SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended June 30, 1999.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from to .
--------------- ---------------
Commission file number: 0-20033
AMERIRESOURCE TECHNOLOGIES, INC.
----------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 84-1084784
---------- ---------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
939 Sante Fe Drive Overland Park, Kansas 66212
------------------------------------------------------------
(Address if principle executive office) (Zip Code)
(913) 859-9292
--------------------
(Issuer's telephone number)
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
The number of outstanding shares of the issuer's common stock, $0.0001
par value, as of August 11, 1999 was 492,060,312.
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS...................................................3
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS....................................4
PART II
ITEM 1. LEGAL PROCEEDINGS......................................................8
ITEM 6. REPORTS ON FORM 8-K....................................................8
SIGNATURES.....................................................................9
INDEX TO EXHIBITS.............................................................10
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2
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to AmeriResource
Technologies, Inc., a Delaware corporation, and its subsidiaries and
predecessors unless otherwise indicated. Consolidated, unaudited, condensed
interim financial statements including a balance sheet for the Company as of the
quarter ended June 30, 1999, statement of operations, statement of shareholders
equity and statement of cash flows for the interim period up to the date of such
balance sheet and the comparable period of the preceding year are attached
hereto as Pages F-1 through F-10 and are incorporated herein by this reference.
[THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK]
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS PAGE
Consolidated Balance Sheet, June 30, 1999....................................F-2
Consolidated Statement of Operations, for the six months ended
June 30, 1999 and 1998....................................................F-4
Consolidated Statement of Stockholder's Equity for the six months ended
June 30, 1999 and 1998....................................................F-5
Consolidated Statement of Cash Flows, for the six months ended
June 30, 1999 and 1998....................................................F-6
Notes to Consolidated Financial Statements, June 30, 1999....................F-9
F-1
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
ASSETS
June 30, June 30,
1999 1998
(Unaudited) (Unaudited)
-------------- -------------
Current assets:
Cash and cash equivalents (Note 1) $ 7,145 $ 234
----------- ----------
Receivables:
Trade 206,137 730,285
Related Party - 14,471
Notes receivable - related party 91,788 332,904
Notes receivable - other 35,000 75,000
Other receivables - 193,000
Allowance for doubtful accounts (148,721) (583,855)
----------- ----------
Net receivables 184,204 761,805
----------- ----------
Prepaid insurance and other current assets 1,950 50,249
Total current assets 193,299 812,288
----------- ---------
Net property, plant and equipment 95,445 20,384
----------- ----------
Other assets:
Organization costs (Net) (Note 1) 450
Publication rights (Net) (Note 1) 1,139,012
Marketable securities (Note 12) 487,893 189,357
---------- ----------
Total other assets 1,627,355 189,357
---------- ----------
Total assets $ 1,916,099 1,022,029
========== ==========
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheet
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, June 30,
1999 1998
(Unaudited) (Unaudited)
----------------- -----------------
<S> <C> <C>
Current liabilities:
Accounts payable:
Trade $ 333,396 $ 634,213
Related party (Note 2) 15,586 69,126
Current portion of long-term debt:
Related party 174,392 552,849
Other 465,424 255,769
Accrued payroll and related expenses 210,173 646,907
Accrued interest:
Related party (Note 2) 97,473 97,473
Other 188,576 77,760
Escrowed Fees 3,552 -
Income Tax Payable 35,960 35,960
------------ -------------
Total current liabilities 1,524,532 2,370,057
Long-term debt:
Notes payable 1,535,857 1,680,939
Convertible debentures 3,350,000 -
Commitments and contingencies 105,000 105,000
------------ -------------
Total liabilities $ 6,515,389 $ 4,155,996
------------ -------------
Stockholders' equity (Note 6)
Preferred stock, $.001 par value; authorized, 5,000,000 shares;
issued and outstanding, 3,089,621 shares - 3,090
Common Stock, $.0001 par value; authorized, 500,000,000
shares issued and outstanding, 492,060,312 shares 49,406 21,724
Additional paid-in capital 8,544,468 6,532,257
Common stock held in treasury; 2,458,000 shares at cost - (5,625)
Accumulated deficit (13,193,164) (9,685,413)
Total stockholders' equity (deficit) (4,599,290) (3,133,967)
------------ -----------
Total liabilities and stockholders' equity $ 1,916,099 $ 1,022,029
============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
For the six months ended June 30, 1999 and 1998
1999 1998
----------------- ----------------
<S> <C> <C>
Net service income $ 45,258 $ -
Operating expenses (1,233) -
General and administrative expenses (275,653) (73,591)
------------- -------------
Operating gain (loss) (231,628) (73,591)
------------- -------------
Other income (expense):
Loss on sale of subsidiaries (39,950) -
Other comprehensive income 230,000
Interest expense (437) -
------------- -------------
Total Other Income (expense) 189,613 -
Net loss before income tax (42,015) (73,591)
Income tax provision - -
------------- -------------
Net loss $ (42,015) $ (73,591)
============= =============
Earnings per share $ .00 $ .00
Weighted average common shares outstanding 458,060,312 199,570,961
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Statement of Stockholders' Equity
For the Six Months Ended Juine 30, 1999
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$.0001 Par Value $.001 Par Value
Common Stock Preferred Stock Additional Stock
---------------- ----------------
Number Number Paid-In Subscription Treasury Accumulated
of Shares Amount of Shares Amount Capital Receivable Stock Deficit Total
--------- ------ --------- ------ ---------- ------------- -------- ----------- -----------
Balance at December 31, 1997 164,213,803 $ 16,420 3,089,621 $ 3,090 $6,347,954 $ - $(5,625) $(9,600,861) $(3,239,022)
Issuance of Shares for:
S-8 options exercised 33,000,000 3,300 (3,300) -
Subscriptions Receivable 41,000,000 4,100 460,900 (465,000) -
Consulting services 62,535,978 6,254 676,151 682,406
Debt 1,958,281 196 137,304 137,500
Accrued Salaries 11,275,327 1,128 42,373 43,501
Stock 23,076,923 2,308 255,586 257,893
Acquisition of FAMC 45,000,000 4,500 4,500
Acquired from FAMC (71,261) (71,261)
Reduction in Subscription Receivable 465,000 465,000
Consideration for guarantee 20,000,000 2,000 18,000 20,000
Net loss for the year ended
December 31, 1998 (4,127,934) (4,127,934)
----------- -----------
Balance at December 31, 1998 402,060,312 $ 40,206 3,089,621 $ 3,090 $7,934,968 $ - $(76,886)$(13,728,795) $(5,827,417)
=========== ======== ========= ======= ========== ============ ========= ============ ============
Issuance of Shares for:
Consulting Services 50,000,000 5,000 393,500 398,500
Legal Services 40,000,000 4,000 216,000 - 220,000
Sale of Treasury stock 76,886 76,866
Adjustment due to Sale of
Subsidiaries 574,756 574,756
Net loss for the quarter ended
June 30, 1999 (42,015) 42,015)
------------ ------------
Balance at June 30, 1999 492,060,312 $ 49,206 3,089,621 $ 3,090 $8,544,468 $ - $ - $(13,196,054) $(4,599,290)
=========== ======== ========= ======= ========== ============ ========= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
For the six months ended June 30, 1999 and 1998
1999 1998
---------------- -----------------
<S> <C> <C>
Reconciliation of net loss provided by (used in) operating activities:
Net loss $ (42,015) $ (73,591)
Depreciation and amortization 8,600 50,824
Non-cash items:
Non-cash services through issuance of stock (150,000) -
(Gain)/Loss on sale of subsidiary 39,950 -
Other comprehensive income (230,000)
Changes in assets affecting operations - (increase) decrease
Accounts receivable 10,050 -
Prepaid insurance and other expenses (1,950) -
Changes in liabilities affecting operations - increase (decrease)
Accounts payable 19,146
Escrowed fees (672) -
Other current liabilities (21,983) -
------------- ---------
Net cash provided by (used in) operating activities $ (88,020) $ (3,621)
============= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
For the six months ended June 30, 1999 and 1998
1999 1998
---------------- --------------
<S> <C> <C>
Cash flows from financing activities:
Repayment of debt (6,476) -
------------- ------------
Net cash provided by (used in) financing activities (6,476) -
Cash flows from investing activities:
Purchase of fixed assets (53,087) -
Proceeds from sale of subsidiaries 550
-------------
Net cash provided by (used in) investing activities (52,537)
-------------
Increase (decrease) in cash (29,007) (3,621)
Cash - beginning of period 36,152 3,855
------------- ----------
Cash - end of period $ 7,145 $ 234
============= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC.
Unaudited Consolidated Statements of Cash Flows
For the six months ended June 30, 1999 and 1998
SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS
1999 1998
----------------- ----------------
<S> <C> <C>
Purchase of fixed assets through issuance of debt -
Debt paid through issuance of stock $ -
Stock issued for services $ 330,000 -
Additional cash flow information Cash paid for:
Interest $ 589 -
Income taxes $ - -
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 1999
1. Summary of Significant Accounting Policies
The accompanying financial statements have been prepared in accordance
with the instructions of Form 10-QSB and do not include all of the information
and footnotes required by Generally Accepted Accounting Principles for complete
accounting statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included.
2. Corporations Included in the Consolidated Financial Statements
Name Location
First Americans Mortgage Corporation Lenexa, Kansas
The Travel Agent's Hotel Guide, Inc. Lenexa, Kansas
Tomahawk Construction Company, Inc. Lenexa, Kansas
3. Sale of closed subsidiaries
On June 30, 1999, the Company sold the following subsidiaries to
Calbear LLC in an effort to eliminate certain liabilities from its balance
sheet:
KLH Engineers & Contractors, Inc.
KLH Engineering of Colorado Springs, Inc.
KLH Engineering of Lakewood, Inc.
KLH Engineering of Grand Junction, Inc.
KLH Engineering of San Mateo, Inc.
KLH Engineering of Greeley, Inc.
Morton Technologies, Inc.
LBH Engineering, Inc.
Coffee Engineering & Surveying, Inc., and
Scanlon & Associates, Inc.
The Company sold the subsidiaries for a nominal amount of cash in conjunction
with certain securities that were issued out for consulting services rendered to
the Company as part of the Company's plan to improve it financial health.
F-9
<PAGE>
4. Basis of Presentation and Principles of Consolidation
The consolidated financial statements include the combined accounts of
AmeriResource Technologies, Inc., and the accounts of all subsidiaries. All
material intercompany transactions have been eliminated in consolidation.
5. Additional footnotes included by reference
Except as indicated in Notes above, there have been no other material
changes in the information disclosed in the notes to the financial statements
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998. Therefore, those footnotes are included herein by reference.
F-10
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
The Company's operations for the second quarter consisted of bidding for
construction projects, developing a new mortgage program to be utilized in major
cities with the Indian Centers that target Urban Native Americans which are not
being serviced at this time, searching for companies to be acquired that are in
the mortgage business, and formulating a plan of operation or sale for The
Travel Agent's Hotel Guide, Inc. ("TAHG").
On June 30, 1999, the Company sold the following subsidiaries to
Calbear LLC in an effort to eliminate certain liabilities from its balance
sheet: (1) KLH Engineers & Contractors, Inc., (2) KLH Engineering of Colorado
Springs, Inc., (3) KLH Engineering of Lakewood, Inc., (4) KLH Engineering of
Grand Junction, Inc., (5) KLH Engineering of San Mateo, Inc., (6) KLH
Engineering of Greeley, Inc., (7) Morton Technologies, Inc. (8) LBH Engineering,
Inc., (9) Coffee Engineering & Surveying, Inc., and (10) Scanlon & Associates,
Inc. The Company sold the subsidiaries for a nominal amount of cash in
conjunction with certain securities that were issued out for consulting services
rendered to the Company as part of the Company's plan to improve its financial
health.
First Americans Mortgage Corporation
The Company's operations during the second quarter of 1999 were
conducted through First Americans Mortgage Corporation ("FAMC"), which was
acquired as a wholly-owned subsidiary on August 6, 1998. The Company's plan to
increase its revenues by servicing loans through FAMC continued to move forward
during the second quarter of operations in 1999.
Furthermore, the Company made modest progress towards achieving its
long-term plan of creating a fully integrated company possessing all the
necessary resources to provide housing for Native Americans ("Nations") through-
out the United States which include constructing homes for Native Americans
through a construction subsidiary while also providing financing through FAMC.
Accordingly, the Company's efforts to find an operating construction company
that may be interested in being acquired by the Company continued during the
second quarter of 1999.
FAMC also made substantial progress in its effort to implement a
specialized mortgage program which targets Native American nations. Under this
program, Native Americans can purchase a home with less than 1% down at closing.
FAMC has already increased its staff from 2 to 8 people since the Company
acquired FAMC, adding 2 additional employee in the second quarter of 1999. FAMC
intends to further increase its staff to approximately 15 by the end of 1999 to
process the additional loans.
The specialized program FAMC designed is now being utilized with five of
the largest Nations in the State of Oklahoma, which should provide mortgages for
over 500 families in 1999. FAMC continued to review and develop relationships
with other Nations to implement these programs on a national level.
4
<PAGE>
FAMC also continued to search for other mortgage companies to acquire.
Specifically, FAMC continued to search for small mortgage companies that provide
services via the Internet. FAMC believes this will improve its abiltiy to tap
into the Native American market, which is largely underdeveloped.
FAMC also launched its loan origination website in June . The website
will allow FAMC to originate mortgages over the Internet. The FAMC web site is
available to both on and off reservation Native American home buyers for
pre-qualifying or making a home loan application. The site can be accessed at
www.nativeamericanlender.com. FAMC received over 175,000 visitors during the
month of June.
The Company has plans to improve the site which will include a
completely operational system that will have video conferencing, allowing the
loan processor to view the applicant at the same time the applicant views the
loan processor. The Company anticipates that the video conferencing feature
will be operational by the year 2000.
Tomahawk Construction
Tomahawk continued to bid for work in the construction management field
during the second quarter of 1999, but obtained no new projects. Tomahawk's
likelihood for success in obtaining new construction contracts jobs will remain
low until a construction partner or a substantial amount of capital is obtained
that would allow Tomahawk to gain bonding capacity. For more information on
Tomahawk, see "Item 1 Description of Business" in the Company's Form 10KSB for
December 31, 1998. Consequently, management is currently planning to explore
opportunities to combine Tomahawk with a more profitable company through merger
or acquisition. The Company continues to search for a construction company that
is interested in being acquired. Such an acquisition would help fulfill the
Company's long-term plan of becoming a full-service housing resource that
provides construction and mortgage services to Native American communities
across the United States.
The Travel Agent's Hotel Guide, Inc.
The Company acquired a 100% interest in the Travel Agent's Hotel Guide,
Inc. ("TAHG") for the purpose of reselling TAHG's sole asset The Travel Agents
Hotel Guide (the "Guide"). The Guide is a publication that lists over 10,000
hotels in North America. TAHG charges for advertising space in the Guide which
historically has been published and distributed twice year. The Company's plan
is to sell the Guide at a profit. Unfortunately, the Guide has been out of
publication for several years. Management plans to find a potential purchaser of
the Guide that has adequate resources to resume publication of the Guide. In the
event the Company is unable to sell the Guide in 1999, the Company is
considering the possibility of a joint venture with an Internet company that
could post the Guide on the Internet and thereby, reduce the substantial cash
outlay needed to publish and distribute the Guide in a conventional print
format. The Company has begun preliminary negotiations with a potential
purchaser.
5
<PAGE>
Results of Operations
Net service income for the quarter ended June 30, 1999, was $45,258 as
compared to $0 for the second quarter in 1998. The Company conducted no
operations for the quarter ended June 30, 1998. All revenues in 1999 are
attributable to service income generated by FAMC.
Operating expenses increased from $0 for the quarter ended June 30, 1998
to $1,233 for the quarter ended June 30, 1999 as a result of FAMC's operations.
General and administrative expenses were $275,653 for the quarter ended
on June 30, 1999 as compared to $73,591 for the same quarter in 1998. The
$202,062 increase in general and administrative expenses was primarily due to
the Company's issuance of shares for services performed by outside
professionals.
The Company's net loss decreased from $73,591 for the quarter ended
June 30, 1998 to $42,015 for the quarter ended on June 30, 1999. The Company's
net loss decreased as a result of the Company's generation of revenues from loan
originations and other comprehensive income which was recorded as a result
of trading certain marketable securities for consulting services to FAMC.
Liquidity and Capital Resources
The Company and its subsidiaries continue to have very restricted
liquidity. The Company has experienced severe financial difficulty as a result
of Bankruptcy proceedings involving its subsidiary Tomahawk. Although Tomahawk
emerged from Bankruptcy in August of 1995, Tomahawk's ability to obtain
construction projects has been severely limited as a result of those
proceedings.
FAMC began to generate revenues in 1999. The Company believes that this
new revenue stream will continue to make a positive impact in the liquidity
during the year of 1999 and into the future.
The Company also believes that its plans to sell TAHG will provide
additional revenues during 1999. In the event the Company is unable to sell
TAHG, the Company will be required to expend considerable funds in order to
commence operations.
Until FAMC, TAHG, and Tomahawk begin generating sufficient revenues to
cover the expenses of the Company, the Company will continue to use its equity
and the resources of its CEO, Delmar Janovec to finance its operations. Mr.
Janovec has advanced $297,544 to date as a loan to support the Company's limited
operations and has continued to work without pay since October 1, 1996. However,
there is no guarantee that Mr. Janovec will continue such support. The Company
will also need to increase its authorized shares of common stock in order to
continue using its equity as a means to finance its operations.
During the quarter ended June 30, 1999, the Company's working capital
deficit was approximately $1,331,233 compared to a deficit of $1,557,769 for the
quarter ended June 30, 1998. The Company's improved working capital position was
a result of the Company's decision to sell its inoperable subsidiaries during
the quarter which reduced its current liabilities.
6
<PAGE>
The Company's net stockholders' deficit increased from $3,133,967 for
the quarter ended in June 30, 1998 to $4,599,290 for the quarter ended June 30,
1999. The Company's deficit increased primarily as a result of acquiring TAHG at
a substantial loss. The Company's efforts to eliminate the deficit include
selling TAHG for an amount greater than the $1,139,012 book value of the publi-
cation rights.
The Company issued a total of fifteen million (15,000,000) shares of
its common stock to consultants and attorneys during the second quarter of 1999
in lieu of cash payments.
Subsequent Events
In July of 1999, FAMC finalized $55 million in loan commitments from
four Native American Nations ("Nations"). The Nations and commitments are as
follows: (1) Chicksaw Nation, $10,000,000; (2) Chotaw Nation of Oklahoma,
$30,000,000; (3) Citizens Potawatomi Nation, $5,000,000 and (4) Cherokee Nation,
$10,000,000. Each Nation has entered into a risk share agreement with PMI
Mortgage Insurance Company. The Nations will share the risk of foreclosure in
partnership with PMI. FAMC is the exclusive originator for the $55 million. In
addition, the Company has expanded the geographic locations in which it will
provide loans to Native Americans to a total of 8 states including: Oklahoma,
Arkansas, Texas, New Mexico, California, Oregon and Washington. FAMC believes it
can originate approximately 900 loans which will generate estimated fees of
$1,385,000 in gross from the $55 million in loan commitments over the next 12
to 16 months.
Year 2000 Compliance
The Year 2000 presents potential concerns for businesses throughout the
world. The consequences of this issue may include systems failures and business
process interruptions. It may also include additional business and competitive
differentiation. Aside from the well-known calculation problems with the use of
2- digit date formats as the year changes from 99 to 00, the year 2000 is a
special case leap year, and in many organizations using older technology,
2-digit dates may have been used for special programmatic functions.
To respond to the Year 2000 issue, the Company hired an outside
computer consultant in October of 1998 who completed a review of the Company's
existing systems and upgraded approximately 90% of its existing system with
hardware and software that purports to be Year 2000 compliant. Based on the
advice of the consultant, the Company expects to be fully compliant by September
30, 1999.
The cost associated with updating the Company's computer systems is not
expected to have a material impact on the financial condition of the Company.
Nonetheless, there can be no assurance that this will be the case
All organizations dealing with the Year 2000 issue must address the
effect this issue will have on their clients, associates, and third-party supply
chain. Although the Company currently has limited information concerning the
Year 2000 compliance status of its clients, associates, and suppliers, the
Company is undertaking steps to identify key third parties and formulate a
system for working with them to understand their ability to continue providing
services (or buying the Company's) through the Year 2000 change. The impact of
the Year 2000 issue on future Company revenue is hard to discern but is a risk
to be considered in evaluating the further growth of the Company.
7
<PAGE>
Forward Looking Statements
The information herein contains certain forward looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. Investors are
cautioned that all forward looking statements involve risks and uncertainty,
including, without limitation, the ability of the Company to continue its
expansion strategy, changes in costs of labor, changes in the cost of
construction materials, fluctuations in interest rates, labor and employee
benefits, as well as general market conditions, competition, and pricing.
Although the Company believes that the assumptions underlying the forward
looking statements contained herein are reasonable, any of the assumptions could
be inaccurate, and therefore, there can be no assurance that the forward looking
statements included in the Form 10QSB will prove to be accurate. In view of the
significant uncertainties inherent in the forward looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved
The management highly recommends reading this Form 10-QSB in
conjunction with the Company's Form 10-KSB for the year ended December 31, 1998,
in order to gain a more complete picture of the Company's financial condition.
PART II
ITEM 1. LEGAL PROCEEDINGS
No material developments occurred in the second quarter regarding the
Company's legal proceedings. For more information please see the Company's Form
10-KSB for the year ended December 31, 1998.
However, subsequent to the quarter ended June 30, 1999, the Company
settled the Industrial State Bank v. AmeriResource Technologies, Inc., case
No.98-C-14923. The Company, Delmar and Marilyn Janovec agreed to pay $200,000
plus 2,750,000 share of the Company's common stock in exchange for the
forgiveness of $1,200,000 worth of debt owed by the Company. The first cash
payment of $100,000 was paid on July 16, 1999 and the second payment is due on
August 30, 1999. Mr. Janovec transferred 2,700,000 shares of the Company's stock
which he owned to the Industrial State Bank. The Company intends to reimburse
Mr. Janovec upon increasing its authorized shares.
ITEM 6. REPORTS ON FORM 8-K
No reports were filed on Form 8-K during the quarter.
8
<PAGE>
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 Quarterly
Report on Form 10-QSB to be executed on its behalf by the undersigned, hereunto
duly authorized.
AMERIRESOURCE TECHNOLOGIES, INC.
August 12,1999
/S/ Delmar Janovec
-------------------------
Delmar Janovec
Chairman of the Board of Directors
and Chief Executive Officer
9
<PAGE>
INDEX TO EXHIBITS
Exhibits marked with an asterisk have been filed previously with the
Commission and are incorporated herein by reference.
EXHIBIT PAGE DESCRIPTION
NO. NO.
3.1 * Articles of Incorporation and Bylaws. Incorporated by reference
to the Company's Form S-4 registration statements, effective
February 11,1992. File No. 33-44104.
10.1 11 Share Purchase Agreement between the Company and Calbear LLC
selling closed subsidiaries of the Company.
10.2 15 Settlement Agreement between the Company, Delmar and Marilyn
Janovec and Industrial State Bank dated July 1999.
27.1 22 Financial Data Schedule for the 3 month period ending June
30, 1999.
10
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT ("Agreement") is executed this 30th day
of June 1999 by and between AmeriResource Technologies, Inc., a Delaware
corporation ("ARET"), and Calbear,LLC., a Texas corporation ("Purchaser").
Recitals
WHEREAS, ARET is in the process of restructuring its operations and
desires to sell all of its shares of common stock and any preferred stock
(collectively referred to as "the Shares") in ten non-operating subsidiaries,
including:
4. KLH Engineering of Colorado Springs, Inc.,
5. KLH Engineering of Lakewood, Inc.,
6. KLH Engineering of Grand Junction, Inc.,
4. KLH Engineering of Greely, Inc.,
5. KLH Engineering of San Mateo, Inc.,
6. KLH Engineering & Constructors, Inc.,
7. Morton Technologies, Inc.,
8. LBH Engineering, Inc.,
9. Coffee Engineering & Surveying, Inc., and
10. Scanlon & Associates, Inc.; and
WHEREAS, Purchaser wishes to purchase ARET's shares in each of the
above listed entities in an attempt to salvage any potential value the
subsidiaries may have.
Agreement
1. Sale of Shares. ARET agrees to transfer the Shares to Purchaser, and
Purchaser agrees to acquire the Shares from ARET. Immediately after
ARET receives a duly executed copy of this Agreement and delivery of
the purchase price set forth below, it will deliver the Shares to
Purchaser.
2. Purchase Price. As consideration for the Shares, the Purchaser shall
deliver to a check in the amount of $550 for all of the Shares, which
constitute all of ARET's share interest in each of the above-named
subsidiaries.
3. Representation, Warranties and Covenants of Purchaser. Purchaser
represents, warrants and covenants that:
a. Purchaser is an entity formed under the laws of the State of
Texas.
b. Purchaser is acquiring the Shares for its own account and not
with a view to any distribution within the meaning of the
Securities Act of 1933, as amended (the "Act"). Purchaser
acknowledges that it has been advised and is aware that the
Shares have not been registered under the Act and are
"restricted stock" within the meaning of Rule 144 promulgated
pursuant
11
<PAGE>
to the Act ("Rule 144"). Unless, and until, the Shares are
registered under the Act, they will be subject to limitations
upon the resale set forth in Rule 144 or in other
administrative interpretations by the SEC in effect at the
time of the proposed disposition.
c. Purchaser has received all of the information it considers
necessary or appropriate for determining whether to purchase
the Shares. Purchaser is familiar with the business, affairs,
risks and properties of the 10 subsidiaries.
d. Purchaser has such knowledge and expertise in financial and
business matters that it is capable of evaluating the merits
and substantial risks of an investment in the Shares and is
able to bear the economic risks relevant to the purchase of
the Shares hereunder.
e. Purchaser is relying solely upon independent consultation with
its professional, legal, tax, accounting and such other
advisors as Purchaser deems to be appropriate in purchasing
the Shares; Purchaser has been advised to, and has consulted
with, its professional tax and legal advisors with respect to
any tax consequences of investing in the Shares.
f. Purchaser recognizes that an investment in the securities of
the 10 subsidiaries involves a substantial risk and
understands the risk factors related to the purchase of the
Shares.
g. Purchaser understands that there is no public market for the
Shares.
h. Without in any way limiting the representations set forth
above, Purchaser further agrees not to make any disposition of
all or any portion of the Shares unless and until:
(1) There is then in effect a registration statement
under the Act covering such proposed disposition and
such disposition is made in accordance with such
registration statement.
i. Purchaser understands that ARET is relying upon Purchaser's
representations and warranties as contained in this Agreement
in consummating the sale and transfer of the Shares without
registering them under the Act or any law. Therefore,
Purchaser agrees to indemnify ARET against, and hold it
harmless from, all losses, liabilities, costs, penalties and
expenses (including attorney's fees) which arise as a result
of a sale, exchange or other transfer of the Shares other than
as permitted under this Agreement.
6. Representations and Warranties of ARET. ARET represents and warrants
that:
a. ARET is a corporation duly organized and validly existing
under the laws of the State of Delaware.
b. ARET has valid title to the Shares which it is transferring to
the Purchaser pursuant to this Agreement. There are no claims,
liens, security interests, or other encumbrances upon the
Shares.
c. All corporate action on the part of ARET required for the
lawful execution and delivery of this Agreement and the
issuance, execution and delivery of the Shares has been duly
and effectively taken. Upon execution and delivery, this
Agreement will constitute a valid and binding obligation of
ARET, enforceable in accordance with its terms, except as the
enforceability may be limited by applicable bankruptcy,
insolvency or similar laws and judicial decisions affecting
creditors' rights generally.
d. Except as to the title to the Shares and the absence of any
claims, liens, security interests, or other encumbrances upon
12
<PAGE>
the Shares, ARET makes no representations or warranty of any
kind whatsoever, either express or implied, with respect to
the Shares and the value thereof or the lack of value
represented thereby and with respect to the financial cond-
ition of any of the above-listed subsidiaries or the assets of
any of such subsidiaries.
7. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants made by ARET and Purchaser in
this Agreement shall survive the purchase and sale of the Shares.
8. Miscellaneous.
a. In the event any one or more of the provisions contained in
this Agreement are for any reason held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not effect any other provisions of
this Agreement. This Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been
contained herein.
b. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective heirs, legal
representatives, successors, and permitted assigns. The
parties hereto may not transfer or assign any part of their
rights or obligations except to the extent expressly permitted
by this Agreement.
c. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the sale of
the Shares and may not be modified or amended except in
writing signed by both parties.
d. No term or condition of this Agreement shall be deemed to have
been waived nor shall there be any estoppel to enforce any
provision of this Agreement except by written instrument of
the party charged with such waiver or estoppel.
e. The validity, interpretation, and performance of this Agree-
ment shall be governed by the laws of the State of Utah, with-
out regard to its law on the conflict of laws. Any action or
proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought
against any of the parties in the courts of the State of Utah,
County of Salt Lake, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any
objection to venue laid therein. The parties exclude any and
all statutes, laws and treaties which would allow or require
any dispute to be decided in another forum or by other rules
of decision than provided in this Agreement.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first appearing herein.
AmeriResource Technologies, Inc. ("ARET") Calbear, LLC.. ("Purchaser")
- --------------------------------- ---------------------------------
Delmar Janovec, CEO BonnieJean C. Tippetts, President
14
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (the "Agreement") is made and entered into as
of this 9th day of July, 1999, by and between INDUSTRIAL STATE BANK, a Kansas
state bank (the "Bank"), and DELMAR A. JANOVEC and MARILYN C. JANOVEC, two (2)
individuals (the "Janovecs"), and AMERIRESOURCE TECHNOLOGIES, INC., a Delaware
corporation ("ARET" and ARET and the Janovecs hereinafter collectively referred
to as the "Settling Defendants");
WITNESSETH:
WHEREAS, on or about November 24, 1998, Bank commenced an action
against ARET in Case No.98-C-14923, captioned Industrial State Bank v.
AmeriResource Technologies, Inc., in the District Court of Johnson County,
Kansas, Civil Court Department (the "ARET Action"); and
WHEREAS, on or about November 24, 1998, Bank commenced an action
against the Janovecs in Case No.98-C-14924, captioned Industrial State Bank v.
Delmar A. Janovec and Marilyn C. Janovec, in the District Court of Johnson
County, Kansas, Civil Court Department (the "Janovec Action" and the ARET Action
and the Janovec Action hereinafter collectively referred to as the "Actions");
and
WHEREAS, at this time, Bank and the Settling Defendants wish to settle
such claims and to resolve any issues between the parties pursuant to the terms
hereof.
NOW, THEREFORE, in consideration of the premises, covenants and
agreements hereinafter set forth, and intending to be legally bound, the parties
hereto agree as follows:
1. Payment of Settlement Amount; Transfer of Preferred Stock. The
Janovecs and ARET shall tender the sum of One Hundred Thousand Dollars
($100,000.00) (the "First Payment") on or before July 16, 1999 by wire transfer
in immediately available funds to Bank and shall tender the sum of One Hundred
Thousand Dollars ($100,000.00) (the "Second Payment" and the First Payment and
the Second Payment hereinafter collectively referred to as the "Settlement
Amount") on or before August 30, 1999 by wire transfer in immediately available
funds to Bank. On or before the date of the payment of the First Payment, Delmar
A. Janovec shall cooperate with Bank to cause, and shall cause, the 2,760,000
shares of preferred stock of ARET, pledged as collateral by the Janovecs, to be
converted into the common stock of ARET and transferred into the name of Bank or
its nominee (the "Stock Transfer").
2. Representations and Warranties of Bank. Bank represents and warrants
as follows:
(a) Authority; No Conflict. Bank has the power to execute and
deliver this Agreement. The execution, delivery and performance of this
Agreement will not violate or breach any provision of any mortgage, trust,
indenture, lien, lease, agreement, instrument, order, judgment, law, statute,
regulation, ordinance, decree or other restriction of any kind or character to
which Bank is subject. This Agreement has been duly authorized, executed and
delivered by Bank and is valid, binding and enforceable against it in accordance
with its terms.
(b) No Transfer. Bank has not sold, conveyed, transferred
or assigned to any other person
15
<PAGE>
or entity any Claim (as that term is defined in Section 4(a) below) against any
of the Settling Defendants, nor any rights in or to any matter, released herein.
3. Representations and Warranties of Settling Defendants. Each of the
Settling Defendants represents and warrants as follows:
(a) Authority; No Conflict; Enforceability. ARET has the power
to execute and deliver this Agreement. The execution, delivery and performance
of this Agreement will not violate or breach any provision of any mortgage,
trust, indenture, lien, lease, agreement, instrument, order, judgment, law,
statute, regulation, ordinance, decree or other restriction of any kind or
character to which ARET is subject. This Agreement has been duly authorized,
executed and delivered by ARET and is valid, binding and enforceable against it
in accordance with its terms. This Agreement has been duly executed and
delivered by the Janovecs and will be valid, binding and enforceable against
them in accordance with its terms.
(b) No Transfer. Neither the Janovecs nor ARET has sold,
conveyed, transferred or assigned to any other person or entity any Claim (as
that term is defined in Section 4(a) below) against Bank, nor any rights in or
to any matter, released herein.
4. Release of Settling Defendants.
(a) Release and Discharge. Upon the payment of the Settlement
Amount and the Stock Transfer, Bank, on behalf of itself, and its affiliates,
directors, officers, constituents, agents, servants, employees, representatives
and attorneys, and the predecessors, successors and assigns of each of them, and
all persons claiming through and under them, and each of them jointly and
severally (collectively, the "Releasing Bank Parties"), do hereby release,
acquit, remise, forgive and forever discharge the Settling Defendants, and their
respective directors, officers, constituents, agents, servants, employees,
successors, assigns, representatives and attorneys from and against any and all
matters, events, conditions, indebtedness, suits, demands, representations,
agreements, debts, obligations, liabilities, damages, claims, actions, and
causes of action of any nature whatsoever (any such matter being referred to
herein a "Claim"), whether known or unknown, arising out of or related to or in
connection with any actions, failures to act, events, occurrences, facts or
allegations, or any combination thereof, including, without limitation, all
claims which were or could have been alleged in the Actions.
(b) Nature of Release and Discharge. Bank, on behalf of itself
and each of the Releasing Bank Parties, expressly understands and acknowledges
that the releases set forth herein include all matters liquidated, unliquidated,
known, apparent, concealed, mature or immature.
(c) Operation of Release. The releases set forth herein shall
operate against each of Bank and the other Releasing Bank Parties in all
capacities of each such party, whether the claims are direct, indirect,
derivative or otherwise.
(d) No Support of Released Claim. Bank, in any capacity
whatsoever, shall not bring or support any claim settled or released herein
against any of the Settling Defendants.
5. Release of Bank.
16
<PAGE>
(a) Release and Discharge. Upon the payment of the Settlement
Amount and the Stock Transfer, the Settling Defendants, on behalf of themselves
and their respective affiliates, directors, officers, constituents, agents,
servants, employees, representatives and attorneys, and the predecessors,
successors and assigns of each of them, and all persons claiming through and
under them, and each of them jointly and severally (collectively, the "Releasing
Defendant Parties"), do hereby release, acquit, remise, forgive and forever
discharge Bank, its directors, officers, constituents, agents, servants,
employees, successors, assigns, representatives and attorneys from and against
any and all Claims, whether known or unknown, arising out of or related to or in
connection with any actions, failures to act, events, occurrences, facts or
allegations, or any combination thereof, including, without limitation, all
claims which were or could have been alleged in the Actions.
(b) Nature of Release and Discharge. The Settling Defendants,
on behalf of themselves and each of the Releasing Defendant Parties, expressly
understand and acknowledge that the releases set forth herein include all
matters liquidated, unliquidated, known, apparent, concealed, mature or
immature.
(c) Operation of Release. The releases set forth herein shall
operate against each of the Settling Defendants and the other Releasing
Defendant Parties in all capacities of each such party, whether the claims are
direct, indirect, derivative or otherwise.
(d) No Support of Released Claim. Each of the Settling
Defendants, in any capacity whatsoever, shall not bring or support any claim
settled or released herein against Bank.
6. Dismissal of Actions. Upon the payment of the Settlement Amount and
the Stock Transfer, Bank shall file the Joint Motions for Dismissal With
Prejudice, attached hereto as Exhibit A, and the Orders of Dismissal With
Prejudice, attached hereto as Exhibit B, pursuant to which the Actions shall be
dismissed with prejudice. Bank and the Settling Defendants agree that the
dismissal with prejudice pursuant to this Section shall provide that each party
is to bear its, his or her own respective costs.
7. No Admission. Each of the parties to this Agreement acknowledges
its, his or her understanding that this Agreement and release is a compromise of
disputed claims, and that each party does not admit liability of any nature or
kind with respect to any claims asserted by any of the other parties.
8. Third Party Beneficiaries. This Agreement is not intended to, and
shall not, confer upon any person other than the parties hereto any rights or
remedies hereunder.
9. Further Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement.
10 Negotiated Transaction. The provisions of this Agreement were
negotiated by the parties hereto and said Agreement shall be deemed to have been
jointly drafted by the parties hereto.
11. Legal Counsel. Each party represents and warrants that it, he
or she has consulted with and has been advised by legal counsel regarding this
Agreement.
17
<PAGE>
12. Nature of Claims and Debts. Bank and the Settling Defendants
acknowledge that the claims that are the subject of the settlement set forth in
this Agreement consist of contested and disputed claims between the parties and
that Bank and the Settling Defendants respectively dispute the claims of the
other party or parties. Bank represents and acknowledges that the debts alleged
to be due and owing to it by the Settling Defendants constitute contested
liabilities and disputed debts of the Settling Defendants. Bank further
represents that the principal amount of the alleged indebtedness of the Janovecs
is $2,941,058.20 and the principal amount of the alleged indebtedness of ARET is
$1,071,214.15. Bank represents that it is its position that it must file
Internal Revenue Service Form 1099-C with respect to the principal amounts of
the indebtedness that it alleges are owed to it by the Settling Defendants even
though the foregoing debts constitute contested liabilities and disputed debts.
Bank shall take such actions, execute such documents and take such further steps
as reasonably requested by the Settling Defendants to assist the Settling
Defendants in any actions, inquiries or proceedings which may be made or
instituted by the Internal Revenue Service with regard to the treatment of this
Agreement.
13. Payment of Expenses. Each of the parties hereto shall pay its, his
or her own out-of-pocket costs and expenses with regard to the preparation,
delivery and execution of this Agreement. Any party hereto shall have the right
to maintain an action in any court of competent jurisdiction to enforce and/or
to recover damages for a breach of the rights and/or obligations created by, or
provided pursuant to, this Agreement. If such court action is successful, the
prevailing party shall be reimbursed by the other party or parties for all fees
and expenses (including attorneys' fees) actually and reasonably incurred in
connection with such action (including, without limitation, the investigation,
defense, settlement or appeal of such action).
14. Assignment. This Agreement and the rights and obligations hereunder
shall not be assigned by any party, without the prior written consent of the
other parties hereto, and any attempted assignment without such written consent
shall be null and void and without legal effect.
15. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
16. Governing Law and Choice of Law. This Agreement and all rights
hereunder shall be governed by, and construed in accordance with, the laws of
the State of Kansas.
17. Headings. The headings in this Agreement are for convenience only
and in no way define, limit or describe the scope or intent of any provisions,
sections or subsections of this Agreement.
18. Entire Agreement. This Agreement and all other pleadings to be
executed and delivered in connection herewith embody the entire agreement and
understanding between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof and thereof.
18
<PAGE>
19. No Inducement. Each party hereto represents and warrants to the
other party that it, he or she is relying upon no facts or information obtained
from any other party hereto in entering into this Agreement, that there is no
inducement for this Agreement other than as set forth herein, and that such
warranting party has conducted, or has had the opportunity to conduct, its, his
or her own investigation into facts and circumstances surrounding all matters
set forth herein and is satisfied with the results and the extent of its, his or
her investigation.
20. Amendments. No amendment or modification of any of the provisions
hereof shall be of any force or effect unless contained in writing and signed by
Bank and each of the Settling Defendants.
21. Notices. All notices required hereunder or pertaining hereto shall
be in writing and may be delivered by any means, including, but not limited to,
delivery by personal delivery, first class registered or certified mail, postage
prepaid, return receipt requested, by a nationally recognized overnight
commercial courier service with charges prepaid, or by facsimile transmission.
Notices shall be deemed received upon actual receipt. In addition, notices shall
be deemed to have been received upon any of the following: (a) delivery, (b) one
attempted but failed delivery to the address of record during business hours,
(c) refusal to accept delivery as shown on the United States Postal Service
return receipt or similar advice from the applicable courier service, or (d)
electronic confirmation of the facsimile transmission. Notices shall be directed
to the addresses set forth below:
If to Bank Industrial State Bank.
32nd and Strong
P.O. Box 6007
Kansas City, Kansas 66016
Attention: President
Fax: (913) 831-2013
with a copy to: Chris W. Henry, Esq.
Payne & Jones, Chartered
11000 King, Suite 200
P. O. Box 25625
Overland Park, Kansas 66225-5625
Fax: (913) 469-0132
If to Settling Defendants: Delmar A. Janovec
AmeriResource Technologies, Inc.
9319 Santa Fe Drive
Overland Park, Kansas 66212
Fax: (913) 341-2809
19
<PAGE>
with a copy to: Richard D. Rhyne, Esq.
Craft Fridkin & Rhyne, L.L.C.
1100 One Main Plaza
4435 Main Street
Kansas City, Missouri 64111
Fax: (816) 753-3222
Any party may change its or their address for purposes of this Agreement by
giving notice of such change in accordance with this Section, provided that such
an address change shall not be effective until two (2) business days after
notice of the change is deemed to have been received.
22. Execution by Facsimile. If a party signs this Agreement and
transmits a facsimile transmission of the signature page to the other party, the
party who receives the transmission may rely upon the facsimile transmission as
a signed original of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INDUSTRIAL STATE BANK
By:
Name:
Title:
DELMAR A. JANOVEC
MARILYN J. JANOVEC
AMERIRESOURCE TECHNOLOGIES, INC.
By:
Name: Delmar A. Janovec
Title: President
20
<PAGE>
APPROVED AND AGREED TO:
PAYNE & JONES, CHARTERED
Chris W. Henry
11000 King, Suite 200
P. O. Box 25625
Overland Park, Kansas 66225-5625
Fax: (913) 469-0132
Attorneys for Bank
CRAFT FRIDKIN & RHYNE, L.L.C.
Richard D. Rhyne
1100 One Main Plaza
4435 Main Street
Kansas City, Missouri 64111
Fax: (816) 753-3222
Attorneys for Settling Defendants
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S JUNE 30, 1999,
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 7145
<SECURITIES> 0
<RECEIVABLES> 332,925
<ALLOWANCES> (148,721)
<INVENTORY> 0
<CURRENT-ASSETS> 193,299
<PP&E> 104,045
<DEPRECIATION> (8,600)
<TOTAL-ASSETS> 1,916,099
<CURRENT-LIABILITIES> 1,524,532
<BONDS> 0
0
0
<COMMON> 49,406
<OTHER-SE> (4,648,696)
<TOTAL-LIABILITY-AND-EQUITY> 1,916,099
<SALES> 45,258
<TOTAL-REVENUES> 45,258
<CGS> 0
<TOTAL-COSTS> 276,886
<OTHER-EXPENSES> 184,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 437
<INCOME-PRETAX> 0
<INCOME-TAX> (42,012)
<INCOME-CONTINUING> (42,012)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,012)
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
