UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] Annual report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the fiscal year ended December 31, 1999.
Commission file number: 0-20033
AmeriResource Technologies, Inc.
----------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 84-1084784
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1881 Hicks Road, #C, Rolling Meadows, IL 60008
------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(847) 221-2801
---------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock ($0.0001 Par Value) None
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ X ].
The issuer's total consolidated revenues for the year ended December
31, 1999, were $55,348.
The aggregate market value of the registrant's Common Stock, $0.0001
par value held by non-affiliates was approximately $83,566,881 based on the
average closing bid and asked prices for the Common Stock on April 11, 2000. On
April 7, 2000, the number of shares outstanding of the registrant's Common
Stock, $0.0001 par value (the only class of voting stock), was 550,821,312.
<PAGE>
TABLE OF CONTENTS
PART I 3
-
ITEM 1. DESCRIPTION OF BUSINESS......................................2
ITEM 2. DESCRIPTION OF PROPERTY......................................3
ITEM 3. LEGAL PROCEEDINGS................ ...................4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........4
PART II 7
-
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.....7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..........................9
ITEM 7. FINANCIAL STATEMENTS........................................10
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE..........11
PART III 11
ITEM 9.
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT...........................11
ITEM 10.
EXECUTIVE COMPENSATION......................................12
ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.......................................12
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13.
EXHIBITS AND REPORTS ON FORM 8-K............................13
INDEX TO EXHIBITS.............................................................15
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
As used herein, the term "Company" refers to AmeriResource
Technologies, Inc. and its subsidiaries and predecessors, unless the context
indicates otherwise. The Company's operations have historically consisted of
providing engineering and construction services. However, in 1996 the Company
closed all of its engineering subsidiaries due to continued losses.
The Company's operations have historically consisted of providing
engineering and construction services through its wholly-owned subsidiaries.
However, in 1996 the Company closed and/or sold all of its engineering
subsidiaries due to continued losses and has obtained no construction contracts
during 1999. The Company has been unable to obtain any construction contracts as
a result of placing Tomahawk Construction Company into Chapter 11 Bankruptcy on
September 15, 1994. Despite Tomahawk's emergence from bankruptcy on August 28,
1995, the Company has been unable to obtain the necessary bonding capacity to
obtain construction contracts. As a result of Tomahawk's lack of new
construction contracts in 1999, the Company is currently exploring opportunities
to combine Tomahawk with another company through a merger or acquisition. The
Company is now searching for a construction company that is interested in being
acquired.
In connection with the Company's operational restructuring, it executed
a Share Purchase Agreement on December 31, 1999, with Dustan Shepherd, the
Company's former President, whereby the Company sold its wholly owned
subsidiary, First Americans Mortgage Company ("FAMC"), to Shepherd for $30,000
payable pursuant to a promissory note. In connection with this subsidiary sale,
FAMC surrendered to the Company 7,000,000 shares of common stock Kelly's Coffee
which had been received by FAMC for services FAMC and the Company had rendered.
Pursuant to this Share Purchase Agreement, the Company forgave FAMC's debt to
Tomahawk, which was secured by a June 30, 1999 promissory note.
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 $550.
THE TRAVEL AGENT'S HOTEL GUIDE, INC.
On August 23, 1999, the Company sold 50% of TAHG to Staruni Corporation
("SRUN") for 400,000 shares of SRUN's common stock. Although SRUN has guaranteed
the value these shares at $1,750,000 for one year, the price guarantee will
lapse if the SRUN stock reaches a $4.00 price and remains above that price for
10 consecutive business days. The SRUN stock has been valued at $86,000. The
Company discounted the value of the SRUN common stock based upon the financial
statements of SRUN and its current market price. The result of this transaction
was a loss of $483,506. The Company hopes that SRUN's experience as an Internet
company will aid in placing the Guide on the world wide web.
As of April 12, 2000, the Company had a total of six (6) employees, of
which four (4) were employed full-time.
Business Developments Occurring Subsequent to the Fiscal Year Ended December 31,
1999
On December 23, 1999, the Company, Magnolia Manors, Inc. and
Krapfcandoit, Inc. executed a contribution agreement, whereby the Company was to
acquire the assets of Magnolia and Krapfcandoit in exchange for shares of the
Company's common stock. Shortly after the execution of this agreement, all
parties decided to modify its terms. The Company no longer has an intention to
acquire Krapfcandoit. Magnolia Manors and the Company have agreed to an asset
purchase agreement whereby Magnolia Manors will be acquired by the Company's
subsidiary, Crestwood Villas, for cash and stock. Magnolia's assets include
approximately 21 assisted living facilities located in Alabama. The Company is
acquiring Magnolia through its subsidiaries, Crestwood Management Company, Inc.
and Crestwood Villas, Inc., which have contractual rights to purchase Magnolia's
assets. Magnolia is currently owned by Krapfcandoit.
ITEM 2. DESCRIPTION OF PROPERTY
The Company owns no real property. The Company's operations are
conducted through one office located at 1881 Hicks Road, #C, Rolling Meadows, IL
60008, which is leased.
ITEM 3. LEGAL PROCEEDINGS
The following are pending material cases involving the Company and its
subsidiaries. The Company and its subsidiaries are subject to a variety of
claims and suits that arise from time to time out of the ordinary course of
business, most commonly contract disputes. The Company believes that the pending
claims are adequately covered by insurance. However, there can be no guarantee
that such insurance will be adequate, will be renewable, or will remain
available in the future.
Craft, Fridkin & Rhyne, L.L.C. vs. AmeriResource Technologies, Inc.
Craft, Fridkin & Rhyne, L.L.C. ("CFR") filed a Demand for Arbitration with the
American Arbitration Association on March 24, 2000, whereby CFR demanded
"compensation for services rendered pursuant to Consulting Agreement dated
August 26, 1998." The arbitration hearing is set for Friday, April 14, 2000.
On August 26, 1998, the Company executed a Consulting Agreement
(incorporated by reference and attached hereto as Exhibit 10(i)) with CFR
whereby the Company agreed to compensate CFR for legal services rendered through
May 31, 1998, with Forty Million (40,000,000) shares of the Company's common
stock which were to be registered with the SEC on Form S-8 under the Securities
Act of 1933, as amended. The Company also agreed to issue additional stock upon
receipt of CFR's monthly billing statements valued at one cent ($.01) per share.
The Company has retained counsel to represent it in this proceeding, although it
believes CFR has been paid in full for all services rendered. Accordingly, the
Company hopes to settle this claim prior to expending significant resources.
Scar I Group vs. AmeriResource Technologies, Inc., Delmar Janovec, and
Tomahawk Construction. This case was filed on January 26, 2000 in the Court of
Common Pleas in Cuyahoga County, Ohio, Case Number 00-400551-CV. Scar I Group
("Scar I") filed suit against the Company, its President, Delmar Janovec and its
subsidiary, Tomahawk Construction, for fraudulent misrepresentation and breach
of contract. The Company has denied all liability and will vigorously defend
itself against the claims asserted in the lawsuit which management believes to
be groundless.
On April 29, 1997, Scar I signed a Loan Agreement with Delmar Janovec
and Tomahawk Construction agreeing to lend them Fifty Thousand Dollars ($50,000)
for a period not to exceed sixty (60) days. Shortly after this Loan Agreement
was signed, Janovec and Tomahawk accepted a $1,851,444 settlement from M.K.
Ferguson and the Department of Energy in an unrelated lawsuit, which was to be
finalized coincident with the Scar I loan. Janovec, Tomahawk and Scar I agreed
that $100,000 of these settlement proceeds would be paid on or before July 2,
1997, to Scar I and constitute total payment of the loan's principal plus
$50,000 interest. As security for the loan, Janovec and Tomahawk executed a
promissory note for the $100,000 and placed an estimated Ten Million
(10,000,000) shares of the Company's common stock in escrow with Surety Title.
On July 16, 1997, Janovec and Tomahawk notified Scar I in writing that
Industrial State Bank had a blanket lien on the settlement proceeds and that no
portion of such could be transferred, and therefore the Company could not meet
the loan's terms. The settlement proceeds were not received until on or about
August 23, 1999. Janovec and Tomahawk requested that the stock certificates and
related documents be released from escrow in Scar I's name. On or about
September 17, 1997, Scar I agreed to cancel the Loan Agreement and to release
the stock and related documents from escrow. On September 17, 1997, Janovec and
Tomahawk sent a certified check in the amount of $200.00 to Surety Title as
payment for escrow services. Also on September 17, 1997, Janovec and Tomahawk
sent a certified check in the amount of $1,000.00 to Chuck Scaravelli at Scar I
as payment in full for its services in connection with the negotiation and
structuring of the loan documents.
Scar I is claiming that Janovec and Tomahawk fraudulently
misrepresented that the settlement funds were not going to be paid and that they
relied upon that misrepresentation in canceling the Loan Agreement. Janovec and
Tomahawk contend that the settlement was not reached within sixty (60) days from
the execution of the Loan Agreement, and that not only has the Loan Agreement
been effectively canceled by Scar I but that they have accepted payment for
their services. Management denies the allegations in this suit and will defend
its position in seeking and out-of-court settlement.
Industrial State Bank vs. AmeriResource Technologies, Inc., Delmar
Janovec and Marilyn Janovec. This case was filed in the District Court of
Johnson County, Kansas, Case Number 98-C-14923. On July 9, 1999, Industrial
State Bank agreed to accept from the Company, Delmar and Marilyn Janovec
$200,000 plus 2,760,000 shares of the Company's common stock in exchange for the
bank's forgiveness of the Company's $1,071,214 debt, which included accrued
interest. The first cash payment of $100,000 was paid on July 16, 1999, and the
second payment was due on August 30, 1999. The note securing the second payment
was extended to December 15, 1999 for an additional payment of $20,000. Mr.
Janovec transferred shares of Series A and Series B Preferred Stock convertible
into 2,760,000 shares of the Company's common stock to the Industrial State
Bank. The Company intends to reimburse Janovec. The Company made additional
payments of $40,000 during the third quarter and was granted an extension until
December 15, 1999, to pay the remaining $60,000. This settlement amount has been
paid in full.
Double K Marketing, Inc. vs. Delmar A. Janovec. This case was filed in
the Jefferson Circuit Court, Division Twelve, Kentucky, Case Number 99-CI-03105.
On November 12, 1999, the Court set aside the Default Judgment against Delmar
Janovec and dismissed the case without prejudice. To date, no further pleadings
have been filed in this matter.
Liberty Systems, Inc. vs. Tomahawk Construction Corporation and Delmar
Janovec. This action is pending in the District Court of Johnson County, Kansas,
Case Number 99C10488. It is set for trial on April 13, 2000. Liberty is suing
Tomahawk and Delmar Janovec for nonpayment of a note for $32,917.00 executed by
and between Delmar Janovec and/or Tomahawk and Liberty on July 31, 1997.
American Factors Group, L.L.C. vs. AmeriResource Technologies, Inc., et
al. This case was filed in the United States District Court, District of New
Jersey, Case Number 3:97cv01094(GEB). In February 2000, the parties stipulated
to the dismissal of certain claims in this suit with prejudice. This stipulation
dismissed all of the claims in this suit except for the claims against
defendants Rod Clawson, Michael Cederstrom and Tim Masters. These remaining
claims have been settled pursuant to a settlement agreement which is discussed
more fully below.
Q Capital Corporation and American Factors Group, L.L.C. vs.
AmeriResource Technologies, Inc. and Delmar Janovec. These parties have entered
into a multiparty settlement agreement. The parties have agreed upon the
specific settlement terms outlined in two separate documents; an Original
Settlement Agreement (incorporated by reference and attached hereto as Exhibit
10(ii)) and a Supplemental Settlement Agreement (incorporated by reference and
attached hereto as Exhibit 10(iii)). Although all of the terms in both documents
have been orally agreed to by all parties, neither document has yet been
executed.
On February 15, 2000, a Settlement and Release Agreement ("Original
Settlement Agreement") was negotiated and orally agreed to by and between Q
Capital Corporation ("Q"), American Factors Group ("AFG"), AmeriResource
Technologies, Inc. ("ARET") and Delmar Janovec ("Janovec"). The Original
Settlement Agreement provided for the payment by ARET and Janovec of certain
obligations and judgments entered in favor of Q and AFG against ARET, Janovec,
and the defendants in the above referenced action, American Factors Group,
L.L.C. V. AmeriResource Technologies, Inc. et al, Case Number 3:97cv01094(GEB)
("Pending Action").
In April 2000, a Supplemental Settlement Agreement ("Supplemental
Settlement Agreement") was negotiated and orally agreed to by and between Q,
AFG, the Company and Janovec. The Company believes this agreement will require
it and Janovec to:
1. Pay Q and AFG Four Hundred Ninety Thousand Dollars ($490,000)
on or before April 10, 2000;
2. Deliver to Q and AFG all of the shares of common stock in
Staruni, Inc., a corporation within the control of ARET and
Janovec; and
3. Release and forever discharge Q and AFG from any and all
claims or causes of action arising out of or related to those
which were, or could have been, alleged in the Pending Action,
Under the terms of the agreement, which has not been finalized in writing, the
Company believes that AFG and Q will:
1. File a Satisfaction of Judgment and Order of Dismissal with
Prejudice as to all defendants in the Pending Action;
2. File with the appropriate courts a Satisfaction of Judgment
against any and all parties for whom AFG or Q received a
judgment in connection with the obligations and judgments
against ARET and Janovec;
3. Void the Original Settlement Agreement; and
4. Release and forever discharge ARET, Janovec and all other
defendants named in the Pending Action from any and all claims
or causes of action arising out of or related to those which
were set forth in any of the Judgments or were, or could have
been, alleged in the Pending Action or any of the other
lawsuits for which they obtained a judgment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year ended December 31, 1999,
the Company did not submit any matters to a vote of security holders through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded on OTC Bulletin Board under the
symbol "ARET."
The table below sets forth the high and low sales prices for the Company's
Common Stock for each quarter of 1998 and 1999 and the first quarter of 2000.
The quotations below reflect inter-dealer prices, without retail markup,
markdown or commission and may not represent actual transactions:
Year Quarter High Low
1998 First $ 0.031 $ 0.016
Second $ 0.050 $ 0.011
Third $ 0.030 $ 0.009
Fourth $ 0.010 $ 0.009
Year Quarter High Low
1999 First $ 0.019 $ 0.008
Second $ 0.530 $ 0.007
Third $ 0.070 $ 0.015
Fourth $ 0.550 $ 0.014
Year Quarter High Low
2000 First $ 0.770 $ 0.036
Shareholders
As of April 7, 2000, there were approximately 792 shareholders of
record holding a total of 550,821,312 shares of Common Stock.
Dividends on the Common Stock
The Company has not declared a cash dividend on its Common Stock in the
last two fiscal years and the Company does not anticipate the payment of future
dividends. The Company may not pay dividends on its Common Stock without first
paying dividends on its Preferred Stock. There are no other restrictions that
currently limit the Company's ability to pay dividends on its Common Stock other
than those generally imposed by applicable state law.
Preferred Stock
No market currently exists for the Company's preferred stock. The
Company has two classes of preferred stock, a Series A class and a Series B
class ("Preferred Stock"). Each share of the Preferred Stock may be converted by
the holder into 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 Common
Stock. Dividends on the Preferred Stock accrue quarterly at an annual rate of
$0.125 per share. The Company has never declared or paid dividends on its
Preferred Stock.
As of April 7, 2000, there were 15 shareholders of record holding a
total of 131,275 shares of the Company's Series A Preferred Stock. On April 7,
2000, there was 1 shareholder of record holding a total of 177,012 shares of the
Company's Series B Preferred Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto appearing elsewhere herein.
Except for historical information contained herein, certain statements herein
are forward-looking statements that are made pursuant to the safe harbor
provisions of the private securities litigation reform act of 1995.
Forward-looking statements involve estimates of the Company's financial
position, business strategy and other plans and objectives for future
operations. Although the Company believes that these expectations are
reasonable, there can be no assurance that the actual results or developments
anticipated by the Company will be realized or, even if substantially realized,
that they will have the expected effects on its business or operations.
GENERAL
The Company's operations for 1999 consisted of bidding for construction
projects and formulating a plan of operation or sale for The Travel Agent's
Hotel Guide, Inc. ("TAHG"), which was acquired from GlobaldataTel in exchange
for a convertible debenture. A continuing condition to the Company's acquisition
of TAHG was TAHG's net value exceeding $3,000,000. Because TAHG's liabilities
exceed its assets, TAHG has a negative net value. The Company therefore believes
it's payment obligations under the GlobaldataTel debenture are not enforceable,
and the Company intends amicably resolve this situation while vigorously
contesting any payment demands made pursuant to the debenture.
TOMAHAWK CONSTRUCTION
Tomahawk continued to bid for work in the construction management field
during 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. 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.
EVENTS OCCURRING SUBSEQUENT TO DECEMBER 31, 1999
The Company is attempting to acquire the assets of Magnolia Manors,
Inc. in exchange for cash and stock. Magnolia Manors and the Company have
executed an asset purchase agreement whereby the Company's subsidiary, Crestwood
Villas, will acquire Magnolia's assets. This agreement is expected to close
after the Company is successful in prioritizing Magnolia's existing mortgages.
Magnolia owns and operates approximately 21 assisted living facilities located
in Alabama. The Company is acquiring Magnolia in its attempt to enter the real
estate industry.
RESULTS OF OPERATIONS
Revenues for the fiscal year ended December 31, 1999 increased to
$82,348, from the 1998 revenues of $43,663. General and administrative expenses
decreased from $3,516,097 in 1998 to $1,361,597 in 1999 because the Company
wrote off goodwill associated with TAHG and uncollectible receivables. This
decrease in general and administrative expenses resulted in an improvement in
our operating loss, which was $1,279,249 for the fiscal year ended December 31,
1999, as compared to $3,469,770 for the 1998 fiscal year. Despite this
improvement in operating loss, the Company's net loss for the fiscal year ended
December 31, 1999, increased to $4,467,050 from $3,469,770 in 1998. This
increase in net loss resulted largely from a $2,760,673 loss realized from the
sale of the Company's subsidiaries and from a $1,053,012 loss on publication
rights of TAHG. Additionally, there were gains in the Company's income related
to the settlement of a debt that the Company owed to Industrial State Bank. On
July 9, 1999, the Company entered into a settlement agreement with Industrial
State Bank to reduce the amount owed to the bank from $1,071,214 to $200,000.
The $200,000 was subsequently paid off with proceeds from the sale of common
stock and by an officer of the Company resulting in $938,017 gain on settlement
of debt.
LIQUIDITY AND CAPITAL RESOURCES
On December, 31, 1999, the Company had a working capital deficit of
$2,557,288. The Company plans to decrease its working capital deficit by
acquiring income producing assets in exchange for its securities. Total
stockholder's equity was a negative $5,586,047 in 1999 (compared to a negative
$5,827,417 in 1998). The Company intends to improve its stockholder equity by
acquiring income producing assets which are hoped to generate profits.
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. However, as FAMC has been
sold, the Company will not receive revenues from it in 2000.
Unless and until the Company successfully acquires revenue producing
assets, it will continue to use its equity and the resources of its CEO, Delmar
Janovec, to finance its operations. However, no assurances can be provided that
the Company will be successful in acquiring assets, whether revenue producing or
otherwise, or that Mr. Janovec will continue to assist in financing the
Company's operations.
ITEM 7. FINANCIAL STATEMENTS
The Company's financial statements for the fiscal year ended December
31, 1999 are attached hereto as pages F-1 through F-24.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC.
AND SUBSIDIARIES
-----------------------------
CONSOLIDATED FINANCIAL STATEMENTS
-----------------
DECEMBER 31, 1999
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONTENTS
Page
Independent Auditor's Report...................................................1
Financial Statements:
Consolidated Balance Sheet...............................................4-5
Consolidated Statements of Operations......................................6
Consolidated Statement of in Stockholders' Equity..........................7
Consolidated Statements of Cash Flows....................................8-9
Notes to Consolidated Financial Statements.............................10-25
<PAGE>
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, 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1999 and 1998. 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, 1999, and the results of
its operations and cash flows for the years ended December 31, 1999 and 1998, 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 11 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 11. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Crouch, Bierwolf & Chisholm
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
April 5, 2000
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1999
Current assets:
Cash and cash equivalents (Note 1) $ 165
Notes receivable - other (Note 3) 30,000
---------
Total current assets 30,165
---------
Property, Plant and Equipment (Note 1):
Equipment 599,843
Furniture, fixtures and library 120,989
Vehicles 53,087
Less accumulated depreciation (773,919)
---------
Net property, plant and equipment --
---------
Other assets:
Marketable securities (Note 10) 426,241
---------
Total assets $ 456,406
=========
(continued0
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1999
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current liabilities:
Accounts payable:
Trade $ 276,374
Related party (Note 2) 70,413
Notes payable - related party (Note 2 and 4) 555,577
Notes payable (Note 4) 956,643
Accrued payroll and related expenses 231,681
Accrued interest:
Related party (Note 2) 182,853
Other 277,952
Income Tax Payable 35,960
------------
Total current liabilities 2,587,453
------------
Other Liabilities:
Convertible debentures 3,350,000
Commitments and contingencies (Note 9) 105,000
------------
Total other liabilities 3,455,000
Total liabilities 6,042,453
------------
Stockholders' equity (Note 6)
Preferred stock, $.001 par value; 5,000,000 shares authorized;
329,621 shares issued and outstanding (Note 5) 330
Common Stock, $.0001 par value; authorized, 1,000,000,000 shares;
issued and outstanding, 550,820,312 shares 55,081
Additional paid-in capital 9,154,352
Accumulated deficit (14,795,810)
------------
Total stockholders' equity (5,586,047)
------------
Total liabilities and stockholders' equity $ 456,406
============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended December 31, 1999 and 1998
1999 1998
------------- -------------
Revenue
Net service income $ -- $ 47,560
Consulting income 82,348 --
------------- -------------
Total revenue 82,348 47,560
------------- -------------
Operating expenses -- 1,233
General and administrative expenses 1,361,597 3,516,097
------------- -------------
Total operating expenses 1,361,597 3,517,330
------------- -------------
Operating loss (1,279,249) (3,469,770)
------------- -------------
Other income (expense):
Gain on forgiveness of debt -- 19,575
Gain on settlement of debt (Note 1) 938,017 --
Gain on marketable securities -- 1,538
Loss on sale of subsidiaries (Note 1) (2,760,673) --
Loss on publication rights (Note 1) (1,053,012) --
Interest expense (312,133) (55,353)
------------- -------------
(3,187,801) (34,240)
------------- -------------
Net loss before income tax (4,467,050) (3,504,010)
Income tax provision (Note 7) -- --
------------- -------------
Net loss before extraordinary item $ (4,467,050) $ (3,504,010)
------------- -------------
Extraordinary loss on judgement -- (623,924)
------------- -------------
Net loss after extraordinary item $ (4,467,050) $ (4,127,934)
============= =============
Earnings per share:
Income before extraordinary items $ (.009) $ (.015)
Extraordinary item -- (.00)
------------- -------------
Net income $ (.009) $ (.015)
============= =============
Weighted average common shares outstanding 493,417,979 273,137,558
============= =============
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998
Additional
Number of Number of Paid-In
Shares Amount Shares Amount Capital
------------ --------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1997
164,213,803 $ 16,420 3,089,621 $ 3,090 $ 6,347,954
Issuance of Shares for:
S-8 options exercised 33,000,000 3,300 (3,300)
Subscriptions Receivable 41,000,000 4,100 460,900
Consulting services 62,535,978 6,254 676,151
Debt 1,958,281 196 137,304
Accrued Salaries 11,275,327 1,128 42,373
Stock 23,076,923 2,308 255,586
Acquisition of FAMC 45,000,000 4,500
Acquired from FAMC
Reduction in Subscription Receivable
Net loss for the year ended
December 31, 1998
------------ --------- ----------- --------- -------------
Balance at December 31, 1998 382,060,312 $ 38,206 3,089,621 $ 3,090 $7,916,968
============ ========= =========== ========= =============
Issuance of Shares for:
Options exercised 7,000,000 700 (700)
Cash 54,000,000 5,400 194,600
Consulting services 65,000,000 6,500 645,000
Legal services 40,000,000 4,000 396,000
Write off of subscription receivable
Sale of treasury stock
Converted from preferred shares to
Common shares 2,760,000 276 (2,760,000) 2,484
Adjustment due to sale of
subsidiaries
Net loss for the year ended
December 31, 1999
------------ --------- ----------- --------- -------------
Balance at December 31, 1999 550,820,312 $ 55,081 329,621 $ 330 $ 9,154,352
============ ========= =========== ========= =============
(continued)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998
(continued)
Stock
Subscription Treasury Accumulated
Receivable Stock Deficit Total
------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $ -- (5,625) $ (9,600,861) (3,239,022)
Issuance of Shares for:
S-8 options exercised --
Subscriptions Receivable (465,000) --
Consulting services 682,406
Debt 137,500
Accrued Salaries 43,501
Stock 257,893
Acquisition of FAMC 4,500
Acquired from FAMC (71,261) (71,261)
Reduction in Subscription Receivable 465,000 465,000
Net loss for the year ended
December 31, 1998 (4,127,934) (4,127,934)
------------ ---------- ------------- -------------
Balance at December 31, 1998 $ -- $ (76,886) $ (13,728,795) $ (5,847,419)
============ ========== ============= =============
Issuance of Shares for:
Options exercised --
Cash (80,000) 120,000
Consulting services 651,500
Legal services 400,000
Write off of subscription receivable 80,000 80,000
Sale of treasury stock 76,886 76,886
Converted from preferred shares to
Common shares --
Adjustment due to sale of
subsidiaries
3,400,035 3,400,035
Net loss for the year ended
December 31, 1999 (4,467,050) (4,467,050)
------------ ---------- ------------- -------------
Balance at December 31, 1999 $ -- $ -- $ (14,795,810) $ (5,586,047)
============ ========== ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
1999 1998
----------- -----------
<S> <C> <C>
Reconciliation of net loss provided by (used in) operating
activities:
Net loss after extraordinary loss $(4,467,050) $(4,127,934)
Non-cash items:
Depreciation and amortization 33,070 2,297,156
Non-cash revenue through issuance of stock (82,348)
Non-cash services through issuance of stock 1,051,500 702,406
Loss on judgement -- 430,924
Provision for bad debts 172,416 219,216
(Gain)/Loss on investments -- (1,538)
(Gain)/Loss on forgiveness of debt (938,017) (19,575)
Loss on sale of subsidiaries 2,760,673 --
Loss on publication rights 1,053,012 --
Changes in assets affecting operations - (increase) decrease
Accounts receivable 759,404 (14,648)
Other receivables -- 193,000
Notes receivables 283,190 49,714
Prepaid insurance and other expenses -- 50,249
Changes in liabilities affecting operations - increase (decrease)
Accounts payable (377,647) (38,434)
Accrued payroll and related (455,746) 40,520
Escrowed fees 4,224 4,224
Accrued interest 136,023 219,549
----------- ----------
Net cash provided by (used in) operating activities (67,296) 4,829
----------- ----------
</TABLE>
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
1999 1998
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of stock $ 200,000 $ --
Proceeds from issuance of debt 80,000 35,130
Repayment of debt (248,691) (8,745)
--------- ---------
Net cash provided by (used in) financing activities 31,309 26,385
--------- ---------
Cash flows from investing activities:
Proceeds from sale of marketable securities -- 4,750
--------- ---------
Net cash provided by (used in) investing activities -- 4,750
--------- ---------
Increase (decrease) in cash (35,987) 35,964
Cash - beginning of period 36,152 188
--------- ---------
Cash - end of period $ 165 $ 36,152
========= =========
<TABLE>
<CAPTION>
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 $ -- $ 181,001
========== =========
Stock issued for services $1,015,500 $ 685,406
========== =========
Additional cash flow information
Cash paid for:
Interest $ -- $ --
========== =========
Income taxes $ -- $ --
========== =========
-9-
</TABLE>
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
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, 1998, the Management Company directly or indirectly
owned 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. On June 30, 1999, the Company sold all its
shares to a third party for $550 in the following subsidiaries:
KLH Engineering of Colorado Springs, Inc.
KLH Engineering of Lakewood, Inc.
KLH Engineering of Grand Junction, Inc.
KLH Engineering of Greeley, Inc.
KLH Engineering of San Mateo, Inc.
KLH Engineering & Constructors, Inc.
Morton Technologies, Inc.
LBH Engineering, Inc.
Coffee Engineering & Surveying, Inc.
Scanlon & Associates, Inc.
Effective December 14, 1998, the Company acquired The Travel Agents
Hotel Guide, Inc. (Agents Hotel Guide) in a stock purchase agreement.
The Company received all the outstanding shares of Hotel Guide in
exchange for a convertible debenture in the amount of $3,350,000. On
August 23, 1999, the Company sold a 50% interest in the Agents Hotel
Guide for 400,000 shares of restricted common stock of Staruni
Corporation. This common stock is valued at $86,000, a significant
discount due to the restriction on the shares and Staruni Corporation's
current financial position.
Effective July 1, 1998, the Company acquired First Americans Mortgage
Corporation (First Americans). The two shareholders of First Americans
transferred 100% of their shares in exchange for 45,000,000 shares of
the Company's stock (see Note 2). First Americans was incorporated on
July 31, 1995 in Missouri. On December 31, 1999, the Company sold 100%
of the shares of First Americans to an officer of First Americans for
$30,000 note receivable. This note is payable to the Company over 5
years at the prime interest rate. In addition, 7,000,000 shares of
Kelly's Coffee Inc. common stock was returned to the Company and a debt
was forgiven.
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. Tomahawk had no operations during 1998
or 1999. Tomahawk is 49% owned by the Company.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
1. Summary of significant accounting policies (continued)
Basis of presentation
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.
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., The Travel Agents Hotel Guide, Inc.
and Tomahawk Construction Company. 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.
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, 1999, and 1998, was $33,070 and $32,804 respectively.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
1. Summary of significant accounting policies (continued)
Stock Subscription Receivable
The Company issued stock in exchange for a stock subscription
receivable. Since the receivable was considered uncollectible, it was
written off during 1999. The Company is currently attempting to get the
stock returned.
Publication Rights/Loss on write off of obsolete asset
The publication rights are for The Travel Agents Hotel Guide. This is a
publication used by travel agents to sell hotel rooms primarily
throughout the United States. The rights consist of the publication
rights, logo, client list and business concept. These rights were
deemed worthless during 1999 and written off.
Gain on settlement of debt
On July 9, 1999, the Company entered into a settlement agreement with
Industrial State Bank. This agreement reduces the note in the amount of
$1,071,214 with related accrued interest of $123,789 to $200,000. The
$200,000 was subsequently paid off with proceeds from the sale of
common stock ($120,000) and by an officer of the Company ($80,000).
This settlement resulted in $995,093 gain on settlement of debt
recorded in the financial statements.
A final settlement was reached with American Factors Group for
$490,000. During 1998, this liability was recorded as $432,924. During
1999, an additional $57,076 was recorded, increasing this liability to
$490,000. These two transactions resulted in a gain on settlement of
debt of $938,017.
Convertible Debentures
The convertible debentures were issued in the purchase of The Travel
Agents Hotel Guide, Inc. and are guaranteed by Lexington Sales
Corporation, Ltd. These debentures pay interest of 7% per year
(cumulative), payable at the time of each conversion until the
principal amount is paid in full or has been converted. The debentures
convert into shares of the Company's common stock (par value $.0001) at
any time after December 14, 2001. After December 14, 2001, the
debentures can be converted in whole or part. The number of shares
issuable upon conversion is determined by dividing the principal
converted plus accrued interest (less any required withholding) by the
conversion price in effect on the conversion date. The conversion price
is the average bid closing price of the Company's common stock for the
five trading days immediately preceding and ending on the day preceding
the date of conversion.
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.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
1. Summary of significant accounting policies (continued)
Income tax
For the years ended December 31, 1999 and 1998, the Company elected to
file a consolidated tax return, accordingly 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.
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
At December 31, 1999, the Company had two notes payable to an officer,
which total $555,577. The related accrued interest and interest expense
(for 1999) on these notes is $182,853 and $38,850, respectively.
During 1999, the Company issued 5,000,000 shares of common stock to a
director for consulting services. This transaction was valued at $.01
per share.
The following is a table summarizing the related party transactions
described above:
For the Years Ended
December 31,
-------------------
1999 1998
-------- --------
Accrued interest on notes payable $182,853 $144,003
======== ========
Notes payable - current $555,577 $369,752
======== ========
Interest expense on notes payable $ 38,850 $ 46,530
======== ========
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
<TABLE>
<CAPTION>
3. Notes receivable
The Company had the following notes receivable:
Others:
Notes receivable from First Americans Mortgage Corp, bearing interest at the
prime rate, principal and interest payments due December 31, starting December
31, 2000 through December 31, 2004.
<S> <C>
$ 30,000
----------
Total Notes Receivable - Other 30,000
Less current portion (30,000)
----------
Total Long Term Notes Receivable $ --
==========
</TABLE>
<TABLE>
<CAPTION>
4. Notes payable
The Company had the following notes payable:
Related Party:
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, 2000.
<S> <C>
$ 194,473
Note payable to an officer, unsecured. Note bears interest at
8% and is due on demand. 361,104
----------
Total notes payable - related parties 555,577
Less current portion (555,577)
----------
Long-term portion $ --
==========
</TABLE>
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
4. Notes payable (continued)
Others:
Judgment against the Company, payable to
American Factors in the original amount of
$490,000, unsecured, due April, 2000 $ 490,000
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
Various notes payable with interest rates
ranging from 0% to 12.75%, monthly payments
from $226 to $243, uncollateralized. 2,000
---------
Total notes payable 956,643
Less current portion (956,643)
---------
Long-term portion $ --
=========
Maturities of notes payable at December 31,
1999, are as follows:
Year Ended
December 31,
------------
1999 $ 1,512,220
2000 --
2001 --
2002 --
Thereafter --
------------
$ 1,512,220
============
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
5. Stockholders' equity
Common stock
The Company increased its authorized shares from 500,000,000
to 1,000,000,000 during 1999. During 1999, the Company issued
the following shares of common stock:
1. 65,000,000 shares of common stock were issued for
consulting services valued at $651,500. These shares
were valued at $.01 per share.
2. 40,000,000 shares of common stock were issued for
legal services valued at $400,000. These shares were
valued at $.01 per share.
3. 54,000,000 shares of common stock were issued for
$120,000 in cash and a subscription receivable of
$80,000. These shares were valued at $.01 per share.
The subscription receivable was subsequently written
off due to uncollectibility.
4. 7,000,000 shares of common stock were issued as the
result of the exercise of options.
5. 2,760,000 shares of common stock were issued from the
conversion of preferred shares to common shares.
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 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 December 1995) of such shares and at
a price of $1.25 plus all unpaid accumulated dividends. Each
preferred 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 1998. Dividends are not payable until
declared by the Company. At December 31, 1999, the amount of
dividends in arrears on the preferred stock was $1,368,406.
During 1999, there were 2,760,000 shares of preferred stock,
converted to 2,760,000 shares of common stock.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
6. 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 $14,000,000
expiring from 2004 to 2019, 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, since there is more than a
50 percent chance this will expire unused.
The significant temporary differences are associated with bad
debts, deferred compensation and accrued vacation.
All of the net operating losses carryforward of approximately
$14,000,000 is subject to significant recognition limitations
due to the merger with Tomahawk, business continuity, and
change of ownership.
7. Closed and sold subsidiaries
On June 30, 1999, the Company sold the following subsidiaries
to a third party for $550: KLH Engineering of Colorado
Springs, KLH Engineering of Grand Junction, KLH Engineering of
Lakewood, KLH Engineering of Greeley, KLH Engineering of San
Mateo, KLH Engineers and Constructors, Morton Technologies,
Inc., LBH Engineering, Inc., Coffee Engineering & Surveying,
Inc. and Scanlon & Associates, Inc. The assets and liabilities
of these subsidiaries are not included in the consolidated
financial statements.
On December 31, 1999, the Company sold 100% of the shares of
First Americans to an officer of First Americans for $30,000.
The $30,000 is payable to the Company over 5 years at the
prime interest rate.
The sale of the above subsidiaries resulted in a net loss of
$2,760,673 being recorded in the consolidated financial
statements.
8. Profit-sharing plan
The Company had 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 were 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 1997 or 1998. This
plan was administered by Security Bank of Kansas City, which
distributed all funds to the plan participants during 1999.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
9. Other commitments and contingencies
The Company and its 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.
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.
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, 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 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.
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.
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.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
9. Other commitments and contingencies (continued)
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 associated with the
M.K. Ferguson/DOE project.
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.
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. (American
Factors) filed suit against the Company and certain
subsidiaries for breach of contract and fraud in the extension
of credit in a factoring agreement. An arbitrator was
appointed and a hearing was held in July 1998. An award of
$490,000 was issued in favor of American Factors. This is
recorded in the notes payable section of the financial
statements. In February 2000, the parties stipulated to the
dismissal of certain claims in this suit with prejudice. This
stipulation dismissed all of the claims in this suit except
for the claims against defendants Rod Clawson, Michael
Cederstrom, and Tim Masters. These remaining claims have been
settled pursuant to a settlement agreement. On February 15,
2000, a Settlement and Release Agreement was negotiated and
orally agreed to by and between Q Capital Corporation (Q),
American Factors Group (AFG), the Company and Delmar Janovec.
This agreement states that the Company will pay Q and AFG
$490,000, deliver 400,000 shares of restricted common stock in
Staruni Corporation (owned by the Company), and release and
discharge any further claims.
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. In January 1998, this matter was
settled by Delmar Janovec contributing 2,000,000 shares of
stock to Mr. Adams.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
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. This note was settled during 1998 when
the Company issued the Dodge Trust 1,959,281 shares of common
stock.
9. Other commitments and contingencies (continued)
Anderson & Associates, Inc. (AAI) obtained a judgment against
Tomahawk construction in Harris County, Texas in the amount of
$3,337. AAI is actively continuing their collection efforts
for this note. This obligation is reflected in the accounts
payable section of the financial statements.
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.
In January 1997, the Carpenters District Council of Kansas
City Pension Fund and certain other plaintiffs (collectively,
the "Carpenters Fund") filed a complaint in the United States
District Court for the Western District of Missouri against
Tomahawk seeking payment of unpaid pension fund and welfare
fund benefits and an accounting of the benefits that were to
have been paid. Based upon the claims asserted by the
Carpenters Fund against United States Fidelity & Guaranty
Company, the amount of the unpaid benefits is approximately
$4,200. It appears a settlement may occur in the near future
which will result in no liability to the Company, therefore no
liability has been recorded in the financial statements.
In January 1997, the Construction Industry Laborers Pension
Fund and certain other plaintiffs (collectively, the
"Construction Fund") filed a complaint in the United States
District Court for the Western District of Missouri against
Tomahawk seeking payment of unpaid pension fund, welfare fund
benefits, vacation fund and training fund benefits and an
accounting of the benefits that were to have been paid. Based
upon the claims asserted by the Construction Fund against
United States Fidelity &
Guaranty Company, the amount of the unpaid benefits is
approximately $41,000. It appears a settlement may occur in
the near future which will result in no liability to the
Company, therefore no liability has been recorded in the
financial statements.
In January 1997, the Kansas City Cement Masons Pension Fund
and certain other plaintiffs (collectively, the "Cement Fund")
filed a complaint in the United States District Court for the
Western District of Missouri against Tomahawk seeking payment
of unpaid pension fund, welfare fund benefits, vacation fund
and training fund benefits and an accounting of the benefits
that were to have been paid. Based upon the claims asserted by
the Cement Fund against United States Fidelity & Guaranty
Company, the amount of the unpaid benefits is approximately
$7,700. It appears a settlement may occur in the near future
which will result in no liability to the Company, therefore no
liability has been recorded in the financial statements.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
9. Other commitments and contingencies (continued)
In January 1997, the Mo-Kan Teamsters Pension Fund and certain
other plaintiffs (collectively, the "Teamsters Fund") filed a
complaint in the United States District Court for the Western
District of Missouri against Tomahawk seeking payment of
unpaid pension fund, welfare fund benefits, vacation fund and
training fund benefits and an accounting of the benefits that
were to have been paid. Based upon the claims asserted by the
Teamsters Fund against United States Fidelity & Guaranty
Company, the amount of the unpaid benefits is approximately
$4,200. It appears a settlement may occur in the near future
which will result in no liability to the Company, therefore no
liability has been recorded in the financial statements.
In December 1997, Morthole & Zeppetello (Morthole) commenced
action against the Company based upon an alleged failure of
the Company to pay under the terms of a promissory note, dated
May 3, 1996. The case was dismissed pursuant to a settlement
agreement reached by the parties. The Company defaulted on the
settlement agreement and a judgement was then entered in the
amount of $8,500 plus interest of 10% per annum from May 3,
1996 forward and attorney's fees of $1,275. The judgment
remains pending, therefore no liability has been recorded in
the financial statements.
In January 1998, OCI, Inc. commenced an action against the
Company for certain temporary services provided for the
Company. The amount alleged to be owed is $2,436 plus
interest. On December 14, 1998, a settlement was reached
between the parties and the Company will pay the sum of $100
per month until the principal amount has been paid. This is
recorded in the accounts payable section of the financial
statements.
In August 1998, the City of Greenwood Village (the "City"),
Colorado filed a third party complaint against a subsidiary,
KLH Engineering of Lakewood. The City alleges that the Company
negligently performed inspection services with respect to a
drainage system constructed in the City by the developer, KTC.
Presently, the parties are in discussions with respect to
filing a default judgment against the Company that will ensure
no claim is made against the Company.
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.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
9. Other commitments and contingencies (continued)
In November 1998, an action was filed against the Company in
the District Court of Johnson County, Kansas. The plaintiff,
Industrial State Bank, claims it is owed for non-payment of a
line of credit in the amount of $1,071,000, which matured in
August of 1998. The Company filed a counter action against
Industrial State Bank for misappropriations of funds. An
agreement was made which reduced the amount of the note
($1,071,000 plus $ accrued interest) for $200,000 and
2,760,000 shares of preferred stock. The $200,000 was
subsequently paid during 1999 and a gain on the settlement of
$995,093 is recorded in the consolidated financial statements.
The preferred stock, which was transferred from Mr. Janovec
personally, was subsequently converted to 2,760,000 shares of
common stock.
An action was filed against a subsidiary, KLH Engineering of
San Mateo, by Lincoln Property Company, N.C. This action
alleged that the Company negligently provided engineering
services. In March of 1999, this action was dismissed.
The convertible debentures issued in the acquisition of Travel
Agents Hotel Guide, Inc., are guaranteed by Lexington Sales
Corporation, Ltd (Lexington). The consideration given to
Lexington in this transaction consists of Lexington receiving
10% of the gross proceeds (if and) when the Company either
merges or is sold to another party. Since the Company believes
the Travel Agents Hotel Guide, Inc. has no value, it intends
to contest the convertible debenture and is pursuing
settlement options vigorously.
A demand for arbitration was filed with the American
Arbitration association on March 24, 2000 against the Company
by it's former law firm over compensation for services
rendered pursuant to a consulting agreement dated August 26,
1998. This action alleged that the Company failed to pay for
services. An arbitration date is set for April 14, 2000.
Management believes this liability was paid since they issued
40,000,000 shares of common stock to this law firm during
1999. No additional liability was recorded.
On January 26, 2000, Scar I Group against the Company,
alleging fraudulent misrepresentation and breach of contract,
filed an action. The Company has denied all liability and will
vigorously defend itself against the claims asserted in the
lawsuit which management believes to be groundless.
A case was filed on November 12, 1999 against the Company in
Jefferson Circuit Court. The Court set aside the default
judgement against the Company and dismissed the case without
prejudice. To date, no further pleadings have been filed in
this matter.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
An action is pending in the District Court of Johnson County,
Kansas for a non-payment of a note to Liberty Systems, Inc.
The note in dispute is in the amount of $32,917 and was dated
July 31, 1997. A trial date is set for April 13, 2000. No
liability has been recorded in the consolidated financial
statements.
10. Marketable securities
At December 31, 1999 marketable equity securities are stated
at their lower of aggregate cost or market value. No
unrealized or realized holding gains have been recorded during
the fiscal year ended December 31, 1999 because of the
financial position of the companies and the volatility of
their stock.
During 1999, the Company received 3,000,000 shares of Kelly's
Coffee, Inc. common stock for performing consulting services.
This transaction was valued at $.001 per share because of the
financial position of the companies and the volatility of
their stock.
During 1999, the Company received 113,800 shares of Oasis
Resorts International, Inc. common stock for performing
consulting services. This transaction was valued at $.46 per
share because of the financial position of the companies and
the volatility of their stock.
<TABLE>
1999
--------------
<S> <C>
400,000 shares of restricted common stock,
Staruni Corporation $ 86,000
8,000,000 shares of common stock,
Kelly's Coffee Group, Inc. 230,000
125,526 shares of common stock, Oasis Resorts
International, Inc. (formerly Flexweight Corporation) 110,241
--------------
Total marketable securities $ 426,241
==============
</TABLE>
11. 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.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
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.
<PAGE>
AMERIRESOURCE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1999
12. 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.
13. Subsequent Events
On December 23, 1999, the Company, Magnolia Manors, Inc. and
Krapfcandoit, Inc. executed a contribution agreement, whereby
the Company was to acquire the assets of Magnolia and
Krapfcandoit in exchange for shares of the Company's common
stock. Shortly after the execution of this agreement, all
parties decided to modify its terms. The Company no longer has
an intention to acquire Krapfcandoit. Magnolia Manors and the
Company have agreed to an asset purchase agreement whereby
Magnolia Manors will by acquired by the Company's subsidiary,
Crestwood Villas, Inc. (acquired in 2000) for cash and stock.
Magnolia's assets include approximately 21 assisted living
facilities located in Alabama. The Company acquired 2 new
companies, Crestwood Villas, Inc. and Crestwood Management
Company, Inc. during 2000. As of April 2000, there have been
no operations in either of the two new subsidiaries.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
During the fiscal year ended December 31, 1999, the Company had no
changes or disagreements with its accountants on accounting or financial
disclosures.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors, Executive Officers and Control Persons
Name Age Position(s) and Office(s)
---------------- ----- --------------------------
Delmar Janovec 51 President, Chief
Executive Officer and Director
Ron Clawson 43 Director
Delmar A. Janovec has served as a director of the Company since May 12,
1994. On June 27, 1994, he was appointed CEO of the Company. On December 31,
1999, Mr. Janovec was appointed President of the Company when Dustan Shepherd
resigned. He is a descendant of the Mdewakanton Wahpakoota and Sisseton-Wahpeton
bands of the Sioux American Indian Tribe and has over twenty years of experience
in the construction industry as a general foreman, superintendent, project
manager, and estimator. For the past fifteen years, he has been the owner and
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 Director of
Marketing. Before joining KLH, Mr. Clawson worked as a manager for other
engineering and industrial companies. Mr. Clawson is a graduate of Regis
University.
Compliance with Section 16(a) of the Exchange Act
Based solely upon a review of Forms 3, 4 and 5 furnished to the
Company, the Company is not aware of any person who at any time during the
fiscal year ended December 31, 1999, was a director, officer, or beneficial
owner of more than ten percent of the Common Stock of the Company, and who
failed to file, on a timely basis, reports required by Section 16(a) of the
Securities Exchange Act of 1934 during such fiscal year, other than Delmar
Janovec who has not filed a Form 4 reporting his sale of 3,200,000 shares of the
Company's common stock in August 1999.
ITEM 10. EXECUTIVE COMPENSATION
No compensation in excess of $100,000 was awarded to, earned by, or
paid to any executive officer of the Company during the fiscal years 1999, 1998
and 1997. The following table provides summary information for the years 1999,
1998 and 1997 concerning cash and noncash compensation paid or accrued by the
Company to or on behalf of the Company's current president, Delmar Janovec. Mr.
Janovec has advanced $555,577 to date as a loan to support the Company's limited
operations and has continued to work without pay since October 1, 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLES
Annual Compensation
----------------------------------------------------------
Name and Other Annual
Principal Position Year Salary ($) Bonus ($) Compensation ($)
-------------------- ------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Delmar Janovec, President 1999 $81,000 (1) -0- -0-
Delmar Janovec, 1998 $81,000 - 0- - 0-
President
Delmar Janovec, 1997 $81,000 - 0- - 0-
President
(1) Delmar Janovec has accrued an annual salary of $81,000 but not received it since October 1, 1996.
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------------------------------------------------
Awards Payouts
--------------------------------------------- --------------------------------
Securities Underlying All Other
Name and Principal Restricted Stock Options/ LTIP Payouts Compensation
Position Year Award(s)($) SARs(#) ($) ($)
- -------------------------- ------ ------------------ ----------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Delmar Janovec, President 1999 - 0- - 0- - 0- - 0-
Delmar Janovec, President 1998 - 0- - 0- - 0- - 0-
Delmar Janovec, President 1997 - 0- - 0- - 0- - 0-
</TABLE>
Compensation of Directors
The Company's directors are not compensated for any meeting the board
of directors which they attend.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
ownership of the Company's Common Stock as of April 7, 2000, with respect to:
(i) each person known to the Company to be the beneficial owner of more than
five percent of the Company's Common Stock; (ii) all directors; and (iii)
directors and executive officers of the Company as a group. As of April 7, 2000,
there were 550,821,312 shares of Common Stock issued and outstanding.
<TABLE>
<CAPTION>
Title of Class Name and Address of Beneficial Owner Amount and Nature of Percent of Class
Beneficial Ownership
- ---------------------------- ------------------------------------- ---------------------------- --------------------
<S> <C> <C> <C>
Class B Tibor L. Nemeth 177,012 100%
Preferred Stock 165 North Aspen Avenue
Azusa, California 91702
- ---------------------------- ------------------------------------- ---------------------------- --------------------
Common Stock ($0.0001 par Delmar Janovec 44,101,361 8.0%
value) 8021 Hallet
Lenexa, Kansas 66215
- ---------------------------- ------------------------------------- ---------------------------- --------------------
Common Stock Rod Clawson 13,700,000 2.9%
($0.0001 par value) 268 West 400 South, Ste 300
Salt Lake City, Utah 84101
- ---------------------------- ------------------------------------- ---------------------------- --------------------
Common Stock Directors and Executive Officers as 57,801,361 10.9%
($0.0001 par value) a Group
(2 individuals)
- ---------------------------- ------------------------------------- ---------------------------- --------------------
</TABLE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1999, Dustan Shepherd, the Company's former president,
executed a Share Purchase Agreement with the Company whereby the Company sold
all of its shares of common stock in First Americans Mortgage Company ("FAMC")
to Shepherd for $30,000 payable pursuant to a promissory note. Pursuant to the
Share Purchase Agreement, the Company forgave a June 30, 1999 promissory note
owed by FAMC to Tomahawk
As of December 31, 1999, and April 12, 2000, the Company was indebted
to its president, Delmar Janovec, in the amount of $555,577.
In connection with the sale of FAMC to Shepherd, FAMC agreed to
surrender to the Company 7,000,000 shares of common stock Kelly's Coffee which
had been received by FAMC for services FAMC and the Company had rendered.
During the quarter ended December 31, 1999, the Company fully resolved
its $1,071,214 debt, plus accrued interest, to Industrial State Bank when the
last portion of the $200,000 settlement proceeds was tendered. Industrial State
Bank had agreed to forgive this debt in exchange for $200,000 and 2,760,000
shares of the Company's common stock. Previously, Delmar Janovec had transferred
shares of Series A and Series B Preferred Stock convertible into 2,760,000
shares of the Company's common stock to Industrial State Bank. While the payment
of $200,000 and 2,760,000 shares extinguished the Company's debt to Industrial
State Bank, it also extinguished a personal promissory note Janovec had made in
favor of Industrial State Bank in connection with the emergence of Tomahawk out
of bankruptcy. Industrial State Bank was due approximately $3,350,000 from
Tomahawk and would not consent to Tomahawk's Chapter 11 plan of reorganization
without Janovec's personal assumption of this debt. However, Industrial State
Bank agreed to extinguish Janovec's personal note upon settlement of the
Company's $1,071, 214 debt. At the time the Company's debt was resolved,
Janovec's personal note had been reduced to approximately $2,100,000.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits beginning on page14 of this
Form 10-KSB, which is incorporated herein by reference.
(a) No reports on Form 8-K were filed on the Company's behalf during the
quarter ended December 31, 1999.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 12th day of April 2000.
AmeriResource Technologies, Inc.
/s/ Delmar Janovec
Delmar Janovec, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature
Title Date
/s/ Delmar Janovec
Delmar Janovec President, Chief Executive Officer April 13, 2000
Delmar Janovec and Director
/s/ Rod Clawson
Rod Clawson Director April 13, 2000
<PAGE>
INDEX TO EXHIBITS
EXHIBIT PAGE
NO. NO. DESCRIPTION
3(i) * Articles of Incorporation of the Company.
3(ii) * Bylaws of the Company.
10(i) ** Consulting Agreement executed on March 26,
1998 by and between the Company and Craft,
Fridkin & Rhyne, L.L.C.
10(ii) ** December 31, 1999, Share Purchase Agreement
by and between the Company and Dustan R.
Shepherd
10(iii) * August 23, 1999, Stock Purchase Agreement
between Staruni Corporation and the Company.
10(iv) * July 15, 1999, Stock Purchase Agreement
between the Company and Kelly's Coffee Group,
Inc.
10(v) * July 9, 1999, Settlement Agreement between
the Company, Delmar and Marilyn Janovec and
Industrial State Bank dated July 1999.
10(vi) * June 30, 1999, Share Purchase Agreement by
and between the Company and Calbear LLC.
21 ** Subsidiaries of Registrant
23 ** Consent of Auditor
27 ** Financial Data Schedule
* Previously filed as indicated and incorporated herein by reference from the
referenced filings previously made by the Company.
** Filed herewith.
Exhibit 10(i)
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 26th day
of Aug., 1998, by and between AmeriResource Technologies, Inc., a Delaware
corporation with principal offices at 8809 Long Avenue, Lenexa, Kansas 66215
(the "Corporation"), and Craft Fridkin & Rhyne, a Missouri corporation, with
principal address at 1100 One Main Plaza, 4435 Main Street, Kansas City,
Missouri 64111 ("Consultant").
PREMISES
WHEREAS, the Corporation and Consultant have a working relationship
pursuant to which Consultant has and will continue to serve as an attorney to
the Corporation in respect to advising the Corporation's and it's related
entities regarding various legal matters;
WHEREAS, the Corporation desires to compensate Consultant for past
services performed, and future services, to be performed from July, 1998,
through June, 1999; and
WHEREAS, Corporation and Consultant desire to enter into this Agreement
for the continued services of Consultant.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which is expressly acknowledged, the corporation and
Consultant agree as follows:
(a) Services. Consultant has and will perform services relating to
the Corporation's legal needs as requested by the Corporation.
(b) Compensation.
(c) Compensation for Services.
The Corporation will issue to Consultant, forty Million (40,000,000) shares of
the Corporation's common stock, under its Form S-8 registration statement under
the Securities Act of 1933, as amended ("Form S-8"), for the Consultant's past
legal services concerning the Corporation's legal needs through May 31, 1998.
Corporation agrees to issue additional stock upon receipt of Consultants monthly
billing statements at One Cent ($.01) per share. All bills or invoices for past
legal services are in possession of AmeriResource Technologies, Inc.
(d) Issuance of Common Stock.
(i) The Corporation will issue Forty Million (40,000,000)
shares of the Corporation's common stock to
Consultant upon receipt of Consultants executed copy
of this Agreement. The Corporation will receive
detailed invoices of all future services performed by
Consultant on a monthly basis. Upon the receipt of
the invoices the Corporation will issue additional
shares of S-8 stock at a value of One Cent ($.01)
unless otherwise agreed to in the future by the
parties.
(ii) All shares to be issued pursuant to the exercise of
the options granted under this Agreement shall be
issued to compliance with a Form S-8.
(e) Compensation is not a Capital Raising Transaction. Both parties
acknowledge that the shares being issued to Consultant constitute
consideration for bona fide services which Consultant has previously
performed or will perform on behalf to the Corporation. The parties
hereby acknowledge that none of the services provided by Consultant
were in connection with the offer or sale of securities in a capital
raising transaction.
(f) All Prior Agreements Terminated.. This Agreement constitutes the entire
agreement and understanding between the parties and supersedes and
replaces all proposals, prior negotiations and agreements, whether oral
or written, between the parties in connection with the subject matter
contemplated by this Agreement. None by this Agreement. None of the
parties shall be bound by any conditions, definitions, warranties or
representations with respect to the subject matter of this Agreement
other than as expressly provided in this Agreement, unless the parties
subsequently agree to modify or amend this Agreement in writing, duly
signed by authorized representatives of the parties.
(g) Termination of the Agreement. This Agreement can be terminated by
either the Corporation or the Consultant at any time by either party
supplying to the other, written notice thirty (30) days in advance.
(h) Miscellaneous.
(i) Authority. The execution and performance of this
Agreement have been duly authorized by all requisite
corporate action. This Agreement constitutes a valid
and binding obligation of the parties.
(ii) Amendment. This Agreement may be amended or modified
only by an instrument in writing executed by the
parties.
(iii) Assignment:
(a) The rights and obligations under this
Agreement shall inure to the benefit of and
shall be binding upon the successors and
assigns of each of the parties. Neither party
shall have the right to transfer or assign
this Agreement without the prior written
consent of the other party.
(b) Nothing in this Agreement, expressed or
implied, is intended to confer upon any
person, other than the parties and their
successors, any rights or remedies under this
Agreement.
(iv) Notices. Any notice or other communication required
or permitted by this Agreement must be in writing and
may be given by personal delivery or by mail,
registered or certified, return receipt requested, or
by overnight delivery service, or via fax
transmission. Mailed notices shall be addressed to
the parties at the addresses appearing herein, but
each party may change its address by written notice
in accordance with this paragraph. Notices delivered
personally shall be deemed to be properly served as
of the time of actual delivery; mailed or otherwise
transmitted notices shall be deemed properly served
upon receipt.
(a) In the case of the Corporation to:
AmeriResource Technologies, Inc.
c/o Delmar Janovec
P.O. Box 14748
Shawnee Mission, Kansas 66285-4748
Phone: (913) 859-9292
Facsimile: (913) 859-9520
(b) In the Case of Consultant to:
Craft Fridkin & Rhyne
ATTN: Richard D. Rhyne
1100 One Main Plaza
4435 Main Street
Kansas City, Missouri 64111
Phone: (816) 531-1700
Facsimile: (816) 753-3222
or to such other person or address designated in
writing to receive notice.
i. Headings and Captions. The headings of paragraphs are included
solely for convenience. If a conflict exists between any
heading and the text of this Agreement, the text shall
control.
j. Entire Agreement. This document contains the entire Agreement
between the parties with respect to the subject matter
contemplated by the Agreement. It may be executed in any
number of counterparts but the aggregate of the counterparts
together constitute only one and the same instrument.
k. Effect of Partial Invalidity. In the event that any one or
more of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but
this Agreement shall be construed as if it never contained any
such invalid, illegal or unenforceable provisions.
l. Controlling Law and Venue. The validity, interpretation, and
performance of this Agreement shall be governed by the laws of
the State of Missouri, without regard to its law on the
conflict of laws. Any dispute arising out of this Agreement
shall be brought in a court of competent jurisdiction in
Jackson County, State of Missouri. 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.
m. Arbitration. Any dispute arising under this Agreement shall be
resolved through a mediation-arbitration approach. The parties
agree to mutually select a neutral third party to help them
mediate any dispute. If the mediation is unsuccessful, the
parties agree that the dispute shall be decided by binding
arbitration in accordance with the rules of the American
arbitration Association then controlling. The site of any such
mediation or arbitration shall be in Jackson County, State of
Missouri.
n. Mutual Cooperation. The parties hereto shall cooperate with
each other to achieve the purpose of this Agreement, and shall
execute such other and further documents and take such other
and further actions as may be necessary or convenient to
effect the transactions described herein.
o. No Third Party Beneficiary. Nothing in this Agreement,
expressed or implied, is intended to confer upon any person,
other than the parties hereto and their appropriate
successors, and rights or remedies under or by reason of this
Agreement, unless this Agreement specifically states such
intent.
p. Facsimile Counterparts. 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 WHEREFORE, this Agreement was duly executed this 26 day of
Aug., 1998.
AmeriResouce Technologies, Inc. Craft Fridkin & Rhyne
/s/ Delmar Janovec /s/ Richard Rhyne
- ------------------------ ------------------
By: Delmar Janovec By: Richard D.
Rhyne
Its President Its Managing Partner
Exhibit 10(ii)
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (`Agreement") is executed this 31st day
of December 1999 by and between AmeriResource Technologies, Inc. a Delaware
corporation ("ARET") and Dustan R. Shepherd ("Purchaser"), an individual
residing in the state of Kansas.
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,
the "shares") in First Americans Mortgage Corporation ("FAMC").
WHEREAS, Purchaser wishes to purchase ARET's shares of FAMC in order to
continue the company's operations.
Agreement
1. Sale of Shares. Aret agrees to transfer the Shares to the
Purchaser, and the Purchaser agrees to acquire the Shares from
ARET. Immediately after ARET receives a duly executed copy of
this Agreement and duly executed copy of the agreed upon
Promissory Note ("attached"), it will deliver the Shares to
Purchaser.
2. Purchase Price. As consideration for the Shares, the Purchaser
shall pay ARET $30,000.00 for FAMC under the terms and
conditions agreed upon in the attached Promissory Note.
3. Representation, Warranties and Covenants of Purchaser.
Purchaser represents, warrants and covenants that:
(a) Purchaser is an individual residing in the state of
Kansas.
(b) 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
FAMC.
(c) Purchaser has such knowledge and expertise in
financial and business matters that he 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.
(d) Purchaser is relying solely upon independent
consultation with his professional, legal, tax,
accounting and such other advisors as the 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.
(e) Purchaser understands that there is no public market
for the Shares.
4. Representation, Warranties and Covenants of ARET. ARET
represents, warrants and covenants 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
transfering to the Purchaser pursuant to the
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, the 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.
5. Surviving of Representations, Warranties and Covenants. The
representations, warranties and covenants made by ARET and the
Purchaser in the Agreement shall survive the purchase and sale
of the Shares.
6. Financial Matters.
(a) Both parties acknowledge that the Purchaser will
assume all outstanding liabilities related to FAMC's
daily operations and the responsibility for timely
payment (i.e., utilities, rents, etc.)
(b) At the time of this Agreement ARET was under contract
with Mr. Kevin S. Woltjen, P.C., Attorney at Law, 900
Jackson Street, Suite 600, Dallas, Texas 75202 to
develop a Securities and Exchange Commission Form 10
Small Business filing for FAMC. ARET will be
responsible for all fees and expenses incurred by Mr.
Woltjen and his subcontractors.
(c) At the time of the Agreement FAMC was conducting an
annual audit and other financial computations. FAMC
was under contract with Crouch, Bierwolf & Chisholm,
50 W. Broadway, Suite 1130, Salt Lake City, UT 84111
for these services. The Purchaser will be responsible
for all fees and expenses incurred by the auditors.
(d) At the time of the Agreement FAMC had an outstanding
legal fees of approximately $20,000.00 with the law
firm of Craft, Fridkin & Rhyne, L.L.C., 1100 E. Main
Plaza, 4435 Main Street, Kansas City, MO. 64111. ARET
will be responsible for all alleged fees owed to the
Craft, Fridkin & Rhyne.
(e) At the time of the Agreement FAMC owed a promissory
note dated June 31, 1999 to Tomahawk Construction
Company, an ARET subsidiary. This note is being
forgiven by ARET as part of this agreement.
(f) It is acknowledged by both parties that the Purchaser
while the president of ARET incorporated in the State
of Kansas an entity, First Plains Construction
Company. First Plains in order develop a corporation
that would conduct construction services for Native
American consumers and tribal governments. No
corporate structure or funds were allocated to the
company by FAMC for its subsequent development. The
Purchaser will acquire the corporation as part of
this Agreement.
(g) It is acknowledge by both parties that the Purchaser
while President of ARET signed an agreement with Wall
Street NewsCast, 396 Broadway, Suite 907, NYNY 10013,
for Monthly Online Conference Call & Sales Program.
The premium for the six month period starting
December 1, 1999 was $1,500.00. ARET will be
responsible for the outstanding balance due to Wall
Street NewsCast.
(h) The Purchaser agrees to transfer 8,000,000 shares of
Kellys Coffee (OTCBB: KLYS) held by FAMC to ARET.
7. Miscellaneous.
(a) In the event any one or more of the provisions
contained in this Agreement are for the 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) The 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 an
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
Agreement shall be governed by the laws of the State
of Kansas without regard to its law on the conflict
of law. 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 Kansas, County
of Johnson, or, if it has or can acquire
jurisdiction, in the United States District Court for
the District of Kansas, 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. Process in any action or proceeding referred
to in the preceding sentence may be served on any
party anywhere in the world.
(f) 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 have executed this Stock Purchase
Agreement as of the day and year first appearing herein.
AmeriResource Technologies, Inc. ("ARET") Dustan R. Shepherd ("Purchaser")
/s/ Delmar Janovec /s/ Dustan Shepherd
- ------------------------------------ --------------------------------
Delmar Janovec, CEO Dustan R. Shepherd
EXHIBIT 21
LIST OF SUBSIDIARIES
OF
AMERIRESOURCE TECHNOLOGIES, INC.
1. Tomahawk Construction, Inc. was incorporated in Missouri.
2. The Travel Agent's Hotel Guide, Inc. was incorporated in
Nevada.
3. The Crestwood Management Company, Inc. was incorporated in
Delaware.
4. The Crestwood Villas, Inc. was incorporated in Delaware.
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report, dated April 5, 2000, in
this annual report on Form 10-SB for the year ended December 31, 1999 for
AmeriResource Technologies, Inc.
/s/ Crouch, Bierwolf & Chisholm
Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
April 13, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from consolidated
audited condensed financial statements filed with this Form 10-KSB for the year
ended December 31, 1999, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000876490
<NAME> AmeriResource Technologies, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 165
<SECURITIES> 426,241
<RECEIVABLES> 30,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,165
<PP&E> 773,919
<DEPRECIATION> (773,919)
<TOTAL-ASSETS> 456,406
<CURRENT-LIABILITIES> 2,587,453
<BONDS> 0
0
330
<COMMON> 55,081
<OTHER-SE> (5,586,047)
<TOTAL-LIABILITY-AND-EQUITY> 456,406
<SALES> 0
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<CGS> 0
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<OTHER-EXPENSES> 1,361,597
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 312,133
<INCOME-PRETAX> (4,467,050)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,467,050)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,467,050)
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</TABLE>
