,275
--------- -------- ----------
Net loss $ (406,818) $ (105,042) $(956,205)
=========== =========== ===========
Loss per share
Loss before extraordinary
item $ (.02) $ (.02) $ (.15)
Extraordinary items -0- -0- -0-
---------- ---------- ----------
Net loss $ (.02) $ (.02) $ (.15)
=========== ========== ===========
The accompanying notes are an integral part of these financial
statements.
<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
January 1, 1992 through December 31, 1996
<TABLE>
<CAPTION>
Series A Additional
Preferred Stock Common Stock Paid-in Accumulated Treasury
Shares Amount Shares Amount Capital Deficit Stock
------ ------ ------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 -0- -0- 1,094,279 $54,713 $2,810,977 $(2,471,991)$(100,000)
Stock issued to an officer and director
for cash, March, 1992, at $.0625 per share -0- -0- 300,000 15,000 3,750 -0- -0-
Shares of treasury stock issued pursuant to
loan agreement -0- -0- -0- -0- (100,000) -0- 100,000
Stock issued in connection with proposed
acquisition, April, 1992 -0- -0- 1,364,000 68,200 (68,200) -0- -0-
Cancellation of stock issued in connection
with unsuccessful proposed acquisition,
October, 1992 -0- -0- (1,364,000) (68,200) 68,200 -0- -0-
Net loss for the year ended Dec. 31, 1992 -0- -0- -0- -0- -0- (251,989) -0-
----- ----- ---------- ------- -------- ---------- -------
Balance at December 31, 1992 -0- -0- 1,394,279 69,713 2,714,727 (2,723,980) -0-
Stock issued to an officer and director
for services rendered, June 18, 1993,
at $.125 per share -0- -0- 600,000 30,000 45,000 -0- -0-
Net loss for the year ended Dec. 31, 1993 -0- -0- -0- -0- -0- (169,430) -0-
----- ----- ---------- ------- -------- ---------- -------
Balance at December 31, 1993 -0- -0- 1,994,279 99,713 2,759,727 (2,893,410) -0-
Stock issued to a corporation owned by the
Company's president for payment of amounts
payable, Feb. 7, 1995, at $.0533 per share -0- -0- 300,000 15,000 1,000 -0- -0-
Stock issued to an officer and director
for payment of cash advances in
the amount of $19,000 and for services
rendered in the amount of $10,000,
September 1, 1994, at $.05 per share -0- -0- 580,000 29,000 -0- -0- -0-
Net loss for the year ended Dec. 31, 1994 -0- -0- -0- -0- -0- ( 22,926) -0-
----- ----- ---------- ------- -------- ---------- -------
Balance at December 31, 1994 -0- -0- 2,874,279 143,713 2,760,727 (2,916,336) -0-
Stock issued to an officer for payment
of cash advances in the amount of $4,850
March 30, 1995, at $.075 per share -0- -0- 65,000 3,250 1,600 -0- -0-
Stock issued to officer for payment of cash
advances in the amount of $22,000
June 30, 1995, at $.05 per share -0- -0- 440,000 22,000 -0- -0- -0-
One for twenty reverse stock split
and change in par value to $.005 -0- -0- (3,210,315)(168,118) 168,118 -0- -0-
Stock issued to acquire a subsidiary on
September 7, 1995 at $.005 per share -0- -0- 22,219,000 111,095 -0- -0- -0-
Stock issued to acquire joint venture
timber concessions on October 10, 1995,
at $5.258 per share -0- -0- 1,350,000 6,750 7,092,198 -0- -0-
Net loss for year ended Dec. 31, 1995 -0- -0- -0- -0- -0- (105,042) -0-
----- ----- ---------- ------- -------- ---------- -------
Balance at December 31, 1995 -0- -0- 23,737,964 118,690 10,022,643 (3,021,378) -0-
Change in par value to $.001 on May 17, 1996 -0- -0- -0- (94,952) 94,952 -0- -0-
Sale of preferred stock on May 30, 1996,
at $1,000 per share 200 200,000 -0- -0- -0- -0- -0-
Stock issued to acquire a marketing
contract on May 31, 1996, at $.001 per
share -0- -0- 1,350,000 1,350 -0- -0- -0-
Sale of preferred stock on June 15, 1996,
at $1,000 per share 30 30,000 -0- -0- -0- -0- -0-
Sale of common stock on July 16, 1996, at
$1.50 per share -0- -0- 10,000 10 14,990 -0- -0-
Conversion of preferred stock on August 12,
1996 (100)(100,000) 66,667 66 99,934 -0- -0-
Sale of common stock on September 1,
1996 at $3.00 per share -0- -0- 41,667 42 124,958 -0- -0-
Sale of common stock on September 15,
1996, at $1.50 per share -0- -0- 10,000 10 14,990 -0- -0-
Sale of common stock on September 30,
1996, at $3.00 per share -0- -0- 41,667 42 124,958 -0- -0-
Net loss for the year end December 31, 1996 -0- -0- -0- -0- -0- ( 406,818) -0-
----- -------- ---------- ------- -------- ---------- -------
Balance at December 31, 1996 130 $130,000 25,257,965 $25,258 $10,497,425 $(3,428,196) $ -0-
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
Consolidated Statement of Cash Flows
Years ended December 31, 1996 and 1995 and
the period January 1, 1992 through December 31, 1996
Cumulative from
Jan. 1, 1992
through
1995 1996 Dec. 31, 1996
---- ---- --------------
Cash flows from operating
activities
Net loss $ (406,818) $(105,042) $(956,205)
Adjustments to reconcile
net loss to net cash used
by operating activities
Depreciation and amortization 7,407 2,750 13,377
Recognition of deferred
income -0- -0- (100,000)
Assumption of assets and
liabilities by President
of Company -0- -0- 55,949
Issuance of stock in payment
of accrued liabilities and
cash advances -0- 26,850 111,850
Decrease in accounts, other
and notes receivable -0- -0- 150,000
Decrease in other assets -0- -0- 237,500
Increase (decrease) in
accounts payable and
related party advances 94,613 2,896 (43,405)
Increase (decrease) in
accrued expenses (1,996) 2,670 674
---------- --------- --------
Net cash used by operating
activities (306,794) (69,876) (530,260)
Cash flows from investing
activities
Proceeds from sale of property
and equipment -0- -0- 1,052
<PAGE>
Proceeds from sale of
marketable securities -0- -0- 626
Payments for marketable
securities -0- -0- (391)
Advances to partners (109,995) -0- (109,995)
Deposits on acquisitions ( 57,316) -0- ( 57,316)
---------- --------- --------
Net cash used by investing
activities (167,311) -0- (166,024)
Cash flows from financing activities
Proceeds from notes payable 80,077 70,000 155,077
Proceeds from preferred stock
issuance 230,000 -0- 230,000
Proceeds from common stock
issuance 280,000 -0- 298,750
Payments on notes payable, long-
term debt, and capital lease
obligations (100,077) -0- (105,077)
---------- --------- --------
Net cash provided by financing
activities 490,000 70,000 578,750
---------- --------- --------
Increase (decrease) in cash 15,895 124 (117,534)
Cash at beginning of period 151 27 133,580
---------- --------- --------
Cash at end of period $ 16,046 $ 151 $ 16,046
============= ============ ============
Supplemental disclosure of cash
flow information
Cash paid during the period for
Interest $ 11,233 $ -0- $ 35,246
Income taxes $ -0- $ -0- $ -0-
The accompanying notes are an integral part of these financial
statements.
<PAGE>
Semper Resources Corporation
(Formerly Resources of the Pacific Corporation)
(A Development Stage Company)
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
------------------------------------------
Organization and consolidation
- ------------------------------
The financial statements presented are those of Semper Resources
Corporation (the Company) and Resources of the Pacific, Inc.
(Resources), its wholly owned subsidiary.
The Company acquired Resources on September 7, 1996 in an exchange
of common stock. Prior to and in conjunction with the acquisition,
the Company had a 1 for 20 reverse stock split. The financial
statements reflect the effects of this transaction.
The Company was organized under the laws of the State of Nevada as
10 Minute Pit Stop USA, Inc. in April, 1987. On April 30, 1987,
the Company merged with Value Funding Corporation, a public
corporation, and the Company was designated as the surviving
corporation. Value Funding Corporation also owned a subsidiary, 6
Minute Pit Stop USA, Inc. The name of the Company was changed in
April 1990 to Pit Stop Auto Centers, Inc., in September 1995 to
Resources of the Pacific Corporation, then in May 1996 to Semper
Resources Corporation. The Company's subsidiary, 6 Minute Pit Stop
USA, Inc., filed for Chapter 7 bankruptcy in 1988. The Company
acquired a controlling interest in Grease N Go International, Inc.,
during 1987. During 1991, the Company disposed of its entire
interest in Grease N' Go International, Inc. The Company is
currently considered a development stage company as defined in SFAS
No. 7. The Company reentered the development stage during 1992
after disposing of all its operations during 1991 (see Note 10).
The Company currently has no operations, but plans to commence
operations in 1998 (see Note 14).
Property and equipment
- ----------------------
Property and equipment are recorded at cost which is depreciated
over the estimated useful lives of the related assets. Depreciation
is computed using the straight-line method for financial reporting
purposes, with accelerated methods used for income tax purposes.
The estimated useful lives of property and equipment for purposes
of financial reporting is 3 to 5 years.
Intangible assets
- -----------------
Goodwill consists of the excess paid by the Company over the fair
market value of the net assets acquired from Resources and is being
amortized using the straight-line method over a 15 year period.
Loss per share
- --------------
The computation of loss per share of common stock is based on the
weighted average number of shares outstanding during the period
presented giving retroactive effect to the 1 for 20 reverse stock
split. Common stock equivalents were not included in the earnings
per share computation as their effect was antidilutive. Statement
of cash flows. For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with
a maturity of three months or less to be cash equivalents.
Income taxes
- ------------
The Company accounts for its income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" which requires the liability approach for the effect
of income taxes.
Use of estimates
- ----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and related notes to
financial statements. Changes in such estimates may affect amounts
reported in future periods.
2. Acquisition
-----------
On September 7, 1995, the Company acquired all of the outstanding
common stock of Resources of the Pacific, Inc. in exchange for
22,219,000 shares of the Company's common stock. The acquisition
has been accounted for using the purchase method and accordingly,
the accompanying consolidated financial statements reflect this
transaction at the date of acquisition.
3. Property and Equipment
----------------------
At December 31, 1996 and 1995 property and equipment consisted
entirely of office equipment at a cost of $2,000. Accumulated
depreciation was $2,000 at December 31, 1996 and 1995. Depreciation
expense for the years ended December 31, 1996 and 1995 was recorded
in the amount of $-0- and $281 respectively.
<PAGE>
4. Income Taxes
------------
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109 "Accounting for Income
Taxes" which requires the liability approach for the effect of
income taxes.
The Company has available at December 31, 1996 unused net operating
loss carryforwards of approximately $3,200,000 which may be applied
against future taxable income and which expire in various years
beginning in 2005 through 2011. If certain substantial changes in
the Company's ownership should occur, there could be an annual
limitation on the amount of net operating loss carryforward which
can be utilized. The amount of and ultimate realization of the
benefits from the net operating loss carryforwards for income tax
purposes is dependent, in part, upon the tax laws in effect, the
future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax benefit of
the loss carryforwards. The change in the valuation allowance is
equal to the tax benefit of the current period's net loss.
5. Related Party Transactions
--------------------------
At December 31, 1996 and 1995 the Company owed $4,100 and $5,100
for advances from related parties.
The Company made various issuances of common stock to related
parties during 1996 and 1995 (see Note 8).
The Company entered into a financing agreement with International
Bell, Inc. (Bell), a stockholder, on September 7, 1995. At
December 31, 1996 and 1995 the unpaid balances were $50,000 and
$70,000, respectively.
On January 14, 1992, $200,000 was loaned to the Company from an
investment group comprised of an independent investment firm, the
wife of the President of the Company, and the Company's legal
counsel. The loan was repaid on May 21, 1992 with $145,188,
$67,471 and $10,354 being paid to the investment firm, the wife of
the President of the Company and the Company's legal counsel,
respectively. As part of the loan agreement, the Company issued
its treasury stock to the investment group with 16,250 shares being
issued to the investment firm, 7,500 shares issued to the wife of
the President of the Company, and 1,250 shares issued to the
Company's legal counsel.
In February of 1990 the Company entered into an employment
agreement with its President covering a five year period. On June
18, 1993, in a transaction approved by the Board of Directors, the
Company and its President canceled the employment agreement and
transferred title of the real property and certificate of deposit
owned by the Company to the president of the Company. In addition
to the real property and certificate of deposit, the president
assumed the existing mortgage on the real property and all other
liabilities attached to the real property. As of the date of these
financial statements, the Company has no continuing liability with
respect to the transferred assets and related liabilities or with
respect to the employment agreement.
6. Going Concern
-------------
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
contemplate continuation of the Company as a going concern.
However, the Company has incurred significant losses of $406,818
and $105,042 for the years ended December 31, 1996 and 1995 and has
not yet established profitable operations. This raises substantial
doubt about the ability of the Company to continue as a going
concern. However, management was able to obtain short term
financing of $50,000, is in the process of arranging a $6,000,000
private placement offering and has created a business plan to begin
operations again during 1998, based on the timber concessions
acquired in 1995 (see Note 14), which alleviate the substantial
doubt about the Company's ability to continue as a going concern.
7. Notes Payable
-------------
1996 1995
---- ----
Note payable to International Bell,
Inc., a stockholder, bearing interest
at twelve percent, payable on demand $50,000 $70,000
======= =======
8. Capital Stock
-------------
On May 17, 1996, the Company filed amended and restated Articles of
Incorporation increasing the authorized common shares from
25,000,000 to 100,000,000, changing the common stock par value from
$.005 to $.001 per share and authorizing 100,000 shares of
preferred stock with a par value of $.001 per share. The financial
statements reflect the change in the common stock par value.
On May 17, 1996, the Company also designated 15,000 shares of
Preferred Stock, par value $.001 per share, as Series A 12%
Convertible Preferred Stock. Holders of Series A stock are
entitled to a dividend of $120 per share per year, payable
semi-annually in cash or in stock (at $1.50 per share), at the
Company's option, on November 15 and May 15 of each year. Series
A stock has a liquidation preference equal to $1,000 per share, are
non-voting shares, and are subject to redemption, at the option of
the Company, at any time after December 31,1997 at $1,000 per share
plus any accrued dividends. Holders of Series A stock have the
option to convert with certain restrictions each share held into
667 shares of common stock on or before December 31, 1997. At
December 31, 1996 dividends in arrears were $12,188.
Public offering
- ---------------
On July 31, 1990, the Company successfully completed a public
offering of 400,000 units for $10 per unit. Each unit consisted of
two shares of common stock and one common stock purchase warrant,
which when exercised, will entitle the holder to purchase one share
of the Company's common stock for $7.50 per share. Commencing
March 31, 1991, the exercise price of the warrants was reduced to
$3.50 per share. The warrants may be exercised at any time from
July 31, 1991 through July 31, 1996. No stock warrants were
exercised.
Related party stock transactions
- --------------------------------
On March 30, 1995, the Company issued 65,000 shares of its common
stock valued at $.075 per share to the Company's President for
payment of advances in the amount of $4,850. On June 30, 1995, the
Company issued 440,000 shares of its common stock valued at $.05
per share, to the Company's President for payment of advances in
the amount of $22,000. These transactions occurred prior to the 1
for 20 reverse stock split.
On February 7, 1994, the Company issued to a corporation owned by
the Company's President 300,000 shares of common stock valued at
$.0533 per share, for payment of advances in the amount of $4,000,
and for consulting services rendered valued at $12,000. On
September 1, 1994, the Company issued 580,000 shares of common
stock valued at $.05 per share to an officer and director for
payment of advances in the amount of $19,000 and for consulting
services rendered valued at $10,000.
On June 18, 1993, the Company issued to an officer and director
600,000 shares of common stock valued at $.125 per share for
services rendered valued at $75,000.
In March, 1992, the Company issued to an officer and director
300,000 shares of common stock valued at $.0625 per share for
$18,750 cash.
9. Non-Cash Investing and Financing Activities
-------------------------------------------
For the year ended December 31, 1996
- ------------------------------------
The Company issued 1,350,000 shares of its common stock valued at
$.001 per share to acquire all the rights, title, and interest in
a Marketing Contract associated with the joint venture timber
concessions acquired in 1995.
The Company issued 66,667 shares of its common stock valued at
$1.50 per share in a conversion of 100 shares of Series A 12%
convertible preferred stock.
For the year ended December 31, 1995
- ------------------------------------
The Company issued 65,000 and 440,000 shares of common stock valued
at $.075 and $.05 per share respectively, prior to the reverse
stock split, in payment of $26,850 in cash advances from an
officer.
The Company issued 22,219,000 shares of common stock valued at
$.005 per share to acquire 100% of the common stock of Resources of
the Pacific, Inc.
The Company issued 1,350,000 shares of common stock valued at
$5.258 per share to acquire all the rights, title and interest in
certain joint venture timber concessions.
10. Development Stage Activity
--------------------------
The Company was previously involved in the operation of car service
centers. In December of 1991 all remaining property, inventories
and other assets used in the operations of the service centers were
sold. During 1992, the Company reentered the development stage
because it no longer had any planned principal operations. The
sole business activity of the Company is its search for a business
to acquire and the acquisition of certain timber concessions and
the planning for their development.
11. Commitments and Contingencies
-----------------------------
In November 1996, the Company entered into a Purchase Agreement
with Casecroft Management Ltd., Ralph Financial Corporation and Roy
Skluth collectively, to acquire real property timber tracts located
in Brazil and all related timber and harvesting rights. The
purchase price is 3,000,000 shares of the Company's common stock
and $275,000 in cash. In consideration of an additional
non-refundable $6,500 payment the Company has the option to
purchase approximately 6.5 million acres for $119,000,000 in cash
and 2,500,000 shares of the Company's common stock. In
consideration of an additional non-refundable $2,500 payment, the
Company has the option to purchase a certain building and
improvements, and certain equipment for $4,000,000 in cash and
8,500,000 shares of the Company's Series A Preferred stock. In
consideration of an additional non-refundable $1,000 payment, the
Company has the option to purchase approximately 92,000 acres for
500,000 shares of the Company's common stock. The Company paid a
sum of $50,000 upon execution of this agreement, $40,000 of which
is refundable upon termination of the agreement. The financial
statements reflect the monies paid as a deposit at December 31,
1996.
During 1992, the Company's former advertising firm, Yaranoff
Advertising, filed a lawsuit against the Company for non-payment
for their services. The total amount requested in the suit
approximates $12,000. The Company countersued on the grounds that
due to placement of advertisements by Yaranoff, which were not in
compliance with specifications of the Company's major supplier, the
Company was unable to collect approximately $27,000 in
reimbursements from the supplier. Both lawsuits were dismissed in
February, 1995 due to inactivity.
During September, 1992, Kay & Kay Associates, an environmental
consulting firm retained by the Company for the clean-up of a
center in Oklahoma City, filed suit against the Company for
non-payment for their services. The total amount of their suit
approximates $18,000. In May 1996, this suit was settled and
payment of approximately $18,000 was made. This expense has been
included in the financial statements as an operating expense.
A claim against the Company was settled on March 8, 1993. The
dispute involved a claim by B & K Fleet Supply, Inc. for unpaid
materials and supplies delivered to the Company. The Company did
not oppose their claim and an arbitration award of approximately
$10,000 with costs and attorney fees included was granted. The
$10,000 judgment has been accrued and is included in accounts
payable. As of December 31, 1996, the amount owed had not been
paid.
The Company is not currently aware of any material pending or
threatened litigation which is likely to have a material adverse
effect upon the Company. However, the possibility exists that
creditors and others seeking relief from the Company's former
subsidiary and former operations may also include the Company in
claims and suits pursuant to the parent/subsidiary relationship
which previously existed. Management believes it would be
successful in defending against such claims and that no material
negative impact on the financial condition of the Company would
occur. Management is also not aware of any pending or threatened
claims against the Company for environmental clean-up or
environmental related contingencies and believes there are no
material liabilities that are required to be accrued or disclosed
in connection with the clean-up of environmental hazards related to
the Company's prior operations.
12. Extraordinary Item
------------------
During 1994, a lawsuit in which the Company was the plaintiff was
settled, and the payment received in settlement was made directly
to the attorney for the Company. Fees for services owed to the
attorney in excess of the settlement amount were forgiven, and the
amount forgiven ($9,275) was recorded as extraordinary income.
13. Stock Option Plan
-----------------
The Company has a stock option plan. Under the plan, non-qualified
stock options may be granted to key employees, directors and
executive officers designated by the Board of Directors (or a
committee appointed by the Board), at exercise prices equal to at
least 100% of the fair market value of the common stock on the date
of grant. In addition to selecting the optionees, the Board (or
such committee) determines the number of shares subject to each
option and otherwise administers the Plan. There is a total of
105,000 shares reserved for this stock option plan. At December
31, 1996, 55,000 shares remained available to be granted. Pursuant
to the stock option plan, an Incentive Stock Option was granted on
January 30, 1991 to the President of the Company, to purchase
50,000 shares of common stock. The exercise period is from January
30, 1992 to January 30, 1996, and the exercise price is $1.69 per
share. At December 31, 1996 no options had been exercised. Not
pursuant to the plan, the Company granted a stock option on January
30, 1991 to the President of the Company to purchase 50,000 shares
of common stock. The exercise period is from January 30, 1992 to
January 30, 1996, and the exercise price is $1.69 per share. At
December 31, 1996, no options had been exercised.
14. Joint Venture Timber Concessions
--------------------------------
On October 7, 1995, the Company acquired from Resources of the
Pacific LTD. all of its rights, title and interest in certain joint
venture timber concessions for the development of timber located in
Fiji. The Company issued 1,350,000 shares of its common stock
valued at $5.258 per share. The Company shall be entitled to sixty
(60) percent of any profits from the operations of these joint
ventures.
The Company anticipates that these joint ventures will commence
operations during 1998, ultimately providing a source of earnings
and cash flow to the Company.
15. Advances to Joint Venture Partners
----------------------------------
During 1996, the Company made advances to its Joint Venture
partners to cover certain expenses in the amount of $109,995 as of
December 31, 1996. These advances will be repaid to the Company
from the Joint Venture partners share of future operating profits.
16. Acquisition/Rescission
----------------------
In April, 1992, the Company entered into an acquisition agreement
wherein the Company issued 1,364,000 shares of common stock to
acquire all of the issued and outstanding shares of Mountain View
Benefits, Inc., making it a wholly owned subsidiary of the Company.
In October, 1992, both companies agreed to terminate and abandon
the acquisition agreement because the terms of the acquisition had
not been completed.
17. Forfeited Acquisition Deposit
-----------------------------
In September 1996, the Company entered into an Asset Purchase and
Sale Agreement with Fremont Forest Products (Fremont) to purchase
substantially all of the assets utilized by Fremont in the
operation of a lumber and building products dock terminal business.
A deposit of $100,000 was paid on execution of this agreement.
Management decided, based on certain facts, not to proceed with the
acquisition and forfeited $80,000 of the deposit paid on execution
of the agreement.
18. Subsequent Events
-----------------
In September 1997, the Company obtained financing in the amount of
$50,000. The notes are due on demand, but if not demanded, no
later than March, 1998.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SEMPER RESOURCES CORP.
Dated: December 30, 1997 By: /s/Robert A. Dietrich
-----------------------------
ROBERT A. DIETRICH,
President, Chief Executive
Officer, Treasurer and
Director
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
Dated: December 30, 1997 By: /s/Robert A. Dietrich
-----------------------------
ROBERT A. DIETRICH,
President, Chief Executive
Officer, Treasurer and
Director
Dated: December 30, 1997 By: /s/John B. Brebbia
-----------------------------
JOHN B. BREBBIA
Secretary and Director
Dated: December 30, 1997 By: /s/Ray Besharaty
----------------------------
RAY BESHARATY
Managing Director and
Director
Dated: December 30, 1997 By: /s/Wayne Walters
-----------------------------
WAYNE WALTERS
Director
JOINT VENTURE AGREEMENT
As of December 19, 1997, THIS JOINT VENTURE AGREEMENT
("Agreement") is made by and between, S.C. ARM S.A. ("ARM"), a
Romanian corporation, , and Semper Resources Corporation ("SRCR"),
a Nevada corporation, collectively, the "Parties".
RECITALS
a. WHEREAS, ARM is a private Romanian corporation,
while acting as a merchant bank, has developed certain
value added timber opportunities in Romania and desires
to enter into a business combination to further develop
its timber manufacturing and marketing opportunities;
b. WHEREAS, SRCR desires to enter into a business
combination in Romania which will develop timber
manufacturing and marketing opportunities;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Establish Romanian Joint Venture Company
1.1 SRCR shall establish a Romanian subsidiary
("SRC-ROM") which shall be chartered to log, mill, remanufacture and
market timber and wood products in Romania. Eighty (80) percent
of the outstanding stock of SRC-ROM shall be owned by SRCR, its
consolidating parent. The remaining twenty (20) percent shall be
owned by ARM as founders along with SRCR. ARM shall be paid, as an
incentive, twenty (20) percent of EBITDA earnings of SRC-ROM each
quarter, in lieu of any dividends paid.
1.2 SRC-ROM's initial direction shall be to obtain
financing and procurement of kiln equipment, semi-finished and
finishing equipment for use by SRC-ROM in its drying and
remanufacturing of green sawn timber based upon a capital budget
agreed upon by SRCR and ARM. SRC-ROM will also procure logging
and mill equipment and lease to ARM under a master lease; such
equipment will be re-leased to ARM's timber concession operators.
The Company will be responsible for advancing deposit money to
RAMSILVA via ARM and a secured depository mechanism for semi-annual
cutting allowances to ensure and capture sources of
supply. SRC-ROM shall market and distribute its wood products
domestically and internationally.
1.3 SRC-ROM shall seek additional timber and wood
products opportunities including sources of supply, milling,
re-manufacturing and distribution of Romanian forest products.
2. Contributions and Responsibilities of the Parties
2.1 Assurances ARM and SRCR agree to take all
actions reasonably necessary to satisfy or cause to be satisfied
the conditions set forth in this Agreement, and shall take or
cause to be taken such further or other actions reasonably
necessary to carry out the intent and purposes of this Agreement.
ARM and SRCR agree that on request of the other and from time to
time prior to or after the Closing, each will take such actions
and execute and deliver such instruments and agreements as may be
reasonably necessary to vest and confirm the Business and
Business Assets in SRCR.
2.2 SRCR. SRCR shall be responsible for the
obtaining financing of and assisting in the procurement of kiln
equipment, semi-finished and finishing equipment for use by SRC-ROM
in its drying and remanufacturing of green sawn timber,
logging and mill equipment for lease to ARM's timber concession
operators, and for advancing deposit money to RAMSILVA for semi-annual
cutting allowances to ensure and capture sources of
supply. It is estimated by the Parties that up to US$3 million
will be required during the first quarter of 1998 for the initial
phase.
2.3 ARM. ARM will receive a twenty (20) percent
interest in SRC-ROM in exchange for a ten year contract, with
five (5) year automatic renewals at SRCR's option, to supply
pine, beechwood and other commercially available species of wood
in green, rough sawn state for prices (I) at wholesale Romanian
market prices, (ii) at the most favorable price offered to any
contract purchaser which ARM's venture partners provide to any
other purchaser of green rough sawn timber or (iii) at a
negotiated purchase contract price, whichever is lowest. ARM
agrees to supply at least 10,000m3 per month of green rough sawn
timber by the sixth month after closing or thereafter as soon as
SRC-ROM has such operational capacity to process 10,000m3 per
month. ARM will be responsible for supplying sufficient wood for
the duration of the supplier contract to meet SRC-ROM's kiln
drying and remanufacturing capacity.
2.4 SRC-ROM shall have the first right of refusal on
future timber project development and opportunities developed or
proposed to SRC-ROM by ARM. Proposals and acceptance or rejection
must be in writing. If SRC-ROM rejects any proposal, ARM and its
principals are free to pursue the rejected proposal without
violating any contractual agreement with SRC-ROM.
2.5 SRC-ROM's Board of Directors will be comprised of
five members of which three will nominated by SRC. Actual board
size may be influenced by any Romanian laws requiring
representation on the Board by Romanian citizens; in any case SRC
will have controlling representation on the Board. Operating and
administrative management will be comprised primarily of managers
provided by ARM. SRC will have the right to recruit and employ
the senior financial manager who will report to the Chairman of
the Board of SRC-ROM. Exhibits A, B and C attached indicates
proposed SRC-ROM officers and their responsibilities and
compensation. In addition, ARM shall have the right to purchase
up to 500,000 Common Shares of SRCR at $2.00 per share via its
warrant certificate granted by SRCR at closing. The warrants are
exercisable at any time after twelve months after closing and
until forty-eight months after closing.
3. Purchase of ARM
3.1 SRCR shall have the right of first refusal to
purchase ARM's timber and wood products operations, its interests
in timber concessions, logging and milling for current market
value and its twenty percent ownership in SRC-ROM.
4. Reporting of Transaction.
4.1 Reporting. Each of the parties hereto agrees to
timely cause to be filed with the appropriate tax and
governmental authorities such forms and/or information as is
required to properly report this transaction and to comply with
any and all reporting requirements. If either party fails to
file the required information and/or forms, such party shall
fully indemnify and hold harmless the other party against any
damage, including, but not limited to, attorneys' and
accountants' fees, as well as costs that result directly or
indirectly therefrom.
5. Closing; Effective Date
5.1 Closing. The "Closing" shall mean the date and
time at which SRCR consummates the transfer of common shares of
SRC-ROM to ARM. ARM shall deliver to SRCR and SRCR shall deliver
to ARM the document(s) set forth in this Section 5.2. The
Closing shall take place at appointed escrow offices around 9:00
A.M. (local time) on the "Closing Date." The "Closing Date"
shall be on or before January 31, 1998 or any other date mutually
agreed upon by the Parties. The Closing shall be deemed to be
effective for tax, financial and accounting purposes as of 9:00
A.M. on the agreed upon Closing Date. Closing may occur only
after SRCR has completed its due diligence of certain ownership
interests in timber logging and production projects in Romania by
ARM.
5.2 SRCR's and ARM's Deliveries. At the Closing:
5.2.1 ARM shall deliver to SRCR all the title
and assignment documents to certain Romanian timber concessions,
logging and milling operations as substantiation of source of
supply for ARM's supplier contract to SRC-ROM.
5.2.2 Supplier Contract. ARM shall deliver to
SRCR a supplier contract which shall describe the commitment to
provide specific species in a green rough sawn state in certain
dimensions and lengths and to match availability of such product
to meet the minimum kiln drying and re-manufacturing capacity of
SRC-ROM over the life of the agreement. The contract will detail
pricing and payment terms and conditions of performance as
described in Section 2.3 above.
5.2.3 Non-Competition Agreement ARM's officers
shall provide an agreement not to compete with SRC-ROM in
Romania, Exhibit A, B and C attached.
5.2.4 Warrant Certificate. SRCR shall deliver
a Warrant Certificate in the amount 500,000 Common Shares of SRCR
exercisable at $2.00 per share for a three year period beginning
after twelve months after closing.
6. SRCR's Conditions to Closing.
SRCR's obligation to consummate the Closing is subject to
the approval of SRCR, which approval shall not be unreasonably
withheld, or an explicit written waiver by SRCR, of each of the
following conditions and the occurrence of the following events:
6.1 Delivery of Documents. Delivery of the documents
described in Section 5.2.
6.2 Representations and Warranties. All covenants,
representations and warranties of ARM contained in this Agreement
shall be true and correct when made and as of the Closing Date as
if made again at such time and shall survive the closing and the
issuance of shares of SRC-ROM for a period of five (5) years from
the Closing Date, and ARM shall have performed and satisfied all
covenants and conditions required by this Agreement to be per-
formed and satisfied by ARM at or prior to the Closing Date.
6.3.1 Compliance with Laws. To the best of ARM's
knowledge, ARM is now in compliance, and at all times has been
operated in compliance with all federal (US and Romania), state
and local laws, statutes, regulations, ordinances and
governmental policies (collectively "Laws") including, without
limitation, all Laws relating to environmental protection,
occupational safety and health and equal employment practices,
and such compliance does not and will not materially impair the
operations of ARM's timber related projects . No notice,
citation, summons or order has been issued, no investigation or
review is pending or, to the knowledge of ARM, threatened by any
governmental or other entity (I) with respect to any alleged
violation by ARM of any Law or (ii) with respect to any alleged
failure by ARM to have any permit, certificate, license,
approval, registration or authorization or (iii) with respect to
any generation, treatment, storage recycling, transportation or
disposal of any hazardous or toxic or polluting substances. The
ARM has not treated, stored, recycled or disposed of any
hazardous, toxic or polluting substances. ARM has reported, to
the extent required by Law, all past and present sites where
hazardous, toxic or polluting substances, if any, from ARM have
been treated, stored or disposed. The ARM has not transported
any hazardous, toxic or polluting substances or arranged for the
transportation of such substances to any location which is
subject of federal, state or local enforcement actions or other
investigations which may lead to claims against ARM or SRCR for
clean-up costs, remedial work, damages to natural resources or
for personal injury claims, including, but not limited to, claims
under the Comprehensive Environmental Response, Compensation and
Liabilities Act of 1980 or equivalent Romanian laws or
regulations.
6.3.2 No Defaults, Etc. Neither the
execution and delivery by ARM of this Agreement or the
consummation by ARM of the transaction contemplated hereby is an
event that, of itself, or with giving of notice or the passage of
time or both, constitutes a material violation of or will
conflict with or result in any material breach of or any default
under, or require the giving or any notice under the terms,
conditions or provisions or any Law to which ARM or any of the
acquired assets is subject, or of any agreement or instrument to
which ARM is a party or by which ARM or any of the acquired
assets is bound, or result in the creation or imposition of any
lien, charge or encumbrance on the acquired assets nor will it
result in an acceleration or modification of any liability or
obligation of the ARM.
6.3.3 Disclosure. No covenant,
representation or warranty by ARM, and no written statement, or
document to be furnished by ARM pursuant hereto or at the Closing
hereunder, contains or will contain any untrue statement of
material fact, or will omit to state a material fact necessary to
provide SRCR with complete and accurate information as to ARM,
its Business, or to make statements therein not misleading. All
documentation and information furnished by ARM to SRCR are
accurate in all respects.
6.4 ARM's Performance. ARM shall have performed,
satisfied and complied with all covenants, agreements and condi-
tions required by this Agreement to be performed or complied with
by ARM on or before the Closing Date.
6.5 Preservation of Organization. ARM shall use its
best efforts (I) to preserve ARM's business organization intact,
(ii) to continue the operations of ARM at normal and customary
levels, and (iii) to preserve for ARM and SRC-ROM the goodwill
and loyalty of the timber suppliers and others having business
relations with ARM.
6.6 Taxes and Assessments. ARM represents and
warrants that it has paid all taxes and assessments due and
owing, or for which it would or will become liable, or that
otherwise may be or become a lien on the Business Assets,
including any franchise taxes due, or franchise fees, as well as
any payroll or income taxes, and ARM further represents that any
and all necessary tax returns which are directly associated with
the Business Assets have been timely and properly filed.
6.7 Corporate Action. All corporate actions
necessary to authorize the performance of this agreement by ARM
shall have been duly and validly taken by ARM; and SRCR shall
have been furnished with copies of all necessary resolutions and
consents certified by the secretary or an assistant secretary of
ARM, as of the Closing Date.
6.8 Officers Certificate. ARM shall execute and
deliver or caused to be delivered to SRCR a certificate dated the
Closing Date signed by the President or Secretary of ARM
certifying that the representations and warranties of ARM made
herein were true and correct as of the Closing Date and that SRCR
has performed and complied in all material respects with all
covenants and agreements required to be performed or complied
with by ARM prior to the Closing Date and dated the Closing Date.
7. ARM's Conditions to Closing
ARM's obligation to consummate the Closing is expressly
subject to the approval of ARM, which approval shall not be
unreasonably withheld, or an explicit written waiver by ARM of
each of the following conditions and the occurrence of the
following events:
7.1 Representations and Warranties at Closing. Each
of the covenants, representations and warranties of SRCR set
forth in this Agreement shall be true and correct when made, and
as of the Closing, as if made again at such time and shall
survive the closing and issuance of common shares of SRC-ROM for
a period of five (5) years from the Closing Date, and SRCR shall
have performed or complied with all agreements and covenants
required by this Agreement to have been complied with by SRCR
prior to the Closing.
7.2 Corporate Action. All corporate actions
necessary to authorize the performance of this agreement by SRCR
shall have been duly and validly taken by SRCR; and ARM shall
have been furnished with copies of all necessary resolutions and
consents certified by the secretary or an assistant secretary of
SRCR, as of the Closing Date.
7.3 Officers Certificate. SRCR shall execute
and deliver or caused to be delivered to ARM a certificate dated
the Closing Date signed by the President or Secretary of SRCR
certifying that the representations and warranties of SRCR made
herein were true and correct as of the Closing Date and that ARM
has performed and complied in all material respects with all
covenants and agreements required to be performed or complied
with by SRCR prior to the Closing Date and dated the Closing
Date.
7.4 SRCR's Performance. SRCR shall have performed,
satisfied and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied
with by SRCR on or before the Closing Date.
7.5 Employees. ARM's employees shall not be
considered employees of SRC-ROM under this Agreement, nor any
other actions by SRCR, other than the execution and delivery of a
written agreement by SRCR to any such employee(s), will create in
ARM's employee's any rights, explicit or implied, to employment
by SRC-ROM. Certain ARM officers shall be offered employment by
SRC-ROM; Exhibits A and B are employment agreements for those
certain individuals.
8. Representations and Warranties of ARM
ARM represents and warrants to SRCR as follows:
8.1 ARM's Best Knowledge. With respect to the
representations and warranties of ARM herein that are to "ARM's
Best Knowledge", "Best Knowledge" shall mean and include (I) the
actual knowledge of, and (ii) that knowledge which could have
been obtained through due and diligent inquiry of ARM or key
employees of ARM.
8.2 Execution, Delivery and Performance. ARM has the
right, power, legal capacity and authority to enter into and
perform its obligations under this Agreement, and to execute and
deliver this Agreement. No further action is required on the
part of ARM or any other person, entity, or court to render this
Agreement and such other agreements or instruments to be
delivered pursuant to this Agreement by ARM as legal, valid, and
binding obligations of ARM which are enforceable against him in
accordance with their terms. ARM further represents and warrants
that it is a corporation in good standing, organized and existing
pursuant to the laws of the State of Romania, and that it has
complied with all requisite corporate formalities, and that its
business license is current and valid.
8.3 No Adverse Change. Except as has been disclosed
by ARM to SRCR in the Financial Statements, there has not been:
8.3.1 Any damage or destruction, whether or
not covered by insurance, materially and adversely affecting the
financial condition, assets or operation of the Business; nor
8.3.2 Any sale or transfer of any asset of the
Business, except in the ordinary course of business.
8.4 Litigation. To the ARM's Best Knowledge, there
are no suits, claims, actions, tax liens, court-imposed or
judgment liens, levies or attachments, proceedings or
investigations pending or threatened against ARM relating to
either the Business or any of the Business Assets, except as
noted below, and ARM has no knowledge or reason to suspect that
the Business is currently operated in violation of any applicable
law, ordinance or regulation.
8.5 Title To and Condition of the Business Assets.
ARM has good and marketable title to each of the Business Assets,
free and clear of all claims of third parties, except to the
extent (if any) that ARM has provided explicit, written
information to SRCR indicating the nature, background, extent and
status of any security interest any third party may have in any
of the Business or Business Assets, and any obligations or
liabilities of any kind or nature whatsoever that ARM has to any
third parties related to the Business or Business Assets. The
Business Assets constitute all of the assets used in the conduct
of the Business, and as of the Closing Date shall be in the same
condition as they were when last inspected and/or inventoried by
SRCR.
8.6 Full Disclosure. None of the representations,
warranties or covenants made by ARM in this Agreement or in any
attached Exhibits or documents delivered to SRCR pursuant to this
Agreement by or on behalf of ARM contain any untrue statement of
any fact or omit to state any fact required to be stated in order
to make the representations, warranties or covenants not
misleading. There is no fact known to ARM which materially
adversely affects the business, operations, affairs, prospects or
condition of the Business which has not been clearly set forth in
this Agreement or an attached Exhibit or a document delivered to
SRCR pursuant to this Agreement.
9. Representations and Warranties of SRCR
SRCR represents and warrants to ARM as follows:
9.1 Valid Execution and Delivery. SRCR has all
requisite power and authority to enter into, execute and perform
the obligations under this Agreement, and no further action is
necessary on the part of SRCR to render this Agreement and such
other agreements or instruments to be delivered pursuant to this
Agreement by SRCR enforceable in accordance with their terms.
9.2 Inspection and Investigation. On the day of or
immediately preceding the Closing Date, ARM shall have a full
inspection of the most current regulatory filings for the purpose
of examining the condition of SRCR. As of the Closing Date, SRCR
shall be entering the joint venture based on: (a) its own
independent investigation and evaluation of the Business, (b) its
future prospects, and (c) the covenants, representations and
warranties of ARM set forth herein, and is not relying on any
oral representations made by ARM in this transaction with regard
to the Business and Business Assets not otherwise contained
explicitly or implicitly herein.
10. Indemnification
10.1 Indemnification by ARM. ARM agrees to indemnify,
defend and hold harmless SRCR from and against any losses, costs,
damage(s) and expenses (including but not limited to attorneys'
fees and costs) incurred by SRCR and resulting from any breach by
ARM of any of ARM's representations, warranties and covenants set
forth in this Agreement. In furtherance and not in limitation of
the foregoing indemnity, ARM shall indemnify and hold harmless
SRCR from and against all claims asserted against, and all
losses, costs, damages and expenses incurred by SRCR arising from
the business conducted by ARM prior to the Closing. SRCR shall
promptly notify ARM of the existence of any claim, demand or
other matter to which ARM's indemnification obligations would
apply and shall give ARM reasonable opportunity to defend the
same at its own expense and with counsel of its own selection;
provided, that SRCR shall at all times also have the right to
fully participate in the defense at its own expense. If ARM
shall, within a reasonable time after such notice, fail to
defend, SRCR shall have the right, but not the obligation, to
undertake the defense of, and to compromise or settle, the claim
or other matter on behalf of ARM. If the claim is one that
cannot by its nature be defended solely by ARM, SRCR shall make
available all information and assistance that ARM may reasonably
request.
10.2 Indemnification by SRCR. SRCR agrees to
indemnify, defend and hold harmless ARM from and against any
losses, costs, damage(s) and expenses (including but not limited
to attorneys' fees and costs) incurred by ARM and resulting from
any breach by SRCR of any of SRCR's representations, warranties,
and covenants set forth in this Agreement. ARM shall promptly
notify SRCR of the existence of any claim, demand or other matter
to which SRCR's indemnification obligations would apply and shall
give SRCR reasonable opportunity to defend the same at its own
expense and with counsel of its own selection; provided, that ARM
shall at all times also have the right to fully participate in
the defense at its own expense. If SRCR shall, within a
reasonable time after this notice, fail to defend, ARM shall have
the right, but not the obligation, to undertake the defense of,
and to compromise or settle (exercising reasonable business
judgment), the claim or other matter on behalf of SRCR. If the
claim is one that cannot by its nature be defended solely by
SRCR, ARM shall make available all information and assistance
that SRCR may reasonably request.
10.2.1 Any time after the Closing Date, but limited
to one (1) year after the Closing Date, ARM shall inform SRCR by
written notification ("Claim Notice") of any claim for
indemnification under Section 10.2. SRCR shall have ten (10)
days from the date of the Claim notice in which to dispute any
such claim. If ARM does not receive written notification
("SRCR's Notice") of any such dispute prior to 5:00 p.m. on the
tenth (10th) day following the date of the Claim Notice such
claim shall be deemed to be approved. In the event that all or
any portion of a claim remains unresolved twenty (20) days after
the date of SRCR's Notice after good faith efforts to resolve the
claim, ARM and SRCR shall attempt to resolve such claim through
mediation, and then, if necessary, by arbitration in accordance
with the procedures described in Section 23.
11. Notices
All notices under this Agreement by either party hereto
shall be in writing and shall be deemed effectively given when
delivered if delivered in person, or if sent by mail at the
earlier of their receipt or five (5) days after the same have
been deposited in a regularly maintained receptacle for the
deposit of U.S. mail, registered or certified, postage prepaid,
and addressed to such party as set forth below:
If to ARM:
S.C. ARM S.A.
Str. Dambovitei NR. 44
Cluj, Romania
If to SRCR:
Mr. Robert A. Dietrich
President & CEO
Semper Resources Corporation
340 E. Warm Springs Road
Ste 1A
Las Vegas, NV 89118
or to such other place as each such party may from time to time
designate by written notice to the other party delivered in the
manner specified herein.
12. Amendments and Waivers
No amendment or waiver of any provision of this Agreement
shall in any event be effective unless the same shall be in
writing and signed by the party to be bound thereby, or its
designated and authorized representative. No failure or delay on
the part of any party in exercising any power, right, privilege
or remedy under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power
or remedy constitute a waiver of any other or further exercise of
any right, power or remedy. Any waiver of any provision of this
Agreement, and any consent to any departure by any of the parties
from the terms or conditions of any provision of this Agreement,
shall be effective only in the specific instance and for the
specific purpose for which given.
13. Severability of Provisions
This Agreement shall be performed and shall be enforceable
to the full extent allowable by applicable law, and the illegal-
ity, invalidity, waiver or unenforceability of any provision of
this Agreement shall not affect the legality, validity,
applicability or enforceability of the remaining provisions
hereof.
14. Counterparts
This Agreement may be executed in two or more counterparts
and in separate counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute on and
the same instrument.
15. Entire Agreement
This Agreement contains the entire agreement of the parties
hereto with respect to the matters set forth herein. Any prior
offers, counter-offers, agreements or understandings, written or
oral, with respect to the matters set forth in this Agreement are
completely superseded by this Agreement. Each party certifies to
its full familiarity with the provisions of this Agreement and
agrees that the provisions of this Agreement are not to be con-
strued either for or against either party merely because one
party or the other has been responsible for the preparation of
the text of this Agreement.
16. Remedies Cumulative
Except as otherwise expressly set forth in this Agreement,
the rights and remedies herein provided are cumulative and are
not exclusive of any rights or remedies that any party may
otherwise have at law or in equity.
17. Successors
This Agreement shall be binding, and shall inure to the
benefit of, SRCR, ARM and their respective successors, heirs,
devisee and assigns.
18. Attorneys' Fees
If any legal action or any arbitration or other proceeding
is brought for the enforcement of this Agreement, or because of
an alleged dispute, breach, default, or misrepresentation in con-
nection with any of the provisions of this Agreement, the
successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it
or they may be entitled.
19. Recitals/ Headings/ Number/ Gender
All recitals set forth immediately preceding paragraph 1
hereof shall be incorporated herein and constitute warranties of
the appropriate party. The headings contained in this Agreement
are solely for convenience and are not intended to and do not
affect the terms hereof. Whenever the single number is used in
this Agreement, the same shall include the plural, and the
masculine gender shall include the feminine and neuter genders,
and the word "person" shall include corporation, firm, or
association when required by the context.
20. Governing Law
This Agreement shall be governed and construed in accordance
with the laws of the State of Nevada. Jurisdiction and venue
over any legal action brought hereunder shall reside exclusively
in the County of Clark, State of Nevada.
21. Expenses
ARM and SRCR shall each pay all expenses incurred by it
(respectively) in connection with and arising out of this
Agreement, including but not limited to, all fees and expenses of
its counsel and accountants.
22. Arbitration of Disputes
Any dispute arising out of this Agreement, shall be finally
settled by binding arbitration in the County of Clark, Nevada, in
accordance with the then current Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). The term "dispute"
includes, without limitation, any disagreements between the
parties concerning the existence, interpretation or enforcement
of this Agreement, or the alleged breach of this Agreement, and
any misrepresentation in connection with any of the provisions of
this Agreement. The award rendered by the arbitrator shall be
final and binding upon ARM and SRCR and may be entered in any
court (subject to paragraph 21) having jurisdiction thereof
subject only to the challenges available under the State of
Nevada's Arbitration Act(s). Either party may commence
arbitration by sending a written notice of arbitration to the
other party. The notice will state the dispute with
particularity. As part of his or her decision, the arbitrator
shall allocate the costs of arbitration, including fees of
attorneys and experts, as he or she deems fair and equitable in
light of all relevant circumstances. Said arbitration shall be
conducted by an arbitrator chosen by mutual agreement of ARM and
SRCR, or failing such agreement, an arbitrator experienced in
commercial/business matters, including the sale and/or purchase
of a small business, appointed by the AAA. There shall be
limited discovery prior to the arbitration hearing as follows:
(a) exchange of witness lists and copies of documentary evidence
and documents related to or arising out of the issues to be
arbitrated, (b) depositions of all party witnesses, and such
other depositions as may be allowed by the arbitrator(s) upon a
showing of good cause. Depositions shall be conducted in
accordance with the Nevada Code of Civil Procedure. The
arbitrator shall be required to provide in writing to the parties
the basis and reasoning of the award or order of such arbitrator.
A court reporter may record all hearings, with such record
constituting the official transcript of such proceedings.
Nothing contained herein, however, shall preclude either party
from promptly seeking equitable relief against the other, if
deemed truly necessary, in a Court in Clark County. Each party
hereto understands and accepts that by virtue of this arbitration
clause, there will very likely be no trial by jury available
hereunder and, thus, each party hereto acknowledges a waiver of
that otherwise fundamental right to a trial by jury.
23. Understanding and Legal Counsel
Each party hereto has carefully read and reviewed this
Agreement, and the exhibits hereto, and understands same. Each
party has also carefully reviewed this Agreement with his counsel
and/or accountant or other professional advisor(s), or chosen not
to do so at his own risk. Each party voluntarily enters into
this Agreement.
24. Brokers/Finders/Intermediaries
ARM shall be responsible for any and all fees charged by
Brad Evans, the only recognized intermediary, incurred or to be
incurred as the result of the consummation of this Agreement and
closing.
IN WITNESS WHEREOF, ARM and SRCR have executed this
Agreement as of the date and year first above written.
Semper Resources Corporation S.C. ARM S.A.
a Nevada corporation A Romanian corporation
By:/s/Robert A. Dietrich By: /s/Louis F. Coppage
----------------------------- --------------------------
Robert A. Dietrich, Louis F. Coppage,
President & CEO Managing Director
SUBSIDIARIES OF THE REGISTRANT
1. Resources of the Pacific, Inc.
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<NAME> SEMPER RESOURCES CORPORATION
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