UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended June 30, 1996
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (No fee required) for the transition period from ____________________ to
_______________________.
Commission file number: 0-19069
ATC II, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 75-2395356
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
268 West 400 South, Suite 300 Salt Lake City, Utah 84101
(Address of Principal Executive Offices) (Zip Code)
(801) 575-8073
(Issuer's Telephone Number, Including Area Code)
Securities registered under
Section 12(g) of the Exchange Act:
Common Stock, $0.01 Par Value
Title of Class
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The issuer had no revenues for the year ended June 30, 1996.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average bid and asked prices of such stock, as of October
14, 1996, was $0.00, because the Company's Common Stock was not traded on a
stock market or quotation system.
es:
The number of shares outstanding of the issuer's common stock ($0.01 par
value), as of October 14, 1996 was 4,996,811.
Total of Sequentially Numbered Pages: 19
Exhibit Index on Page: 16
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS..............................................3
ITEM 2. DESCRIPTION OF PROPERTY..............................................5
ITEM 3. LEGAL PROCEEDINGS....................................................5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................. 7
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..........7
ITEM 7. FINANCIAL STATEMENTS ................................................9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.......................10
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT................ 10
ITEM 10. EXECUTIVE COMPENSATION..............................................10
ITEM 11. SECURITY OWNERSHIP OF BENEFICIAL OWNERS.............................11
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................12
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K....................................14
SIGNATURES..................................................15
INDEX TO EXHIBITS...........................................16
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Business Development
ATC II, Inc. is a Delaware corporation with corporate headquarters
located in Salt Lake City, Utah. Hereinafter, unless the context indicates
otherwise, the term "Company" refers to ATC II, Inc., and its predecessors and
former subsidiaries. The Company was originally organized as ATC, Inc. on
February 7, 1979 under the laws of British Columbia, Canada. The Company was
redomiciled as a Delaware corporation on November 20, 1990. On December 13,
1990, Amertelco, Inc., a Delaware corporation and then the sole owner of the
Company, merged into the Company. The Company adopted its present name on July
27, 1993 in conjunction with the revival of its charter under Delaware law.
From July 1984 through June 1992, the Company's primary business was
conducted through its former subsidiary, American Telecommunications Corp., a
Texas corporation ("American"), which provided long-distance telecommunications
management services to the hotel industry. On June 18, 1992, the Company
liquidated its interest in American. For more information on the sale of
American and the litigation which resulted from this sale, see the Company's
Form 10-KSB for fiscal year ended June 30, 1995 and "Item 6 - Management's
Discussion and Analysis or Plan of Operation."
On August 31, 1993, the Company acquired all outstanding capital stock
of Carnegie Film Group, Inc. ("Carnegie") in exchange for shares of the
Company's common stock, par value $0.01 ("Common Stock"). On the same day, the
Company acquired a $3.6 million promissory note payable by Carnegie in favor of
Communications and Entertainment Corporation ("ComEnt"). In exchange for the
note, the Company issued shares of Common Stock and 3,076,923 shares of 4%
Series A Cumulative Convertible Preferred Stock. The Company also guaranteed the
payment of a separate $350,000 demand note executed by Carnegie in favor of
ComEnt Funding Corp. ("ComEnt Funding"), a subsidiary of ComEnt. Subsequently,
the Company itself borrowed an additional $150,000, payable on demand, from
ComEnt Funding.
ComEnt filed suit against the Company due to the Company's failure to
make payments on the note the Company had executed, as well as the note it had
guaranteed. The lawsuit was dismissed pursuant to a Settlement Agreement entered
by and between the Company, ComEnt, ComEnt Funding and Carnegie on August 15,
1994. Pursuant to the Settlement Agreement, which led to the cancellation of all
of ComEnt's 3,076,923 shares of Series A Convertible Preferred Stock and the
issuance of 900,000 shares of a new Series B Convertible Preferred Stock to
ComEnt.
On October 2, 1995, the Company paid ComEnt Funding $20,000 in exchange
for the redemption of all Series B Convertible Preferred Stock and in settlement
of all claims. This payment extinguished all debts owed to ComEnt and ComEnt
Funding, including all accrued dividends on the preferred stock. All shares of
the Series B Convertible Preferred Stock were ultimately canceled by the Company
on July 2, 1996. For more information regarding the purchase of Carnegie, see
the Company's Form 10-KSB for fiscal year ended June 30, 1995. The Company no
longer has any shares of preferred stock outstanding.
On November 5, 1993, the Company formed Filmways Entertainment
Corporation, a Delaware corporation ("Filmways"), for the purpose of acquiring,
producing and marketing feature length films.
From August 1993 through June 1994, the Company's subsidiaries,
Carnegie and Filmways, engaged in the distribution of feature length motion
pictures. During the 1994 fiscal year, these subsidiaries discontinued all film
distribution operations. Effective June 23, 1994, the Company sold any and all
rights, title and interest it had in the common stock of Carnegie to National
Media Inventory, Inc. ("NMI"), an affiliate of the Company. In exchange for the
capital stock of Carnegie, the Company received advertising credits in a weekly
Spanish language newspaper and a Spanish advertising circular. These advertising
credits were subsequently transferred to ComCentral as settlement for claims
ComCentral had asserted against the Company. For more information on the
disposition of Carnegie, see the Company's Form 10-KSB for fiscal year ended
June 30, 1995.
<PAGE>
Effective September 1, 1994, the Company transferred all of its rights
and interests in the stock of Filmways to Xeta Corporation pursuant to the order
of the United States District Court for the Northern District of Oklahoma. For
more information on this transfer to Xeta, see "Item 3 - Legal Proceedings."
The Company, through its subsidiary, Thistle Properties, Inc., an
Illinois corporation ("Thistle"), entered into a Real Estate Sales Agreement
dated June 20, 1994 (the "RES Agreement"). Through the RES Agreement, Thistle
purchased a manufacturing plant located in Canton, Illinois from CyberAmerica
Corporation, a Nevada corporation then known as The Canton Industrial
Corporation ("CyberAmerica"). From June 20, 1994 to May 12, 1995, Thistle owned
and managed the manufacturing plant. On May 4, 1995, Thistle received a Notice
of Default from CyberAmerica. Thistle subsequently informed CyberAmerica that
due to Thistle's poor financial position, neither Thistle nor the Company would
be able to comply with the terms of the Note. Thistle, with the Company's
approval, proposed to forfeit all payments made to CyberAmerica and to allow
CyberAmerica to foreclose on the security (100% of Thistle's capital stock)
provided by the Amended RES Agreement in exchange for a mutual release of all
claims. Effective May 12, 1995, the Company and Thistle executed a Mutual
Release with CyberAmerica, through which 100% of the capital stock of Thistle
was transferred to CyberAmerica. For more information on the Canton
Manufacturing plant, see the Company's Form 10-KSB for fiscal year ended June
30, 1995.
Thistle entered into a Textile Purchase Agreement dated June 20, 1994
with Carousel, Inc., a Utah corporation, pursuant to which Thistle purchased
commercial textiles in exchange for shares of Common Stock. On June 30, 1994,
the Company entered into Exchange Agreements with Asset Management Trust, San
Pedro Securities, Global Market Systems, and David Newren pursuant to which the
Company acquired additional prepaid advertising credits. The textiles and due
bills were transferred to ComCentral according to the Compromise, Release and
Indemnification Agreement. For more information on this settlement, see "Item 6
- - Management's Discussion and Analysis or Plan of Operations."
Pursuant to a June 30, 1995 Purchase Agreement with Turner, Turner &
Associates, a Washington corporation ("TTA"), the Company acquired the exclusive
right to license products produced under U.S. Patents Numbers 5,296,216 and
5,306,509 (the "Patents"). The Patents relate to an oral lavage, the trademark
of certain products, and a protocol known as STOMASTAT(TM). In development since
1983, STOMASTAT(TM) is a peroxide and bicarbonate-based solution that cleanses,
irrigates, and protects the oral cavity from stomatitis, a process which results
in mouth ulcers or canker sores. The Purchase Agreement was rescinded in
February 1996 because several conditions of the Purchase Agreement had not been
met and both the Company and TTA desired an alternative structure for the
purchase. After several months of unsuccessful negotiations, both parties
decided to abandon this transaction.
Business of Issuer
Due to the liquidation of Carnegie and Filmways and the surrender of
Thistle to CyberAmerica, the Company no longer has any operating subsidiaries.
The Company's business is now directed toward finding a suitable merger or
acquisition candidate who can provide the Company with the basis for successful
operations. Since the Company lacks significant cash flow, any merger of
acquisition effected by the Company will involve the issuance of its Common
Stock. As of the date of this filing, the Company has identified potential
merger and acquisition candidates; however, all negotiations are in the
preliminary stages and no definitive agreements have been reached.
To help it find an appropriate reorganization partner, the Company has
retained the services of Canton Financial Services Corporation, a Nevada
corporation ("CFS"). CFS provides financial consulting services including
preparing necessary documentation for capital raising, handling shareholder and
public relations work, and introducing the Company to suitable business
opportunities. CFS introduced the Company to TTA. CFS was originally retained
pursuant to a June 30, 1994 Consulting Agreement which has been renewed on a
month-to-month basis since that date. According to that Agreement, CFS receives
a $30,000 monthly fee which the Company can pay in cash or by issuing restricted
common stock to CFS. CFS is a subsidiary of the aforementioned CyberAmerica. For
more information on both CFS and CyberAmerica, see "Item 12 - Certain
Relationships and Related Transactions."
<PAGE>
The Company has no full time employees. However, pursuant to the
consulting agreement with CFS, the Company receives consulting, administrative
and other services from CFS as needed. CFS employs approximately 40 full-time
employees, many of whom rendered services to the Company during the fiscal year.
ITEM 2. DESCRIPTION OF PROPERTY.
In August 1996, the Company relocated its corporate headquarters from
6701 Baum Drive, Suite 345, Knoxville, Tennessee, 37919 to 268 West 400 South,
Suite 300, Salt Lake City, Utah, 84101. This office space is currently being
leased by the Company pursuant to the Consulting Agreement with Canton Financial
Services Corporation. The Company does not own any property, and does not
anticipate the purchase of additional property in the near future.
ITEM 3. LEGAL PROCEEDINGS
The Company knows of no material legal proceedings or material
developments in any legal proceedings involving the Company or its subsidiaries,
other than those discussed below. However, due to the recent resignations of
officers and directors of the Company and the discontinuation of the businesses
of some of the Company's subsidiaries, there may be other material legal
proceedings pending or threatened against the Company, its subsidiaries or
former officers and directors of which current management is not aware.
On February 5, 1993, BG Acorn Capital Fund, a trust formed under the
laws of the Province of Ontario, Canada (the "Trust"), filed suit in the Supreme
Court of British Columbia against the Company and former officers of the
Company, Richard L. Liu and Raymond R. Cottrell. The Trust contends that the
Company owed it $500,000 plus interest at 10% from December 1990 and sought
costs and further relief for the Company's failure to repay indebtedness. The
Trust alleged that funds advanced to the Company's subsidiary, American
Telecommunications Corp., were for the benefit of, and used by, the Company. The
Trust received a judgment against American prior to filing this lawsuit. The
Company contends that the court does not have jurisdiction over it and that the
money is owed by American, not the Company. This action was set for trial on
September 7, 1994, but the Trust did not proceed to trial at that time. Trial
could be rescheduled by the Trust.
On October 6, 1993, The Private Lessons Partnerships, L.P., a
California limited partnership ("PLP"), filed suit in the Superior Court of the
State of California for the County of Los Angeles against the Company, Filmways,
Carnegie, the officers of Filmways and Carnegie, and other defendants. PLP is
seeking compensatory damages of $315,000 and punitive damages for an alleged
breach of a distribution agreement and fraud. PLP has attached Carnegie's assets
in California. The suit results from an alleged breach of a distribution
agreement and fraud. The Company is defending the lawsuit on the grounds that it
is not liable for the breach, if any, since the agreement was with its
subsidiaries.
On September 18, 1992, Xeta Corporation, an Oklahoma corporation
("Xeta"), filed suit in the United States District Court for the Northern
District of Oklahoma, against the Company based on the alleged breach of a
security agreement. On August 26, 1993, Xeta obtained Summary Judgment against
the Company and American in the principal sum of $119,379.42 plus $30,479.72 for
attorney's fees and costs. The Company accrued the amount of the judgment as an
expense. In December 1993, the Company filed an appeal with the Tenth Circuit
Court of Appeals, challenging the Summary Judgment on various procedural issues.
The Company was represented by local counsel on September 26, 1994, at oral
arguments of such appeal. On October 10, 1994, the Tenth Circuit affirmed
Summary Judgment. On July 21, 1994, following several asset hearings and other
collections efforts, the Court issued an Order for Judgment Debtor to Appear and
Turn Over Assets and Property to the Plaintiff (the "Order"). Pursuant to the
Order, the Company transferred all outstanding shares of the capital stock of
Filmways to Xeta.
<PAGE>
On March 8, 1995, Xeta filed a related suit in the United States
District Court, in the Central District of Utah, case number 95CV-218G. In this
suit, Xeta is seeking to recover $116,500 which it contends was fraudulently
conveyed by the Company in order to avoid payment on the judgment held by Xeta.
Xeta brought suit against CyberAmerica Corporation (then known as The Canton
Industrial Corporation), the recipient of the alleged fraudulent conveyance, as
well as Richard Surber and Dr. Gerald Curtis, both directors of the Company at
the time of the transfer. On April 16, 1996, the Court announced its decision to
grant Xeta's Motion for Summary Judgment against CyberAmerica, but denied Xeta's
motion in regard to Mr. Surber and Dr. Curtis. CyberAmerica has appealed the
granting of Summary Judgment and that appeal is currently pending. If Xeta
ultimately prevails in this litigation, CyberAmerica will likely seek
indemnification against the Company for the full $116,500.
In February 1994, Strategic Growth International, Inc. filed a
complaint in the Supreme Court of the State of New York, County of Nassau,
against the Company in the amount of approximately $89,000 for an unpaid fee
allegedly earned pursuant to a contract for investor relations services. The
Company's management has terminated the contract and is attempting to reach a
settlement. If a reasonable settlement, in light of the facts and actual
services performed, cannot be reached, the Company intends to defend this
lawsuit to the extent the Company's resources permit it to do so.
On December 30, 1994, Krishna Shah, an individual, filed a complaint in
the Superior Court for the State of California, County of Los Angeles, case
number BC119166. The complaint was filed against N. Norman Muller, ComEnt, the
Company, Carnegie Film Group, Jerry Minsky, Perry Scheer, Susan Bender, Larry
Meyers, Robert E. Hesse and Double Helix Films, Inc. Shah's complaint alleged
that the defendants had made false promises to the plaintiff and, through a
series of corporate mergers and acquisitions, negligently injured the plaintiff
to the extent of $152,000. The suit seeks unspecified compensatory and punitive
damages as well as emotional distress damages. Shah has filed a motion seeking a
default judgment against the Company, but this motion has yet to be granted. The
Company believes that the suit is without merit and intends to respond in the
appropriate manner.
On July 11, 1995, the Company filed a complaint in the State of Utah,
Third Judicial District Court against Louis Metzer, an individual resident of a
foreign country, civil case number 950904843. On November 1, 1994, Louis Metzer
entered into a stock purchase agreement with the Company, wherein Metzer agreed
to purchase 250,000 shares of the Company's Common Stock in exchange for
$187,500. On the same date, Metzer entered into a written promissory note
promising to pay the Company $187,500 plus 6% per annum on or before February 1,
1995. Metzer has defaulted on the promissory note and the Company is seeking
recovery on said note. Efforts to serve Metzer have been unsuccessful. The
Company is currently working to locate Metzer to complete service.
On July 11, 1995, the Company filed a complaint against Christopher
Wells, an individual resident of a foreign country, in the State of Utah, Third
Judicial District Court civil case number 950904842. On October 10, 1994,
Christopher Wells ("Wells") entered into a stock purchase agreement with the
Company, in which Wells agreed to purchase 1,500,000 shares of the Company's
Common Stock. The transaction was secured by a promissory note with a face value
of $562,500 entered into between both parties on October 10, 1994. Wells has
defaulted on the promissory note and the Company seeks to recover on said note.
Efforts to serve Wells have been unsuccessful. The Company is currently working
to locate Wells to complete service.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders during
the fourth quarter of fiscal year 1996 and had not submitted any such matters as
of October 14, 1996.
<PAGE>
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The common stock of the Company traded over-the-counter on the NASDAQ
Small Cap Market under the symbol "ATCI" until December 22, 1994 when it was
delisted for failure to maintain minimum listing requirements. The Company's
Common Stock has not publicly traded since that time. Accordingly, the table
below only quotes prices through the end of 1994. The Company intends to apply
to have its securities traded on the OTC Bulletin Board, and is in the process
of obtaining a quotation pursuant to Rule 15c2-11 under the Securities Exchange
Act of 1934. The table set forth below lists the range of high and low bids for
the Company's Common Stock as reported by NASDAQ for each quarter during the
Company's 1994 fiscal year. The prices in the table reflect inter-dealer prices,
without retail markup, markdown or commission and may not represent actual
transactions. These prices HAVE been adjusted for the 1-for-40 reverse split
effected August 24, 1994.
Calendar Year Calendar Quarter High Low
1994 Third $6.00 $2.40
1994 Fourth (Partial Period) $3.60 $2.40
On August 16, 1994, the Company's shareholders approved one-for-ten
(1:10) and one-for-four (1:4) reverse splits of the Company's common stock
(effectively amounting to a one-for-forty (1:40) reverse split), which took
effect on August 24, 1994. For more information, see the Company's Form 10-QSB/A
for the quarter ending September 30, 1994.
Holders
As of October 14, 1996, there were 423 stockholders of record holding
4,996,811 shares of the Company's Common Stock.
Dividends
The Company has not declared any cash dividends for the last three
fiscal years and does not anticipate paying any dividends in the foreseeable
future. The payment of dividends is within the discretion of the Board of
Directors and will depend on the Company's earnings, capital requirements,
financial condition, and other relevant factors.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
The following discussion should be read together with the Company's
consolidated financial statements and notes thereto included in this Form
10-KSB.
From 1984 to 1993, the Company's business was in telecommunications and
producing and distributing feature length motion pictures. In June 1992, the
Company began to divest its interest in certain unprofitable subsidiaries.
Similar divestitures followed in fiscal 1993 and 1994. In fiscal 1994, the
Company focused its efforts on discontinuing or winding down unsuccessful
operations, resolving existing and potential liabilities and searching for
attractive merger or acquisition partners and profitable business opportunities.
These efforts, which continued in fiscal 1995 and 1996, have affected
inter-period comparability of the Company's operating results and financial
condition.
<PAGE>
On December 29, 1994, the Company and ComCentral Corp., a Utah
corporation n/k/a Tianrong Building Material Holdings, Ltd. ("ComCentral"),
agreed to a Compromise, Release and Indemnification Agreement. This settled
ComCentral's claim that the Company breached representations it, or its
predecessor in interest, allegedly made in a 1992 agreement between the
companies whereby the Company sold to ComCentral all of the common stock of
American Telecommunications Corp. ("American"). ComCentral claimed that the
Company had misrepresented the value of American's assets and existing contracts
and asserted damages of $2,533,600. The parties agreed to fully settle these
claims with the Company's immediate transfer to ComCentral of textiles valued at
$626,500 and media credits valued at $775,000, and a future transfer of $250,000
worth of media credits. ComCentral agreed to assume the payment obligation of a
$400,000 promissory note secured by the media credits. ComCentral also assumed
the position of payee with respect to a promissory note on the textiles which
was initially payable to Carousel, Inc. by Thistle Properties, Inc., a former
wholly owned subsidiary of the Company. The Company's current management was
unaware of the existence of this potential liability until it was notified by
ComCentral in January 1995. For more information on the settlement with
ComCentral, see the Company's Form 10-KSB for the fiscal year ended June 30,
1995.
In May 1994, CyberAmerica Corporation, a Nevada corporation then known
as The Canton Industrial Corporation ("CyberAmerica"), served Thistle
Properties, Inc., then a wholly-owned subsidiary of the Company ("Thistle"), and
the Company with a Notice of Default on the Real Estate Lien Note executed
between the parties. Thistle proposed to forfeit all payments previously made
under the Real Estate Sales Agreement entered by and between Thistle and
CyberAmerica and to allow CyberAmerica to foreclose on the security (100% of the
capital stock of Thistle) in exchange for a mutual release of all claims.
Effective May 12, 1995 the Company and Thistle executed a Mutual Release with
CyberAmerica by which the Company transferred 100% of the capital stock of
Thistle to CyberAmerica and by which CyberAmerica released the Company from all
obligations with respect to the Canton Manufacturing plant. For more information
on this transaction see "Item 1 - Description of Business" and the Company's
Form 10-KSB for fiscal year ended June 30, 1995.
Effective September 1, 1994, the Company transferred all of its rights
and interests in the stock of Filmways Entertainment Corporation, to Xeta
Corporation pursuant to an order of the United States District Court for the
District of Oklahoma. For more information on this transfer, see "Item 3 Legal
Proceedings."
By the end of the 1994 fiscal year, the Company had disposed of nearly
all of its assets in an attempt to extinguish liabilities and restructure
operations. The Company's emphasis then shifted toward finding a suitable
acquisition or merger candidate.
Effective June 30, 1995, the Company entered into a Purchase Agreement
with Turner, Turner & Associates, a Washington corporation ("TTA"), and TTA's
shareholders. According to the Purchase Agreement, the Company acquired the
rights to United States Patents numbered 5,296,216 and 5,306,509. The patents
were developed by TTA and relate to STOMASTATTM, a peroxide and
bicarbonate-based solution that cleanses, irrigates, and protects the oral
cavity from stomatitis, a process which results in mouth ulcers or canker sores.
The Company intended to make the production and distribution of STOMASTATTM the
focal point of its operations.
On January 19, 1996 and in order to help facilitate the Purchase
Agreement, Richard H. Turner, the president of TTA, was appointed as the
Company's president and director. The Purchase Agreement, however, was rescinded
in February 1996 because many of its conditions had not been met and because all
parties involved determined that an alternative structure would be preferable.
The Company continued to negotiate with TTA for several months in an attempt to
reach a second agreement, but no such agreement was reached. The parties
ultimately discontinued all negotiations in May 1996. On May 6, 1996, Richard H.
Turner resigned as president and a director of the Company. On August 20, 1996,
the Company appointed Dr. Gerald Curtis as its president and director. Jack
Hartgrove and James Thompson resigned as officers and directors of the Company
immediately after the appointment of Dr. Curtis, leaving Dr. Curtis as the
Company's sole officer and director.
Under new management, the Company is continuing its search for a
suitable merger or acquisition partner. As of the date of this filing, the
Company has identified potential merger and acquisition candidates, however all
negotiations are in the preliminary stages and no definitive agreements have
been reached.
<PAGE>
Plan of Operation
The Company has not had any revenue from operations during the past two
fiscal years. The following discussion of the Company's plan of operations
should be read in conjunction with the audited financial statements included in
this Form 10-KSB.
As a result of the transfers of Carnegie, Filmways, and Thistle, and
the rescission of the Purchase Agreement with TTA, the Company no longer has any
operating or other significant assets. The Company does not currently produce
any goods or provide any services, and has no employees aside from it current
president. The Company's business plan involves merging with or acquiring a
suitable business entity that can provide the Company with a basis for
successful operations. While the Company is currently in negotiation with
potential merger or acquisition candidates, all discussions are currently in the
preliminary stages, and no definitive agreements have been reached. The Company
can provide no assurances that the Company will be able to locate an entity with
which to combine or that, if such a combination is achieved, that it will be
profitable, worthwhile or sustainable.
Since the Company no longer has any significant assets, any merger or
acquisition that the Company ultimately effects will involve the issuance of the
Company's Common Stock. Such an exchange of the Company's Common Stock would
substantially dilute the existing ownership position of the Company's current
shareholders. A merger or acquisition will also likely result in the Company's
recruitment of additional employees.
The Company is in the process of obtaining a quotation for its Common
Stock pursuant to the provisions of Rule 15c2-11 under the Securities Exchange
Act of 1934. The Company hopes that obtaining a quotation will facilitate the
Company's efforts to acquire merger or acquisition candidates through the
issuance of Common Stock. However, the Company can provide no assurances that it
will be able to obtain a quotation of its Common Stock or that, if it is
successful in obtaining a quotation, that the Company will successfully effect a
merger or acquisition.
In order to help it find a suitable merger or acquisition partner, the
Company has retained the services of Canton Financial Services Corporation, a
Nevada corporation which provides professional business consulting services
("CFS"). CFS assists the company in preparing the documentation necessary to
raise capital, finding suitable business opportunities, and handling shareholder
and public relations work. CFS was originally retained pursuant to a June 30,
1994 Consulting Agreement which originally had a one year term, but has been
renewed on a month-to-month basis since that time. According to that Agreement,
CFS receives a $30,000 monthly fee which the Company can pay in cash or by
issuing restricted common stock to CFS.
ITEM 7. FINANCIAL STATEMENTS
Please see Pages F-1 through F-13.
<PAGE>
ATC II, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
PAGE
Consolidated Financial Statements (Submitted in response
to Part II, Item 7):
Independent Auditor's Report (Year Ended June 30, 1996) F-2
Consolidated Balance Sheets - June 30, 1996 F-3
Consolidated Statements of Loss - for the Years
Ended June 30, 1996, and 1995 F-4
Consolidated Statements of Stockholders' Equity/
Deficit - for the Period from July 1, 1994
through June 30, 1996 F-5
Consolidated Statements of Cash Flows - for the Years
Ended June 30, 1996, and 1995 F-6
Notes to Consolidated Financial Statements F-7
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors
ATC II, Inc.
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheet of ATC II, Inc. and
subsidiaries as of June 30, 1996, and the related consolidated statements of
loss, stockholders' equity, and cash flows for the years ended June 30, 1996 and
1995. 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.
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 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 provides 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 ATC II, Inc. and
subsidiaries as of June 30, 1996, and the results of their operations and their
cash flows for the years ended June 30, 1996 and 1995 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described more fully in Note 5 to
the consolidated financial statements, the Company has suffered recurring losses
from operations and has an accumulated deficit that raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
In addition, as described more fully in Note 4 to the consolidated financial
statements, the Company has several significant outstanding contingencies. The
ultimate outcome of these matters can not presently be determined. Accordingly,
no provision for any liability that may result upon the final outcome has been
made in the accompanying consolidated financial statements.
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
October 14, 1996
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 1996
ASSETS
<S> <C>
Film distribution rights (Net of Amortization of $63,050)$ .. 252,200
Total Assets .................................................. $ 252,200
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable ............................................ $ 213,904
Accrued expenses (Note 1) ................................... 379,354
Notes payable-current (Note 2) .............................. 157,500
Total Current Liabilities ..................................... 750,758
Total Liabilities ............................................. 750,758
STOCKHOLDERS' DEFICIT
Common Stock, $.01 par value;
20,000,000 shares authorized;
4,978,580 shares issued and outstanding .................. 49,786
Paid-in capital ............................................. 24,160,854
Accumulated deficit ......................................... (24,709,198)
Total Stockholders' Deficit ................................... (498,558)
Total Liabilities and Stockholders' Deficit ................... $ 252,200
</TABLE>
F-3
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF LOSS
YEARS ENDED JUNE 30, 1996 AND 1995
1996 1995
<S> <C> <C>
Sales ................................... $ -- $ --
Cost of sales ........................... -- --
Gross profit ............................ -- --
Operating expenses:
General and administrative ............ 2,981 1,126,214
Amortization .......................... 63,050 --
Salaries and consulting fees .......... 23,077 1,185,898
Total operating expenses ................ 89,108 2,312,112
Loss from operations .................... (89,108) (2,312,112)
Other income (expense):
Interest expense ...................... (21,030) (207,384)
Asset valuation adjustment ............ -- (486,850)
Loss in value of investments .......... -- (214,779)
Total other income (expense) ............ (21,030) (909,013)
Income (loss) from continuing operations (110,138) (3,221,125)
Loss from discontinued operations
(Note 3) ................................ -- (582,769)
Net loss before preferred dividends ..... (110,138) (3,803,894)
Preferred dividends (Note 6) ............ 15,750 31,500
Net loss before extraordinary items ..... (125,888) (3,835,394)
Extraordinary items:
Gain on forgiveness of debt
(net of tax of $0) (Note 6) ............. 47,250 --
Net loss ................................ $ (78,638) $(3,835,394)
Loss per share (Note 1):
Loss from continuing operations ....... $ (0.04) $ (1.26)
Loss from discontinued operations ..... $ 0.00 $ (0.23)
Extraordinary item .................... $ 0.02 $ --
Loss per share .......................... $ (0.02) $ (1.49)
Weighted average shares outstanding ..... $ 2,875,299 $ 2,550,446
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
ATC II INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEAR ENDED JUNE 30, 1996
Series A Series A Series B Series B Common Common
Preferred Preferred Preferred Preferred Stock Stock
Shares Amount Shares Amount Shares Amount
------------- ------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994 .... 3,076,923 $ 30,769 $ -- -- 503,689 $ 5,037
Shares issued for services .. -- -- -- -- 9,481,331 94,813
Shares issued for cash ...... -- -- -- -- 476,711 4,767
Shares issued for assets .... -- -- -- -- 1,043,750 10,438
Conversion of preferred stock (3,076,923) (30,769) 900,000 900,000 -- --
Move redeemable stock
above equity section ...... -- -- -- -- -- --
Transferred Thistle to Canton
(Note 7) .................. -- -- -- -- -- --
Net loss for the year
ended June 30, 1995 ....... -- -- -- -- -- --
------------ ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1995 .... $ -- -- 900,000 $ 900,000 11,505,481 $ 115,055
Redemption of preferred stock
(Note 6) .................. -- -- (900,000) (900,000) -- --
Factional shares ............ -- -- -- -- (73) (1)
Cancellation of shares
(Note 8) .................. -- -- -- - (8,468,156 (84,682)
Stock issuance for consulting
services .................. -- -- -- -- 1,941,328 19,414
Net loss for the year
ended June 30, 1996 ....... -- -- -- -- -- --
------------ ---------- ---------- ---------- ---------- ----------
Balance at June 30, 1996 .... $ -- -- $ -- -- 4,978,580 $ 49,786
============ ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5(a)
<PAGE>
<TABLE>
<CAPTION>
ATC II INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
YEAR ENDED JUNE 30, 1996
Total
Paid-in Accumulated Valuation Stockholder
Capital Deficit Allowance Deficit
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Balance at June 30, 1994 .... $ 21,552,719 $ (20,795,166) $ (441,684) $ 351,675
Shares issued for services .. 975,366 -- -- 1,070,179
Shares issued for cash ...... 633,694 -- -- 638,461
Shares issued for assets .... 903,624 -- -- 914,062
Conversion of preferred stock (869,231) -- -- --
Move redeemable stock
above equity section ...... -- -- -- (900,000)
Transferred Thistle to Canton
(Note 7) .................. -- -- 441,684 441,684
Net loss for the year
ended June 30, 1995 ....... - (3,835,394) - (3,835,394)
-------------- ------------- ------------ ------------
Balance at June 30, 1995 .... $ 23,196,172 $ (24,630,560) $ - (1,319,333)
Redemption of preferred stock
(Note 6) .................. 880,000 -- -- 880,000
Factional shares ............ -- -- -- (1)
Cancellation of shares
(Note 8) .................. 84,682 -- -- --
Stock issuance for consulting
services .................. -- -- -- 19,414
Net loss for the year
ended June 30, 1996 ....... -- (78,638) -- (78,638)
-------------- ------------- ------------ ------------
Balance at June 30, 1996 .... $ 24,160,854 $ (24,709,198) $ -- (498,558)
============== ============= ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
F-5(b)
<TABLE>
<CAPTION>
ATC II, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30. 1996 AND 1995
1996 1995
<S> <C> <C>
Cash flow from operations:
Loss from continuing operations $ (78,638) $(3,221,125)
Adjustment to reconcile loss to net cash
provided by (uses for) continuing operations:
Bad debt - 750,000
Depreciation and amortization 63,050 -
Loss on valuation adj. inventory, receivables - 701,629
Gain on forgiveness of debt (47,250) -
Shares issued for services 19,414 1,070,179
Change in assets and liabilities net of acquisitions:
Accounts, notes, and other receivables - 40,850
Prepaid expenses - 61,086
Accounts payable 22,394 (68,483)
Accrued expenses 21,030 (253,643)
Cash used for continuing operations - (919,507)
Gain (loss) from discontinued operations: - (582,769)
Adjustments to reconcile gain (loss) to net cash
provided by (used for) discontinued operations:
Disposal of Thistle and Filmways - 830,719
Depreciation - 30,847
Cash provided by (used for) discontinued operations - 278,797
Cash provided by (used for) operating activities - (640,710)
Cash flow from investing activities:
Cash flow from financing activities:
Proceeds from stock issuances - 638,461
Cash provided by (used for) financing activities - 638,461
Net increase (decrease)in cash - (2,249)
Cash, beginning of year - 2,249
Cash, end of year $ - $ -
Supplemental cashflow information:
Cash paid for interest $ - $ 207,384
Noncash investing and financing transactions:
Purchase of assets with common stock - 914,062
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - ATC II, Inc. (ATC II) was incorporated under the laws of
British Columbia, Canada in 1979 under the name ATC, Inc. ATC II was redomiciled
as a Delaware corporation on November 20, 1990. Its primary business operating
segments have been in telecommunications, entertainment, and real estate. ATC II
is actively pursuing opportunities in the aforementioned spheres, as well as any
other business opportunity.
Filmways Entertainment Corporation was incorporated in the State of
Delaware on November 5, 1993. Its primary business was the distribution of films
in the United States and internationally. Filmways was awarded to another
company in settlement of a lawsuit on September 1, 1994.
Thistle Properties, Inc. (Formerly known as TAC of Illinois) was organized
in the State of Illinois. ATC II purchased Thistle from CyberAmerica
Corporation, a Nevada corporation, formerly known as the Canton Industrial
Corporation (CyberAmerica) to hold commercial rental real estate (see Note 7).
Thistle was returned to CyberAmerica after Thistle defaulted on a loan on May
12, 1995.
Principles of Consolidation - The consolidated financial statements for the
year ended June 30, 1996 include the accounts of ATC II, Inc. (formerly ATC,
Inc.) only.
The consolidated financial statements as of June 30, 1995 include the
accounts of ATC II, Inc. and its subsidiaries, Thistle Properties, Inc.
(Thistle) until May 12, 1995, when Thistle was returned to CyberAmerica; and
Filmways Entertainment Corporation until September 1, 1994, when Filmways was
awarded to another company in settlement of a lawsuit.
Collectively, these entities are referred to as the Company. See Note 3 for
discussion of the disposition of subsidiaries during the year. All significant
intercompany transactions and accounts have been eliminated.
Accounting Method - The Company's financial statements are prepared using
the accrual method of accounting.
Property and Equipment - Depreciation is computed on the straight-line
method over the estimated useful lives. Major renewals and betterments are
capitalized while expenditures for maintenance and repairs are charged to
operations as incurred.
Property and equipment are recorded at cost. Depreciation expense for the
year ended June 30, 1995 was included in the "discontinued operations" (see Note
3) and amounted to $30,847.
Net (Loss) Income per Common Share - The computation of net (loss) income
per common share is based on the weighted average number of common shares
outstanding during the period. Employee stock options and stock purchase
warrants are not included because their effect is immaterial. In August of 1994
the Company authorized a 1-for-40 reverse split of its outstanding common stock.
All share and per share information in these financial statements and notes have
been retroactively
F-7
<PAGE>
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
restated to reflect this reverse split.
Income Taxes - The Company and its subsidiaries file separate tax returns.
The Company adopted Statement of Financial Accounting Standards No, 109
"Accounting for Income Taxes" in the fiscal year ended June 30, 1994 and has
applied the provisions of the statement on a retroactive basis to the fiscal
year ended June 30, 1993 which resulted in no significant adjustments.
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount of
taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the recognition
of accounting transactions for tax and financial reporting purposes. There were
no temporary differences at June 30, 1996 and 1995, accordingly, no deferred tax
liabilities or assets have been recognized for temporary differences as of June
30, 1996 and 1995.
The Company had cumulative net operating loss carryforwards of over
$5,000,000 at June 30, 1996, and 1995. No effect has been shown in the financial
statements for the net operating loss carryforwards as the likelihood of future
tax benefit from such net operating loss carryforwards is not presently
determinable. Accordingly, the potential tax benefits of the net operating loss
carryforwards have been offset by valuation reserves of the same amount.
Cash and Cash Equivalents - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.
Accrued Expenses - Accrued expenses include $85,715 in accrued interest
expense, $149,858 to settle a judgement against the Company from a previous
lawsuit, $113,781 in accrued attorneys fees, and $30,000 for consulting fees.
Film Distribution Rights - On September 20, 1993 the Company entered into
an agreement to acquire all ownership rights, title and interest in (subject to
existing distribution agreements) five motion picture films for 25,000 shares of
common stock valued at $0.02 per share (average price during period of
negotiation and sale). The film distribution rights are amortized over five
years using the straight line method. At June 30, 1995 the film rights were
written-down by $486,850 to reflect the current market price as established by a
film distribution company.
Intangible assets - Film Distribution Rights are amortized using the
straight line method over the 60 month period they are expected to benefit. At
June 30, 1995 the film rights were written-down by $486,850 to reflect the
current market price as established by a film distribution company. The
amortization of the rights for the period ended June 30, 1996 was $63,050.
Method of determining uncollectability of receivables - Aged receivables in
excess of 90 days are reviewed on an individual basis to determine the
collectibility of such account.
F-8
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
An allowance is created for the estimated uncollectible accounts. When all
efforts to collect an account have failed, the receivable is cleared to the
allowance account. If the write off exceeds the allowance account it is cleared
to bad debt expense. At June 30, 1995 all of the receivables were written off as
uncollectible.
NOTE 2 - NOTES PAYABLE
At June 30, 1996 notes payable consist of the following:
Various notes payable on demand or are currently due totalling $130,000 at
an interest rate of 15% per annum.
Note payable due on demand for $27,500 at 8% per annum.
Accrued interest on the above notes at June 30, 1996 was $85,715.
NOTE 3 - DISCONTINUED OPERATIONS
Reserve-A-Phone Systems, Inc. (RAP) RAP had no income during the year ended
June 30, 1994. Expenses associated with the winding up of operation, and legal
expenses incurred in regard to RAP were written-off to discontinued operations
in the amount of $44,618. During the year ended June 30, 1995, the Company also
settled a dispute relating to a prior contract by issuing assets resulting in a
loss of $601,500.
Thistle Properties, Inc. (Thistle) On May 4, 1995 Thistle received a Notice
of Default from CyberAmerica, on the Real Estate Lien Note attached to property
(See Note 7). The Company subsequently allowed CyberAmerica to foreclose on the
security (100% of Thistle's capital stock) in exchange for a mutual release of
all claims. The loss of $42,166 recorded on the books of Thistle is recorded as
a loss from discontinued operations.
Filmways Entertainment Corporation (Filmways) Effective September 1, 1994
the Company transferred all of its rights and interests in the stock of Filmways
to Xeta Corporation pursuant to the order of the United States District Court
for the Northern District of Oklahoma. The accounts of Filmways were written-off
to discontinued operations resulting in a gain of $45,883.
NOTE 4 - LITIGATION
The Company is a litigant in several law suits resulting from the poor
financial condition of the Company and its prior subsidiaries. The Company
received a summary judgement against it in the amount of $149,859. This amount
has not yet been paid. However, the Company has recorded this expense during
1994, and the liability is recorded as an accrued expense for the years ended
June 30, 1996 and 1995.
The potential exposure from other litigation at June 30, 1996 is $1,139,879
plus punitive damages and interest. The actual amount of possible loss can not
be estimated at this time. Management believes that the outcome of any of the
actions against the Company
F-9
<PAGE>
NOTE 4 - LITIGATION (Continued)
may have a material impact on its financial position and results of
operations. The financial statements have not been adjusted to reflect the
outcome of these contingencies.
On July 21, 1994 following several asset hearings and other collection
efforts, the United States District Court of the Northern District of Oklahoma
issued an Order for Judgment Debtor to Appear and Turn over Assets and Property
to the Plaintiff (the Order). The Order required the Company to turn over and
relinquish possession to the Plaintiff all the assets of Carnegie and Filmways
and all documents relating to accounts receivables of Carnegie and Filmways.
The Company did not turn over the five films known as the Weintraub Library
as part of its required compliance with the Order because the library was
outside the scope of the Order. The library had previously been transferred to
another wholly owned subsidiary, Thistle Properties, Inc. Thistle subsequently
transferred the Weintraub Library to ATC II prior to receiving the default
notice from CyberAmerica (See Note 3).
On August 15, 1994 the Company entered into a Settlement Agreement with the
holder of the 3,076,923 shares of Series A Convertible Preferred Stock in which,
among other things, the Series A Convertible Preferred Stock was exchanged for
900,000 shares of Series B Convertible Preferred Stock. The Series B Preferred
Stock is convertible, share for share into Common Stock at the holders' option.
The Preferred Stock pays a 7% cumulative dividend and will be redeemed for $1
per share if not converted after five years from the date of issuance. On
October 6, 1995, the Company redeemed 900,000 shares of preferred stock for
$20,000 (Note 6).
During July 1995, the Company filed complaints in the State of Utah to
recover damages from unexecuted common stock subscriptions. The Company alleges
that the stock agreements of 250,000 and 1,500,000 valued at $187,500 and
$562,500. Both cases are in exploratory stages. The financial statements have
not been adjusted to reflect the possible collections of these lawsuits.
NOTE 5 - GOING CONCERN
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As shown in the
accompanying consolidated financial statements the Company has incurred
substantial operating losses in recent years and as of June 30, 1996 has no
current assets to pay the current liabilities. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
The Company's continued existence is dependent on its ability to obtain
additional debt or equity financing or finding suitable business opportunities
to provide profitable operations. Management's plans are to seek merger and
acquisition candidates that will provide profitable operations.
The consolidated financial statements do not include any adjustments that
might be necessary if the Company is not able to continue as a going concern.
F-10
<PAGE>
NOTE 6 - STOCKHOLDERS' EQUITY
Preferred stock. On October 2, 1990 shareholder approval was obtained for
the creation of 5,000,000 shares of Class "A" Preferred shares with a par value
of $0.01, 4% cumulative convertible preferred stock. At June 30, 1994 3,076,923
share were issued and outstanding which are convertible into 3,076,923 shares of
ATC II common stock with an initial liquidation preference of $1.30.
The preferred stock was issued for the purchase
of a note from an outside comapny. (see Note 3).
On August 15, 1994 the Company entered into a Settlement Agreement with the
holder of the 3,076,923 shares of Series A Convertible Preferred Stock in which,
among other things, the Series A Convertible Preferred Stock was exchanged for
900,000 shares of Series B Redeemable Convertible Preferred Stock. The Series B
Preferred Stock is convertible, share for share into Common Stock at the
holders' option. The Preferred
Stock pays a 7% cumulative dividend (3.5% in the first year) and will be
redeemed for $1 per share if not converted after five years from the date of
issuance. If the Company fails to pay dividends for six consecutive quarters, it
must redeem outstanding shares upon demand of the holders at $1.00 per share. At
June 30, 1995 the Company was in arrears for four quarters, or $31,500.
On October 6, 1995, the Company redeemed 900,000 shares of the redeemable
preferred stock for $20,000. CyberAmerica paid the $20,000 in behalf of the
Company to redeem the stock. The accounts payable includes the $20,000. The
remaining par value of $880,000 was reflected in paid-in capital.
The Agreement released the Company from any obligation to pay preferred
dividends of $15,750 for 1996 and $31,500 for 1995. The extraordinary item of
$47,250 ($.02 per share) represents the Company's gain on the forgiveness of
preferred dividends in 1995 for $31,500 and $15,750 in 1996. The Company does
not have any income tax adjustment due to tax carryforwards. (See Note 1)
Private placement. During the year ended June 30, 1995 the Company issued
476,711 shares of common stock for cash in the amount of $638,461.
During the year ended June 30, 1995 the Company issued 1,043,750 shares of
common stock for assets (primarily stock in other companies) valued at $914,062.
It was later determined that the stock received was worthless and was therefore
written off.
At June 30, 1995 the Company had issued 2,668,152 shares of common stock to
an escrow agent to hold pending an agreement regarding a business opportunity.
The negotiations were subsequently withdrawn and the shares returned during July
of 1996.
During the year ended June 30, 1995 the Company issued 9,481,331 shares of
common stock to various consultants and officers of the Company for services
rendered valued at $1,070,179.
On May 5, 1996, the Company issued 1,941,328 shares of common stock for
consulting services performed by Canton Financial Services, Inc. (CFS), a wholly
owned subsidiary of CyberAmerica. (See Note 7)
F-11
<PAGE>
NOTE 6 - STOCKHOLDERS' EQUITY (Continued)
Options.
In March, 1990, the Company authorized an Employee Incentive Stock Option
Plan permitting the issuance of options to purchase up to 5,833 shares of the
Company's common stock. In addition, the Board of Directors approved the
issuance to non- employee directors of up to 1,333 shares of the Company's
common stock. The options are to be issued at market value at the time of the
grant. At June 30, 1996 options to purchases 46,417 shares of common stock at an
exercise price between $30.00 and $72.00 were outstanding.
Warrants.
The Company, from time to time, grants warrants at exercise prices equal to
or above market price in consideration of loans to the Company, settlement of
lawsuits, forgiveness of debt, or purchases of assets. At June 30, 1996 warrants
to purchase 30,885 shares of common stock at an exercise price between $40.00
and $122.80 were outstanding.
NOTE 7 - RELATED PARTY TRANSACTIONS
Property purchase. Effective June 30, 1994 the Company purchased property
located in Canton, Ill. from CyberAmerica, a Company owning 19% of the
outstanding common stock. The Company also purchased its wholly owned
subsidiary, Thistle, from CyberAmerica to hold the property.
The purchase price of the property was recorded at predecessor cost as
follows:
Short-term note payable $ 428,000
Long-term debt 397,000
Assume EPA Liability 160,000
Property tax payable 150,783
Total 1,135,783
Net predecessor cost of property (694,099)
Valuation allowance $ 441,684
During the year ended June 30, 1995, the Company paid $60,000 in cash
applied to the principal of the short-term note, $118,000 in interest payments,
and issued $250,000 of media due bills in partial satisfaction of the short-term
note. Effective May 12, 1995 the Company allowed CyberAmerica to foreclose on
the security (100% of Thistle capital stock) because Thistle was in default on
the loan to CyberAmerica. The loss on this property was recorded in discontinued
operations.
Consulting agreement. The Company has entered into a consulting agreement
with Canton Financial Services (CFS) (a wholly owned subsidiary of CyberAmerica)
to provide general business consulting and administrative services. The
agreement is dated April 29, 1994. The Company will pay CFS $30,000 per month in
cash or in shares of restricted stock of the Company at the rate of one half
(1/2) the average bid price over a ten day period ending the 14th of the month.
F-12
<PAGE>
NOTE 8 - RECISSION OF AGREEMENT
During June 1995, the Company signed a Purchase Agreement with Turner,
Turner & Associates, a Washington corporation (TTA). According to the Purchase
Agreement, the Company acquired all rights and interests in U.S. Patents numbers
5,296,216 and 5,306,509 (the Patents). In exchange for the Patents, the Company
issued 8,468,156 shares of its common stock to a designee of TTA and CFS for
services to be performed. The Purchase Agreement was subsequently rescinded in
February 1996 because conditions had not been met by the Company and TTA. The
Company continued to negotiate with TTA in an attempt to acquire the Patents. On
May 5, 1996, the Company ceased all negotiations with TTA. On June 13, 1996, the
Company cancelled the 8,468,156 shares previously issued to all parties
involved.
F-13
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in the Company's principal independent
accountants during the two most recent fiscal years.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors and Executive Officers
Name Age Title(s)
Gerald Curtis 63 President and Director
Dr. Gerald Curtis was appointed as president and director of the Company on
August 20, 1996. Dr. Curtis served a previous term as the Company's president
from May 1994 to June 1995. Dr. Curtis has been a licensed dentist for over 20
years and has been a partner in real estate development and sales companies. Dr.
Curtis was previously a partner in a movie production company and has also held
executive positions with oil and gas companies.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of the forms furnished to the Company during
the fiscal year, the Company is not aware of any person, who at any time during
the fiscal year ended June 30, 1996 was a director, officer, or beneficial owner
of more than ten percent of the Company's Common Stock and failed to file on a
timely basis reports required by Section 16(a) of the Securities Exchange Act
with respect to that fiscal year, other than the following: Dr. Curtis failed to
file Form 3 within 10 days of his appointment as the Company's president and a
director, but has since filed that document with the Commission.
ITEM 10. EXECUTIVE COMPENSATION
Executive Compensation
No compensation in excess of $100,000 was awarded to, earned by, or
paid to any executive officer of the Company during the 1996 fiscal year.
The following table provides summary information for each of the last
three fiscal years concerning cash and non-cash compensation paid or accrued by
the Company to or on behalf of: Dr. Gerald Curtis, the Company's current
president, who also served as the Company's president from May 1994 to June
1995, and James L. Thompson, the Company's president from June 1995 to January
1996.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
Restricted Securities Other
Other Annual Stock Underlying LTIP Compensation
Name & Position Year Salary Bonus($) Compensation Award(s) ($) Options/SARs(#) Payouts
--------------- ---- ------ -------- ------------ ------------ --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald Curtis 1996 0 0 0 0 0 0 0
Current President 1995 0 0 0 47,5311 0 0 0
1994 0 0 0 9,3752 0 0 0
James Thompson 1996 0 0 0 0 0 0 0
Former President 1995 0 0 0 0 0 0 0
</TABLE>
1.Gerald Curtis received shares of restricted Common Stock for services rendered
during fiscal 1995. The value above is the product of the closing market price
of unrestricted stock on the date of grant and the number of restricted shares
issued (57,629) net of consideration paid by Gerald Curtis. There is, however,
no market for restricted shares of the Company's Common Stock and the numbers
above do not therefore reflect the actual value of the shares received by Dr.
Curtis. Dividends declared by the Company on its Common Stock, if any, would
also be applicable to those shares.
2.Gerald Curtis received shares of restricted Common Stock for services rendered
during fiscal 1994. The value above is the product of the closing market price
of unrestricted stock on the date of grant and the number of restricted shares
issued (2,500) net of consideration paid by Gerald Curtis. There is, however, no
market for restricted shares of the Company's Common Stock and the numbers above
do not therefore reflect the actual value of the shares received by Dr. Curtis.
Dividends declared by the Company on its Common Stock, if any, would also be
applicable to those shares.
Director Compensation
Directors may receive a fixed fee or reimbursement of expenses for
attendance at meetings of the directors. Directors are not precluded from
serving in any other capacity as an officer, agent, employee, or otherwise, and
receiving compensation therefor. No director received any cash compensation for
services as a director in the fiscal year ended June 30, 1996.
ITEM 11. SECURITY OWNERSHIP OF BENEFICIAL OWNERS
<TABLE>
<CAPTION>
The following table sets forth certain information concerning the
Company's stock ownership as of October 14, 1996 with respect to: (i) each
person who is known to the Company to be the beneficial owner of more than 5
percent of the Company's common stock; (ii) all directors; (iii) each of the
executive officers; and (iv) directors and executive officers of the Company as
a group:
Name and Address Amount and Nature of
Title of Class of Beneficial Owner Beneficial Ownership Percent of Class
<S> <C> <C> <C>
Common Stock Am-Russ CTV, Inc. 1,000,000 20.0%
$0.01 par value 6701 Baum Drive, Suite 345
Knoxville, Tennessee 37919
Common Stock Canton Financial Services Corporation 945,663 18.9%
$0.01 par value 268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Common Stock Dr. Gerald Curtis, President and Director 72,998 1.5%
$0.01 par value 1401 East 3900 South
Salt Lake City, Utah 84124
Common Stock Directors and Officers as a Group 72,998 1.5%
$0.01 par value
</TABLE>
<PAGE>
Change of Control
The Company is not aware of any arrangements which may result in a
future change of control in the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Proposed Transactions with Turner, Turner & Associates
During the past year, the Company had been engaged in negotiations with
Turner, Turner & Associates, a Washington corporation ("TTA"). The purpose of
these negotiations was the transfer from TTA to the Company of certain rights in
U. S. Patents Numbers 5,296,216 and 5,306,509 (the "Patents"). TTA developed the
Patents, which relate to an oral lavage, a trademark of certain products, and a
protocol known as STOMASTATTM. In furtherance of the proposed transaction, the
Company appointed Jack E. Hartgrove and James L. Thompson as directors in June
1995. Hartgrove and Thompson helped introduce the Company to TTA, and were
issued shares of Common Stock which were held in escrow in exchange for their
services rendered in arranging an agreement between the parties.
On June 30, 1995, the Company signed a Purchase Agreement with TTA.
According to the Purchase Agreement, the Company acquired all rights and
interests in the Patents in exchange for $10 Million to be paid in cash and
Common Stock. To facilitate the transfer of the Patents, Richard Turner,
chairman of TTA, was appointed as the Company's president and one of its
directors on January 19, 1996. The Purchase Agreement, however, was subsequently
rescinded in February 1996 because many of its conditions had not been met and
because both parties determined an alternative structure would be optimal. The
Company continued to negotiate with TTA in an attempt to acquire the Patents. On
May 5, 1996, the Company ceased all negotiations with TTA because the parties
had not made any progress toward reaching a second agreement. All shares issued
pursuant to the Purchase Agreement were returned to the Company and canceled.
Richard Turner is deemed to have had a material interest in the
proposed transaction between the Company and TTA because of his positions as
president of the Company and Chairman of TTA during the aforementioned
negotiations. Jack Hartgrove and James Thompson, who were also officers and
directors of the Company during the negotiations with TTA, may also be deemed to
have had a material interest in the proposed transaction because they were both
entitled to receive shares of the Company's Common Stock once an agreement was
reached with TTA. For more information on the proposed transaction with TTA, see
"Item 1 - Description of Business."
Transactions with CyberAmerica Corporation
On August 23, 1994, Thistle Properties, an Illinois corporation and a
subsidiary of the Company ("Thistle"), entered into a Real Estate Sales
Agreement (the "RES Agreement") with CyberAmerica Corporation (then known as The
Canton Industrial Corporation). Pursuant to the RES Agreement, Thistle acquired
a manufacturing plant located in Canton, Illinois from CyberAmerica in exchange
for $4,000,000 in cash and the Company's Common Stock and the assumption by
Thistle of liabilities related to the plant. Thistle and CyberAmerica later
amended the RES Agreement by lowering the purchase price to $850,000 based on
the determination of the Company's independent auditors that the RES Agreement
was not an "arms-length" transaction because the Company was receiving
consulting services from Canton Financial Services Corporation ("CFS"), a Nevada
Corporation and subsidiary of CyberAmerica.
On May 4, 1995, Thistle received a Notice of Default from CyberAmerica.
Thistle, with the Company's approval, forfeited all payments to CyberAmerica and
allowed CyberAmerica to foreclose on the security (100% of Thistle's capital
stock) provided by the amended RES Agreement in exchange for a mutual release of
all claims. Effective May 12, 1995, the Company and Thistle executed a Mutual
Release with CyberAmerica, through which 100% of the capital stock of Thistle
was transferred to CyberAmerica.
The transactions by and between the Company, Thistle, and CyberAmerica
may be considered to be interested transactions because CFS, who was acting as a
financial consultant to the Company, was a subsidiary of CyberAmerica and
therefore had an indirect financial interest in these transactions. Moreover,
Richard Surber, a director of the Company when these transactions occurred, was
also the president and a director of CyberAmerica. The Company estimates the
amount of this interest to be $441,684, the difference between the amended
purchase price and CyberAmerica's book value of the plant net of depreciation
($694,099), plus the liabilities Thistle assumed in connection with the purchase
($310,783). For more information about these transactions, see "Item 1
Description of Business."
<PAGE>
Transactions with Christopher Wells
On October 1, 1994, the Company entered into a Consulting Agreement
with Christopher Wells. Pursuant to this agreement, the Company retained Wells
to introduce the Company to business opportunities and merger or acquisition
candidates in Europe. In consideration of these services, the Company granted
Wells an option to purchase 90,000 shares of the Company's Common Stock at $0.75
per share which was exercised on or about November 11, 1994. This transaction
made Wells a beneficial owner of more than 5% of the Company's Common Stock.
On October 10, 1994, the Company entered into a Stock Purchase
Agreement with Wells to sell 1,500,000 shares of Common Stock pursuant to
Regulation S for $1,250,000, or $0.75 a share. The agreement called for the
Company to issue the shares in increments of 500,000 and for Wells to execute a
recourse promissory note in favor of the Company. Wells subsequently defaulted
on the promissory note, and the Company has filed a complaint against Wells for
payment on the promissory note. The Company is currently trying to locate Wells
to complete service of process. For more information on this matter, see "Item 3
- - Legal Proceedings" and the Company's Form 10-KSB for fiscal year ended June
30, 1995.
Transactions with Louis Metzer
On October 1, 1994, the Company entered into a Consulting Agreement
with Louis Metzer, a resident of the Cayman Islands ("Metzer"). Pursuant to this
agreement, the Company retained Metzer to introduce the Company to business
opportunities and merger or acquisition candidates in Europe. In consideration
of these services the Company granted Metzer an option to purchase 90,000 shares
of the Company's Common Stock at $0.75 per share which was exercised on or about
November 11, 1994. This transaction made Metzer a beneficial owner of more than
5% of the company's Common Stock.
On November 1, 1994, the company entered into a Stock Purchase
Agreement with Metzer to sell 250,000 shares of Common Stock pursuant to
Regulation S for $187,500, or $0.75 a share. The agreement called for the
Company to issue the shares and for Wells to execute a recourse promissory note
in favor of the company. Metzer subsequently defaulted on the promissory note,
and the Company has filed a complaint against Metzer for payment on the
promissory note. The Company is currently trying to locate Metzer to complete
service of process. For more information on this matter, see "Item 3 - Legal
Proceedings."
Transactions with Avi Herson
On October 7, 1994, the Company entered into a Consulting Agreement
with Avi Herson, a resident of the Cayman Islands ("Herson"). Pursuant to this
agreement, the Company retained Herson to introduce the company to business
opportunities and merger or acquisition candidates in Europe, to perform
business and managerial services for any European business the Company acquires
and to perform other services from time to time at the request of the board of
directors. In consideration of these services the company issued 90,000 shares
of the company's Common Stock pursuant to Regulation S to Herson on or about
November 29, 1994. This transaction made Herson a beneficial owner of more than
5% of the Company's Common Stock. Based solely on the closing market price of
the Company's Common Stock as reported by NASDAQ on November 29, 1994 the
Company believes the value of Herson's interest in this transaction is $180,000.
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits. Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits beginning on page
16 of this Form 10-KSB, which is incorporated herein by this
reference.
(b) Reports on Form 8-K. The Company did not make any filings on Form 8-K
during the fourth quarter of the fiscal year ending June 30, 1996.
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, this 15TH day of October 1996.
ATC II, INC.
/s/ Dr. Gerald Curtis
Dr. Gerald Curtis, President
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.
Signature Title Date
/s/ Dr. Gerald Curtis President and Director October 15, 1996
- ------------------------
Dr. Gerald Curtis
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NUMBER DESCRIPTION
3(i) * Articles of Incorporation of the Company, filed as Exhibit
3.1 to Registrant's Registration Statement on Form S-4 filed
June 2, 1990, as amended.
3(ii) * By-laws of the Company, filed as Exhibit 3(ii) to
Registrant's Registration Statement on Form S-4 filed June
2, 1990, as amended.
4(i) * Form of Common Stock certificate.
4(ii) * Form of Designation, Preferences and Rights of 4% Cumulative
Convertible Preferred Stock of the Registrant, filed as
Exhibit 3.4 to the Registrant's Form 8-K, reporting events
as of October 7, 1993.
MATERIAL CONTRACTS
10(i)(a) * Consulting Agreement between the Company and Canton
Financial Services, Inc., effective April 29, 1994, filed as
exhibit of like number to the Registrant's Form 10-KSB for
the period ending June 30, 1994.
10(i)(b) * Real Estate Sales Agreement between Thistle Properties, Inc.
and The Canton Industrial Corporation, dated August 23, 1994
and effective June 29, 1994, filed as exhibit of like number
to the Registrant's Form 10-KSB for the period ending June
30, 1994.
10(i)(c) * Commercial lease between The Canton Industrial Corporation
and P & O Manufacturing Corporation, dated August 15, 1994,
and Assignment and Assumption of Lease by The Canton
Industrial Corporation to Registrant, filed as exhibit of
like number to the Registrant's Form 10-KSB for the period
ending June 30, 1994.
10(i)(d) * Exchange Agreement between the Company and National Media
Inventory, Inc. effective June 23, 1994, filed as exhibit of
like number to the Registrant's Form 10-KSB for the
periodending June 30, 1994.
10(i)(e) * Exchange Agreements between the Company and San Pedro
Securities Ltd., Asset Management Trust Ltd., David Newren
and Globe Marketing Systems all effective June 30, 1994,
filed as exhibit of like number to the Registrant's Form
10-KSB for the period ending June 30, 1994.
10(i)(f) * Textile purchase Agreement between Thistle Properties, Inc.
and Carousel, Inc. effective June 20, 1994, filed as exhibit
of like number to the Registrant's Form 10-KSB for the
period ending June 30, 1994.
10(i)(g) * Settlement Agreement between the Company and Communications
and Entertainment Corp. effective August 15, 1994, filed as
exhibit of like number to the Registrant's Form 10-KSB for
the period ending June 30 1994.
10(i)(h) * Stock Purchase Agreement between the Company and Lexington
Sales Corporation Limited effective July 22, 1994, filed as
exhibit of like number to the Registrant's Form 10-KSB for
the period ending June 30, 1994.
<PAGE>
10(i)(i) * Consulting Agreement between the Company and Kerry R. Fox
effective September 23, 1994, filed as exhibit of like
number to the Registrant's Form 10-KSB for the periodending
June 30, 1994.
10(i)(j) * Registration Rights Agreement dated August 31, 1993 among
ATC and holders of Carnegie Film Group, Inc. Common Stock,
filed as Exhibit 10.74 to Registrant's Form 8-K reporting
events as of October 7, 1993.
10(i)(k) * Registration Rights Agreement dated August 31, 1993 between
ATC and ComEnt, filed as Exhibit 10.75 to Registrant's Form
8-K reporting events as of October 7, 1993.
10(i)(I) * Letter dated April 19, 1993 from Budget Rent-a-Car
Corporation to Reserve-A-Phone Systems, Inc., filed as
Exhibit 10.76 to Registrant's Form 10-KSB for the period
ending June 30,1993, as amended.
10(i)(m) * Guaranteed Demand Promissory Note dated October 4, 1993 in
the original principal amount of $150,000 payable to the
offer of ComEnt Funding Corp. By ATC II, Inc., filed as
Exhibit 10.77 to Registrant's Form 10-KSB for the period
ending June 30, 1993, as amended.
10(i)(n) * Security and Pledge Agreement dated as of October 4, 1993,
filed as Exhibit 10.78 to Registrant's Form 10-KSB for the
period ending June 30, 1993, as amended.
10(i)(o) * Note Purchase Agreement dated April 7, 1993 between Unibank
A/S and MJC Leasing Corp. II., filed as Exhibit 10.83 to the
Registrant's Form 10-KSB for the period ending June 30,
1993, as amended.
10(i)(p) * Demand Promissory Note dated March 31, 1993 in the original
principal amount of $350,000 payable to ComEnt Funding Corp.
By MJC Leasing Corp. II., filed as Exhibit 10.84 to the
Registrant's Form 10-KSB for the period ending June 30,
1993, as amended.
10(i)(q) * Security and Pledge Agreement dated March 31, 1993, filed as
Exhibit 10.85 to the Registrant's Form 10-KSB for the period
ending June 30 1993, as amended.
10(i)(r) * Agreement dated April 12, 1993 between MJC Leasing Corp. II
and ComEnt Funding Corp., filed as Exhibit 10.86 to the
Registrant's Form 10-KSB for the period ending June 30,
1993, as amended.
10(i)(s) * Termination and Settlement Agreement dated November 24, 1993
between Richard L. Liu and ATC II, Inc., filed as Exhibit
10.90 to the Registrant's Form 10-KSB, for the period ending
June 30, 1993, as amended.
10(i)(u) * Termination and Settlement Agreement dated November 24, 1993
between Robert Hesse and ATC II, Inc., filed as Exhibit
10.92 to the Registrant's Form 10-KSB for the period ending
June 30, 1993, as amended.
<PAGE>
10(i)(v) * Amendment to Real Estate Sales Agreement between the
Company, Thistle properties, Inc., and The Canton Industrial
Corporation effective June 20, 1994, filed as exhibit of
like number to Registrant's Form 10-KSB for the period
ending June 30, 1994.
10(i)(w) * Stock Purchase Agreement between the Company and Christopher
Wells effective October 10, 1994, filed as exhibit of like
number to Registrant's Form 10-KSB for the period ending
June 30, 1994.
10(i)(y) * Stock Purchase Agreement between the Company and Louis
Metzer effective November 1, 1994, filed as exhibit of like
number to Registrant's Form 10-KSB for the period ending
June 30, 1994.
10(i)(z) * Consulting Agreement between the Company and Louis Metzer
effective October 1, 1994, filed as exhibit of like number
to Registrant's Form 10-KSB for the period ending June 30,
1994.
10(i)(aa) * Consulting Agreement between the Company and Ari Herson
effective October 7, 1994, filed as exhibit of like number
to Registrant's Form 10-KSB for the period ending June 30,
1994.
10(i)(bb) * Consulting Agreement between the Company and Christopher
Wells effective October 1, 1994, filed as exhibit of like
number to Registrant's Form 10-KSB for the period ending
June 30, 1994.
10(i)(cc) * Compromise, Release and Indemnification Agreement between
the Company and ComCentral Corp. effective December 29,
1994, filed as Exhibit 10 to Registrant's Form 10-QSB for
the period ending December 31, 1994.
10(i)(dd) * Purchase Agreement between the Company and Turner, Turner
and Associates effective June 30, 1995, filed as Exhibit 10
to Registrant's Form 8-K Current Report dated September 26,
1995.
10(i)(ee) * Rescission Agreement between the Company, Turner, Turner &
Associates, Robert E. Turner, Richard H. Turner, and Sherry
L. Ruxer signed February 21, 1996.
10(ii)(a) * Consulting Agreement between the Company and Bert Martinez
effective April 29, 1994, filed as exhibit of like number to
the Registrant's Form 10-KSB for the period ending June 30,
1994.
10(ii)(b) * Consulting Agreement between the Company and Bert Martinez
effective June 23, 1994, filed as exhibit of like number to
the Registrant's Form 10-KSB for the period ending June 30,
1994.
10(ii)(c) * Employment Agreement between the Company and Dr. Gerald
Curtis dated August 23, 1994, filed as exhibit of like
number to the Registrant's Form 10-KSB for the period ending
June 30, 1994.
<PAGE>
10(ii)(d) * Employment Agreement between the Company and Tony Geonnotti
dated August 23, 1994, filed as exhibit of like number to
the Registrant's Form 10-KSB for the period ending June 30,
1994.
16(i) * Form 8-K/A (Amendment No. 2) dated October 25, 1994
containing the response from Swalm & Associates to the
dismissal as accountants for ATC II, Inc.
21 * Subsidiaries of the Company, filed as exhibit of like number
to the Registrant's Form 10-KSB for the period ending June
30, 1994.
* Incorporated herein by reference from the Company's Form 10-KSB/A for fiscal
year ended June 30, 1995 filed with the Commission on August 30, 1996.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMAR FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
JUNE 30, 1996 ANNUAL REPORT ON FORM 10-KSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000865286
<NAME> ATC II, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Jun-30-1996
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 252,200
<CURRENT-LIABILITIES> 750,758
<BONDS> 0
0
0
<COMMON> 49,786
<OTHER-SE> (548,344)
<TOTAL-LIABILITY-AND-EQUITY> 252,200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 89,108
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,030
<INCOME-PRETAX> (110,138)
<INCOME-TAX> 0
<INCOME-CONTINUING> (110,138)
<DISCONTINUED> 0
<EXTRAORDINARY> 31,500
<CHANGES> 0
<NET-INCOME> 78,638
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.02)
</TABLE>
