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 (FEE REQUIRED) for the fiscal
year ended December 31, 1997
___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) for the
period from_____________ to ______________
Commission file number 0-20033
AMERIRESOURCE TECHNOLOGIES, INC.
(Name of small business issuer in its charter)
DELAWARE 84-1084784
(State of incorporation or organization) (I.R.S. Employer Identification No.)
8809 Long Avenue, Lenexa, Kansas 66215
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (913) 859-9292
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, Par Value $0.0001 Per Share
(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 No X
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the 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 $43,663
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date within
the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange
Act). $2,394,669 as of March 31, 1998
(Applicable only to corporate registrants) State the number of
shares outstanding of each of the issuer's classes of common equity, as of
the latest practicable date:
164,213,803 Shares of Common Stock, Par Value $.0001 Per Share, as of
March 31, 1998.
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 Securities Holders 9
PART II
Item 5: Market for Common Equity and Related
Stockholder Matters 9
Item 6: Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 7: Financial Statements 12
Item 8: Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 39
PART III
Item 9: Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act 39
Item 10: Executive Compensation 40
Item 11: Security Ownership of Certain Beneficial Owners
And Management 41
Item 12: Certain Relationships and Related Transactions 42
Item 13: Exhibits and Reports on Form 8-K 43
PART I
Item 1. Description of Business
AmeriResource Technologies, Inc. was originally incorporated in Delaware
under the name M-1 Financial Corporation in 1988 (the "Company"). The Company
adopted the name KLH Engineering Group, Inc in connection with its May 29, 1991
stock acquisition of KLH Engineering Group, Inc., a Colorado corporation (the
"Engineering Subsidiary"). In 1996 the Engineering Subsidiary name was changed
to KLH Engineers & Constructors, Inc.. In 1994 the Company acquired Tomahawk
Construction, Inc., a Missouri Corporation, which became the Company's
Construction Subsidiary (the Construction Subsidiary). During 1996 the Company
changed its name to AmeriResource Technologies, Inc.
Engineering Subsidiary's
Until March 1992, the Company's primary means of growth was through
acquisitions. Prior to such time, the Company acquired seventeen companies
with operations in Wyoming, Colorado, New Mexico, Nevada, and California. The
Company's emphasis was in the acquisition of selected small and mid-size civil
engineering and specialty engineering firms to achieve diversification in
geographical markets and services. During 1992, the Company began to
experience a dramatic decline in its operations in California due primarily to
the declining California economy. In January of 1993, the Company announced the
first of several reorganization and cost-cutting plans, closing two California
subsidiaries and cutting management costs. In late November 1993, the Company
announced major consolidation plans, including the closure of several more
operations. By May of 1994, the Company had closed and/or sold six additional
operations. In July of 1995, the Company closed its Mexico subsidiary. During
1996 the Company closed all of its remaining Engineering Subsidiary's. The
closure of the Engineering Subsidiary's was caused by the continued losses which
occurred despite the reduction of operations.
The Company has consulted with legal counsel regarding the filing of
bankruptcy proceedings for each of the Company=s Engineering Subsidiaries. The
Company intends to file the bankruptcy proceedings during 1998.
Construction Subsidiary
On May 13, 1994, the Company entered into an agreement to acquire a
Construction Subsidiary. The acquisition, which was completed on July 27, 1994,
was accomplished by merging the Construction Subsidiary into a wholly owned
subsidiary of the Company. Under the terms of the acquisition, the Company
issued 70,854,526 and 14,659,558 shares of the Company's Common Stock to Delmar
Janovec and John Larry Adams, respectively, in exchange for their shares of
Tomahawk Construction, Inc.(ATomahawk@) common stock. Prior to the acquisition
Mr. Janovec and Mr. Adams respectively owned 80% and 12.5% of Tomahawk's issued
and outstanding common stock. Immediately following the acquisition, Mr.
Janovec owned approximately 70% of the Company's Common Stock and Mr. Adams
owned approximately 12%. For information regarding their current holdings in
the Company, see "Security Ownership of Certain Beneficial Owners and
Management".
The Construction Subsidiary is a Kansas City, Kansas-based general contractor
and was a qualified American Indian Minority Business Enterprise specializing
in concrete and asphalt paving, utilities, grading/site work, structural
concrete and commercial buildings. On September 15, 1994, the Construction
Subsidiary filed for reorganization pursuant to Chapter 11 of Title 11 of the
U.S. Code (see "Legal Proceedings"). The filing was necessitated due to
unexpected short term capital needs created when the Construction Subsidiary's
primary lender required that seventy percent of all accounts receivable be paid
to the bank for reduction of the $3,000,000 line of credit. This was a change
in terms from the original loan agreement, which the Company did not expect.
The Construction Subsidiary, after filing bankruptcy, entered into an agreement
with the Bank to allow the Construction Subsidiary continued use of its account
receivable. On August 28, 1995, the Construction Subsidiary emerged
from bankruptcy. Since that time the Construction Subsidiary
has been unable to secure new projects in its traditional area of expertise.
The Construction Subsidiary continues to bid for work in its primary area of
expertise and in the construction management field. The Construction
Subsidiary currently has bid for work in its traditional area of expertise and
has been notified that its bid is in the final bid process. The work has been
bid as a joint venture project with another Kansas City area construction firm.
In addition, the Construction Subsidiary has bid to be a construction manager
on a hydroponics project and a housing project. As of March 31, 1998 the
Construction Subsidiary has not been awarded any of the above projects but the
Company believes that the projects could be awarded as early as April 3, 1998.
Markets Served and Marketing Strategy
Services. The Company provides construction management services. The
Construction Subsidiary maintains a good reputation for its work and safety
record.
Client Development. The Construction Subsidiary will seek to qualify as a
Native American minority-owned business and its contacts in the minority
community to attract new business.
In the past, the Construction Subsidiary has competed for projects on a
competitive bid process. Projects are awarded based upon factors such as lowest
bid, ability to complete the project in a timely manner, safety record, business
reputation and qualified minority business status. The Construction Subsidiary
competes with other small to medium size construction firms throughout the
country and does not expect its competition to change appreciably in the
foreseeable future.
The Construction Subsidiary has traditionally completed projects for both
governmental agencies and the private sector. During 1998 the Construction
Subsidiary will attempt to attract work through use of joint ventures and
primarily bid for work in the private sector. The dispersion of the Construction
Subsidiary's projects throughout several states has kept it from relying on any
one supplier or subcontractor for the completion of projects. Materials
necessary for construction have historically been readily available and the
Construction Subsidiary does not foresee any significant problem in the future
with respect to material availability.
Net profit margins in today's construction industry on competitive bid projects
are approximately three percent. As a general contractor, the Construction
Subsidiary faces strong pressures to keep its cost down on its jobs--
particularly when competitive bidding is involved. Competitive bidding keeps
the Construction Subsidiary's profit margin small. In addition, since its
bankruptcy filing, the Construction Subsidiary has not been able to directly
receive bonding for projects. The increased cost of obtaining bonding makes
it difficult for the Construction Subsidiary to be competitive in its bidding.
The use of joint ventures during 1998 will assist the Construction Subsidiary
with its bonding problems.
Item 2. Description of Property
The Company owns no real property. The Company's operations are conducted
through one office in Kansas that is leased.
Item 3. Legal Proceedings
The Company's Engineering Subsidiaries are typically subject to various claims
arising in the ordinary course of business, which usually relate to claims of
professional negligence or contract breaches. However, during November 1996 all
of the Company's subsidiaries were closed. The Engineering Subsidiaries have
not conducted any work since December 1, 1996 all pending contracts were either
transferred to other engineering firms or returned to the owners of the project.
The Company has discussed filing bankruptcy under chapter 7 or chapter 11 of the
United States Bankruptcy Code for its Engineering Subsidiaries. The filing of
the Chapter 7 petitions will take place, if necessary, after March 1998.
Actions Against the Company
The Company has attempted to maintain professional liability insurance. The
Company has been able to meet the costs of insurance premiums and currently
does have insurance. However the Company has failed to pay certain insurance
deductibles and an action has been brought against the Company for failure to
pay insurance deductibles. It is believed that these actions can be settled for
little or no money since the Company does not have on going engineering
operations and has no current cash flow to met these obligations.
The Company is aware of three actions that have been filed against a closed
subsidiary of the Company, Morton Technologies, Inc. ("Morton"). The actions
against Morton arose prior to the Company acquiring Morton and the claims were
filed after Morton was closed. At this time the Company is not answering the
complaints and will file a liquidation bankruptcy proceeding for Morton if the
action proceeds towards a judgment against Morton
In October 1993, the U.S. Securities and Exchange Commission (the "SEC")
began a private "order of investigation" of the Company. In a letter dated Feb.
14, 1995, the SEC's Central Regional Office informed the Company that it planned
to recommend to the SEC that a civil injunctive action for violations of federal
securities laws, alleged to have occurred during 1993, be brought against two
former Presidents and Directors of the Company, Fred Boethling and Richard
Kendall (the "Former Management"), and against the Company itself. During the
time frame of the violations alleged by the SEC, no members of the current
management of either AmeriResource Technologies, Inc. or Tomahawk were involved
in any transactions with the Company or the Company's securities, or in the
preparation of any of the Company's disclosure or sales material. The Company
was given the opportunity to submit a written statement to the SEC setting
forth its positions and arguments concerning the recommendations (a "Wells
Submission"). The Company engaged counsel independent of Former Management to
prepare its Wells Submission, which was delivered to the SEC on April 21, 1995.
On April 30, 1996, the Company submitted documents to the SEC with a request to
finalize the settlement of this matter. The SEC informed the Company in October
1996 that no action would be taken against the Company in this matter.
On March 18, 1994, Franklin Resources, Inc. filed a Complaint, in Superior
Court of California for the County of San Mateo, against C-REM Engineers, Inc.,
a subsidiary of the Company, and against the Company, claiming breach of
contract for non payment of a note for which the Company is a guarantor. The
matter was settled by allowing a stipulated judgement to be entered. This
subsidiary has been closed and has no assets to satisfy the stipulated judgement
The total judgement entered against the Company is for $160,000.
On April 19, 1995, The Canton Industrial Corporation and Canton Industrial
Corporation of Salt Lake City (the "Plaintiffs") filed a breach of contract and
fraud action against the Company. This matter has been settled at no cost to
the Company.
On June 26, 1995, Kimberly Pearce sued KLH's Pueblo office in the District
Court of Colorado. Ms. Pearce also sued Raymond Koester, a consultant for, and
former employee of, the Pueblo office. The lawsuit alleges that Koester was
negligent in preparing an engineering opinion on the structural integrity of an
old home Pearce bought. Pearce claims that the home was not structurally sound,
and that Koester should have discovered the defects. The Company believes the
structural defects were not noticeable at the time of the sale, if they were
there at all at that time. The Company believes its exposure in this matter to
be minimal. The Company has retained outside counsel to defend this matter.
The Company will seek bankruptcy protection for this Engineering Subsidiary if
any adverse decision is rendered.
On July 12, 1995, Thomas Neale filed a Complaint and Jury Demand in
Arapahoe County, Colorado District Court, naming as defendants the Company,
Delmar Janovec (the Company's President and a director), J. Larry Adams (the
Company's former Executive Vice President and director), and two of the
Company's subsidiaries, KLH Engineers & Constructors, Inc. ("E&C") and Tomahawk
Construction Company. Mr. Neale was president of E&C from July 1994 until the
Company terminated his employment in May 1995. The complaint alleges breach of
employment contract and express warranties, wrongful termination and violation
of public policy, fraudulent concealment, and piercing of the corporate veil.
The relief sought was not specified in the complaint. This matter was settled
on December 2, 1996 by the Company issuing 4 million shares of restricted Stock.
On October 10, 1995, KLH brought an action against James Laraby, a former
officer and director of the Company, seeking payment on a $150,000 promissory
note made by Mr. Laraby that had matured in June of 1994. No payment has been
made on the note. Mr. Laraby counterclaimed, seeking an "accounting of records"
and declaratory judgment. This matter has been dismissed for failure to
prosecute the action. The Company had no funds to maintain this action and
could not locate counsel to handle on a contingence basis.
In or about February 1996, Imperial Premium Finance filed an action in the
Superior Court of the State of California for the County of Los Angeles (case
number LC03587). This action is for premiums financed for Errors and Omissions
Coverage. This matter has been settled by allowing a stipulated judgement.
Total judgement in this matter is $60,000.
On or about February 10, 1996, the Bankruptcy Trustee for Scanlon and
Associates, a former subsidiary of the Company, filed an action for Bankruptcy
Preference in the United States Bankruptcy Court for the District of New Mexico.
The Trustee maintains that the Company received a preference from the monies
paid to the company by the debtor for the one-year period prior to the filing of
Bankruptcy. The Company contends that the monies were not a preference. In or
about April 1997 the Company responded to discovery that was served on the
Company. After the response to discovery was filed the Trustee of Scanlon and
Associates agreed to dismiss the action.
On April 26, 1996, Dyer Brothers Construction Company filed an action against
the Company's Lakewood subsidiary and the subsidiary's former President,
alleging negligence in the design of roadways. The county initially approved
the roadways and the Company believes its exposure is minimal. The Company is
represented by outside counsel in the lawsuit and an answer has been filed. The
Company will seek bankruptcy protection for this Engineering Subsidiary if any
adverse decision is rendered.
On July 9, 1996, the Comed Corporation, Norman Fast, President, brought an
action against the Company for breach of contract arising out of construction
management services the Company's Colorado Springs subsidiary hired Mr. Fast to
perform. The amount sought is $15,090 plus interest and costs. The Company has
not filed a response. The Company will seek bankruptcy protection for this
Engineering Subsidiary if any adverse decision is rendered.
On July 30, 1996, Rocky Mountain Aerial Surveys, Inc. was awarded a default
judgment against the Company in the amount of $25,051.43 for the Company's
failure to make payments to Rocky Mountain. The Company will seek bankruptcy
protection for this Engineering Subsidiary.
In October 1996, the Internal Revenue Service (the "IRS") placed liens on the
assets of all of the Company=s Colorado and California subsidiaries for failure
to pay payroll taxes in 1996. The Company is several months behind in payment
and is attempting to resolve the matter with the IRS. The Total of the liens
through the 3rd quarter of 1996 is approximately $320,000. It is believed that
the total exposure for all quarters is approximately $480,000. As of January
1998 the Company has not yet received a lien for the 4th quarter 1996 payroll
taxes. The Company also faces potential action by the State of Colorado.
In February 1997 Enterprise Capital Corporation filed suit against the company
and certain Subsidiaries for breach of contract and fraud in the extension of
credit on a factoring agreement. The Company disputes this claim in that the
contract called for American Factors Group to purchase the receivables from the
Company on a non-recourse basis. The Company has filed a response to the
Compliant and demanded that the matter be submitted to arbitration. An
arbitrator has been appointed, but a date has not been scheduled. American
Factors Group claims it is owed $291,044 plus interest.
In July 1996 a judgement was entered in favor of Lexington Insurance Company in
the amount of $39,774 with interest (8%). In December 1997, the court entered
an order ordering the Company to appear for a hearing in aid of execution. A
hearing date is to be determined.
Actions Involving Tomahawk Construction
On September 16, 1994, the Company's Construction Subsidiary, Tomahawk
Construction Company, filed for protection pursuant to Title 11 of the U.S. Code
under Chapter 11 in the Western District of Missouri, Western Division as case
number 94-42499-2-11. A plan for reorganization on or about March 9, 1995 and
an Amended Plan of Reorganization on April 29, 1995. The court confirmed the
amended plan on August 28, 1995.
Tomahawk has filed suit against M.K. Ferguson for work completed in Oak
Ridge, Tennessee. The claim was settled in May 1997 for the sum of
$1,851,444. Tomahawk has agreed with its subcontractors to sharing a percentage
of the delay claim only, in exchange for releases of monies owed by Tomahawk.
Tomahawk has agreed to settle with USF&G, its bonding company, by paying to
USF&G the sum of $500,000 out of the settlement for a release of approximately
$2,300,000 of Bond Claims. In addition, Tomahawk has agreed to pay Industrial
State Bank the sum of $336,000 for a release of the Banks claims on the
Settlement money. The Settlement money will also pay to the IRS the sum of
approximately $22,000 for a release of all liens.
Tomahawk was named co-defendant in a lawsuit brought by private plaintiffs
for damages alleged sustained as a result of construction activity performed on
a sewer project in Johnson county, Kansas. An unspecified amount of damages
was sought. The court dismissed the action, and there is no ultimate liability
to the Company since the recovery is limited to insurance proceeds.
Litigation Against Officer, Director or 5% Shareholder
In September 1996 John Larry Adams, the Company's former Executive Vice
President, filed suit against the Company for unreimbursed expenses. The
Company has settled this matter by allowing a stipulated judgement to be entered
for $80,652 plus interest.
The Company has defaulted upon interest and principal with respect to a
promissory note in favor of the Olivia I. Dodge Charitable Remainder Unitrust
(the "Dodge Trust") which became due on December 31, 1995. The total due as of
May 1, 1996, according to the Dodge Trust's attorney, is $169,760.80, which sum
is reflected in the accounts payable of the Company.
The Company has defaulted upon interest and principal with respect to a
$40,818.55 note in favor of the Roy Lee Johnston Trust (the "Johnston Trust").
The Johnston Trust has received a judgment in its favor on the note and has
made unsuccessful attempts to collect on the judgment. This obligation is
reflected in the accounts payable of the Company.
The Company's subsidiary KLH Engineers & Constructors, Inc. has defaulted
upon interest and principal with respect to a promissory note in favor of Thomas
Little, a former officer of the Engineering Subsidiary, which became due upon
demand made November 14, 1995. The principal amount owed is $17,500, with
interest accruing at 10% per annum from the notes issuance on October 29, 1990.
This obligation is reflected in the accounts payable of the subsidiary. The
Company will seek bankruptcy protection for this Engineering Subsidiary if any
adverse decision is rendered.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company submitted no matters to a vote of security holders during the
fourth quarter of 1996 or during the entire year of 1997.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
From July 1991 until August 14, 1992, the Company's common stock was quoted
on the electronic bulletin board system. From August 14, 1992, to August 4,
1994, the common stock traded on the NASDAQ SmallCap Market. On August 4,
1994, the Company was delisted from the NASDAQ trading system because of the
Company's failure to maintain a minimum bid price of greater than or equal to
$1.00 per share. From August 4, 1994 until mid 1996, the Company's stock was
traded on the NASD electronic Bulletin Board under the symbol "KLHE."
Since July 16, 1996 the Company's stock has traded on the NASD electronic
Bulletin Board under the symbol "ARET".
Trading in the Common Stock has been limited since the NASDAQ delisting.
Due to the limited trading market, the price quotations set forth below may not
be reliable or indicative of future price trends. There can be no assurance
that any significant trading market will develop or, if developed, that any
price level will be maintained. Set forth in the following table are high and
low bid prices for the Common Stock for each quarterly period of trading for the
past four fiscal years, as reported by NASDAQ. Such quotations, rounded to the
nearest cent, reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions.
<TABLE>
<S> <C> <C>
Period High Bid Low Bid
1994
First Quarter .34 .09
Second Quarter .44 .06
Third Quarter .25 .06
Fourth Quarter .18 .07
1995
First Quarter .25 .07
Second Quarter .18 .03
Third Quarter .31 .05
Fourth Quarter .13 .01
1996
First Quarter .04 .01
Second Quarter .15 .01
Third Quarter .15 .01
Fourth Quarter .0625 .01
1997
First Quarter .02 .01
Second Quarter .02 .01
Third Quarter .3125 .01
Fourth Quarter .45 .003
</TABLE>
The bid price for the Common Stock at the close of trading on March 31, 1998
was $0.017 per share. As of December 31, 1997, there were 634 holders of
record of the Common Stock.
Dividends on the Common Stock
No cash dividends have been paid on the Common Stock, and the Company has
no current plans to pay any cash dividends in the future. The Company has
outstanding 2,312,609 shares of Series A and 777,012 shares of Series B
preferred stock (the "Preferred Stock"). Each share of the Preferred Stock may
be converted by the holder to one share of common stock. The Preferred Stock
has a liquidation value of $1.25 per share and has voting rights equivalent to
one share of the Common Stock. Dividends on the Preferred Stock accrue
quarterly at the annual rate of $0.125 per share. The Company has never
declared or paid any dividends on the Preferred Stock and may not declare
dividends on its common stock without first paying accrued dividends to the
Preferred Stock holders.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
During 1997 the Company has sought work through its Construction
Subsidiary. A number of projects have been bid and proposed, however, as of
March 31, 1998 only a few projects have been completed. These projects have
been within the Native American community. The Company continues to bid
projects and currently is in negotiation on several projects both within and
outside the Native American community. The projects consist of construction of
Hydroponics facilities to the construction of a paper mill facility. The
Company has entered into a joint venture arrangement for the bidding of the
paper mill facility. The fact that the Company has bid these projects does
not mean that the company will be successful in obtaining the projects. To
increase the probability of securing the projects the Company has determined
that it would be in its best interest to allow Delmar Janovec to purchase a
fifty-on percent interest in the Construction Subsidiary. This will be
accomplished by Delmar Janovec applying a portion of the obligations owed to him
by the Company for the interest in the Construction Subsidiary. This
transaction will allow the Construction Subsidiary to maintain a minority
contractor status, providing a bidding advantage. In addition, the minority
ownership will help facilitate the award of Native American projects. (Please
refer to "Item 12 Certain Relationships and Related Transactions")
Comparison of the Fiscal Year Ended December 31, 1997 and December 31, 1996
This comparison will be affected by the extraordinary events of 1996 as set
forth above in the closing of the entire Engineering Subsidiary.
The Company's total asset's in 1996 were $3,075,411 as compared to $887,950
in 1997. This 246% decrease in assets is primarily due from the closure of the
Engineering Subsidiary and the liquidation of assets from the closing of the
facilities.
The Company's liabilities decreased from $2,761,930 in 1996 to $2,341,033 in
1997. This decrease was created from the settlement with M.K. Ferguson in May
1997. This settlement substantially reduced the obligations of the Construction
Subsidiary. (Please refer to "Item 3 Legal Proceedings")
The remaining debt of the Company is primarily associated with the
Engineering Subsidiaries. The Company will file Chapter 11 bankruptcy
proceedings during 1998 naming its Engineering Subsidiaries to eliminate a
majority of the remaining liabilities. (Please refer to "Item 3 Legal
Proceedings").
The net service income in 1996 decreased to $43,663 in 1997 from $994,382 in
1996. This decrease was due to the closure of the Engineering Subsidiaries and
the lack of large projects for the Construction Subsidiary. The "operating
expense" and "general and administrative expense" were high due to the cost of
closing the Engineering Subsidiaries, legal expenses and the preparation cost
associated with the M.K. Ferguson settlement.
Item 7. Financial Statements and Supplementary Data
AMERIRESOURCE TECHNOLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS
AMERIRESOURCE TECHNOLOGIES, INC. CONSOLIDATED FINANCIAL
STATEMENTS FOR 1997 AND 1996
Independent Auditor's Report 13
Financial Statements:
Consolidated Balance Sheet 14
Consolidated Statement of Operations 16
Consolidated Statement of Changes in Stockholders' Equity 17
Consolidated Statement of Cash Flows 18
Notes to Consolidated Financial Statements 21
INDEPENDENT AUDITOR'S REPORT
The Stockholders
and Board of Directors
of AmeriResource Technologies, Inc.
We have audited the accompanying consolidated balance sheet of AmeriResource
Technologies, Inc. and subsidiaries as of December 31, 1997, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1996 and 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit 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 AmeriResource
Technologies, Inc. and subsidiaries as of December 31, 1997, and the results of
its operations and cash flows for the years ended December 31, 1996 and 1997, in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 13 to
the 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
those matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Salt Lake City, Utah
March 24, 1998
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1997
ASSETS
Current assets:
<TABLE>
<S> <C>
Cash and cash equivalents (Note 1) $ 188
Receivables:
Trade 730,285
Related Party 14,471
Notes receivable- related party (Note 2 and 3) 332,904
Notes receivable - other (Note 3) 75,000
Other receivables (Note 1) 193,000
Allowance for doubtful accounts (583,855)
Net receivables 761,805
Prepaid insurance and other assets 50,249
Total current assets 812,242
Property, Plant and Equipment (Note 1):
Equipment 633,392
Furniture, fixtures and library 134,051
Vehicles 53,087
820,530
Less accumulated depreciation (749,572)
Net property, plant and equipment 70,958
Other assets:
Marketable securities (Note 12) 4,750
Total assets $887,950
</TABLE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
Current liabilities:
Accounts payable:
Trade $638,084
Related party (Note 2) 36,231
Current portion of long-term debt:
Related party (Note 2 and 4) 552,849
Other (Note 4) 255,769
Accrued payroll and related 646,907
Accrued interest:
Related party (Note) 97,473
Other 77,760
Income Tax Payable 35,960
Total current liabilities 2,341,033
Long-term debt:
Notes payable:
Other 1,680,939
Commitments and contingencies (Note 11) 105,000
Total liabilities 4,126,972
Stockholders' equity (Note 6)
Preferred stock, $.001 par value;
authorized, 10,000,000 shares;
Series A, issued and outstanding,
3,089,621 shares authorized 3,090
Common Stock, $.0001 par value; authorized,
500,000,000 shares; issued and outstanding,
164,213,803 shares 16,420
Additional paid-in capital 6,347,954
Common stock held in treasury; 3,600 shares at cost (5,625)
Accumulated deficit (9,600,861)
Total stockholders' equity (3,239,022)
Total liabilities and stockholders' equity $ 887,950
</TABLE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended December 31, 1997 and 1996
<TABLE>
<S> <C> <C>
1997 1996
Net service income $ 43,663 $ 994,382
Operating expenses (737,256) (2,888,467)
General and administrative expenses (945,946) (902,467)
Loss from sold and closed subsidiaries (Note 8) - (708,598)
Operating loss (1,639,539) (3,505,150)
Other income (expense):
Gain on sale of subsidiary (Note 8) 100,631
Loss on marketable securities (109,412)
Interest expense (46,373) (55,366)
(46,373) (64,147)
Net loss before income tax (1,685,912) (3,569,297)
Income tax provision (Note 7) - -
Net loss (1,685,912) $(3,569,297)
Net loss per common share (.01) (.02)
Weighted average common shares outstanding 162,963,803 145,942,742
</TABLE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Years Ended December 31, 1997 and 1996
Stated in 000's
$.0001 Par $.001 Par
Com Stock Pref Stock Addl
Num Num Paid-In Treas Accum
Shares Amt Shares Amt Capital Stock Deficit Total
<TABLE>
<S> <C> <C> <C> <C><C> <C> <C> <C>
Bal at Dec 31, 1995 130,171 $13 3,090 $3 $5,425 $(5.6) $(4,353) $1,082
Issuance of Shares for:
Services 10,000 1 50 51
S-8 options exer 17,525 1.75 873 874
Fund employee plan 18 2 1 1
Shares issued due to settlement
agreement (Note 11) 4,000 .4 (.4) -
Net loss for the year ended
December 31, 1996 (3,562) (3,562)
Bal at Dec 31, 1996 161,713 $16 3,090 $3 $6,348 $(5.6) $(7,915) (1,553)
Issuance of Shares for:
S-8 options exercised 2,500 .25 (.25) -
Net loss for the year ended
December 31, 1997 (1,686) (1,686)
Bal at Dec 31, 1997 164,214 $16 3,090 $3 $6,348 $(5.6) $(9,601) (3,239)
</TABLE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1997 and 1996
<TABLE>
<S> <C> <C>
1997 1996
Reconciliation of net loss provided by
(used in) operating activities:
Net loss (1,685,912) (3,561,598)
Non-cash items:
Depreciation and amortization 125,626 104,060
Non-cash services through issuance of stock - 51,000
(Gain)/loss from sale and closure of subsidiaries - 708,598
Provision for bad debts 16,486 (394,047)
Loss on investments - 109,412
Write down of goodwill - 95,616
Loss (gain) on sale of equipment - 17,535
Changes in assets affecting operations - (increase)
decrease
Accounts receivable 1,851,639 (954,468)
Other receivables (2,825) (190,700)
Work-in-process 83,401 4,335,087
Prepaid insurance and other expenses 104,986 90,616
Other assets - -
Changes in liabilities affecting operations - increase
(decrease)
Bank overdrafts - (34,017)
Accounts payable 15,089 (611,325)
Accrued payroll and related 44,672 428,967
Accrued expenses - (74,219)
Accrued interest 46,257 47,004
Deferred rent - (19,524)
Commitments and contingencies (80,652) -
Other current liabilities (91,508) 9,357
Net cash provided by (used in) operating
activities $427,259 $157,353
</TABLE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1997 and 1996
<TABLE>
<S> <C> <C>
1997 1996
Cash flows from financing activities:
Proceeds from issuance of debt 62,593 -
Repayment of debt (498,000) (149,017)
Net cash provided by financing activities (435,407) (149,017)
Net cash used in investing activities - -
Increase (decrease) in cash (8,148) 8,336
Cash - beginning of period 8,336 -
Cash - end of period $ 188 $ 8,336
</TABLE>
AMERIRESOURCE TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1997 and 1996
SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS
<TABLE>
<S> <C> <C>
1997 1996
Purchase fixed assets through issuance of debt $ - $ -
Debt paid through issuance of stock $ - $ -
Stock issued for services $ - $ 51,000
Additional cash flow information
Cash paid for:
Interest $ - $ -
Income taxes $ - $ -
</TABLE>
1. Summary of significant accounting policies
Nature of business and business combinations
AmeriResource Technologies, Inc., formerly known as KLH Engineering Group, Inc
(the Management Company), a Colorado corporation, was incorporated March 3,
1989 for the purpose of providing diversified civil engineering services
throughout the United States, to be accomplished through acquisitions of small
to mid-size engineering firms. On July 16, 1996, the Company changed its name
to AmeriResource Technologies, Inc.
At December 31, 1997, the Management Company directly or indirectly owns 100%
of the stock of KLH Engineering of Colorado Springs, KLH Engineering of San
Mateo, KLH Engineering of Grand Junction, KLH Engineering of Lakewood, KLH
Engineering of Greeley, and KLH Engineers and Constructors. All of the
Subsidiaries closed their operations during 1996, with the exception of KLH
Pueblo which was sold to a third party during 1996. The Subsidiaries provided
diversified civil engineering services. They serviced both private and public
sector clients on projects mainly located in the Western United States Region,
including Colorado and California. Private sector clients included residential,
commercial, industrial, institutional and corporate clients. Public sector
clients included special districts, municipalities, county, state and federal
agencies.
On May 13, 1994, the Company entered into an agreement to acquire Tomahawk
Construction Company, a Missouri corporation (Tomahawk). The acquisition,
which was completed on July 27, 1994, was accomplished by merging Tomahawk into
a wholly-owned subsidiary of the Company. Tomahawk then became a subsidiary of
the Company. This transaction has been treated as a reverse acquisition.
Tomahawk is a Kansas City, Kansas-based general contractor and qualified
American Indian Minority Business Enterprise specializing in concrete and
asphalt paving, utilities, grading/site work, structural concrete and commercial
buildings. Tomahawk was organized on April 12, 1980, as a Missouri
corporation.
Basis of presentation
At January 1, 1995, Tomahawk changed its fiscal year from September 30 to
December 31. These consolidated financial statements include the activity for
the year ended December 31, 1997 and balance sheet of AmeriResource Technologies
and its subsidiaries. See "Nature of Business" for all subsidiaries included.
The accompanying financial statements have been prepared in conformity with
principles of accounting applicable to a going concern, which contemplates the
realization of assets and the liquidation of liabilities in the normal course of
business. The Company has incurred continuing losses and has not yet generated
sufficient working capital to support its operations. The Company's ability to
continue as a going concern is dependent, among other things, on its ability to
reduce certain costs, and its obtaining additional financing and eventually
attaining a profitable level of operations.
1. Summary of significant accounting policies (continued)
It is management's opinion that the going concern basis of reporting its
financial condition and results of operations is appropriate at this time. The
Company plans to increase cash flows and to take steps towards achieving
profitable operations through the sale or closure of unprofitable operations,
and through the merger with or acquisition of profitable operations.
Principles of consolidation
The consolidated financial statements include the combined accounts of
AmeriResource Technologies, Inc., Tomahawk Construction Company, and KLH
Management Company, Inc., and the accounts of their Subsidiaries. All material
intercompany transactions and accounts have been eliminated in consolidation.
Cash and cash equivalents
For the purpose of the statement of cash flows, the Company considers currency
on hand, demand deposits with banks or other financial institutions, money
market funds, and other investments with original maturities of three months or
less to be cash equivalents.
Other Receivables
The Company sold the account receivables of four subisidaries to American
Factors Group, Inc. during 1996. This balance is contingent on the collection of
these receivables. See Note 11 for explanation involving legal action taken.
Property, Plant and Equipment
The Company's fixed assets are presented at cost. Certain Subsidiaries use tax
depreciation methods which approximates straight-line. All others are being
depreciated on a straight-line basis. The estimated useful lives used are as
follows:
Furniture, fixtures and library 5 to 17 years
Equipment, including capitalized leased equipment 3 to 7 years
Vehicles 5 to 7 years
Construction equipment 3 to 10 years
Related depreciation and amortization expense for the years ended December 31,
1997, and 1996, was $125,626 and $76,671 respectively.
Repairs and maintenance are charged to operations as incurred. Major renewals
and betterment that extend the useful lives of property and equipment are
capitalized.
1. Summary of significant accounting policies (continued)
Repairs and maintenance expense totaled $0 and $17,861 for the years ended
December 31, 1997 and 1996, respectively.
There was no accumulated depreciation relating to leased assets for the years
ended December 31, 1997 and 1996.
Acquisition costs
Acquisition costs consist of legal and broker fees incurred in connection with
the acquisition of the Company's subsidiaries. These costs were amortized over
five years ending in 1996. All subsidiaries have been closed and all related
acquisition costs have been written off.
Goodwill
The excess of the fair value over book value of the subsidiaries acquired was
allocated to fixed assets and goodwill at the time of the acquisition.
Goodwill was being amortized on a straight-line basis over 15 years. The
related amortization expense for 1997 and 1996 was $0 and $27,389,
respectively.
The Company evaluates annually the realizable value of goodwill based on the
subsidiaries revenue level, backlog, and their results of operations using a
discounted cash flow analysis.
The unamortized goodwill of the subsidiaries closed and sold (Note 8) has been
recorded in the loss from closure and sale of these subsidiaries. In addition,
the remaining value of the goodwill associated with the subsidiary sold in 1994
(Note 8) was re-evaluated during and was written down $888,325 to the value
realized in the subsequent sales. Goodwill was re-evaluated during 1995 and
1996 resulting in an additional write downs of $154,795 and $95,616 respectively
At December 31, 1996 all goodwill was written off.
Offering Costs
Offering costs consist primarily of legal, accounting fees, commissions and
expenses incurred related to the sale of shares of the Company's common stock
(Note 6). These costs have been netted against additional paid-in capital.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. In these financial statements assets and
liabilities involve extensive reliance on management's estimates. Actual
results could differ from those estimates.
1. Summary of significant accounting policies (continued)
Income tax
For the years ended December 31, 1997 and 1996, the Company elected to file a
consolidated tax return and the income tax provision is on a consolidated
basis. Prior to 1992, the Subsidiaries filed separate corporate returns.
Effective January 1, 1993, the Financial Accounting Standards Board (FASB)
issued FASB No. 109, "Accounting for Income Taxes". FASB No. 109 requires that
the current or deferred tax consequences of all events recognized in the
financial statements be measured by applying the provisions of enacted tax laws
to determine the amount of taxes payable or refundable currently or in future
years. There was no impact on from the adoption of this standard.
Deferred income taxes are provided for temporary differences in reporting income
for financial statement and tax purposes arising from differences in the methods
of accounting for construction contracts and depreciation.
Construction contracts are reported for tax purposes and for financial
statement purposes on the percentage-of-completion method. Accelerated
depreciation is used for tax reporting, and straight-line depreciation is used
for financial statement reporting.
Revenue recognition / Earnings in excess of billings
Except for fixed fee contracts, revenue from services performed are recognized
as time and expenses are incurred. Revenues from fixed fee contracts are
recognized on the percentage-of-completion method. Under this method, revenues
are accrued based on the percentage that costs-to-date bear to the total
estimated costs. At the time a loss on a contract becomes known, the entire
amount of the estimated loss is recorded. For contracts which extend over
one or more years, revisions in costs and estimated profits during the course
of the work are reflected in the accounting period in which the facts which
require the revision become known.
Accounts receivable represents amounts billed, but uncollected, on contracts
and services rendered.
Loss per common share
Loss per common share is based on the weighted average number of common shares
outstanding during the period. Options, warrants and convertible debt
outstanding are not included in the computation because the effect would be
antidilutive.
2. Related party transactions
Some of the subsidiaries rented office space from minority stockholders and
from entities with common ownership. At December 31, 1997 and 1996, in addition
to the above, there were miscellaneous receivables owed from officers and
employees.
At December 31, 1997 and 1996, the Company and some of the Subsidiaries had
notes payable balances to officers, a former officer and other stockholders
(Note 4). In addition, there was related interest expense incurred and accrued
interest. At December 31, 1997 and 1996, the Company also had a note receivable
from a former officer and minority shareholder of the Company (Note 3).
The following transactions occurred between the Company and it stockholders and
its affiliated companies:
A. The Company leased its office space from its stockholder, Delmar Janovec
in 1996 and First American Mortgage Company (an entity with common ownership) in
1997. The lease is on a year to year basis unless either party gives 90 days
written notice of cancellation. Rents paid were $2,450 in 1997, and $17,528
in 1996.
B. The Company has a note receivable from First American Mortgage Company in
the amount of $75,771. An officer of the Company is a major shareholder of the
First American Mortgage Company. This note is due on demand and is
non-interest bearing.
C. The Company has a note receivable from Dellar Investments in the amount of
$43,981. An officer of the Company is a major shareholder of the Dellar
Investments. This note is due on demand and is non-interest bearing.
2. Related party transactions (continued)
The following is a table summarizing the related party transactions described
above:
For the Years Ended
December 31,
1997 1996
<TABLE>
<S> <C> <C>
Receivables $ 14,471 $ 14,425
Advances $ - $ -
Note receivable - current $332,904 $330,079
Accrued interest on notes payable $ 97,473 $ 56,396
Notes payable - current $552,849 $490,256
Notes payable - non-current $ - $ -
Office rent incurred (included in general
and administrative expenses) $ 2,450 $ 17,528
Interest expense on notes payable $ 41,077 $ 10,506
</TABLE>
3. Notes receivable
Related parties:
Note receivable from First American Mortgage Company, due on
demand, non-interest bearing. $ 75,771
Note receivable from an officer, due on demand, non-interest
bearing. 213,152
Note receivable from Dellar Investments, due on demand,
non-interest bearing. 43,981
Total Notes Receivable - Related Party 332,904
Less current portion (332,904)
Total $ -
Others:
Note receivable from the sale of a subsidiary, secured, non-
interest bearing, six equal payments of $6,667 starting
in June 1996. Note is in dispute, see Note 11. $ 40,000
Notes receivable from several individuals, no stated
interest rate, due July 10, 1997, unsecured. These have been
extended until August 1998. 35,000
Total Notes Receivable - Other 75,000
Less current portion (75,000)
Total Notes Receivable $ -
4. Notes Payable
Related Parties:
Note dated August 11, 1995, payable to an officer in the
original amount of $344,837, unsecured. Note bears
interest at 8.75% and is due in full on August 11, 1997,
this was extended until August 11, 1998. $270,648
Note dated March 14, 1994 payable to an officer,
unsecured. Note bears interest at 8% and is due on
demand. 210,123
Notes payable to former directors, bears interest at 10%,
unsecured, due on demand. 13,394
Notes payable to minority shareholder and former
shareholders with interest rates of 10% on notes due on
demand, unsecured. 17,500
Note payable to Johnston Trust, in dispute (see Note 11).
No stated interest rate, unsecured, due on demand. 41,184
Total notes payable - related parties 552,849
Less current portion (552,849)
Long-term portion $ -
Others:
Convertible notes
Note payable with original interest rate of 10%, payable in
full on December 31, 1993. During 1993, the note was
extended with interest at 12% due in full on December 31,
1997. Subject to specific conditions under the note
agreement, the principal balance may be converted to
100,000 shares of common stock. This note is in dispute,
see Note 11 for Olivia Dodge Trust litigation. $137,500
Bank Loans
Note dated August 11, 1996 to Industrial State Bank in
the original amount of $1,500,000, secured by Company
assets, secured and unsecured guarantees. The note has a
balloon payment of $1,216,296 due on August 11, 1998. 1,216,296
Notes payable to various subcontractors and suppliers for
goods and services provided in contracts. The notes have
no interest rate and are paid to the extent a payment for
providing services or goods on specified contracts are
collected. This debt is under class 7 of the Plan of
Reorganization and is to be paid from cash flows of
Tomahawk. 464,643
4. Notes payable (continued)
Various notes payable with interest rates ranging from 0% to
12.75%, monthly payments from $226 to $243,
uncollateralized. 113,913
Total notes payable 1,932,352
Less current portion (1,932,352)
Long-term portion $ -
Maturities of notes payable at December 31, 1997, are as follows:
Year Ended
December 31,
<TABLE>
<S> <C>
1998* 1,680,939
1999 -
2000 -
2001 -
Thereafter -
$1,680,939
</TABLE>
* These obligations are due when Tomahawk is profitable and has cash flow.
5. Operating leases
Tomahawk leases office space from First American Mortgage Company on a
month-to-month basis. An officer of the Company is a major shareholder of the
First American Mortgage Company.
6. Stockholders' equity
Regulation S offering
During 1997 the Company issued 2,500,000 shares of common as a result of
the exercise of options acquired under the 1994 stock option agreement.
Preferred stock
The Company has currently designated 2,500,000 shares of their authorized
preferred stock to Series A Convertible Preferred Stock and an additional
2,500,000 shares to Series B Convertible Preferred Stock.
Both Series A and Series B preferred stock bear a cumulative $.125 per share
per annum dividend, payable quarterly. The shareholders have a liquidation
preference of $1.25 per share, and in addition, all unpaid accumulated
dividends are to be paid before any distributions are made to common
shareholders. These shares are subject to redemption by the Company, at any time
after the second anniversary of the issue dates (ranging from August 1990
through October 1992) of such shares and at a price of $1.25 plus all unpaid
accumulated dividends. Each share is convertible, at any time prior to a
notified redemption date, to one common share. The preferred shares have equal
voting rights with common shares and no shares were converted in 1997. The
preferred dividends are not accrued until the Company declares said dividends.
Options
In January 1996, the Company issued 4,907,000 options at $.03 per share to
be exercised within the next two years. Only 250,000 shares were exercised
during 1997, the rest have expired.
Also during 1996 the Company issued 6,500,000 options at various prices
ranging from $.02 to $.10 per share in exchange for services. An additional
2,870,000 options were issued for reduction of debt and 4,000,000 options
were issued for settlement of a lawsuit. All 13,370,000 of the previous
mentioned options were exercised.
7. Income tax
No current or deferred tax provision resulted, as there was both an
accounting and a tax loss for each of the periods presented. The primary
permanent differences between tax and accounting losses are non-tax
deductible penalties, losses from closure of subsidiaries and amortization of
certain goodwill.
The Company has available for income tax purposes, a net operating loss
carryforward of approximately $10,000,000 expiring from 2004 to 2007,
including $970,000 subject to certain recognition limitations. A valuation
allowance for the full amount of the related deferred tax asset of
approximately $1,380,000 has not been recorded.
The significant temporary differences are associated with bad debts, deferred
compensation and accrued vacation.
All of the net operating loss carryforward of approximately $10,000,000 is
subject to significant recognition limitations due to the merger with
Tomahawk.
8. Closed and sold subsidiaries
As of December 31, 1996 the following subsidiaries have ceased operations:
KLH Engineering of Colorado Springs, KLH Engineering of Grand
Junction, KLH Engineering of Lakewood, KLH Engineering of Greeley,
KLH Engineering of San Mateo and KLH Engineers and Constructors.
In April 1996, the Company sold KLH Engineering of Pueblo to an outside
party for a $40,000 note receivable, $33,433 in cash and $166,567 in
assumption of debt.
Accordingly, the net losses from operations and the loss from the liquidation
or sale of these subsidiaries have been included as a separate line on the
accompanying statement of operations.
9. Profit-sharing plan
The Company has an employee savings and profit-sharing plan for all
eligible employees which includes an employees savings plan established
under the provisions of Internal Revenue Code Section 401(k). The
Company's contributions to the plan are at the Board of Director's
discretion, but may not exceed the maximum allowable deduction permitted
under the Internal Revenue Code at the time of the contribution. No
contributions were made under this plan in 1996. This plan is administered
by Security Bank of Kansas City and had a balance of $181,639 at
December 31, 1997.
All Subsidiaries participated in the plan. Those subsidiaries that had defined
benefit plans prior to acquisition by the Company terminated their
individual plans and transferred the assets to the Company plan during
1991, except for C-REM Engineers, Inc. (C-REM), as discussed below.
Due to the stipulations under C-REM's pension plan and money purchase
plan regarding a repayment of debt by an unrelated party, C-REM has not
yet terminated these plans nor transferred the assets to the Company plan;
however, the company intends to do so upon the repayment of the debt to
the plans. Contributions have been suspended until the plans are terminated
and the assets are transferred to the Company's plan.
Tomahawk sponsors employee savings or deferred compensation plan under
which a matching contribution may be made by the Tomahawk. Tomahawk
has the authority to determine the amount of matching contribution, if any,
to be made.
The Company issued 17,506 shares of common stock to fund this plan
during 1996. The Company did not fund this plan during 1997.
10. Incentive stock option plan
In July 1993, the Company's shareholders approved an incentive stock
option plan (ISOP) which authorizes options to be granted to key
employees to purchase up to an aggregate of 500,000 shares of common
stock at prices not to be less than the fair market value of the shares at the
time the options are granted. The plan provides that the options may be
exercisable at any time after distribution and expire three years after date of
grant. As of December 31, 1994, 32,187 options have been granted at an
exercise price of $1.60 each. At the date of the audit report, all of these
options have expired unexercised.
11. Other commitments and contingencies
The Company's subsidiaries are typically subject to various claims arising in
the ordinary course of business which usually relate to claims of professional
negligence or contract breaches.
11. Other commitments and contingencies (continued)
The Company believes that all pending professional liability proceedings are
adequately covered by insurance. However, due to the nature of the
Company's business, the Company has historically been able to procure
insurance, but there can be no assurance such insurance will be adequate or
that it will be renewable or remain available in the future.
The Company is aware of three actions that have been filed against a closed
subsidiary of the Company, Morton Technologies, Inc. ("Morton"). The
actions against Morton arose prior to the Company acquiring Morton and
the claims were filed after Morton was closed. At this time the Company is
not answering the complaints and will file a liquidation bankruptcy
proceeding for Morton if the action proceeds towards a judgment against
Morton.
The Company has attempted to maintain professional liability insurance.
The Company has been able to meet the costs of insurance premiums and
currently has insurance, however, the Company has failed to pay certain
insurance deductibles and an action has been brought against the Company
for failure to pay insurance deductibles. It is believed that this action can
be settled for little or no money since the Company does not have current
operations or cash flow.
In October 1993, the U.S. Securities and Exchange Commission (the
"SEC") began a private "order of investigation" of the Company. In a letter
dated February 14, 1996, the SEC's Central Regional Office ("CRO")
informed the Company that it planned to recommend to the SEC that a civil
injunctive action for violations of federal securities laws, alleged to have
occurred during 1993, be brought against two former Presidents and
Directors of the Company, Fed Boethling and Richard Kendall (the "Former
Management"), and against the Company itself. During the time frame of
the violations alleged by the SEC, no members of the current management
of either AmeriResource Group, AmeriResource Technologies, Inc. or
Tomahawk were involved in any transactions with the Company or the
Company's securities, or in the preparation of any of the Company's
disclosure or sales material. The Company was given the opportunity to
submit a written statement to the SEC setting forth its positions and
arguments concerning the recommendations (a "Wells Submission"). The
Company engaged counsel independent of Former Management to prepare
its Wells Submission, which was delivered to the SEC on April 21, 1995.
On April 30, 1996, the Company submitted documents to the SEC with
a request to finalize the settlement of this matter. The SEC informed the
Company in October 1997 that no action will be taken against the
Company.
On March 18, 1994 Franklin Resources, Inc. filed a Complaint, in Superior
Court of California for the County of San Mateo, against C-REM
Engineers, Inc., a subsidiary of the Company, and against the Company,
claiming breach of contract for non payment of a note for which the
Company is a guarantor. The matter was settled by allowing a stipulated
judgement to be entered in the amount of $160,000. This subsidiary has
been closed and has no assets to satisfy the stipulated judgement. This
obligation is reflected in the notes payable section of the financial
statements.
11. Other commitments and contingencies (continued)
On April 19, 1996, the Canton Industrial Corporation and Canton
Industrial Corporation of Salt Lake City (the "Plaintiffs") filed a breach of
contract and fraud action against the Company. This matter has been settled
at no cost to the Company.
On July 12, 1996, Thomas Neale filed a Complaint and Jury Demand in the
Arapahoe County, Colorado, District Court, naming as defendants in the
action the Company, Delmar Janovec (the company's President and a
director), J. Larry Adams (the Company's Executive Vice President and a
director), and two of the Company's subsidiaries, KLH Engineers &
Constructors, Inc. ("E&C") and Tomahawk Construction Company. Mr.
Neale was president of E&C from July 1994 until the company terminated
his employment in May 1996. The complaint alleges breach of employment
contract and express warranties, wrongful termination and violation of
public policy, fraudulent concealment, and piercing of the corporate veil.
This matter was settled on December 2, 1996 by the Company issuing
4,000,000 shares of restricted stock.
In February 1996, Imperial Premium Finance filed an action in the Superior
Court of the State of California for the County of Los Angeles. This action
is for premiums financed for errors and omissions coverage. This matter has
been settled by allowing a stipulated judgement in the amount of $60,000.
This obligation is recorded in the contingencies and commitments section
of the financial statements.
Also in February 1996, the Bankruptcy Trustee for Scanlon and Associates,
a former subsidiary of the Company, filed an action for Bankruptcy
Preference in the United States Bankruptcy Court for the District of New
Mexico. The Trustee maintains that the Company received a preference
from the monies paid to the Company by the debtor for the one-year period
prior to the filing of Bankruptcy. The Company contends that the monies
were not a preference. In April 1996 the Company responded to discovery
which resulted in a dismissal of the action.
On June 26, 1995, Kimberly Pearce sued KLH's Pueblo office in the
District Court of Colorado. Ms. Pearce also sued Raymond Koester, a
consultant for, and former employee of, the KLH's Pueblo office. The
lawsuit alleges that Koester was negligent in preparing an engineering
opinion on the structural integrity of an old home Pearce bought. Pearce
claims that the home was not structurally sound, and that Koester should
have discovered the defects. The Company believes the structural defects
were not noticeable at the time of the sale and its exposure in this matter to
be minimal. The Company has retained outside counsel to defend this
matter. This matter will be discharged upon the filing of Chapter 7
Bankruptcy by this subsidiary.
On October 10, 1995, the Company brought an action against James
Laraby, a former officer and director of the Company, for payment on a
$150,000 promissory note made by Mr. Laraby that had matured in July
1994. No payment had been made on the note. Mr. Laraby
counterclaimed, seeking an accounting of records and declaratory relief.
This matter has been dismissed for failure to prosecute the action.
11. Other commitments and contingencies (continued)
On September 16, 1994, Tomahawk filed for protection pursuant to Title
11 of the U.S. Codes under Chapter 11, in the Western District of Missouri,
Western Division. A plan of reorganization was filed on or about March 9,
1996 and an Amended Plan of Reorganization on April 29, 1996. The
court confirmed the amended plan on August 28, 1996.
Tomahawk filed suit against M.K. Ferguson for work completed in Oak
Ridge, Tennessee. The claim was settled in May 1997 for the sum of
$1,851,444. Tomahawk has agreed with its subcontractors to sharing a
percentage of the delay claim only, in exchange for releases of money owed
by Tomahawk. Tomahawk has agreed to settle with its bonding company
(USF&G) by paying $500,000 for a release of $2,300,000 of bond claims.
In addition, Tomahawk has agreed to pay Industrial State Bank the sum of
$336,000 for release of the Bank's claim on the settlement money.
Tomahawk will also pay the Internal Revenue Service $22,000 for a release
of all liens.
In July 1996, a judgement was entered in favor of Lexington Insurance
Company in the amount of $39,774 with interest (8%). In December
1997, the court entered an order ordering the Company to appear for a
hearing in aid of execution. A hearing date is to be determined. This
obligation is recorded as a contingency and commitment.
Tomahawk was named co-defendant in a lawsuit brought by private
plaintiffs for damages allegedly sustained as a result of construction activity
performed on a sewer project in Johnson County, Kansas. An unspecified
amount of damages was sought. The court dismissed the action, and there
is no ultimate liability to the Company since the recovery is limited to
insurance proceeds.
In April 1996, Industrial State Bank filed an action against John Larry
Adams on his guarantee of the Company's loan with Industrial State Bank
(the "Bank"). The Bank has not filed suit against the Company nor has the
Bank declared the Company in default under the loan. Mr. Adams is a
director, officer and a more than 5% shareholder of the Company. Mr.
Adams has retained his own counsel to respond to the complaint.
On April 26, 1996, Dyer Brothers Construction Company filed an action
against the Company's Lakewood subsidiary and the subsidiary's former
President, alleging negligence in the design of roadways. The roadways
were initially approved by the county and the Company believes its exposure
is minimal. The Company is represented by outside counsel in the lawsuit
and an answer has been filed. This matter will be discharged upon the filing
of Chapter 7 Bankruptcy proceedings.
On July 9, 1996, the Comed Corporation, and its President, Norman Fast,
brought an action against the Company for breach of contract. The
Company's Colorado Springs subsidiary hired Mr. Fast to perform
construction management services. The amount sought is $15,090 plus
interest and costs. The Company has not filed a response. This matter will
be discharged upon the filing of Chapter 7 bankruptcy proceedings after
January 1998.
11. Other commitments and contingencies (continued)
On July 30, 1996, Rocky Mountain Aerial Surveys, Inc. was awarded a
default judgement against a subsidiary in the amount of $25,051 for the
Company's failure to make payments. This obligation is recorded as an
account payable.
In October 1996, the Internal Revenue Service (IRS) placed liens on the
assets of all of the Company's Colorado and California subsidiaries for
failure to pay payroll taxes in 1996. The Company is several months behind
in payment and is attempting to resolve this matter. The total of the liens
is approximately $480,000. The Company also faces potential action by the
State of Colorado.
In February 1996, American Factors Group, L.L.C. filed suit against the
Company and certain subsidiaries for breach of contract and fraud in the
extension of credit in a factoring agreement. The Company disputes this
claim in that the contract called for American Factors Group to purchase the
receivables from the Company on a non-recourse basis. The Company has
filed a response to the complaint and demanded that the matter be
submitted to arbitration. An arbitrator has been appointed, but a date has
not been scheduled. American Factors Group claims it is owed $291,044
plus interest.
In September 1996, John Larry Adams, the Company's former Executive
Vice President, filed suit against the Company for unreimbursed expenses.
In September 1996, the Company settled this matter by allowing a
stipulated judgement to be entered for $80,652 plus interest. This
obligation is recorded as a contingency and commitment.
The Company has defaulted upon interest and principal with respect to a
promissory note in favor of the Olivia I. Dodge Charitable Remainder
Unitrust (the "Dodge Trust") which became due to December 31, 1995.
According to the Dodge Trust's attorney, the total due (including interest)
as of May 1, 1996 is $169,761. Interest was not accrued in the financial
statements since this note is in dispute.
The Company has defaulted upon interest and principal with respect to a
$40,819 note in favor of the Roy Lee Johnston Trust (the "Johnston
Trust"). The Johnston Trust has received a judgement in its favor but has
been unsuccessful in their attempts to collect. This obligation is reflected in
the notes payable section of the financial statements.
The Company's subsidiary, KLH Engineers & Constructors, Inc. has
defaulted on a promissory note to Thomas Little, a former officer of the
subsidiary. The note became due on November 14, 1996. The principal
amount owed is $17,500 with 10% interest accruing from the date of the
note, October 29, 1990. This obligation is reflected in the notes payable
section of the financial statements.
12. Marketable securities
At December 31, 1997, marketable equity securities are stated at their lower
of aggregate cost or market value. No unrealized or realized holding gains
occurred during the fiscal year ended December 31, 1997. The Company
has marketable securities available for sale. No other investments in trading
or held-to-maturity marketable securities exist as of December 31, 1997.
During 1996, the Company wrote off the preferred shares of Edmund
Construction since the shares were deemed worthless.
<TABLE>
<S> <C> <C>
1997 1996
Marketable securities available for sale:
100 shares of common stock, General
Motors Corporation $ 4,750 $ 4,750
Total marketable securities at
December 31, 1997 $ 4,750 $ 4,750
</TABLE>
13. Going concern uncertainty
The accompanying financial statements have been prepared in conformity
with principles of accounting applicable to a going concern, which
contemplates the realization of assets and the liquidation of liabilities in
the normal course of business. The Company has incurred continuing losses and
has not yet generated sufficient working capital to support its operations.
The Company's ability to continue as a going concern is dependent, among
other things, on its ability to reduce certain costs, obtain new contracts and
additional financing and eventually, attaining a profitable level of operations.
It is management's opinion that the going concern basis of reporting its
financial condition and results of operations is appropriate at this time. The
Company plans to increase cash flows and take steps towards achieving
profitable operations through the sale or closure of unprofitable operations,
and through the merger with or acquisition of profitable operations.
14. Bankruptcy proceedings of subsidiary
On September 16, 1994, Tomahawk filed for protection pursuant to Title 11
of the U.S. Code under Chapter 11, in the Western District of Missouri. On
August 28, 1995 the court confirmed the Company's amended plan of
reorganization. The plan provides for payment of claims through the
continued operations of the Company, and contingent upon the collection of
receivables on completed projects. The Company has reclassified various
payables into long-term debt relative to these claims in the amount of
$464,643.
ITEM 8. Changes In and Disagreements With Accountants on Accounting
and Financial Disclosure
Resignation of Independent Accountant
On January 20, 1995, the Company received a letter from Lehman, Butterwick
& Company, P.C. ("Lehman"), dated January 16, 1995, which notified the Company
in writing of Lehman's resignation as the Company's auditors. Lehman's reports
on the Company's financial statements for the past two years contained no
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope, or accounting principles, other than a paragraph
expressing doubt as to the ability of the Company to continue as a going
concern.
During the Company's two most recent fiscal years and subsequent interim
period there were no disagreements with Lehman on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement(s), if not resolved to Lehman's satisfaction,
would have caused it to make a reference to the subject matter of the
disagreement(s) in connection with its reports.
Engagement of New Independent Accountant
On February 8, 1995, the Company engaged Crouch, Bierwolf & Call, now
known as Crouch, Bierwolf & Chisholm, as its independent accountants to perform
annual audits of the Company's financial records.
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
Directors of the Company are elected annually, and serve until the next annual
meeting of shareholders and qualification of their successors. The executive
officers and directors of the Company are currently as follows:
Name Age Position(s) and office(s)
Delmar A. Janovec 48 Chairman of the Board of Directors and
Chief Executive Officer
Rod Clawson 41 Director and Vice President
Delmar A. Janovec has served as a director of the Company since May 12,
1994. On June 27, 1994, he was appointed President and CEO of the Company.
Mr. Janovec, who is a descendant of the Mdewskanton Wahpakoota and Sisseton-
Wahpeton bands of the Sioux American Indian Tribe, has over twenty years
experience in the construction industry as a general foreman, superintendent,
project manager, and estimator, and for the past fifteen years has been the
owner-CEO of Tomahawk Construction Company, a subsidiary of the Company. Mr.
Janovec attended undergraduate studies at Kansas State University.
Rod Clawson has been with the Company since October 1, 1993. Since May
of 1995, he has served as Vice President of the Company and President of KLH
Engineers & Constructors, Inc., the Company's engineering subsidiary. On August
10, 1995, Mr. Clawson was made a director of the Company. Before his
appointment as an officer of the Company, Mr. Clawson served as the Company's
Marketing Director. Prior to joining KLH, Mr. Clawson worked as a manager for
other engineering and industrial companies. Mr. Clawson is a graduate of Regis
University.
There were two changes in the Board during 1995, one change during 1996 and
four changes during 1997. On August 3, 1995, Nancy Adams and Debbie Freeman
resigned from the Company's board of directors to pursue other interests. Both
had served on the board since their initial appointments on July 1, 1994.
The board accepted their resignations, and on August 10, 1995 appointed Alicia
M.(Yarbrough) Ellis and Rod Clawson as new directors of the Company. Ms.
(Yarbrough) Ellis was formerly married to Chester Ellis. In July 1996 John
Larry Adams resigned from the Company's board of directors. On April 6, 1997
Dick White, Alicia M. Yarbrough and Chester Ellis resigned from the board of
directors. None of the resigning directors have been replaced as of
March 31, 1998.
Compliance With Section 16(a) of the Exchange Act
The Company's current officers and directors were delinquent in 1996 and 1997
in the filing of all Forms 4 and 5 as required under Section 16(a).
Item 10. Executive Compensation
Director Compensation
The Company does not pay fees to directors who are full-time employees of the
Company or reimburse them for out-of-pocket expenses in connection with
attending Board or committee meetings. Directors may, by resolution of the
Board of Directors, receive a fixed fee 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 compensation for services as a director in the fiscal year
ended December 31, 1996 or in the fiscal year ended December 31, 1997.
Executive Compensation
No compensation in excess of $100,000 was awarded to, earned by, or paid to
any executive officer of the Company during 1996 or 1997.
Item 11. Security Ownership of Certain Beneficial Owners and
Management
The table below sets forth certain information regarding ownership of the
Company's Common Stock, par value $0.001 per share, and the Series A and B
Preferred Stock taken together, as of December 31, 1997, by each person who is
known by the Company to beneficially own more than five percent of the Common
Stock or the Preferred Stock, by each director of the Company, and by all
directors and executive officers of the Company as a group. Shares issuable
upon the exercise of warrants or options that are exercisable within 60 days are
deemed outstanding for the purpose of computing the percentage ownership of
persons beneficially owning such warrants or options but are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person. To the knowledge of the Company, unless otherwise
indicated, the persons listed below have sole voting and investment power
with respect to the shares indicated, subject to community property laws
where applicable and the information contained in the notes to the table.
<TABLE>
<S> <C> <C> <C>
Name and Address Title Amount and Nature Percent of
of Benefl Owner of Class of Beneficial Owner Class
Delmar A. Janovec Common Stock 23,350,948*,** 14.2%
8809 Long Street
Lenexa, KS 66215 Perferred Stock 2,760,000 89.3%
John Larry Adams Common Stock Unknown 0
Olathe, KS
Rod Clawson Common Stock Nil 0
Englewood, CO
Dick White Common Stock Nil 0
8809 Long Street
Lenexa, KS 66215
Chester Ellis All Stock Nil 0
Alicia (Yarbrough) Ellis All Stock Nil 0
Tibor L. Nemeth Preferred Stock 177,012 5.7
165 North Aspan Ave.
Azusa, CA 91702
All Executives Officers
and Directors as a Common Stock 23,350,948 14.2%
Group Preferred Stock 2,760,000 89.2%
(*) Includes 5,000,000 shares of Common Stock owned by First Americans Mortgage
Corporation, which Delmar Janovec is deemed to own beneficially by virtue of
his position as executive officer and director of First Americans Mortgage
Corporation.
(**) Includes 2,760,000 shares of Preferred Stock owned by Delmar Janovec,
which may be exchanged at any time by Janovec for the Company's Common Stock on
a one-for-one basis.
Item 12. Certain Relationships and Related Transactions
On January 1, 1991, the Company's subsidiary Tomahawk Construction
Company entered into a month-to-month Lease agreement with Delmar and Marilyn
Janovec. Under the terms of the Lease, Tomahawk is to pay the Janovec's
$2,876.36 per month, plus taxes and insurance costs, for the use of the office
building and surrounding property in Kansas City, Kansas. As of December 31,
1996, Tomahawk was behind $44,478.49 in payments due under the lease.
On October 21, 1992, the Company executed a Loan Modification Agreement
with Mr. Nemeth. In satisfaction of its obligation to pay interest on the line
of credit through October 9, 1992, the Company issued 177,012 shares of its
Series B Preferred Stock to Mr. Nemeth at his election. The Company's credit
agreement with Mr. Nemeth matured on January 10, 1993. On April 22, 1993, Mr.
Nemeth filed a suit against the Company, alleging breach of the loan agreements.
On March 24, 1994, the Court found in favor of the Company regarding additional
penalties being sought by Mr. Nemeth. Mr. Nemeth still has a claim pending
against the Company seeking repayment of interest originally converted to
preferred stock. The Company believes that these agreements with Mr. Nemeth
were at arm's length due to the adversarial position at the time of negotiating.
On March 15, 1993, Delmar Janovec loaned Tomahawk Construction Company
$19,000 at current market interest rates. The Promissory Note Tomahawk
executed became due on March 15, 1995, but payment was extended under the same
terms to March 15, 1996. On December 31, 1995, following another loan from
Janovec to Tomahawk, Tomahawk issued to Janovec another Promissory Note, due
December 31, 1996 under the same terms, in the amount of the new loan,
$18,400.
On three separate occasions during 1995, Delmar Janovec exchanged debt owed
to him by the Company for preferred stock in the Company. This was done to
reduce the Company's liabilities and increase its equity, improving the
financial condition of the Company. On September 18, 1995, the Company issued
Mr. Janovec 560,000 shares of its Series A Preferred Stock in exchange for the
release of $700,000 in debt the Company owed Mr. Janovec. On November 30, 1995,
1,600,000 shares of Series A Preferred Stock were issued in exchange for the
release of $2,000,000 in debt the Company owed Mr. Janovec. Effective December
29, 1995, 600,000 shares of Series B Preferred Stock were issued in exchange for
the release of $750,000 in debt the Company owed Mr. Janovec. The Company's
Board of Directors unanimously approved each of the transactions.
On December 31, 1995, in conjunction with a loan to Tomahawk from Janovec's
wholly owned corporation Tomahawk Maintenance Services Company ("TMSC"),
Tomahawk issued to TMSC a Promissory Note, due December 31, 1996, in the amount
of the new loan, $20,585.69, and bearing 8.75% annual interest.
On March 31, 1998 the Company entered into a transaction whereby Delmar
Janovec acquired a 51% ownership in Tomahawk Construction, the Construction
Subsidiary, in exchange for reduction of obligations owed to the Company. The
transaction benefits the Company by allowing Tomahawk to become a minority
owned business. This status will allow Tomahawk to compete for new work. The
company will continue to own 49% of Tomahawk.
Item 13. Exhibits and Reports on Form 8-K
Exhibits
Exhibits marked with an asterisk are filed herewith. The remainder of the
exhibits have heretofore been filed previously with the Commission and are
incorporated herein by reference.
SEC # DESCRIPTION
2.1 Amended Plan of Reorganization of Tomahawk Construction
Company, dated April 27, 1995. Incorporated by reference
to the Company's Quarterly Report on Form 10-QSB for the
quarterly period ended June 30, 1995.
2.2 Second Addendum to Debtor's Amended Plan of
Reorganization of Tomahawk Construction Company, filed
August 28, 1995.
3.1 Articles of Incorporation and Bylaws. Incorporated by
reference to the Company's Form S-4 registration
statement, effective February 11, 1992, File No. 33-44104.
4.1 Resolutions Establishing and Designating Series A and
Series B Convertible Preferred Stock. Incorporated by
reference to the Company's Form S-4 registration
statement, effective February 11, 1992, File No. 33-44104.
4.2 Loan Agreement, Security Agreements, and Guaranty
Agreements for KLH Engineering Group, Inc. and
subsidiaries with Industrial State Bank. Incorporated by
reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ending December 31, 1993.
10.1 Agreement, dated December 7, 1995, between the Company
and Barrick Properties, L.C.
10.2 Lease, dated January 1, 1991, between Tomahawk
Construction Company and Delmar and Marilyn Janovec.
10.3 Promissory Note in the amount of $19,000, dated March 15,
1995, made by Tomahawk Construction Company to Delmar
Janovec as payee.
10.4 Promissory Note in the amount of $18,400, dated December
31, 1995, made by Tomahawk Construction Company to
Delmar Janovec as payee.
10.5 Promissory Note in the amount of $20,585.69, dated
December 31, 1995, made by Tomahawk Construction
Company to Tomahawk Maintenance Services Company as
payee.
10.6 Consulting Agreement, dated November 16, 1995, between
the Company and Neil Rand.
16.1 Letter, dated March 28, 1995, from Lehman, Butterwick &
Company, P.C. to the Securities & Exchange Commission.
Incorporated by reference to the Company's Annual Report
on Form 10-KSB for the fiscal year ending December 31,
1994.
22.1 List of Subsidiaries.
Reports on Form 8-K
In the first quarter of 1996, the Company filed a Current Report on Form 8-K
regarding the closing of the Company's San Mateo office and the Company's
continuing cash flow problems. The date of the report was March 1, 1996.
In the second quarter of 1997, the Company filed a Current Report on Form 8-K
regarding the failure and inability to file timely annual report on Form 10KSB,
closure of all Engineering Subsidiary's, resignation of Ed Blume, Chet Ellis,
Alicia Ellis and Richard White as directors of the Corporation. The date of the
report was April 8, 1997.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Annual Report on
Form 10-KSB to be executed on its behalf by the undersigned, thereunto duly
authorized.
AmeriResource TECHNOLOGIES, INC.
Delmar Janovec March 31, 1998
Delmar Janovec
Chairman of the Board of Directors
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Annual Report on Form 10-KSB has also been executed below by the following
persons in the capacities as indicated as of March 31, 1998, each of whom
attests to the completeness and accuracy of this report.
Rod Clawson
Rod Clawson
Director and Vice President
EXHIBIT INDEX
Exhibits marked with an asterisk are filed herewith. The remainder of the
exhibits have heretofore been filed previously with the Commission and are
incorporated herein by reference.
SEC # PAGE # DESCRIPTION
2.1 Amended Plan of Reorganization of Tomahawk Construction
Company, dated April 27, 1995. Incorporated by reference
to the Company's Quarterly Report on Form 10-QSB for the
quarterly period ended June 30, 1995.
2.2 Second Addendum to Debtor's Amended Plan of
Reorganization of Tomahawk Construction Company, filed
August 28, 1995.
3.1 Articles of Incorporation and Bylaws. Incorporated by
reference to the Company's Form S-4 registration
statement, effective February 11, 1992, File No. 33-44104.
4.1 Resolutions Establishing and Designating Series A and
Series B Convertible Preferred Stock. Incorporated by
reference to the Company's Form S-4 registration
statement, effective February 11, 1992, File No. 33-44104.
4.2 Loan Agreement, Security Agreements, and Guaranty
Agreements for KLH Engineering Group, Inc. and
subsidiaries with Industrial State Bank. Incorporated by
reference to the Company's Annual Report on Form 10-KSB
for the fiscal year ending December 31, 1993.
10.1 Agreement, dated December 7, 1995, between the Company
and Barrick Properties, L.C.
10.2 Lease, dated January 1, 1991, between Tomahawk
Construction Company and Delmar and Marilyn Janovec.
10.3 Promissory Note in the amount of $19,000, dated March 15,
1995, made by Tomahawk Construction Company to Delmar
Janovec as payee.
10.4 Promissory Note in the amount of $18,400, dated December
31, 1995, made by Tomahawk Construction Company to
Delmar Janovec as payee.
10.5 Promissory Note in the amount of $20,585.69, dated
December 31, 1995, made by Tomahawk Construction
Company to Tomahawk Maintenance Services Company as
payee.
10.6 Consulting Agreement, dated November 16, 1995, between
the Company and Neil Rand.
16.1 Letter, dated March 28, 1995, from Lehman, Butterwick &
Company, P.C. to the Securities & Exchange Commission.
Incorporated by reference to the Company's Annual Report
on Form 10-KSB for the fiscal year ending December 31,
1994.
22.1 List of Subsidiaries.
</TABLE>
