<PAGE> 1
As filed with the Securities and Exchange Commission on December 28, 1999
Registration No. _____________
==============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
DIVERSIFIED RESOURCES GROUP, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
Utah 87-0427911
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
355 Interstate Blvd., Sarasota, FL 34240
-------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (941) 923-1949
--------------
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
N/A N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001 per share
----------------------------------------
(Title of Class)
==============================================================================
<PAGE>
<PAGE> 2
DIVERSIFIED RESOURCES GROUP, INC.
FORM 10-SB
TABLE OF CONTENTS
PART 1 Page
Item 1. Description of Business ..................................... 3
Item 2. Management's Discussion and Analysis or Plan of Operation ... 12
Item 3. Description of Property...................................... 16
Item 4. Security Ownership of Certain Beneficial Owners
and Management.............................................. 17
Item 5. Directors, Executive Officers, Promoters
and Control Persons......................................... 18
Item 6. Executive Compensation....................................... 20
Item 7. Certain Relationships and Related Transactions............... 22
Item 8. Description of Securities.................................... 24
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters................. 25
Item 2. Legal Proceedings............................................ 26
Item 3. Changes in and Disagreements with Accountants................ 26
Item 4. Recent Sales of Unregistered Securities...................... 26
Item 5. Indemnification of Directors and Officers.................... 28
PART F/S
Financial Statements......................................... 31
PART III
Item 1. Index to Exhibits............................................ 55
Signatures................................................... 55
<PAGE>
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Corporate History
- -----------------
General
- -------
The Registrant was incorporated in the state of Utah in July 1984 under the
name Gen II, Inc., and had no operations until July 1992, when it acquired
Data-1, Inc., a Delaware corporation ("Data Del"). In the acquisition, the
holders of all the outstanding shares of Data Del exchanged their shares for
81.8% of the outstanding shares of the Registrant, and Data Del became a
wholly-owned subsidiary of the Registrant. As part of the transaction, the
Registrant changed its name to Data 1, Inc., management of Data Del assumed
management and control of the Registrant, and the business of Data Del became
the business of the Registrant. In February 1996, the Registrant incorporated
a wholly-owned subsidiary, Memory 1, Inc., a Florida corporation.
In September 1997, the Registrant filed a petition for relief under Chapter 11
of the federal bankruptcy laws. Under Chapter 11, the Registrant continued
its business operations while negotiating settlements and preparing a Plan of
Reorganization. The Registrant's operations during 1998 and 1997 involved the
manufacturing and marketing of computer memory devices. By December 31, 1998,
the Registrant had reverted to the status of a startup company, with
essentially no operations. In May 1999, the Registrant changed its name to
Diversified Resources Group, Inc., to better reflect management's intentions
to diversify its operations once the emergence from bankruptcy proceedings was
finalized. Final approval of the Plan of Reorganization was granted by the
United States Bankruptcy Court in July 1999. (See Part I, Item 7, CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, and Part II, Item 2, LEGAL
PROCEEDINGS).
Summary of Recent Business Operations
- -------------------------------------
During the lengthy process of the Company's emergence from bankruptcy,
management faced problems of capitalization as well as decisions about the
future direction of the Company. Management decided to seek out and explore a
variety of potential business opportunities that might better shield the
Company and its shareholders from the kind of specific market risk to which
the Company fell victim as a result of the collapse of the memory chip market.
In an attempt to diversify the Company's business operations and spread its
risk exposure, management has determined that the Company will be best served
by focusing on operations in three diverse areas; sales of rechargeable
batteries, investments in selected real estate opportunities, and the
marketing of a new HIV screening test. Of these three distinct areas of
business focus, the battery sales operation is up and running, a real estate
prospect has been identified, and certain preliminary financial and scientific
assessments of the HIV screening test have begun. Certain specifics regarding
each of these areas of operation have been provided by management and are set
forth below.
I. BATTERY BUSINESS
- -------------------
General
- -------
The rechargeable battery business was suggested to the Company as a means of
using the existing infrastructure of the Company, including a substantial
portion of its customer base, to generate immediate cash sales. Unlike the
<PAGE>
<PAGE> 4
memory business, a supplier was readily available, and one investment group,
United Funding Solutions, Inc. ("United Funding"), a company controlled by one
of the Company's principal shareholders, was interested in assisting the
Company's entrance into this business. Beginning in April 1999, the Company
began to implement its restructuring plan under the trade name "Cordless Power
Corporation," and has redirected its focus towards supplying rechargeable
batteries.
To date, the Company's most crucial relationship is with United Funding which
has been engaged to establish supply lines, recruit management and sales
organizations, assist in major institutional sales, establish warehousing and
shipping facilities, and assist in market planning and strategies. Under a
consulting agreement (the "Consulting Fee Agreement"), United Funding is being
paid a base amount of $100,000 per year for the next five years and is also
being paid 10,000,000 shares of common stock under a performance clause. The
Consulting Fee Agreement calls for issuance of "post-split" shares in amounts
of 1,000,000 shares up front with up to an additional 9,000,000 shares issued
subject to one share being released for every dollar of gross profit earned.
At the time the Consulting Fee Agreement was signed, it was assumed that the
Company was going to effect a 1 for 10 reverse split. Because the reverse
split has not yet been effected, the shares issued to United Funding have been
adjusted by informal agreement. At this time, however, the Company does not
have sufficient authorized capital to meet its obligations for additional
share issuances if the performance targets are met under the agreement.
The Company's principal supplier of batteries is E-Tech, Inc. USA ("E-Tech"),
which was introduced to the Company by United Funding. E-Tech has
historically been one of the world's leading suppliers of equipment for
battery manufacturing facilities. In recent years, through arrangements with
manufacturing facilities for which E-Tech supplies equipment, E-Tech has
developed a supply of batteries it can offer to distributors such as the
Company for resale in the United States and other markets. The Company
believes that the patents for impedance matching for E-Tech's batteries gives
it's products an advantage against many other competing technologies. The
Company is one of many distributors representing E-Tech's products.
Principal Product
- -----------------
The Company's principal product is rechargeable replacement battery packs for
cellular telephones. The rechargeable replacement battery packs sold by the
company fit most major cellular telephone brands including Nokia, Motorola,
Ericsson, Nextel, and NEC.
Distribution Methods
- --------------------
The Company markets the cellular telephone rechargeable replacement battery
packs through two separate and distinct distribution outlets:
- Internet/eCommerce: The Company operates an eCommerce (direct sales) web
site located at www.factorydirectbatteries.com that allows Internet users to
purchase batteries directly from the web site by using any of the following
payment methods: Master Card, Visa, American Express, or Internet Check. The
company is taking the proper steps to obtain the valuable exposure that is
absolutely imperative in promoting a web presence on the Internet. For
example: The Company has secured listings with all major search engines, and
has secured advertising, and in some cases top billing, on the popular
www.goto.com search portal.
- Mobile Distributors: The Company contracts with independent sales
representatives who purchase batteries directly from the Company. The
independently contracted sales representatives deliver the batteries to
cellular rechargeable replacement battery pack retailers throughout their
designated sales territory.
<PAGE>
<PAGE> 5
Status of New Products
- ----------------------
The Company has evaluated the following new products, and will begin selling
these products in the fourth (4th) quarter of 1999. These new products are:
cellular telephone replacement battery pack rechargers/eliminators, leather
phone cases, and hands-free car cigarette lighter plug-in with speaker phone
capability.
The Company is currently evaluating the following product lines for possible
addition to the Company's product menu in the year 2000: camcorder replacement
battery packs, lap top computer replacement battery packs, and cordless power
tool replacement battery packs.
Competitive Business Conditions
- -------------------------------
Based on its current business relationship with E-Tech, the Company believes
that it can, and is establishing itself in the undeveloped rechargeable
replacement battery pack business. This belief is based upon the following:
- Patent Pending Technology. The Company believes that the battery products
supplied by E-Tech provide impedance matching technology that is in a patent
pending status that is proven to produce battery packs with longer life spans
and greater performance. The impedance matching technology matches power
cells within a single battery pack to within one percent (1%) performance of
each other. The industry standard for impedance matching currently matches
power cells within a battery pack to within twenty percent (20%) to thirty
percent (30%). The Company believes that this is a significant advantage over
competitive products with less impedance matching.
- Pricing Advantages. The Company's direct relationship with the
manufacturer of the replacement battery packs allow it pricing advantages.
Since there are no middle-persons to compensate, these savings can be passed
on to the independent sales representatives and/or end-users/consumers.
- Market size and growth. Cellular telephone industry experts predict that
the number of cellular telephone users in the United States will grow from
today's 35,000,000 users to 70,000,000 users by the year 2005. The Company
believes that this growth will affect the growth of the replacement battery
pack industry positively.
Raw Materials and Suppliers
- ---------------------------
The Company purchases finished goods only; there are no raw materials used or
purchased by the Company.
The Company currently utilizes one principal supplier and one secondary
supplier for rechargeable replacement battery packs and accessories for
Cordless Power. E-Tech is the Company's primary supplier, and USACell is the
Company's secondary supplier.
Dependence on One or a Few Principal Suppliers
- ----------------------------------------------
The Company currently relies on two suppliers for the purchase of rechargeable
replacement battery packs and accessories. Its principal supplier of
replacement battery packs and accessories is E-Tech. E-Tech, Inc. USA has
been manufacturing battery packs since 1978, and operates manufacturing
facilities in China. E-Tech has a patent pending on the impedance matching
technology that matches power cells within a single battery pack to within one
percent (1%) performance of each other.
<PAGE> 6
The Company presently pays cash at factory-direct pricing for its inventory,
but hopes to establish lines of credit with its suppliers once it has
established a historical relationship with such suppliers.
Patents, Trademarks, Licenses
- -----------------------------
The Company currently owns the Trademark, "Cordless Power" for private
labeling of its rechargeable replacement battery packs and accessories.
The Company owns no other Patents, Trademarks, or Licenses.
Need for Governmental Approval, Effect of Governmental Regulations
- ------------------------------------------------------------------
The Company is not aware of any governmental regulations relating directly or
indirectly to its Cordless Power business operations, or of any need to seek
government approval for such operations.
Research and Development Activities
- -----------------------------------
The Company is not involved in any research and development activities.
Costs & Effects of Environmental Laws
- -------------------------------------
The Company knows of no environmental laws that relate directly or indirectly
to its Cordless Power business operations.
Employees
- ---------
As of December 1, 1999 there were 3 full-time employees in the Cordless Power
division.
II. VIROTEST BUSINESS
- ---------------------
General
- -------
In December 1998, one of the Company's directors was approached by a relative
who had previously invested in a company called Virotest which had been in the
process of bringing a new HIV screening test to market. Virotest's president
and other key officers were all killed in a plane crash and the business
operations of Virotest were subsequently tied up by litigation. After some
examination of the Virotest product, the Company determined that it might be
beneficial to obtain acquisition rights to the Virotest HIV screening product,
subject to completion of audits and scientific due diligence. The Company has
engaged its auditors, Jones, Jensen and Company, to audit the financial
records of Virotest through September 30, 1999, and to assist the Company on
an as needed basis with other due diligence associated with the transaction,
including assembling such information needed in the preparation of a joint
proxy statement, assistance in determining the appropriate accounting
treatment post merger, and any other auditing and financial services deemed
necessary associated with the potential acquisition of Virotest.
The Company has entered into an agreement with Quintiles, Inc. ("Quintiles"),
a nationally recognized consultant in the medical field, to review and
evaluate the feasibility of the Virotest operations, specifically new product
assessment. Quintiles has demonstrated capabilities in every phase of medical
product development, including laboratory support, product promotion,
regulatory assistance, manufacturing support, management recruiting,
feasibility studies, and product distribution. In the event that the Company
pursues the Virotest acquisition, Quintiles will be looked at to expand its
role. Quintiles bills the Company at hourly professional rates for its
services.
<PAGE>
<PAGE> 7
Virotest's Principal Product
- ----------------------------
Virotest's principal product is intended to be a low cost, saliva-based, quick
result AIDS test. The Company's management is in the process of evaluating
this technology, and has entered into an informal agreement to allow for the
acquisition of the technology with Virotest, Inc., a California corporation.
The agreement permits the Company to complete its due diligence before
finalizing the acquisition. The product has not yet been brought to market
pending the resolution of certain key questions (see "Status of Product").
Distribution Methods
- --------------------
Because the Company has not completed the acquisition, it has not developed a
formal distribution plan. It is the Company's intention is to use separate
and distinct distribution outlets such as:
- Internet/eCommerce: Upon completion of the acquisition, the Company will
construct an eCommerce website that allows Internet users, where permitted, to
purchase kits directly from the website by using any of the following payment
methods: Mastercard, Visa, American Express, or Internet Check. The Company
will take the proper steps to obtain the degree of exposure that is absolutely
imperative in promoting a web presence on the Internet. For example: The
Company will secure listings with all major search engines, and has secured
advertising space, and in some cases top billing, on the popular www.goto.com
search portal.
- Distributors: The Company intends to contract with independent sales
organizations and representatives who purchase kits directly from the Company.
The independently contracted sales representatives deliver the kits to the
appropriate drug retailers and health organizations throughout their
designated sales territories.
Status of Products/Acquisitions
- -------------------------------
Management's evaluation of the project is as follows:
To justify further investment prior to the acquisition, the Company intends to
take the following steps, not necessarily in this order:
- Define and identify the target markets in terms of countries and
populations;
- Determine the level of protection afforded the intellectual property by
the existing patent(s), and determine if the projection level justifies going
forward;
- Further identify the competition and estimate the market size and
anticipated share of the target markets;
- Develop the product specification for an HIV-1 saliva screening assay so
as to satisfy the performance, ease of use, shelf life, storage conditions,
and other requirements mandatory to achieving regulatory approval and
sufficient sales in the target markets;
- Estimate the manufacturing cost;
- Develop a program to include:
Defining regulatory strategy for each target market,
Defining marketing and sales strategy for each target market,
Development of the product,
Development of the manufacturing process,
Pilot manufacturing of the product for clinical trial use,
Evaluation of the product performance in the clinic,
Obtaining regulatory approvals, and
Scaling up of manufacturing for market quantities.
<PAGE>
<PAGE> 8
- Complete of audit and financial due diligence of Virotest, Inc., the
acquisition target.
The Company's management will review carefully the feasibility of the project
as it moves through the above steps. The Company has not yet received any
information to indicate it will be unable to complete any of the required
steps. At this time, however, there can be no assurance that all of the
outstanding concerns and questions will be resolved. If any significant
problems develop, the Company will table the project or modify its plans.
Competitive Business Conditions
- -------------------------------
Based on current conditions, the Company believes that, subject to the
positive resolution of the matters indicated above, it may have an opportunity
to have a positive future in AIDS testing. This belief is based upon the
following:
- Patented Technology: The Virotest product will be the only product in the
market that is low-cost, saliva-based, requires no medically trained
personnel, and provides results within a few minutes. The Western Blot Test,
used throughout the U.S. and western Europe is similar to the Virotest
product, but uses blood. In addition to unpleasantness, there is risk of
spreading the disease through accidental skin pricks. Another industry
leader, Orasure, has a product which requires the mailing of results to their
lab for further analysis, which is expensive and slow. The Company believes
that the Virotest product will be competitive in the market place.
- Pricing Advantages: The Company's ownership of its own patent, if
operations commence, should allow it pricing advantages. Since there are no
organizational middle-persons to compensate, cost savings can be passed on to
independent sales representatives and/or end-users/consumers.
- Market Size and Growth: As AIDS continues to spread, the need for the
product should increase as the need to halt the spread of AIDS increases in
importance, particularly in third world countries.
Raw Materials and Suppliers
- ---------------------------
Virotest currently purchases peptides from Repligen, Inc. The peptide is
crucial to the manufacture of the product but can be developed from other
sources at a much greater start-up cost. There will be no other crucial raw
materials used or purchased by the Company.
The Company has not developed relationships with laboratories, packaging
suppliers, manufacturers and other suppliers which it will need upon
commencement of operations.
Dependence on a Key Consultatnt and Limited Suppliers
- -----------------------------------------------------
At present, the Company is dependent on its consultant, Quintiles, Inc., for
the necessary science and business contacts needed to resolve due diligence
issues and, if appropriate, commence operations. In the event that the
Company's relationship with Quintiles were to discontinue, the Company is not
confident that a suitable replacement could be found. Other relationships,
such as the purchase of peptides from Repligen, Inc., are equally significant
should operations develop. There is no alternative supplier currently
available, and the Company's current information indicates that purchases from
any alternative supplier would materially increase the costs of production.
<PAGE>
<PAGE> 9
Patents, Trademarks and Licenses
- --------------------------------
Neither the Company nor Virotest, Inc. owns any other patents, trademarks or
licenses.
Need for Governmental Approval
- ------------------------------
Virotest has obtained government approval for sale in Canada and Mexico which
approval is believed to provide a platform for subsequent approval in many key
countries throughout the world. FDA approval in the United States is
currently too much of a strain on the Company's meager resources to pursue.
There are however, a variety of nations with both a greater need for the
product and less stringent governmental regulations. Should the Company
acquire Virotest, its intention is to first market the product in those
countries with little or no barriers to market.
Effect of Existing or Probable Governmental Regulations
- -------------------------------------------------------
The Company is not aware of any new or proposed regulations which will make it
more difficult to go to market, although it is possible that such regulations
may be enacted before marketing begins. Development of an appropriate
worldwide regulatory strategy is crucial for the Company's success.
Research and Development Activities
- -----------------------------------
At present, the Company has no research and development activities related to
this product.
Costs and Effects of Environmental Laws
- ---------------------------------------
The Company does not believe there will be any significant environmental
issues and related costs and effects to comply with any applicable
environmental laws from the manufacturer, sale, use and/or disposal of the
product.
Employees
- ---------
None.
III. REAL ESTATE DEVELOPMENT
- ----------------------------
General
- -------
In May 1999, management entered into discussions with James M. Matheny, a
shareholder of the Company, concerning the exchange of restricted stock of the
Company for a real estate development project. After researching the
background of the project, management determined that the project was sound,
and that the project could result in revenue either from the development of
the project or from the sale of all or some of the properties involved.
Accordingly, in August 1999, the Company entered into an assignment agreement
with Matheny Development, LLC ("Matheny Development"), an entity controlled by
James M. Matheny, for an assignment of all Matheny Development's right and
interest in a Contract for the Purchase and Sale of Real Property dated April
8, 1999 (the "Purchase and Sale Contract"), between Matheny Development and
PCF Falls, LLC ( "PFC"). The Purchase and Sale Contract called for
<PAGE>
<PAGE> 10
a $100,000 earnest money deposit on signing, with 75% of the $21,000,000
purchase price due in cash at closing, and the remaining 25% balance due in
the form of an interest bearing promissory note. The original closing was to
be not later than July 31, 1999, with an extension until December 1, 1999
subject to additional non-refundable extension fee of $76,562 per month. The
extension fees apply to the purchase price. In October 1999, the closing date
was extended by the parties to March 2, 2000. At December 15, 1999, the
Company has paid a total of $459,372 in extension payments.
The assignment between the Company and Matheny Development (the "Assignment")
calls for the payment by the Company to Matheny Development, at the closing of
the Purchase and Sale Contract, of $2,000,000, plus the return to Matheny
Development of the $100,000 earnest money deposit, and the assumption by the
Company of the monthly extension payment obligation. The Assignment also
contains provisions for payment by the Company to Matheny Development of
liquidated damages in the event of a breach of the Purchase and Sale Contract.
If the Company breaches the contract, it must reassign its rights to Matheny
Development and pay damages in the amount of $2,100,000. If PFC breaches
the contract, the Company must either pursue all legal action necessary to
enforce the contract, or reassign its rights to Matheny Development and pay
damages in the amount of $2,200,000.
In order to meet its obligations under the Assignment, the Company has
explored multiple fundraising options. To establish the viability of the
project and to assist the Company in obtaining a funding commitment, the
Company has entered into letters of intent with various residential home
builders (i.e., U.S. Homes and Washington Homes, a division of Westminster
Homes, and with Drucker and Falk and Squire Homes).
The letters of intent with U.S. Homes and Washington Homes provide for
closings on a minimum number of lots each quarter according to a five year
schedule. Closing prices per lot include an escalator provision whereby a
portion of the interest and taxes accumulated from the signing of the letters
of intent are added to the final price of the lots sold. In the event that
the schedules for closings are not met, the development project will be
entitled to recover certain earnest money funds deposited.
The letters of intent with Drucker and Falk and Squire Homes are for sales of
entire parcels within the development, and provide for a fixed price and a
specified time to close. There is no earnest money arrangement for the parcel
sales.
Principal Product
- -----------------
Falls River Development is an upscale residential real estate development in
the Raleigh, North Carolina area for which the Company has development rights.
The development is one of the few larger scale (600 acres) residential
projects available in this real estate market.
Distribution Methods
- --------------------
The Company currently markets the lots on a wholesale basis by selling to
major builders such as U.S. Homes, Washington Homes, Drucker & Falk, Squire
Homes, and other well known names in the residential construction industry.
Status of Property
- ------------------
The Company has the entire real estate development project under contract with
a closing extended to March 2, 2000. The Company has yet to obtain the
necessary financing to close the project, but management is exploring
<PAGE>
<PAGE> 11
a variety of methods to obtain financing, including joint ventures,
development loans, sale of major parcels, or sale of the entire contract.
However, there can be no assurance that the Company will be able to meet its
commitments or finance the property based on current operating cash flows.
Competitive Business Conditions
- -------------------------------
Based on the current economic environment, the Company believes that it can,
and is establishing itself as a competitor in its market. This belief is
based upon the following:
- Location. The former owner of the property, Duke University, did not
pursue its development as most of the surrounding area was built. As a
result, the surrounding area and infrastructure are well developed and the
capacity for absorbing new growth exists. For instance, Interstate 540, a
bypass that shortens rush hour drive time to Research Triangle, a major
employment hub, from 45 minutes to 15 minutes is expected to open by the
spring of 2001.
- Market Size and Growth. Several of the leading communities in the Raleigh
area such as Apex and Cary, have various building permit and development
restrictions due to their lack of infrastructure. Raleigh and the Research
Triangle area continue to prosper as the nations economy booms.
Raw Materials and Suppliers
- ---------------------------
The Company is purchasing raw land which is already under contract. The
Company believes its corporate officers have significant experience in finding
suppliers for development functions and do not expect any deviation from
normal competitive supplier conditions for this industry.
Dependence on One or a Few Principal Suppliers
- ----------------------------------------------
None.
Patents, Trademarks and Licenses
- --------------------------------
The Company owns no Patents, Trademarks or Licenses for its real estate
business.
Need for Governmental Approval
- ------------------------------
Real estate development requires government (i.e., federal, state, county and
local) planning and approval for virtually every step of the development
process relating to planning and zoning, infrastructure needs, environmental
considerations, drainage, transportation, construction, recreation, education
and other similar issues. The property is approved for single family, multi-
family and neighborhood village usage. The Company is submitting construction
drawings to the city of Raleigh, North Carolina, for final approval.
Effect of Existing or Probable Governmental Regulations
- -------------------------------------------------------
Other than building permit restrictions in other nearby communities, and the
various regulations discussed herein, there are no existing or probable
regulations which will affect the property.
Research and Development Activities
- -----------------------------------
The nature of the development process does not lend itself to any research and
development activities.
<PAGE>
<PAGE> 12
Costs and Effects of Environmental Laws
- ---------------------------------------
Since the property is adjacent to the Noose River, it is subject to
regulations regarding the Noose River Basin and other regulations from the
Army Corps of Engineers regarding wetlands. The Company believes its
development plan is in compliance with all required laws.
Employees
- ---------
As of December 1, 1999, there were no full-time employees and three part-time
employees in the Falls River Development project.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Regarding Forward-looking Statements
- ---------------------------------------------------------
This report may contain "forward-looking" statements. Examples of forward-
looking statements include, but are not limited to: (a) projections of
revenues, capital expenditures, growth, prospects, dividends, capital
structure and other financial matters; (b) statements of plans and objectives
of the Company or its management or Board of Directors; (c) statements of
future economic performance; (d) statements of assumptions underlying other
statements and statements about the Company and its business relating to the
future; and (e) any statements using the words "anticipate," "expect," "may,"
"project," "intend" or similar expressions.
Year 2000
- ---------
The year 2000 problem is the result of computer programs, microprocessors and
embedded date reliant systems using two digits rather than four to define the
applicable year. If such programs are not corrected, such date sensitive
computer programs, microprocessors and embedded systems may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculation causing disruptions in operations.
State of Readiness
- ------------------
In an effort to assess our year 2000 state of readiness, during 1998 we began
performing a complete inventory assessment of all of our internal systems,
which we have divided into two categories, business essential, or mission
critical, and support systems, or non-mission critical. As part of our year
2000 program and as part of our overall procurement plan, we have sought to
ensure that fixed assets acquired were year 2000 compliant.
Costs of Y2K
- ------------
At December 31, 1998, the total value of property and equipment acquired was
approximately $25,000. As part of the acquisition process and our ongoing
review, we have inventoried, tested, and ensured year 2000 compliance for all
of our systems. The total estimated cost of ensuring our preparation for year
2000 is approximately $5,000, all of which has already been incurred and
expensed.
Risks and Contingency Plans
- ---------------------------
The Company believes that the greatest potential risk of Y2K problems lies in
possible failures of its batteries. The Company has received assurances
confirming Y2K compliance from E-Tech, its principal supplier, and does not
anticipate any problems. If the batteries are determined to be not compliant,
the Company will have to seek alternative suppliers. The Company does not
<PAGE>
<PAGE> 13
have any other contingency plans at this time and does not intend to prepare
any such plan because the most critical factors in its worst case scenario
(i.e., failure of the electric power grid or internet shut down) are
essentially beyond the Company's control. The Company intends to continue
its maintenance and upgrades of its internal systems, and will continue to
query its major customers concerning their respective states of readiness.
Overview
- --------
The Company voluntarily filed for Chapter 11 Bankruptcy in the United States
Bankruptcy Court, Middle District of Florida, on September 24, 1997, Case No.
97-15827-8P. The registrant's Plan of Reorganization was approved by the
Bankruptcy Court on June 19, 1998, and it was consummated by the Bankruptcy
Court on July 13, 1999 under the Court's final decree.
Since filing for protection under Chapter 11 of the United States Bankruptcy
Code, In September of 1997, the Company has significantly curtailed its
electronics components business due to its inability to obtain credit lines.
It has begun the process of reinvigorating its electronics components business
through the sale of rechargeable batteries and the sale of computer batteries,
components and accessories, as well as cellular batteries and accessories.
The Company also has finalized an agreement to acquire a 607.74 acre parcel of
real estate located in one of the fastest growing markets in the United
States, North Raleigh, Wake County, North Carolina. This development project
is planned to have a 5-year build-out, and it is estimated it will produce
approximately $5,000,000 per year in land sales gross profits throughout the
life of the project, assuming the Company does not sell the project in its
entirety before full development.
Results of Operations
- ---------------------
The following discussion of results of operations relates to the Company on a
historical basis. Because the Company is now considered to be a development
stage company, some of the historical information is no longer indicative of
present or planned future operations. Management expects changes in the
Company's operations to be reflected when or if the Company is no longer in
the development stage.
Revenue and Cost of Sales
- -------------------------
The Company's revenues were $17,273 and its cost of sales was $11,554 for the
year ended December 31, 1998, as compared to sales of $1,662,290 and cost of
sales of $1,618,609 for the year ended December 31, 1997. The differences in
these amounts were due largely to the inability to finance the acquisition of
memory chip inventory due to the poor financial condition of the Company, as
reflected in the description of the bankruptcy proceedings described above.
As a result of concessions by creditors, the financial condition has improved
significantly. However, the sales and cost of sales of the Company for the
nine months ended September 30, 1999, of $20,378 and $20,613, respectively,
and $16,945 and $20,470, respectively for the 3 months ended September 30,
1999, do not yet reflect the changes and restructuring that have occurred to
rebuild the Company's revenue base from its focus on memory chips to
rechargeable batteries.
General and Administrative Expenses
- -----------------------------------
The Company's general and administrative expenses include commissions paid to
independent sales representatives and overhead costs associated with its
<PAGE>
<PAGE> 14
headquarters, which also serves as its operations center and sales office.
General and administrative expenses have continued to increase as the Company
develops and expands its business. Management anticipates that these expenses
will continue to increase as the Company's business is expanded in the future,
and further anticipates that these expenses will continue to be incurred in
advance of projected revenue.
General and administrative expense was $685,411 for the year ended December
31, 1998, as compared to $935,005 for the year ended December 31, 1997. Most
of these expenses are attributable to overhead costs associated with the
Company's headquarters and operations center. The reduction was due to the
Company decision to reduce payroll and move its operations center to lower
overhead. However, general and administrative expense rose to $957,463 and
$762,415 for the nine and three months ended September 30, 1999, compared to
$441,802 and $212,671 for the same periods in 1998. This significant increase
was due to increased activities of the Company related to the operations of
the battery business, expenses for real estate consulting services, and
expenses incurred in the due diligence process of evaluating the potential of
Virotest.
Salaries and commissions for the nine months ended September 30, 1999 were
$363,542. Advertising and promotion expenses were $5,896. We expect to incur
additional expenses as we continue to invest in our sales and marketing
infrastructure and actively market our products and services.
Debt Restructuring Gains
- ------------------------
At December 31, 1998, the Company recognized a gain of $5,956,183 on the
restructuring of debt pursuant to its Chapter 11 bankruptcy Plan of
Reorganization. For the nine months ending September 30, 1999, the Company
recognized an additional $100,000 gain on the restructuring of debt relating
to the settlement of employment agreements with its former officers, Mr.
Kamkar and Mr. Sovich, but unrelated to the bankruptcy Plan of Reorganization.
The gains on restructuring of debts represent settlement of past debts and do
not reflect revenues to the Company. The Company does not expect to recognize
any additional debt restructuring gains during the next 12 months.
Other Expenses
- --------------
At September 30, 1999, the Company recorded other expenses of $306,175,
attributable to expenses for the settlement of employment agreements with its
former officers, Mr. Kamkar and Mr. Sovich, including payments of $100,000
each, $64,503 in extra health care and other employment benefit expenses per
the respective settlement agreements, and $41,672 in legal, accounting and
administrative expenses associated with the settlements. The Company does not
expect that any similar other expenses will be incurred during the next 12
months.
Depreciation and Amortization
- -----------------------------
Depreciation and amortization expense includes charges relating to
depreciation of property and equipment, which consist principally of shipping
equipment such as switches and points of presence, furniture and equipment,
leasehold improvements, and amortization of intangible assets should they
arise. The Company depreciates its equipment over periods ranging from five
(5) to seven(7) years and amortizes its intangible assets over periods ranging
from three (3) to twenty-five (25) years.
Depreciation and amortization expense was $21,710 and $7,237, respectively,
for the
<PAGE>
<PAGE> 15
nine and three month periods ended September 30, 1999, compared with $24,750
and $8,368, respectively, for the nine and three month periods ended September
30, 1998. Depreciation and amortization expense was $534,643 for the year
ended December 31, 1997 compared to $28,945 for the year ended December 31,
1998. The 1997 expense was attributable to a write off of the basis of
$208,248 of circuit designs and a write off of a contract with Catalyst
Communications, Inc. ("Catalyst"), a related party, in the amount of $297,917,
due to Catalyst's poor financial condition which eventually resulted in
bankruptcy. (See ITEM 5, Involvement in Certain Legal Proceedings).
Management anticipates that depreciation expense will not increase
substantially from the current level as the Company's future expansion plans
are not capital equipment intensive, but require significant investment in
inventories.
Interest
- --------
The Company did not incur any significant interest income or expense and did
not capitalize any interest.
Inflation and Deflation
- -----------------------
The Company does not believe that either inflation or deflation will have a
significant effect on operations for the foreseeable future.
Market Risk Exposure
- --------------------
The Company is subject to indirect foreign currency exchange rate risk
relating to payments to suppliers. The Company does not consider the market
risk exposure relating to foreign currency exchange to be material. See
"Liquidity and Capital Resources Foreign Currency".
Financial Position, Liquidity and Capital Resources
- ---------------------------------------------------
Cash at September 30, 1999 and December 31, 1998 was $48,791 and $2,475,
respectively. During 1999, the Company was funded by equity transactions
which raised nearly $1,000,000 in cash plus over $200,000 in expenses which
were paid by stockholders in exchange for stock. See "Management and Other
Affiliated Transactions" for the terms of these transactions.
The Company will need additional funding to meet its obligations for the
acquisition of the North Carolina real estate. The Company is paying $76,562
per month in non-refundable fees for the extension of the closing deadline to
March 2, 2000. At December 15, 1999, the Company has advanced a total of
$459,372 under the extension agreement. According to the terms of the
acquisition, $21,000,000 will be due at closing, $15,750,000 in cash, and the
balance in an interest bearing promissory note. We expect to meet this
obligation through a combination of a variety of methods, whether joint
venture, development loan, sale of major parcels, or sale of the entire
contract. Although management has begun to explore several of these
possibilities, no definite funding source has been identified.
According to the terms of the assignment by which the Company acquired its
rights to the property, if we fail to close on the property, we may be
obligated to pay liquidated damages of $2.1 million to Matheny Development.
If the failure to close is caused by PFC, we may be required to pursue and pay
for all legal action necessary to enforce the contract, or re-assign the
rights to Matheny Development and pay liquidated damages of $2.2 million to
Matheny Development.
The Company is aware of its ongoing cash requirements and has implemented a
cash flow plan, including a reduction in its general and administrative
<PAGE>
<PAGE> 16
expenses. Additionally, the Company is developing an overall strategy and
attempting to develop certain financing options to meet its ongoing needs
through December 2000. Due to the need for working capital, the Company will
continue to seek additional debt and/or equity financing from existing
shareholders and other investment capital resources, however, no assurance can
be given that the Company will be able to obtain other commitments.
The Company needs between $2 million and $5 million in additional funding to
complete the acquisition of Virotest and for ongoing website development,
marketing, promotion, and for general working capital purposes, including the
Company's plans to hire additional full-time management personnel. The
Company will also need $2.5 million for real estate operations and $1 million
for general overhead and battery operations, none of which can be financed
from current operations. The Company has been funded through equity and debt
in the short run and management hopes to eventually raise significant cash
from the sale of real estate. Thereafter, we may need additional capital.
Future equity investments may have a dilutive effect on the percentage of
ownership of the Company's present shareholders. There can be no assurances
that future capital will become available when needed, or at all. We are also
considering possible mergers in the battery area, and other mergers, including
Virotest, to grow the Company. These mergers may not come to fruition, or may
result in substantial dilution to investors if they do come to fruition.
There can be no assurance that the Company will be able to raise all needed
amounts of capital. In the event that the Company is not able to obtain the
needed funds in the future, we may not be able to continue operations or put
its business plan into full effect.
ITEM 3. DESCRIPTION OF PROPERTY
- --------------------------------
The Company's temporary principal executive offices are 355 Interstate
Boulevard, Sarasota, Florida, 34240. The Company pays approximately $1,000
per month for space it shares on an interim basis with Tampa Bay Financial,
Inc., a related shareholder. The facility is used for office and
administration. The Company anticipates leasing separate additional
facilities in the near future for which incorporates battery warehousing as
well as office and administration. The 600 acre Falls River Land project (see
Business of the Company) was acquired for investment purposes only, and the
Company has no plans to acquire additional real estate in the foreseeable
future. The Company has no formal investment policy but approved the
investment in Falls River in its annual meeting in August, 1999.
<PAGE>
<PAGE> 17
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
The following table sets forth the share holdings of those persons who own
more than five percent of GRG's common stock as of October 22, 1999, based
upon 91,151,831 outstanding shares:
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ -----------
Carl L. Smith 8,269,368(1) 9.0%
355 Interstate Blvd.
Sarasota, FL 34240
Christopher R. Beck 10,000,000(2) 11.0%
235 Sunrise Avenue
Suite C-24
Palm Beach, FL 33480
---------- ----
18,269,368 20.0%
========== ====
(1) Includes 5,269,368 shares owned by ASFT, Inc. (see "Security Ownership of
Directors and Officers" below), and 3,000,000 shares owned by Vikki C. Cook.
(2) Shares owned by United Funding Solutions, Inc. (see "Security Ownership of
Directors and Officers" below).
Security Ownership of Directors and Officers
- --------------------------------------------
The following table sets forth the share holdings of the Company's directors
and executive officers as of October 22, 1999. Information regarding the
capacities in which each person serves for the Company is contained in Pt. I,
Item 5.
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ -----------
O. Howard Davidsmeyer, Jr. 4,507,525 4.94%
5159 Riverwood Avenue
Sarasota, FL 34231
Carl L. Smith 8,269,368 9.0%
355 Interstate Blvd.
Sarasota, FL 34240
Christopher R. Beck 10,000,000 11.0%
235 Sunrise Avenue
Suite C-24
Palm Beach, FL 33480
J. Michael Matheny 350,000 0.4%
105 Fairway Valley Court
Cary, NC 27513
Matthew A. Veal 600,000 0.66%
1004 Marlin Lakes Circle
#211
Sarasota, FL 34232 ---------- -----
Totals 23,726,893 26.0%
========== ====
<PAGE>
<PAGE> 18
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The names of the Registrant's executive officers and directors and the
positions held by each of them are set forth below:
Name Age Position Held Position Since
- ---- --- -------- -------------------
O. Howard Davidsmeyer, Jr. 76 Chairman, C.E.O. 1/92
Carl L. Smith 56 Director 4/99
Christopher R. Beck 46 Director 5/99
President, Cordless
Power Corporation
Matthew A. Veal 41 Director 2/96
Secretary/Treasurer
J. Michael Matheny 48 Director 8/99
The term of office of each director is one year and until his or her
successor is elected at the Registrant's annual shareholders' meeting and is
qualified, subject to removal by the shareholders. The term of office for
each officer is for one year and until a successor is elected at the annual
meeting of the board of directors and is qualified, subject to removal by the
board of directors.
Biographical Information
- ------------------------
Set forth below is certain biographical information with respect to each
of the Registrant's officers and directors.
O. Howard Davidsmeyer, Chairman of the Board of Directors. Mr. Davidsmeyer is
76 years of age. Mr. Davidsmeyer has been the chairman of Diversified
Resources Group, Inc., formerly known as Data 1 Inc., from 1994 to 1996 and
again from 1997 to present. He also served as CEO from 1994 to 1995 and again
June 1999 to present. He has also served as chairman of Catalyst
Communications, Inc. from 1994 to present. Mr. Davidsmeyer's career extends
many years and includes a variety of business and civic accomplishments.
Carl L. Smith, Director. Mr. Smith is 56 years of age. Mr. Smith is an
entrepreneur in marketing, sales and business development. Mr. Smith has
served as the CEO of Catalyst Communications, Inc. from 1994 to present and
has served on the Board of Directors of Diversified Resources Group, Inc. from
1994 to 1996 and from April 1999 to present. Mr. Smith has also been chairman
of Tampa Bay Financial, Inc. from 1994 to present.
Christopher R. Beck, Director. Mr. Beck is 46 years of age. Mr. Beck is a
businessman and negotiator with experience in sales, marketing and corporate
management. He has served for the last five years as the president of Phone
USA, an independent telecommunications firm and also became president of
Cordless Power, Inc. a division of Diversified Resources Group, Inc. in 1999.
Matthew A. Veal, CFO. Mr. Veal is 41 years of age. Mr. Veal, a CPA, is
currently CFO for Catalyst and Tampa Bay Financial. From 1997 to 1998 he was
Chief Accounting Officer for Koasmas Group International. From 1995 to 1997
he was CFO for Catalyst and from 1994 to 1995 he was CFO for ComCentral Corp.
Mr. Veal served on the Boards of Directors of ComCentral and Data 1. Mr. Veal
is a graduate of the University of Florida School of Accounting.
<PAGE> 19
J. Michael Matheny, director. Mr. Matheny is 48 years of age. Mr. Matheny
president and owner of Matheny Development, LLC, is a licensed North Carolina
real estate broker, and is also licensed as a North Carolina general
contractor. For the last five years, Mr. Matheny has been a major developer
in the Wake County, North Carolina area. Mr. Matheny has developed Ivy Creek,
a townhouse development project in Cary, North Carolina, Preston Grande Towers
and Preston Grande Villas in North Carolina, and over 400 homes in this area.
Mr. Matheny is also currently serving as president of Sitescapes Design Group,
a company which submits plans and site designs to local agencies for approval.
Mr. Matheny joined the board of the Company in August 1999 and acts as the
Company's liaison in all real estate matters.
Family Relationships
- --------------------
There are no family relationships between any director or executive officer.
Involvement in Certain Legal Proceedings
- ----------------------------------------
During the past five years, except as noted below, no present or former
director, executive officer or person nominated to become a director or an
executive officer of the Company:
- was a general partner or executive officer of any business against which
any bankruptcy petition was filed, either at the time of the bankruptcy or two
years prior to that time, except Mr. Veal, Mr. Smith and Mr. Davidsmeyer
having served as officers and directors of Diversified Resources Group, Inc.
and Catalyst Communications, Inc., which filed for bankruptcy in 1997 and
1998, respectively;
- was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
- was subject to any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; or
- was found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
Executive Committee: In December 1999, the Board of Directors will establish
an executive committee (the "Executive Committee"), which is granted such
authority as may be determined from time to time by a majority of the Board of
Directors. The Executive Committee will consist of Messrs. Davidsmeyer and
Smith.
Audit Committee: Shortly after becoming a registrant, the Board of Directors
will establish an audit committee (the "Audit Committee"), which will consist
of two or more directors. The Audit Committee will be established to make
recommendations concerning the engagement of independent public accountants,
review with the independent public accountants the plans and results of the
audit engagement, approve professional services provided by the independent
public accountants, review the independence of the independent public
accountants, consider the range of audit and non-audit fees, and review the
adequacy of the Company's internal accounting controls.
Compensation Committee: Shortly after completion of the Company's
registration, the Board of Directors will establish a compensation committee
(the "Compensation Committee"), which will consist of two or more non-employee
or independent directors to the extent required by Rule 16b-3 under the
<PAGE>
<PAGE> 20
Exchange Act and Section 162(m) of the Code, to determine compensation for the
Company's senior executive officers.
Nominating Committee: Shortly after completion of the Company's registration,
the Board of Directors will establish a nominating committee (the "Nominating
Committee"), which will initially consist of Messrs. Smith and Beck. The
function of the Nominating Committee will be to recommend to the full board of
Directors nominees for election as directors of the Company and the
composition of committees of the Board of Directors.
The Board of Directors of the Company initially will not have any other
committees.
Director Compensation
- ---------------------
Except for those shares granted to directors for board services (see "Certain
Relationships and Related Transactions" and "Recent Sales of Unregistered
Securities"), the Company does not currently contemplate any compensation to
its directors for 1999.
ITEM 6. EXECUTIVE COMPENSATION
The following tables set forth certain summary information concerning the
compensation paid or accrued for each of the Registrant's last three completed
fiscal years to the Registrant's or its principal subsidiaries chief executive
officer and each of its other executive officers that received compensation in
excess of $100,000 during such period (as determined at December 31, 1998 the
end of the Registrant's last completed fiscal year). During the periods
covered by the table, Mr. Kamkar served as President of the Company. Mr.
Kamkar was also President of the two subsidiaries. Mr. Kamkar resigned all
positions effective April 1999. During the periods covered by the table, Mr.
Sovich served as Vice-President of the Company. Mr. Sovich resigned his
position effective June 30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Name and Other Restricted
Principal Annual Stock Options LTIP All other
Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ---------- ------- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael 9/30/99 38,795 0 0 0 0 0 48,462(1)
Kamkar, 12/31/98 110,427 0 0 0 0 0 0
Former 12/31/97 100,227 0 0 0 0 0 0
President
Richard 9/30/99 48,209 0 0 0 0 0 101,654(2)
L. Sovich, 12/31/98 92,282 0 0 0 0 0 0
Former Vice
President 12/31/97 82,218 0 0 0 0 0 0
O. Howard 9/30/99 0 0 0 0 0 0 0
Davidsmeyer 12/31/98 0 0 4,000(3) 0 0 0 0
Jr.Chairman 12/31/97 0 0 0 0 0 0 0
and CEO
<PAGE>
PAGE> 21
SUMMARY COMPENSATION TABLE (continued)
</TABLE>
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
Name and Other Restricted
Principal Annual Stock Options LTIP All other
Position Year Salary Bonus($) Compensation Awards /SARs Payout Compensation
- ---------- ------- ------ -------- ------------ ------ ------- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Carl L. 9/30/99 0 0 0 269,512(4) 0 0 0
Smith, 12/31/98 0 0 0 0 0 0 0
Director 12/31/97 0 0 0 0 0 0 0
Christopher 9/30/99 0 0 0 320,000(5) 0 0 0
R. Beck, 12/31/98 0 0 0 0 0 0 0
Director 12/31/97 0 0 0 0 0 0 0
</TABLE>
- --------------
(1)Received $48,462 in cash towards $100,000 settlement of employment
agreement. Also Company had forgiven loans of $55,250 as part of settlement.
(2)Received $34,615 in cash towards $100,000 settlement of employment
agreement. Also Company had forgiven loans of $56,250 as part of settlement.
Also received 2,031,478 shares for deferred salaries in 1997 and 1998.
(3)Received $4,000 in the form of 160,000 shares at $.025 per share for board
services for 1997, 1998 and 1999 (paid during 1999).
(4)Received 8,983,720 shares at $.03 per share for services on behalf of the
Company (see "Recent Issuance's of Unregistered Securities").
(5)Received 10,000,000 shares at $.032 per share in connection with Consulting
Fee Agreement with Cordless Power Corporation (see "Recent Issuance's of
Unregistered Securities").
Cash Compensation Awards
- ------------------------
No cash compensation, deferred compensation or long-term incentive plan awards
were issued or granted to The Company's management during the years ended
December 31, 1998 and 1997, or the period ended September 30, 1999, except as
set forth in the Summary Compensation Table. Further, no member of The
Company's management has been granted any option or stock appreciation rights;
accordingly, no tables relating to such items have been included within this
Item.
Stock Option or Benefit Plans
- -----------------------------
The Company does not have any stock option or benefit plans.
Compensation of Directors
- -------------------------
The Company's directors have been compensated $200 per month for services
provided as a director. No additional amounts are payable to The Company's
directors for committee participation or special assignments.
<PAGE>
<PAGE> 22
Employment Contracts, Termination, Change in Control Arrangements
- -----------------------------------------------------------------
Other than the Settlement of Employment Agreements with Michael Kamkar and
Richard L. Sovich, dated April 24, 1999, and July 12, 1999, respectively, and
the Stock Performance Agreements with United Funding Solutions, Inc., dated
July 17, 1999, there are no employment contracts, compensatory plans or
arrangements, including payments to be received from The Company, with respect
to any director or executive officer of The Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with The Company or its
subsidiaries, any change in control of The Company, or a change in the
person's responsibilities following a change in control of The Company. Copies
of the agreements are attached hereto and incorporated herein by reference.
See Part III, Item 1.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
- ---------------------------------------
The information set forth below is provided by the Company based on what the
Company believes may be material to the shareholders in light of all the
circumstances of the particular case. The significance of the transactions
disclosed may be evaluated by each shareholder after taking into account the
relationship of the parties to the transactions and the amounts involved in
the transactions.
The only transactions between members of management, nominees to
become directors or executive officers, 5% stockholders, or promoters or
persons who may be deemed to be parents of The Company are:
In 1999, the Company issued 4,883,880 shares of Common Stock for cash,
professional services and equipment. The value for the services was placed at
an average of $0.03 per share. Of these shares, a total of 2,006,720 shares
was issued for services and equipment, including 1,686,720 shares to Tampa Bay
Financial, Inc., and 160,000 shares each to O. Howard Davidsmeyer and Matthew
Veal, two of the Company's directors, for director fees. The aggregate
offering price for the securities issued for services was determined to be the
fair market value for the services provided. The services consisted of
administrative services, product line development services, and merger and
acquisition services.
In 1999, the Company issued 10,000,000 shares of Common Stock to United
Funding Solutions, Inc., a company controlled by Christopher Beck, a director
of the Company, for professional services in connection with establishing the
Company's battery division. The value for the services was placed at an
average of $0.032 per share. The aggregate offering price for the securities
issued for services was determined to be the fair market value for the
services provided.
In 1999, the Company issued 2,031,478 shares of Common Stock in
settlement of an employment agreement valued at $0.033 per share. These
shares were issued to Richard L. Sovich, who retired as an officer and
director of the Company in July 1999.
In 1999, the Company issued 33,192,120 shares of Common Stock for cash
(25,695,720 shares at $0.025 per share) and services (7,496,400 shares at an
average price of $0.03 per share). Of these shares, a total of 25,354,880
shares were issued to officers and directors and affiliates of the Company as
follows:
<PAGE>
<PAGE> 23
- 500,000 shares to Carl Smith III, a relative of director Carl L. Smith;
- 12,562,800 shares to ASFT, Inc., a company controlled by Vikki C. Cook;
- 1,000,000 shares to United Funding Solutions, Inc., an entity controlled by
a director of the Company, Christopher Beck;
- 3,000,000 shares to Vikki Cook;
- 5,452,080 shares to Tampa Bay Financial, Inc., a company owned 55% by Vikki
Cook, whose president is Vikki Cook, and whose vice-president is Matthew
Veal, a director of the Company;
- 2,100,000 shares to O. Howard Davidsmeyer, the Company's CEO;
- 340,000 shares to Matthew Veal, a director of the Company; and
- 400,000 shares to James M. Matheny, a director of the Company.
In 1998, the Company issued 4,707,504 shares of Common Stock in a private
placement for cash at an average price of $0.05 per share. Of these shares, a
total of 3,500,000 shares were issued to ASFT, Inc., a company controlled by
Vikki C. Cook.
In 1998, in connection with the Company's bankruptcy proceedings, the
Company issued 11,952,380 shares of Common Stock to certain creditors of the
Company for conversion of outstanding indebtedness at an average price of
$0.05 per share. A total of 11,000,000 shares were issued to ASFT, Inc.,
ASFT, Inc., a company controlled by Vikki C. Cook, which had purchased the
largest claim against the Company. The remainder were issued to unaffiliated
former creditors.
In 1998, the Company issued 5,292,496 shares of Common Stock in a private
placement for subscription receivables at an average price of $0.05 per share
to certain investors. Of these shares, a total of 3,500,000 shares were
issued to ASFT, Inc., a company controlled by Vikki C. Cook.
<PAGE>
<PAGE> 24
ITEM 8. DESCRIPTION OF SECURITIES
General
- -------
The Registrant is authorized to issue 100,000,000 shares of common stock,
par value $0.001 per share (the "Common Stock")and 1,000,000 shares of
preferred stock, par value $0.001 per share (the "Preferred Stock"). The
Company has 91,151,831 shares of Common Stock and no shares of Preferred Stock
issued and outstanding at September 30, 1999. Although the Company's Board of
Directors has no present intention to do so, the Board of directors has
authority, without action by or vote of the Company's Shareholders, to issue
all or part of the authorized but unissued shares. In addition, the Company's
Board of Directors has authority, without action by or vote of the Company's
Shareholders, to fix and determine the rights, preferences, and privileges of
the Preferred Stock, which may be given voting rights superior to that of the
Common Stock, which power may be used to hinder or deter a takeover proposal,
should any occur. Any issuance of additional shares of Common Stock or
Preferred Stock will dilute the percentage ownership interest of Shareholders
and may further dilute the book value of the Company's shares.
Common Stock
- ------------
The holders of Common Stock are entitled to one vote per share on each
matter submitted to a vote at any meeting of shareholders. Shares of Common
Stock do not carry cumulative voting rights and, therefore, a majority of the
shares of outstanding Common Stock will be able to elect the entire board of
directors and, if they do so, minority shareholders would not be able to elect
any persons to the board of directors. The Registrant's bylaws provide that a
majority of the issued and outstanding shares of the Registrant constitutes a
quorum for shareholders' meetings, except with respect to certain matters for
which a greater percentage quorum is required by statute or the bylaws.
Shareholders of the Registrant have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock is
not subject to redemption and carries no subscription or conversion rights.
In the event of liquidation of the Registrant, the shares of Common Stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities.
Holders of Common Stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds legally
available for the payment of dividends. The Registrant seeks growth and
expansion of its business through the reinvestment of profits, if any, and
does not anticipate that it will pay dividends in the foreseeable future.
Preferred Stock
- ---------------
The authority to issue the Preferred Stock is vested in the board of
directors of the Company, which has authority to fix and determine the powers,
qualifications, limitations, restrictions, designations, rights, preferences,
or other variations of each class or series within each class which the
Company is authorized to issue. The above described authority of the Board of
Directors may be exercised by corporate resolution from time to time as the
Board of directors sees fit.
<PAGE>
<PAGE> 25
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
Until November 1, 1999, the Company's common stock was quoted under the symbol
"DRGI" (formerly "DMEM") on the OTC Bulletin Board of the National Association
of Securities Dealers, Inc. (the "NASD"). There is no assurance that any
current market for the Company's common stock will develop or be maintained.
For any market that develops for the Company's common stock, the sale of
"restricted securities" (common stock) pursuant to Rule 144 of the Securities
and Exchange Commission by members of management and others may have a
substantial adverse impact on any such public market. Information about the
dates when current holders' Rule 144 holding period of "restricted securities"
commenced can be found under the caption "Recent Sales of Unregistered
Securities," Part II, Item 4. A minimum holding period of one year is required
for resale's under Rule 144, along with other pertinent provisions, including
publicly available information concerning the Company (this requirement will
be satisfied by the filing and effectiveness of this Registration Statement,
the passage of 90 days and the continued timely filing by the Company of all
reports required to be filed by it with the Securities and Exchange
Commission; limitations on the volume of "restricted securities" which can be
sold in any 90 day period; the requirement of unsolicited broker's
transactions; and the filing of a Notice of Sale of Form 144.
Effective January 4, 1999, the NASD adopted rules and regulations requiring
that prior to any issuer having its securities quoted on the OTC Bulletin
Board of the NASD that such issuer must be a "reporting issuer" which is
required to file reports under Section 13 or 15(d) of the 1934 Act. Under the
"phase-in" schedule of the NASD, the Company had until November 1, 1999,
within which to become a "reporting issuer," and to satisfy all comments of
the Securities and Exchange Commission respecting this Registration Statement.
This Registration Statement will not become effective for 60 days from the
date of its filing, and the Company has not timely satisfied those quotation
requirements of the NASD. Therefore, OTC Bulletin Board quotations of the
Company's common stock ceased on November 1, 1999, and the Company's common
stock has thereafter be quoted in the "Pink Sheets" of the NQB. Once the Form
10 SB has cleared comments, the Company will seek to have its common stock
reinstated for quotations on the OTCBB.
The following quotations were provided by the National Quotation Bureau, and
do not represent actual transactions; these quotations do not reflect dealer
markups, markdowns or commissions.
STOCK QUOTATIONS
Quarter ended: High Low
- ------------------- ------- -------
March 31, 1997 $0.07 $0.05
June 30, 1997 $0.05 $0.04
September 30, 1997 $0.05 $0.03
December 31, 1997 $0.04 $0.01
March 31, 1998 $0.02 $0.01
June 30, 1998 $0.14 $0.01
September 30, 1998 $0.08 $0.03
December 31, 1998 $0.05 $0.02
March 31, 1999 $0.04 $0.02
June 30, 1999 $0.05 $0.03
September 30, 1999 $0.29 $0.03
<PAGE>
<PAGE> 26
Holders
- -------
The number of record holders of the Company's securities as of the date of
this Registration Statement is approximately 210.
Dividends
- ---------
The Company has not declared any cash dividends with respect to its common
stock, and does not intend to declare dividends in the foreseeable future.
The future dividend policy of the Company cannot be ascertained with any
certainty, and if and until the Company completes any sales of its products,
no such policy will be formulated. There are no material restrictions
limiting, or that are likely to limit, the Company's ability to pay dividends
on its securities.
Transfer Agent
- --------------
The Company's transfer agent is Standard Registrar and Transfer Company,
located at 12528 South 1840 East, Draper, Utah 84020.
ITEM 2. LEGAL PROCEEDINGS
The Company voluntarily filed for Chapter 11 Bankruptcy in the United States
Bankruptcy Court, Middle District of Florida, on September 24, 1997, Case No.
97-15827-8P. The registrant's Plan of Reorganization was approved by the
Bankruptcy Court on June 19, 1998, and it was consummated by the Bankruptcy
Court on July 13, 1999 under the Court's final decree.
The United States Securities and Exchange Commission ("SEC") has entered a
formal order of investigation styled as "In the matter of Diversified
Resources Group, Inc. (NY/6573)." On or about September 30, 1999, the Company
received a subpoena duces teum requesting that the Company provide the
Northeast regional Office of the SEC with various documents regarding past,
present and intended business operations, financial statements and underlying
financial records, prior news releases, and other documentation. The Company
has provided the documentation requested and has and intends to continue to
fully cooperate with this formal order of investigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
In 1999, the Company issued 4,883,880 shares of Common Stock for cash,
professional services and equipment. The value for the services was placed at
an average of $0.03 per share. A total of 2,877,160 shares was issued for
cash to unaffiliated investors. A total of 2,006,720 shares was issued for
services and equipment, including 1,686,720 shares to Tampa Bay Financial,
Inc., and 320,000 shares to two of the Company's directors for director fees.
The aggregate offering price for the securities issued for services was
determined to be the fair market value for the services provided. The services
consisted of administrative services, product line development services, and
merger and acquisition services.
In 1999, the Company issued 10,000,000 shares of Common Stock to United
Funding Solutions, Inc., a company controlled by a director of the Company,
for professional services in connection with establishing the Company's
battery division. The value for the services was placed at an average of
$0.032 per share. The aggregate offering price for the securities issued for
services was determined to be the fair market value for the services provided.
<PAGE>
<PAGE> 27
In 1999, the Company issued 2,031,478 shares of Common Stock in
settlement of an employment agreement valued at $0.033 per share. These
shares were issued to Richard L. Sovich, who retired as an officer and
director of the Company in July 1999.
In 1999, the Company issued 33,192,120 shares of Common Stock for cash
(25,695,720 shares at $0.025 per share) and services (7,496,400 shares at an
average price of $0.03 per share). A total of 25,354,880 shares were issued
to officers and directors and affiliates of the Company. The remaining
7,837,240 shares were issued to unaffiliated investors.
In 1998, the Company issued 4,707,504 shares of Common Stock in a private
placement for cash at an average price of $0.05 per share. A total of
3,500,000 shares were issued to ASFT, Inc., a company controlled by Vikki C.
Cook. The remaining 1,207,504 shares were issued to unaffiliated investors.
In 1998, in connection with the Company's bankruptcy proceedings, the
Company issued 11,952,380 shares of Common Stock to certain creditors of the
Company for conversion of outstanding indebtedness at an average price of
$0.05 per share. A total of 11,000,000 shares were issued to ASFT, Inc., a
company controlled by Vikki C. Cook, which had purchased the largest claim
against the Company. The remainder were issued to unaffiliated former
creditors.
In 1998, the Company issued 5,292,496 shares of Common Stock in a private
placement for subscription receivables at an average price of $0.05 per share
to certain investors. A total of 3,500,000 shares were issued to ASFT, Inc.,
a company controlled by Vikki C. Cook. The remaining 1,792,496 shares were
issued to unaffiliated investors.
Each of these persons had access to all material information regarding The
Company prior to the offer or sale of these securities. The Company believes
that all unaffiliated investors were either accredited or sophisticated; ASFT,
Inc. and Tampa Bay Financial, Inc. are beneficially owned by Vikki C. Cook who
is believed to be an "accredited investor"; and the other shares were issued
to directors or executive officers who had access to all material information
respecting The Company. The offers and sales of all of these securities are
believed to have been exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended, pursuant to Section 4(2) thereof,
and from similar applicable states' securities laws, rules and regulations
exempting the offer and sale of these securities by available state exemptions
from required registration.
<PAGE>
<PAGE> 28
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 16-10a-901 through 909 of the Utah Revised Business Corporation
Act provides in relevant parts as follows:
(1) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of
the corporation) by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, conviction, or on
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only
to the extent that the court in which such action or suit was brought shall
determine on application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in 1) or (2) of this subsection, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
(4) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
a person.
<PAGE> 29
The foregoing discussion of indemnification merely summarizes certain
aspects of indemnification provisions and is limited by reference to the above
discussed sections of the Utah Revised Business Corporation Act.
The Registrant's certificate of incorporation and bylaws provide that the
Registrant "may indemnify" to the full extent of its power to do so, all
directors, officers, employees, and/or agents. It is anticipated that the
Registrant will indemnify its officers and directors to the full extent
permitted by the above-quoted statute.
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act may be permitted to officers and directors of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant
is aware that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
Limitations on Liability
- ------------------------
Subsequent to the Company's incorporation, the state of Utah enacted a
statute limiting the liability of officers and directors of the Company and
its shareholders in certain circumstances. Management has determined that it
would be advantageous for the Company to amend its Articles of Incorporation
to include the protections provided to officers and directors of the Company
pursuant to Section 16-10a-841 of the Utah Revised Business Corporation Act.
The amendment to the Articles of Incorporation would eliminate the
personal liability of a director to the Company or its shareholders for
monetary damages for any action taken or any failure to take any action, as a
director, except liability for (a) the amount of a financial benefit received
by a director to which he is not entitled; (b) an intentional infliction of
harm to the corporation or the shareholders; (c) an unlawful distribution; or
(d) an intentional violation of a criminal law.
It should be noted that the provisions eliminating liability of directors
limit the remedies available to a shareholder dissatisfied with a Board
decision which is protected by the provision. An aggrieved shareholder's only
remedy in such a circumstance is to sue to stop the completion of the Board's
action. In many situations, this remedy may not be effective. Shareholders,
for example, may not be aware of a transaction or an event until it is too
late to prevent it. In these cases, the shareholders and the Company could be
injured by a careless Board decision and yet have no effective remedy.
Management believes that limiting director's liability is in the best
interest of the shareholders and the Company, as it should enhance the
Company's ability to attract and retain qualified individuals to serve as
directors of the Company by assuring directors ( and potential directors) that
their good faith decisions will not be second-guessed by a court evaluating
decisions with the benefit of hindsight. This is particularly applicable,
management believes, in the recruitment of outside directors who are not
employees of the Company and who may, therefore, bring additional objectivity
and experience to the Board of Directors. Management believes that the
diligence exercised by directors stems primarily from their desire to act in
the best interest of the Company and not from a fear of monetary damage
awards. Consequently, management believes that the level of scrutiny and care
exercised by directors will not be lessened by this provision of the Articles
of Incorporation.
<PAGE> 30
Indemnification of Officers, Directors and Others
- -------------------------------------------------
This Article has been added to provide that the Company shall indemnify
directors to the fullest extent permitted by the RBCA and that the Company may
indemnify officers, employees, or agents as authorized by the bylaws and the
Board of Directors. The Board of Directors believes that indemnification for
directors is important to enable the Company to attract and retain competent
directors. The Board of Directors believes that permissive indemnification
for others, as determined by the Board of Directors, is important because it
permits indemnification in appropriate circumstances.
The indemnification provisions in the Amended Articles may require the
Company to indemnify individuals against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement, that may arise by reason of
their status or service as directors, officers, or agents (other than
liabilities arising from willful misconduct of a culpable nature) and to
advance expense incurred as a result of any proceeding against them as to
which they could be indemnified. As a result of such indemnification
limitations, any large damage awards that are not compensated by insurance
will come directly from the Company's treasury.
Subsequent to shareholder approval of the above Amended Articles in April
1999, the board of directors adopted revisions to the Company's Bylaws to
include Article V, Indemnification of Directors, Officers, Agents and
Employees. This Article parallels the provisions adopted in the Amended
Articles of Incorporation.
<PAGE>
<PAGE> 31
PART F/S
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
YEAR END
- --------
The Company's consolidated balance sheets of Diversified Resources Group, Inc.
and Subsidiaries as of December 31, 1998 and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for
the years ended December 31, 1998 and 1997, have been examined to the extent
indicated in their reports by Jones, Jensen & Company, independent certified
accountants, and have been prepared in accordance with generally accepted
accounting principles and pursuant to Regulation S-B as promulgated by the
Securities and Exchange Commission and are included herein.
INTERIM UNAUDITED
- -----------------
The accompanying financial statements for the nine month period ending
September 30, 1999, have been prepared by the Company, without audit, in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore may not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments (which include only normal recurring
accruals) necessary to present fairly the financial position and results of
operations for the periods presented have been made. These financial
statements should be read in conjunction with the accompanying notes, and with
the historical financial information of the Company.
<PAGE>
<PAGE> 32
INDEPENDENT AUDITORS' REPORT
Board of Directors
Diversified Resources Group, Inc. and Subsidiaries
(Formerly Data 1, Inc.)
(A Development Stage Company)
Sarasota, Florida
We have audited the accompanying consolidated balance sheet of Diversified
Resources Group, Inc. and Subsidiaries (formerly Data 1, Inc.) (a development
stage company) as of December 31, 1998 and the related consolidated statements
of operations, stockholders' equity (deficit) and cash flows for the years
ended December 31, 1998 and 1997. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Diversified Resources Group, Inc. and Subsidiaries (formerly Data 1, Inc.)
(a development stage company) as of December 31, 1998, and the consolidated
results of their operations and their cash flows for the years ended December
31, 1998 and 1997 in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 4 to
the consolidated financial statements, the Company's recurring losses from
operations and net accumulated deficit raise substantial doubt about its
ability to continue as a going concern. Management's plans concerning these
matters are also described in Note 4. The consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
June 17, 1999
<PAGE>
<PAGE> 33
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
------
December 31,
1998
------------
CURRENT ASSETS
Cash $ 2,475
Inventory 200
-----
Total Current Assets 2,675
-----
FIXED ASSETS (Note 1)
Computers 41,238
Test equipment 1,569
Office equipment 15,379
Software 32,475
Accumulated depreciation (65,972)
------
Net Fixed Assets 24,689
------
OTHER ASSETS
Due from related parties 6,984
Prepaid expenses, net 3,183
Deposits 5,045
------
Total Other Assets 15,212
------
TOTAL ASSETS $ 42,576
======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 34
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31,
1998
------------
CURRENT LIABILITIES
Cash overdraft $ 17,481
Accounts payable - trade 83,868
Accrued expenses (Note 3) 189,389
Current portion of long-term debt (Note 8) 26,148
-------
Total Current Liabilities 316,886
-------
LONG-TERM DEBT (Note 8) 168,248
COMMITMENTS AND CONTINGENCIES (Note 2)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, .001 par value,
1,000,000 shares authorized,
-0- shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized;
issued and outstanding 41,044,353 shares 41,044
Additional paid-in capital 4,305,137
Stock subscription receivable (276,125)
Accumulated deficit (4,512,614)
---------
Total Stockholders' Equity (Deficit) (442,558)
-------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 42,576
======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 35
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
From
Inception of the
Development
Stage on
December 31,
For the Years Ended 1998 Through
December 31, December 31,
1998 1997 1998
------------ ------------ ----------------
REVENUES
Sales, net $ 17,273 $ 1,662,290 $ -
Cost of sales 11,554 1,618,609 -
------ --------- -------
Gross Margin 5,719 43,681 -
----- ------ -------
EXPENSES
General and administrative 685,411 935,005 -
Depreciation and amortization 28,945 534,643 -
------- ------- -------
Total Expenses 714,356 1,469,648 -
------- --------- -------
LOSS FROM OPERATIONS (708,637) (1,425,967) -
------- --------- -------
OTHER INCOME (EXPENSE)
Interest expense - (50,514) -
Interest income 1,984 1,076 -
Other income 17,426 31,117 -
------ ------ -------
Total Other Income
(Expense) 19,410 (18,321) -
------ ------ -------
LOSS BEFORE REORGANIZATION
ITEMS (689,227) (1,444,288) -
------- --------- -------
REORGANIZATION ITEMS
Gain on restructuring
of debt (Note 10) 5,956,183 - -
--------- --------- -------
Total Income from
Reorganization Items 5,956,183 - -
--------- --------- -------
INCOME (LOSS) BEFORE
INCOME TAXES 5,266,956 (1,444,288) -
INCOME TAX EXPENSE - - -
--------- --------- -------
NET INCOME (LOSS) $ 5,266,956 $(1,444,288) $ -
========= ========= =======
BASIC INCOME (LOSS)
PER SHARE
Net loss before
reorganization items $ (0.02) $ (0.08)
Reorganization items 0.19 (0.00)
---- ----
BASIC INCOME (LOSS)
PER SHARE $ 0.17 $ (0.08)
---- ----
WEIGHTED AVERAGE SHARES
OUTSTANDING 30,798,039 19,091,973
========== ==========
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 36
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional Stock
Common Stock Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
---------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 19,091,973 $ 19,092 $ 3,332,971 $ (115,000) $ (8,335,282)
Net loss for the year
ended December 31, 1997 - - - - (1,444,288)
---------- -------- ----------- ------------ ---------
Balance, December 31, 1997 19,091,973 19,092 3,332,971 (115,000) (9,779,570)
Adjustment for reduction of
exercise price of options - - (103,500) 103,500 -
Common stock issued for cash
at $0.05 per share 4,707,504 4,708 230,667 - -
Common stock issued for
settlement of debt at
$0.05 per share 11,952,380 11,952 585,666 - -
Common stock issued for
subscriptions receivable
at $0.05 per share 5,292,496 5,292 259,333 (264,625) -
Net income for the year
ended December 31, 1998 - - - - 5,266,956
---------- ------ --------- ------- ---------
Balance, December 31, 1998 41,044,353 $ 41,044 $ 4,305,137 $ (276,125) $ (4,512,614)
========== ====== ========= ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 37
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
From
Inception of the
Development
Stage on
December 31,
For the Years Ended 1998 Through
December 31, December 31,
1998 1997 1998
---------- ---------- ----------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) $ 5,266,956 $(1,444,288) $ -
Adjustments to reconcile
net income (loss) to
net cash used in operating
activities:
Depreciation and
amortization 28,945 534,643 -
Loss on disposition
of fixed assets 2,977 - -
Gain on restructuring
of debt (5,956,183) - -
Loss from market valuation - 7,009 -
Allowance for doubtful
accounts - (123,000) -
Changes in assets and
liabilities:
(Increase) decrease in
inventory 4,129 704,738 -
(Increase) decrease in
accounts receivable 2,339 123,702 -
(Increase) decrease in
prepaid expenses (3,183) (13,362) -
(Increase) decrease in
other receivables - 75,226 -
(Increase) decrease in
other assets 31,126 (13,362) -
Increase (decrease) in
cash overdraft 17,481 - -
Increase (decrease) in
accounts payable 63,817 95,624 -
Increase (decrease) in
accrued expenses 79,718 24,801 -
------ ------ ---------
Net Cash (Used) by
Operating Activities (461,878) (28,269) -
------- ------ ---------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Sale of fixed assets - 1,700 -
Sale of investments - 11,585 -
Purchase of fixed assets - (3,981) -
------- ------ ---------
Net Cash Provided by
Investing Activities - 9,304 -
------- ------ ---------
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 38
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (CONTINUED)
From
Inception of the
Development
Stage on
December 31,
For the Years Ended 1998 Through
December 31, December 31,
1998 1997 1998
---------- ---------- ----------------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Collections from related
parties 213,837 76,924 -
Loans to related parties - (70,000) -
Issuance of common stock 235,375 - -
------- ------ ---------
Net Cash Provided by
Financing Activities $ 449,212 $ 6,924 $ -
------- ------ ---------
Net Increase (Decrease)
in Cash $ (12,666) $ (12,041) $ -
CASH AT BEGINNING OF YEAR 15,141 27,182 -
------ ------ ---------
CASH AT END OF YEAR $ 2,475 $ 15,141 $ -
====== ====== =========
CASH PAID FOR:
Interest expense $ - $ 50,514 $ -
Income taxes $ - $ - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued in
settlement of debt $ 597,618 $ - $ -
Common stock issued for
subscriptions receivable $ 264,625 $ - $ -
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 39
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES
The Company was incorporated under the laws of the State of Utah on July 31,
1984. The Company has a wholly-owned Delaware subsidiary, named Data 1,
Inc., and a wholly- owned subsidiary named Memory 1, Inc. (Mem 1). The
Company changed its name to Diversified Resources Group, Inc. in May 1999.
The Company has not paid dividends. Dividends that may be paid in the future
will depend on the financial requirements of the Company and other relevant
factors.
Memory 1, Inc. (Mem 1) was organized February 6, 1996 under the laws of the
State of Florida to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Florida.
Mem 1 is currently inactive.
A summary of the significant policies consistently applied in the
preparation of the consolidated financial statements follows:
a. Accounting Method
The Company's consolidated financial statements are prepared using the
accrual method of accounting. The Company has adopted a calendar year end.
b. Basic Income (Loss) Per Share
For the Year Ended
December 31,
1998 1997
------------ ------------
Numerator:
Loss before reorganization items $ (689,227) $ (1,444,288)
Gain on restructure of debt $ 5,956,183 $ -
Denominator (weighted average number
of shares outstanding) 20,798,039 19,091,973
Income (loss) per share
Net loss before reorganization $ (0.02) $ (0.08)
Gain on restructure of debt $ 0.19 $ -
----------- ------------
$ 0.17 $ (0.08)
=========== ============
The computation of basic income (loss) per share of common stock is based on
the weighted average number of shares outstanding at the date of the
consolidated financial statements.
c. Income Taxes
At December 31, 1998, the Company had a net operating loss carryforward of
approximately $4,500,000 that may be offset against future taxable income
<PAGE>
<PAGE> 40
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES (Continued)
through 2013. No tax benefit has been reported in the financial statements,
because the Company believes there is a 50% or greater chance the carryforward
will expire unused. Accordingly, the potential tax benefits of the loss
carryforward are offset by a valuation allowance of the same amount.
d. Cash Equivalents
The Company considers all highly liquid investments and deposits with a
maturity of three months or less when purchased to be cash equivalents.
e. Revenue Recognition
Revenue is recognized upon shipment of goods to the customer. Sales
primarily require immediate payment or C.O.D.
f. Restated Consolidated Financial Statements
Prior period consolidated financial statements have been restated to conform
with current consolidated financial statement presentation.
<PAGE>
<PAGE> 41
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES (Continued)
g. Depreciation
Property and equipment are stated at cost. Depreciation of property and
equipment is computed using straight-line and accelerated methods over the
estimated useful lives of the related assets, primarily from three to seven
years.
h. Principles of Consolidation
The December 31, 1998 consolidated financial statements, include those of
Data 1, Inc. and Memory 1, Inc. All significant intercompany accounts and
transactions have been eliminated.
i. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
j. Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
k. Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and Statement of
Financial Accounting Standards No. 129 "Disclosures of Information About an
Entity's Capital Structure." SFAS No. 128 provides a different method of
calculating earnings per share than was previously used in accordance with APB
Opinion No. 15, "Earnings Per Share." SFAS No. 128 provides for the
calculation of "Basic" and "Dilutive" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing income available to
common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, similar
to fully diluted earnings per share. SFAS No. 129 establishes standards for
disclosing information about an entity's capital structure. SFAS No. 128 and
SFAS No. 129 are effective for financial statements issued for periods ending
after December 15, 1997. In fiscal 1998, the Company adopted SFAS No. 128,
which did not have a material impact on the Company's financial statements.
The implementation of SFAS No. 129 did not have a material effect on the
Company's financial statements.
The Financial Accounting Standards Board has also issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 130 establishes standards
<PAGE>
<PAGE> 42
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 1 - ACCOUNTING POLICIES AND PROCEDURES(Continued)
for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners. Among other disclosures, SFAS No. 130 requires that all items that
are required to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that displays
with the same prominence as other financial statements. SFAS No. 131
supersedes SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that public
companies report financial information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It
also establishes standards for disclosure regarding products and services,
geographic areas and major customers. SFAS No. 131 defines operating segments
as components of a company about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
SFAS No. 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Results of operations and financial position
were unaffected by implementation of these standards.
In February 1998, the Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standard ("SFAS") No 132. "Employers'
Disclosures about Pensions and other Postretirement Benefits" which
standardizes the disclosure requirements for pensions and other postretirement
benefits and requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis. SFAS No. 132 is effective for years beginning after December 15,
1997 and requires comparative information for earlier years to be restated,
unless such information is not readily available. The adoption of this
statement had no material impact on the Company's financial statements.
In February 1998, the Financial Accounting Standards Board ("FASB") has issued
Statement of Financial Accounting Standard ("SFAS") No 132. "Employers'
Disclosures about Pensions and other Postretirement Benefits" which
standardizes the disclosure requirements for pensions and other postretirement
benefits and requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis. SFAS No. 132 is effective for years beginning after December 15,
1997 and requires comparative information for earlier years to be restated,
unless such information is not readily available. The adoption of this
statement had no material impact on the Company's financial statements.
<PAGE>
<PAGE> 43
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 2 - COMMITMENTS AND CONTINGENCIES
a. Escrow Agreements
The Company is a party to a February 8, 1994, escrow agreement entered into
as a source of working capital. Under the terms of the escrow agreement
certain funds were held by the Company's attorney in an escrow account and
disbursed to repay principal and to pay interest to the funding source. This
agreement was terminated under the terms of the bankruptcy proceedings
discussed in Note 10.
b. Leases
Effective June 30, 1999, the Company terminated its lease for facilities in
Sarasota, Florida it has been leasing on a month-to-month basis. Lease
payments were $1,551 per month. The Company has since relocated to a facility
leased by an affiliate company.
c. Employment Contracts
Effective August 11, 1996, the Company has entered into 5 year employment
agreements with the President and Chief Financial Officer. These contracts
were terminated in 1999. See Note 11.
<PAGE>
<PAGE> 44
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 3 - ACCRUED EXPENSES
The Company's accrued expenses is comprised of the following items:
December 31,
1998
------------
Accrued payroll and payroll taxes $ 88,525
Settlement agreement 100,000
Other 864
-------
Total $ 189,389
=======
NOTE 4 - GOING CONCERN
The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has incurred losses from its inception
through December 1998. Management intends to restructure its product lines to
generate desired levels of revenues and profit as it emerges from the
bankruptcy proceedings discussed in Note 10. Thereafter, the Company intends
to seek a merger with an existing, operating company.
NOTE 5 - CUSTOMERS AND EXPORT SALES
During 1998 and 1997, the Company operated primarily in one industry segment
which includes the manufacturing and marketing of computer memory devices.
The Company's financial instruments subject to credit risk are primarily
trade accounts receivable from its customers.
For the Years Ended
December 31,
1998 1997
--------- -----------
Domestic sales $ 17,273 $ 1,662,290
------ ---------
$ 17,273 $ 1,662,290
====== =========
In 1998 and 1997, the Company had 0 and 2 customer(s), respectively, which
each exceeded 10% of its net sales.
NOTE 6 - STOCK OPTIONS
Except for stock options for 1,000,000 shares of common stock granted to and
exercised by the President and Chief Financial Officer, respectively, under
the terms of the bankruptcy proceedings discussed in Note 9, there are no
other stock options available.
<PAGE>
<PAGE> 45
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 7 - RELATED PARTY TRANSACTIONS
A related shareholder of the Company had borrowed $250,567, plus accrued
interest of $25,120 during 1995, of which $34,384 remained outstanding at
December 31, 1997. Additional amounts of $200,000 and $70,000 were borrowed
by this party in December 1996, and May 1997 respectively. Payments of $94,773
were made against the amounts borrowed bringing the total amount outstanding
to $209,611 at December 31, 1997. This amount was repaid in 1998.
NOTE 8 - LONG-TERM DEBT
Long term debt at December 31, 1998 consisted of the following:
Various notes payable given in settlement of accounts payable,
non-interest bearing, quarterly payments of $7,405, unsecured. $ 105,089
Note payable to a related party, non-interest bearing, quarterly
payments of $5,500, unsecured. 89,307
-------
194,396
Less current maturities (26,148)
-------
Long-term debt $ 168,248
=======
Aggregate maturities required on long-term debt at December 31, 1998 are as
follows:
Year Amount
------------------- ----------
1999 $ 26,148
2000 39,319
2001 42,560
2002 46,068
2003 34,908
2004 and thereafter 5,393
--------
Total $ 194,396
========
This amount represents notes issued under the bankruptcy proceedings
discussed in Note 10 as payment for certain amounts due as provided for in the
Company's Plan or Reorganization. The notes are non-interest bearing, so
interest has been imputed at 8% per annum. The balances are shown net of a
discount of $41,483.
<PAGE>
<PAGE> 46
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 9 - STOCK SUBSCRIPTION RECEIVABLE
Stock subscriptions receivable include amounts of $56,250 and $55,250 which
represent notes given to the Company as consideration for stock options
exercised by the President and Chief Executive Officer, and the Vice President
- - Finance and Chief Financial Officer, respectively. The balance of $164,625
represents an amount subscribed to by a related party to provide working
capital to the Company while the Company was emerging from the bankruptcy
proceedings discussed in Note 10. The notes due from the two officers were
liquidated in the settlement of employment contracts discussed in Note 11, and
the amount subscribed to by the related party was received in 1999.
NOTE 10 - REORGANIZATION ITEMS
On September 24, 1997, Data 1, Inc. (the "Debtor") filed a petition for
relief under Chapter 11 of the federal bankruptcy laws in the United States
Bankruptcy Court for the Middle District of Florida, Tampa Division, Case No.:
97-15827-8P1. Under Chapter 11, certain claims against the Debtor in
existence prior to the filing of the petitions for relief under the federal
bankruptcy laws are stayed while the Debtor continues business operations as
debtor-in-possession. These claims are reported in the December 31, 1997
balance sheet as "liabilities subject to compromise." Claims secured against
the Debtor's assets ("secured claims") also are stayed, although the holders
of such claims have the right to move the Court for relief from the stay.
There are no secured claims.
The Debtor received approval from the bankruptcy Court to pay or otherwise
honor certain of its prepetition obligations. These obligations have all been
liquidated through the bankruptcy proceedings, and the Plan of Reorganization
of the debtor is scheduled to be consummated in July 1999.
NOTE 11 - SUBSEQUENT EVENTS
Name Change and Increase in Authorized Shares
On May 17, 1999, the shareholders of the Company approved and amended the
Articles of Incorporation to increase the Company's authorized common shares
to 100,000,000 shares and change the name of the Company to Diversified
Resources Group, Inc. from Data 1, Inc.
Purchase of Employment Contracts
On May 31, 1999, the Company and the President and Chief Executive Officer
of the Company entered into a settlement of employment agreement, wherein, for
certain considerations, including his resignation . He would receive $100,000
plus continued health benefits payable over a 54 week period. On July 12,
1999, the Company and the Vice President - Finance and Chief Financial Officer
entered into an identical agreement.
Development Stage Company
The Company essentially has reverted to the status of a startup company as
it emerges from the bankruptcy proceedings discussed in Note 10. As of
December 31, 1998, the Company entered into the development state, and will be
considered to be a development stage company until it commences operations as
planned.
<PAGE>
<PAGE> 47
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
------
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
CURRENT ASSETS
Cash $ 48,791 $ 2,475
Inventory 7,081 200
------ -----
Total Current Assets 55,872 2,675
------ -----
FIXED ASSETS (Note 1)
Computers 41,238 41,238
Test equipment 1,569 1,569
Office equipment 20,879 15,379
Software 32,475 32,475
Accumulated depreciation (87,682) (65,972)
------ ------
Net Fixed Assets 8,479 24,689
------ ------
OTHER ASSETS
Deposits on land 229,686 -
Due from related parties - 6,984
Prepaid expenses, net 899 3,183
Deposits - 5,045
------- -----
Total Other Assets 230,585 15,212
------- ------
TOTAL ASSETS $ 294,936 $ 42,576
======= ======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 48
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
September 30, December 31,
1999 1998
------------- -------------
(Unaudited)
CURRENT LIABILITIES
Cash overdraft $ - $ 17,481
Accounts payable - trade 45,730 83,868
Accrued expenses 132,125 189,389
Current portion of long-term debt - 26,148
------- -------
Total Current Liabilities 177,855 316,886
------- -------
LONG-TERM DEBT 72,951 168,248
------- -------
Total Liabilities 250,806 485,134
------- -------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, .001 par value,
1,000,000 shares authorized,
-0- shares issued and outstanding - -
Common stock, $.001 par value,
100,000,000 shares authorized;
91,151,831 and 41,044,353 shares
issued and outstanding,
respectively 91,151 41,044
Additional paid-in capital 5,504,109 4,305,137
Stock subscription receivable - (276,125)
Accumulated deficit (5,551,130) (4,512,614)
--------- ---------
Total Stockholders' Equity (Deficit) 44,130 (442,558)
------ -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 294,936 $ 42,576
======= ======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 49
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
For the For the December 31,
Nine Months Ended Three Months Ended 1998 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
----------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES
Sales, net $ 20,378 $ 16,945 $ 783 $ 2,950 $ 20,378
Cost of sales 20,613 20,470 257 967 20,613
------ ------ ---- ----- ------
Gross Margin (Deficit) (235) (3,525) 526 1,983 (235)
------ ------ ---- ----- ------
EXPENSES
General and administrative 957,463 441,802 762,415 212,671 957,463
Depreciation and amortization 21,710 24,750 7,237 8,368 21,710
------- ------- ------- ------- -------
Total Expenses 979,173 466,552 769,652 221,039 979,173
------- ------- ------- ------- -------
LOSS FROM OPERATIONS (979,408) (470,077) (769,126) (219,056) (979,408)
------- ------- ------- ------- -------
OTHER INCOME (EXPENSE)
Interest expense (10,094) - (3,365) - (10,094)
Other income 5,400 - - - 5,400
Other expense (306,175) (116) - - (306,175)
------- ----- ------ ------ -------
Total Other Income (Expense) (310,869) (116) (3,365) - (310,869)
------- ----- ------ ------ -------
LOSS BEFORE REORGANIZATION
ITEMS (1,290,277) (470,193) (772,491) (219,056) (1,290,277)
--------- ------- ------- ------- ---------
REORGANIZATION ITEMS
Gain on restructuring
of debt 100,000 - - - 100,000
------- ----- ----- ------ -------
Total Income from
Reorganization Items 100,000 - - - 100,000
------- ----- ----- ------ -------
(LOSS) BEFORE INCOME TAXES (1,190,277) (470,193) (772,491) (219,056) (1,190,277)
INCOME TAX EXPENSE - - - - -
--------- ------- ------- ------- ---------
NET (LOSS) $(1,190,277) $(470,193) $(772,491) $(219,056) $(1,190,277)
========= ======= ======= ======= =========
BASIC INCOME (LOSS)
PER SHARE
Net loss before
reorganization items $ (0.01) $ (0.01) $ (0.01) $ (0.01)
Reorganization items 0.00 0.00 0.00 0.00
---- ---- ---- ----
BASIC INCOME (LOSS)
PER SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.01)
==== ==== ==== ====
WEIGHTED AVERAGE SHARES
OUTSTANDING 71,589,263 38,746,921 79,544,660 41,044,353
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 50
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional Stock
Common Stock Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
---------- -------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 19,091,973 19,092 3,332,971 (115,000) (9,779,570)
Adjustment for reduction of
exercise price of options - - (103,500) 103,500 -
Common stock issued for cash
at $0.05 per share 4,707,504 4,708 230,667 - -
Common stock issued for
settlement of debt at
$0.05 per share 11,952,380 11,952 585,666 - -
Common stock issued for
subscriptions receivable
at $0.05 per share 5,292,496 5,292 259,333 (264,625) -
Net income for the year
ended December 31, 1998 - - - - 5,266,956
---------- ------ --------- ------- ---------
Balance, December 31, 1998 41,044,353 $ 41,044 $ 4,305,137 $ (276,125) $ (4,512,614)
Receipt of stock subscription
(unaudited) - - - 276,125 -
Common stock issued for cash at
$0.025 per share on April 4,
1999 (unaudited) 25,695,720 25,696 616,697 - -
Common stock issued for services
at $0.03 per share on April 4,
1999 (unaudited) 12,380,280 12,380 359,028 - -
Common stock issued in
settlement of employment
agreement at $0.033 per share
on June 30, 1999 (unaudited) 2,031,478 2,031 65,008 - -
Common stock issued for services
at $0.032 per share on July 7,
1999 (unaudited) 10,000,000 10,000 310,000 - -
Net loss for the nine months
ended September 30, 1999,
(unaudited) - - - - (1,190,277)
---------- ------- --------- -------- ---------
Balance, September 30, 1999
(unaudited) 91,151,831 $ 91,151 $ 5,655,870 $ - $ (5,702,891)
========== ====== ========= ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 51
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
For the For the December 31,
Nine Months Ended Three Months Ended 1998 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(1,190,277) $ (470,193) $ (772,491) $ (219,056) $ (1,190,277)
Adjustments to reconcile
net loss to net cash
provided (used) in
operating activities:
Depreciation and
amortization 21,710 28,274 7,237 8,368 21,710
Stock issued for services 691,408 - 566,921 - 691,408
Stock issued for employment
settlement 67,039 - - - 67,039
Changes in assets and
liabilities:
(Increase) decrease in
inventory (6,881) (557) (7,081) - (6,881)
(Increase) decrease in
accounts receivable - (2,330) - - -
(Increase) decrease in
prepaid expenses 7,329 (66) - - 7,329
(Increase) decrease in
notes receivable - 393,529 - 199,955 -
(Increase) decrease in
other assets (229,686) 7,259 (234,731) - (229,686)
Increase (decrease) in
cash overdraft (17,481) - (26,667) - (17,481)
Increase (decrease) in
accounts payable (38,238) 34,700 27,345 - (38,238)
Increase (decrease) in
accrued expenses (57,264) (6,939) (47,490) - (57,264)
------- ------ ------- ------ -------
Net Cash Provided (Used)
by Operating Activities (752,241) (16,323) (486,957) (10,733) (752,241)
------- ------ ------- ------ -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Sale of fixed assets - 1,400 - - -
Purchase of fixed assets (5,500) - (500) - (5,500)
----- ----- ---- ------ -----
Net Cash Provided (Used)
by Investing Activities $ (5,500) $ 1,400 $ (500) $ - $ (5,500)
----- ----- ---- ------ -----
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 52
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Consolidated Statements of Cash Flows (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
From
Inception of the
Development
Stage on
For the For the December 31,
Nine Months Ended Three Months Ended 1998 Through
September 30, September 30, September 30,
1999 1998 1999 1998 1999
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on debt $ (121,445) $ - $ (106,145) $ - $ (121,445)
Collections from related
parties 6,984 - - - 6,984
Issuance of common stock 918,518 - 642,393 - 918,518
--------- ---- ------- ---- ---------
Net Cash Provided by
Financing Activities 804,057 - 536,248 - 804,057
--------- ---- ------- ---- ---------
Net Increase (Decrease)
in Cash 46,316 (14,923) 48,791 (10,733) 46,316
CASH AT BEGINNING OF PERIOD 2,475 15,141 - 10,951 2,475
------ ------ ------ ------ ------
CASH AT END OF PERIOD $ 48,791 $ 218 $ 48,791 $ 218 $ 48,791
====== ====== ====== ====== ======
CASH PAID FOR:
Interest expense $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
NON CASH FINANCING ACTIVITIES:
Common stock issued in
settlement of debt $ - $ 597,618 $ - $ 597,618 $ -
Common stock issued for
subscriptions receivable $ - $ 264,625 $ - $ 264,625 $ -
Common stock issued for
services $ 691,408 $ - $ 331,846 $ - $ 691,408
Common stock issued in
settlement of employment
agreement $ 67,039 $ - $ 47,179 $ - $ 67,039
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
<PAGE> 53
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at September 30, 1999
and for all periods presented have been made.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with general accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's December 31,
1998 audited consolidated financial statements. The results of operations for
the periods ended September 30 are not necessarily indicative of the operating
results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company does not have significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover its operating costs and to allow it to continue as a going concern.
It is the intent of the Company to seek a merger with an existing, operating
company. Until that time, the stockholders have committed to covering the
operating costs of the Company.
NOTE 3 - CONTINGENCIES
Real Estate
- -----------
On July 31, 1999, the Company entered into an agreement whereby it was
assigned the rights to acquire a 607.74 tract of undeveloped land in Wake
County, North Carolina from Matheny Development, LLC, ("Matheny Development"),
a North Carolina limited liability controlled by James M. Matheny, one of the
Company's directors. As part of the assignment, the Company agreed to pay
Matheny Development $2,100,000 as liquidated damages if the purchase is not
closed by the due date plus extensions, unless the contract is breached by
Matheny Development of PFC Falls, LLC ("PFC"). If PFC breaches the contract,
the Company has the option of pursuing all necessary actions to obtain
specific performance by PFC or to assign the contract to Matheny Development
and pay liquidated damages of $2,200,000. The assignment also provides that
the Company pay a non-refundable extension fee of $76,562 per month and is
currently under extension through March 21, 2000.
Consulting Fee Agreement
- ------------------------
On July 7, 1999, the Company entered into a consulting fee agreement with
United Funding Solutions, Inc. (United) wherein the Company would pay United
$100,000 per year for 5 years. Additionally, the Company issued United
<PAGE> 54
DIVERSIFIED RESOURCES GROUP, INC. AND SUBSIDIARIES
(Formerly Data 1, Inc.)
(A Development Stage Company)
Notes to Consolidated Financial Statements
September 30, 1999 and December 31, 1998
NOTE 3 - CONTINGENCIES (Continued)
10,000,000 shares of common stock valued at the trading price of $0.032 per
share. Pursuant to the agreement, the Company could be required to issue up
to 90,000,000 additional shares of common stock. The stock would be issued at
a formula of 1 share for each dollar of gross profit earned by the Company.
The Company would be required to obtain shareholder approval to increase the
authorized number of shares.
NOTE 4 - STOCK ISSUANCES
The stock issuances in 1998 were valued at $0.05 per share per the bankruptcy
agreement. The stock issued for services in 1999 was valued at the trading
price on the dates of issue. In 1999, the Company issued 34,678,840 shares of
common stock for cash pursuant to a 504 offering at $0.025 per share.
NOTE 5 - LEGAL PROCEEDINGS
The United States Securities and Exchange Commission ("SEC") has entered a
formal order of investigation styled as "In the matter of Diversified
Resources Group, Inc. (NY/6573)." On or about September 30, 1999, the Company
received a subpoena duces teum requesting that the Company provide the
Northeast Regional Office of the SEC with various documents regarding past,
present and intended business operations, financial statements and underlying
financial records, prior news releases, and other documentation. The Company
has provided the documentation requested and has and intends to continue to
fully cooperate with this formal order of investigation.
<PAGE>
<PAGE> 55
PART III
ITEM 1. INDEX TO EXHIBITS
Copies of the following documents are included as exhibits to this
amended Form 10SB pursuant to Item 601 of Regulation SB.
SEC
Exhibit Reference
No. No. Title of Document
- ------- --------- -----------------
3(i) 3.01 Articles of Incorporation and Amendments
3(ii) 3.02 Bylaws
4 4.01 Specimen Stock Certificate
10 10.01 United Funding "Consultant Fee Agreement"
10 10.02 Quintiles Agreement
10 10.03 Contract for Purchase and Sale of Real Property
10 10.04 Assignment of Contract for Purchase and Sale of Real
Property
10 10.05 Westminster Homes Letter of Intent
10 10.06 U.S. Home Letter of Intent
10 10.07 Squires Homes Letter of Intent
10 10.08 Drucker and Falk Letter of Intent
21 21 List of Subsidiaries
27 27 Financial Data Schedule
99 99.01 Final Decree of Bankruptcy Court, July 13, 1999
ITEM 2. SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
DIVERSIFIED RESOURCES GROUP, INC.
DATED: December 24, 1999 /S/ O. Howard Davidsmeyer, Jr., C.E.O.
/S/ Matthew A. Veal, Secretary/Treasurer
<PAGE> 1
EXHIBIT 3.01
ARTICLES OF INCORPORATION [RECEIVED
OF 1994 JUL 31 PM 1:30
GEN II, INC. Lt.Gov/Sec. of State]
We, the undersigned named natural persons of the age of twenty-one years
or more, acting as incorporators of corporation under the Utah Business
Corporation Act, adopt the following articles of incorporation:
ARTICLE I
The name of the corporation is GEN II, INC.
ARTICLE II
PERIOD OF DURATION
The period of duration of the corporation is XXXXXX
ARTICLE III
PURPOSES AND POWERS
The corporation shall have unlimited power to engage in and to do any
lawful act concerning any or all lawful business for which corporation may be
organized under the Utah Business Corporation Act, including but not limited
to, the following:
(a) The acquisition exploration, development, and marketing of oil and
gas resources, mineral resources, and other natural resources, together with
research, development and marketing of high technology equipment and materials
related to the natural resources industry as well as any other industry or
field.
(b) to engage in any lawful act or activity for which corporations may be
organized under the Utah Business Corporation Act.
(c) to have and to exercise all rights and powers from time to time
granted to a corporation by law including, without limitation, the power to
enter into any partnership, joint venture, or other arrangement where the
management of the business of the corporation is delegated in whole or in
part.
(d) to own real and personal property, necessary or appropriate to the
general business purpose of this corporation, and may invest in real estate,
mortgages, stocks, bonds, and any other types of investment.
Each of the above clauses shall be construed as a separate statement
conferring independent purposes and powers upon the corporation, but each of
the clauses of this Article III shall not in any way be limited by reference
to or in reference from one another.
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which the corporation shall have authority
to issue is Fifty Million (50,000,000) shares of $0.001 (one mill) par value
common voting stock.
<PAGE> 2
ARTICLE V
STOCK CLASSES AND PREFERENCES
The corporation shall have only one class of common voting stock and no
preferred stock shall be authorized.
ARTICLE VI
COMMENCEMENT OF BUSINESS
The corporation shall not commence business until consideration of the
value of at least ONE THOUSAND DOLLARS ($1,000.00) has been received for the
issuance of shares.
ARTICLE VII
PRE-EMPTIVE RIGHTS
The shareholders of the corporation shall not have pre-emptive rights to
purchase stock subsequently issued by the corporation.
ARTICLE VIII
VOTING OF SHARES
Each outstanding share of the common stock of the corporation shall be
entitled to one vote on each matter submitted to a vote at a meeting of the
shareholders, each shareholder be entitled to vote his shares in person or by
proxy executed in writing by such shareholder or by his duly authorized
attorney in fact. At each election for directors, every shareholder entitled
to vote at such election shall have the right to vote in person or by proxy
the number of shares owned by im for as many persons as there are directors to
be elected. Shareholders shall have no right whatsoever to accumulate their
votes with regard to such election.
ARTICLE IX
TRANSFER RESTRICTIONS
Shares of stock in this corporation shall not be transferred or sold
until the sale or transfer shall have been reported to the Board of Directors
and Unanimously approved by them.
ARTICLE X
INITIAL REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation is 3276
Alta Hills Drive, Sandy, Utah 84092 and the name of its initial registered
agent at such address is Paul Burton.
ARTICLE XI
INITIAL BOARD OF DIRECTORS
The number of directors constituting the initial Board of Directors of
the corporation is three (3), and the names and addresses of the persons who
are to serve as directors until the first annual meeting of shareholders or
until their successors are elected and shall qualify are:
<PAGE> 3
NAME ADDRESS
---- -------
Paul Burton 3276 Alta Hills Drive
Sandy, Utah 84092
Gordon Elliott 4578 Clearview Street
Holladay, Utah 84117
Richard Widerburg 7157 East Manor Drive
Holladay, Utah 84121
ARTICLE XII
INCORPORATORS
The names and addresses of the incorporators are:
NAME ADDRESS
---- -------
Paul Burton 3276 Alta Hills Drive
Sandy, Utah 84092
Gordon Elliott 4578 Clearview Street
Holladay, Utah 84117
Richard Widerburg 7157 East Manor Drive
Holladay, Utah 84121
DATED this 27th day of July, 1984
7/27/84 /S/ Paul Burton
7/27/84 /S/ Gordon Elliott
7/27/84 /S/ Richard Widerburg
STATE OF UTAH )
: SS.
COUNTY OF SALT LAKE )
SUBSCRIBED AND SWORN TO before me this 27th day of July, 1984.
/Rhonda [Sic] Johnson
--------------------------------
NOTARY PUBLIC
Residing in: Sandy, Utah
My commission Expires:
11/5/86
<PAGE>
<PAGE> 4
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
GEN II, INC.
Pursuant to the provisions of Section 16-10a-1006 of the Utah Revised Business
Corporation Act, the undersigned corporation hereby adopts the following
Articles of Amendment to its Articles of Incorporation.
FIRST
- -----
The name of the corporation is Gen II, Inc.
SECOND
- ------
The following amendments to the Articles of Incorporation of Gen II, Inc. were
duly adopted by the stockholders bf the corporation at meetings hold-June 19,
1992, and July 29, 1992, in the manner prescribed by the Utah Revised Business
Corporation Act, to-wit:
ARTICLE I - NAME
- ----------------
The name of this corporation is Data 1, Inc.
ARTICLE IX - TRANSFER RESTRICTIONS
- ----------------------------------
Deleted in its entirely.
THIRD
- -----
These amendments do not provide for any exchanger reclassification or
cancellation of issued shares; however, pursuant to the resolution adopted by
the stockholders of the corporation at the meeting held June19, 1992, the
3,500,000 shares of, one mill ($0.001) par value common voting stock issued
and outstanding are, affective on the filing of these Articles of Amendment,
reverse split on a basis of 1.75 for one, retaining the par value at one mill
($0.001) per share, with appropriate adjustments being made in the additional
paid in capital and stated capital accounts of the corporation, and resulting
in a total of 2,006,000 shares of one mill ($0.001) par value common voting
stock being issued are outstanding.
FOURTH
- ------
The amendment adopting the reverse split of the Company's common stock and the
challenge of name to Data 1, Inc. was adopted by, the stockholders at a
meeting hold June 19,1992; and the amendment deleting Article IX of the
Articles of Incorporation of the Company was adopted by the stockholders at a
meeting held July 29, 1902.
FIFTH
- -----
These amendments were not adopted by the incorporators or the Board of
Directors without stockholder action.
SIXTH
- -----
(a) The designation and number of outstanding shares of each class entitled
to vote thereon as a class were as follows, to-wit:
<PAGE> 5
CLASS NUMBER OF SHARES
- ----- ----------------
Common 3,500,000
(b) The number of shares voted for such amendments at the June 19, 1992,
meeting, was 1,766,000 with none opposing and none abstaining. The number of
shares voted for such amendments at the July 29, 1992, meeting, was 1,766,000
with none opposing and none abstaining.
IN WITNESS WHEREOF, the undersigned officers, having been there unto duly
authorized, have executed the foregoing Articles of Amendment for the
corporation this 30 day of July, 1992.
GEN II, INC.
By /S/ Gordon R. Elliott, Vice President
Attest:
/S/ D. Richard Widerburg, Secretary
<PAGE>
<PAGE> 6
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
DATA 1, INC.
Article IV of the Articles of Incorporation of DATA 1, INC., a Utah
corporation (the "Corporation"), is hereby further amended and restated in its
entirety to read as follows:
ARTICLE IV
CAPITAL STOCK
The aggregate number of shares which the Corporation shall have authority to
issue is 50,000,000 shares of $0.001 (one mill) par value voting common stock
(the "Common Stock").
Upon the filing with the Division of Corporations and Commercial Code of the
State of Utah of these Articles of Amendment of the Articles of Incorporation
of the Corporation to cause Article IV to read as set forth above (the
"Effective Date"), such Article IV having previously been amended effective
August 17, 1992 to effect at that date a 1.75 for one reverse stock split of
the then outstanding Gordon Stock, each issued and outstanding share of Common
Stock shall thereby and thereupon, automatically pad without further action on
the part of the holder thereof, be reclassified, changed and converted into
one half validly issued, fully paid and nonassessable share of Common Stock,
thereby effecting a further one-for-two reverse split of the Common Stock.
Each certificate which immediately prior to the Effective Date, represented
shares of Common Stock shall, from and after the Effective Date, represent one
half of that same number of shares of Common Stock, and the Corporation shall
thereafter issue certificates representing such appropriate number of shares
of Common Stock upon surrender of the certificates representing such reverse
split shares of Common Stock.
Any options or rights to acquire or to he issued shares of Common Stock
outstanding at the Effective Date shall, from and after the Effective Date, be
deemed to refer to one half of that same number of shares of Common Stock.
The foregoing amendment (the "Amendment") was adopted and approved by the
written consent, dated and effective December 20, 1993, of the holders of more
then a majority of the Corporation's 15,455,000 shares of $0.001 (one mill)
par value voting common stock (the "Common Stock") then outstanding in
accordance with the provisions of Section 16-lOa-704 of the Utah Revised
Business Corporation Act. The holders of the 15,455,000 shares of Common Stock
were the only voting group entitled to vote on the Amendment, and each of
these shares was entitled to one vote. The total number of undisputed votes
cast for the Amendment by this voting group was 9,759,166, and the number of
votes cast for the Amendment by such voting group was sufficient for approval
by that voting group.
IN WITNESS WHEREOF, these Articles of Amendment are executed on January 13,
1994.
Effective 5:00 o'clock p.m. on DATA 1, INC.
January 17, 1994 By: /S/ O. Howard Davidsmeyer, Chairman
and Chief Executive Officer
<PAGE>
<PAGE> 7
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
DATA 1, INC. [RECEIVED 1995 JAN
17 PM 2:30]
DIVISION OF CORPORATIONS
STATE OF UTAH]
ARTICLE IV OF THE ARTICLES OF INCORPORATION OF DATA 1, INC. a Utah corporation
(the "Corporation), is hereby further amended and restated in its entirety to
read as follows:
ARTICLE IV
CAPITAL STOCK
Section 1. Authorized Shares. The aggregate number of shares of capital stock
authorized to be issued by the Corporation is 51,000,000, divided into two
classes. The designation of each class, the number of shares of each class,
and the par value of the shares of each class is as set forth herein.
Class Number of Shares Par Value Per Share
----- ---------------- -------------------
Common Shares 50,000,000 $0.001
Preferred Shares 1,000,000 $0.01
Upon the filing with the Division of Corporations and Commercial Code of the
State of Utah of these Articles of Amendment of the Articles of Incorporation
of the Corporation to cause Article IV to read as set forth herein (the
"Effective Date"), such Article IV having previously been amended effective
August 17, 1992 to effect at that date a 1.75 for one reverse stock split of
the then outstanding shares of $0.001 (one mill) par value voting common stock
and thereafter amended effective at 5:00 o'clock p.m. on January 17, 1994 to
effect at that time a further one-for-two reverse split of the then
outstanding of shares of $0.001 (one mill) par value voting common stock),
each issued and outstanding shares of $0.001 (one mill) par value voting
common stock shall thereby and thereupon, automatically and without further
action on the part of the holder thereof, be reclassified, changed and
converted into a validly issued fully paid and nonassessable Common Share.
Each certificate which immediately prior to the Effective Date represented
shares of $0.001 (one mill) par value voting common stock shall, from and
after the Effective Date, represent the same number of Common Shares, and the
Corporation may thereafter issue certificates representing a like number of
Common Shares upon surrender of the certificates representing such shares of
common stock.
Section 2. Common Shares. Except as otherwise provided in these articles or
bylaws the Common Shares shall have the exclusive right to vote on matters to
be voted upon by the shareholders of the Corporation, with each Common Share
being entitled to one vote upon such matters. Subject to the provisions of law
and the preferences of any stock ranking prior to the Common Shares as to
dividends, the holders of the Common Shares shall be entitled to received
dividends at such time and in such amount as may be determined by the Board of
Directors. In the event of any dissolution of the Corporation, after payment
or provision for payment of the debts and liabilities of the Corporation as
provided by law and the preferential distribution of assets in such event
shall be entitled, the holders of the Common Shares and the holder of any
other stock ranking on a parity with the Common Shares in the distribution of
assets in such event shall be entitled to share in the remaining assets of the
Corporation according to their respective interests.
<PAGE> 8
Section 3. Preferred Shares. The Board of Directors is authorized, subject to
limitations prescribed by law, to provide for the issuance of the Preferred
Shares in series and to establish the number os shares to be included in each
such series, the full or limited voting powers, or the denial of voting powers
of each such series, and such designations, preferences, limitations, and
relative rights of the shares of each such series of Preferred Shares. The
authority of the Board of Directors with respect to the Preferred Shares of
each such series shall include determination of the following:
(a) the number of shares of each such series and the distinctive designation
thereof;
(b) whether the shares of each such series shall have any voting rights in
addition to those prescribed by law and, if so, the terms and conditions of
exercise of voting rights;
(c) whether the shares of each such series shall be redeemable and, if so, the
terms and conditions of such redemption, including the time or times when the
price or prices at which such shares of each series may be redeemed, and
whether redeemable for money, indebtedness, securities or other property;
(d) whether the shares of each such series shall be convertible into or
exchangeable for shares of any other class, or any series of the same or any
other class, and if so, the terms and conditions thereof, including the price
or prices or the rate or rates at which shares of each such series shall be so
convertible or exchangeable (and whether convertible or exchangeable for
money, indebtedness, securities or other property), and the adjustment which
shall be made, and the circumstances in which such adjustment shall be made,
in such conversion or exchange prices or rates;
(e) the rate or amount of dividends, if any, payable on shares of each such
series and whether payable in preference to any dividends on other Preferred
Shares or on Common Shares, whether such dividends shall be payable in cash or
in property or both, whether such dividends shall be cumulative, noncumulative
or partially cumulative, and the conditions upon which and/or the date when
such dividends shall be payable; and
(f) the amount, if any, payable on shares of each such series in the event of
dissolution of the Corporation and whether any of such amount shall be payable
in preference to any such amount on other Preferred Shares or on Common
Shares.
The foregoing amendment (the "Amendment") was adopted and approved by the
written consent, dated and effective January 4, 1995, of the holders of more
then a majority of the Corporation's 7,685,113 shares of $0.001 (one mill) par
value voting common stock then outstanding in accordance with the provisions
of Section 16-lOa-704 of the Utah Revised Business Corporation Act. The
holders of the 7,685,113 shares of $0.001 (one mill) par value voting common
stock were the only voting group entitled to vote on the Amendment, and each
of these shares was entitled to one vote. The total number of undisputed votes
cast for the Amendment by this voting group was 4,423,248, and the number of
votes cast for the Amendment by such voting group was sufficient for approval
by that voting group.
IN WITNESS WHEREOF, these Articles of Amendment are executed on January 10,
1995.
DATA 1, INC.
By: /S/ O. Howard Davidsmeyer, Chairman
and Chief Executive Officer
<PAGE>
<PAGE> 9
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
DATA 1, INC. [RECEIVED FEB 01, 1995
UT DIV. OF CORP. & COMM. CODE]
ARTICLE IV OF THE ARTICLES OF INCORPORATION OF DATA 1, INC. a Utah corporation
(the "Corporation), is hereby further amended to add thereto a new Section 4
to read in its entirety as follows:
Section 4. Series A Preferred Shares. The Cumulative Convertible Preferred
Shares, Series A, Paying $.40 Per Annum, of the Corporation shall have the
preferences, limitations, and relative rights set forth below:
(a) Designation and Number. The first series of Preferred Shares to be issued
by the Corporation shall be designated Cumulative Convertible Preferred
Shares, Series A, Paying $.40 Per Annum (the "Series A Shares" or "Series A"),
and shall consist of 200,000 shares and be issued for consideration equal to
$5.00 per Series A Share. Reference in this Section 4 to "year" shall be
references to the fiscal year ending December 31.
(b) Dividends. The dividend payable on each of the shares of Series A shall be
$.40 per annum. The initial dividend shall be payable December 31, 1995 and
subsequent dividends shall be payable on outstanding shares of Series A each
December 31 thereafter; provided that the timing of the declaration and
payment of such dividends, and the record date for determining those entitled
to receive them, shall be at the discretion of the Board of Directors of the
Corporation in conformity with the Utah Revised Business Corporation Act (the
"Utah Corporation Act"). The dividends shall begin to accrue, whether or not
earned or paid, on each share of Series A from the date of its issue, and the
dividends on the outstanding Series A Shares shall be cumulative on a
noncompounded basis until paid. The shares of Series A shall be
nonparticipating. Each such dividend authorized by the Board of Directors
shall be paid to holders of record of the Series A Shares as they appear on
the share register of the Corporation on the record date, which shall not be
more than 60 nor less than 10 days preceding the payment date. Holders of
shares of Series A shall not be entitled to any dividends, whether payable in
cash or property, in excess of the full cumulative dividends on the Series A
Shares as provided herein. Notwithstanding the foregoing, no dividend shall be
declared or paid on the Common Shares unless the dividend on the Series A
Shares for the current year is declared and paid, and any dividend unpaid on
the Series A Shares for any prior years is also paid.
(c) Redemption. The Corporation, by resolution of its Board of Directors, may
at any time commencing March 1, 1997, and from time to time thereafter, upon
giving at least 30 days' prior written notice to the holders of Series A
Shares as shown on the books of the Corporation, redeem all or part of the
Series A Shares at $6.00 per share, plus the amount of any dividend accrued
but unpaid thereon for that part of the year of redemption up to the date of
redemption and any preceding years, whether or not earned or declared. There
shall be no right on the part of the holders of the Series A Shares to compel
the Corporation to redeem such shares. Nothing contained herein regarding the
redemption of shares by the Corporation shall abrogate or alter any of the
rights of holders of shares of the Corporation upon liquidation as hereinafter
provided.
In the event that fewer than all of the outstanding Series A Shares are to be
redeemed, the number of shares to be redeemed shall be determined by the Board
of Directors of the Corporation, and the shares to be redeemed shall be
<PAGE> 10
determined pro rata, by lot, or by any other method determined to be equitable
by the Board of Directors of the Corporation. In the event the Corporation
shall redeem the shares of Series A, each notice of redemption shall state:
(i) the redemption date; (ii) the number of shares of Series A to be redeemed
and, if fewer than all of the shares held by such holder are to be redeemed,
the number of shares to be redeemed from such holder; (iii) the redemption
price; (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed shall cease to accrue on such redemption date.
Upon surrender in accordance with such notice of the certificates for any
shares to be redeemed (properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require and if the notice has
so stated), such shares shall be redeemed by the Corporation at the applicable
redemption price. In case fewer than all of the shares represented by any such
certificate are redeemed, a new certificate representing the shares of Series
A not redeemed shall be issued to the holder thereof, without any cost to the
holder thereof.
Dividends on the Series A Shares so called for redemption shall cease to
accrue, such shares shall no longer be deemed outstanding, and all rights of
the holders thereof as Series A shareholders of the Corporation (except the
right to receive the redemption price from the Corporation) shall cease on the
redemption date, unless the Corporation should default in payment of the
redemption price. Any Series A Shares that shall at any time be redeemed
shall, after such redemption, be deemed canceled.
(d) Conversion. Commencing March 1, 1997, and during the period of time
between any notice by the Corporation of redemption of the Series A Shares and
the redemption date, each holder of Series A Shares shall have the right to
convert each of the holder's Series A Shares into 3-1/2 Common Shares by
giving to the Corporation, at least five days prior to the date on which such
conversion is intended to be effected, written notice of the exercise of this
privilege, accompanied by the certificate for the Series A Shares to be
converted, duly endorsed with signature guaranteed. The conversion ratio of
3-1/2 Common Shares for each share of Series A shall be subject to appropriate
and proportionate adjustments to account for the following with respect to the
Common Shares: stock dividends, stock splits, reverse stock splits, and any
similar adjustments in the Common Shares. If less than all of the Series A
Shares represented by a certificate surrendered for conversion are to be
converted pursuant to the election of the holder thereof, the Corporation
shall issue a new certificate for the balance of the Series A Shares without
expense to the holder.
(e) Voting and Preemptive Rights. (i) Except as is required by the Utah
Corporation Act, the Series A Shares have no voting rights. (ii) Holders of
the Series A Shares shall not have any preemptive rights.
(f) Liquidation Preference. (i) Upon the dissolution, liquidation or winding
up of the Corporation, the holders of Series A Shares then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders all amounts to which such holders are
entitled pursuant to subparagraph (ii) of this subsection (f) before any
payment shall be made to the holders of any class of capital stock of the
Corporation ranking, upon liquidation, junior to the Series A Shares. In the
event the assets of the Corporation available for distribution to the holders
of shares of Series A upon any dissolution, liquidation or winding up of the
Corporation shall be insufficient to pay in full all amounts to which such
<PAGE> 11
holders are entitled pursuant to subparagraph (ii) of this subsection (f), no
such distributions shall be made on account of the Common Shares or any shares
of any other class or series of Preferred Shares ranking junior to the Series
A Shares; (ii) Upon the dissolution or voluntary or involuntary liquidation or
winding up of the Corporation, the holders of record of Series A Shares shall
be entitled to receive out of the assets of the Corporation, before any
payment or distribution shall be made on the Common Shares or any other class
of Preferred Shares ranking junior to the Series A Shares upon liquidation,
the amount of $5.00 per share, plus the amount of any dividend accrued but
unpaid thereof for that part of the year of dissolution up to the date of
dissolution and any preceding years, whether or not earned or declared; (iii)
After any payment to the holders of the Series A Shares of the full
preferential amounts provided for in this subsection (f), the remaining assets
of the Corporation shall be distributed among and paid to the holders of the
Common Shares, share and share alike, in proportion to their shareholders; and
(iv) The merger or consolidation of the Corporation into or with any other
corporation, or of any other corporation into or with the Corporation, and the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets
of the Corporation shall not be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for purposes of this subsection (f).
(g) Other Stock. For purposes of this Section 4, any shares of any series,
class or classes of capital stock of the Corporation shall be deemed to rank:
(i) Prior to the Series A Shares, either as to dividends or upon liquidation,
if the holders of such classes of capital stock shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or
priority to the holders of Series A [it being understood that, pursuant to the
final paragraph of this subsection (g), no such prior shares are to be
authorized or issued by the Corporation]; (ii) On a parity with the Series A
Shares, either as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates, redemption or liquidation prices per
share or sinking fund provisions, if any be difference from those of Series A,
if the holders of such shares shall be entitled to the receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority, one over the
other, as between the holders of such shares and the holders of shares of
Series A [it being understood that, pursuant to the final paragraph of this
subsection (g), no such parity shares are to be authorized or issued by the
Corporation]; and (iii) Junior to the shares of Series A, either as to
dividends or upon liquidation, if such class shall be Common Shares or if the
holders of shares of Series A shall be entitled to the receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders of
shares of such series, class or classes.
The Series A Shares shall rank prior to the Common Shares as to dividends and
upon dissolution as set forth herein. The Corporation has not and shall not
authorize or issue any share of any class of capital stock ranking prior to or
on a parity with the Series A Shares as to dividends or upon liquidation; and
shall not authorize the reclassification of any authorized capital stock of
the Corporation into any such prior shares; or authorize or issue any
obligation or security convertible into or evidencing the right to purchase
any such prior shares. The Corporation may authorize and issue additional
series of Preferred Shares ranking junior to the Series A Shares.
<PAGE> 12
(h) No Sinking Fund. There are no sinking fund requirements for the Series A
Shares.
(i) Certificates. The certificates representing Series A Shares shall contain
the following conspicuous statement: "[o]n the written request of any
shareholder, the Corporation shall furnish, without charge, a full written
statement of the designations, preferences, limitations, and relative rights
applicable to each class of capital stock of the Corporation, the variations
in preferences, limitations, and relative rights determined for each series
thereof, and the authority of the Board of Directors of the Corporation to
determine variations for any existing or future class or series."
The foregoing amendment (the "Amendment") was adopted and approved by the
Board of Directors of the Corporation by unanimous written consent, dated and
effective January 27, 1995, as contemplated by, among other sections, Section
16-lOa-602(1) of the Utah Revised Business Corporation Act. The Amendment was
duly adopted without action by the shareholders of the Corporation, and such
shareholder action was not required. The Amendment does not alter or revoke
the preferences, limitations, or relative rights granted to or imposed upon
any wholly unissued class or series of shares of capital stock of the
Corporation.
IN WITNESS WHEREOF, these Articles of Amendment are executed on January 31,
1995.
DATA 1, INC.
By: /S/ O. Howard Davidsmeyer, Chairman
and Chief Executive Officer
<PAGE>
<PAGE> 13
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
DATA 1, INC.
[RECEIVED APRIL 21, 1995
UT DIV. OF CORP. & COMM. CODE]
ARTICLE IV OF THE ARTICLES OF INCORPORATION OF DATA 1, INC. a Utah corporation
(the "Corporation), is hereby further amended by amending and restating in its
entirety Section 4 thereof as added effective February 1, 1995 so that upon
the filing of these Articles of Amendment such Section 4 shall read in its
entirety as follows:
Section 4. Series A Preferred Shares. The Cumulative Convertible Preferred
Shares, Series A, Paying $.40 Per Annum, of the Corporation shall have the
preferences, limitations, and relative rights set forth below:
(a) Designation and Number. The first series of Preferred Shares to be issued
by the Corporation shall be designated Cumulative Convertible Preferred
Shares, Series A, Paying $.40 Per Annum (the "Series A Shares" or "Series A"),
and shall consist of 200,000 shares and be issued for consideration equal to
$5.00 per Series A Share. Reference in this Section 4 to "year" shall be
references to the fiscal year ending December 31.
(b) Dividends. The dividend payable on each of the shares of Series A shall be
$.40 per annum. The initial dividend shall be payable December 31, 1995 and
subsequent dividends shall be payable on outstanding shares of Series A each
December 31 thereafter; provided that the timing of the declaration and
payment of such dividends, and the record date for determining those entitled
to receive them, shall be at the discretion of the Board of Directors of the
Corporation in conformity with the Utah Revised Business Corporation Act (the
"Utah Corporation Act"). The dividends shall begin to accrue, whether or not
earned or paid, on each share of Series A from the date of its issue, and the
dividends on the outstanding Series A Shares shall be cumulative on a
noncompounded basis until paid. The shares of Series A shall be
nonparticipating. Each such dividend authorized by the Board of Directors
shall be paid to holders of record of the Series A Shares as they appear on
the share register of the Corporation on the record date, which shall not be
more than 60 nor less than 10 days preceding the payment date. Holders of
shares of Series A shall not be entitled to any dividends, whether payable in
cash or property, in excess of the full cumulative dividends on the Series A
Shares as provided herein. Notwithstanding the foregoing, no dividend shall be
declared or paid on the Common Shares unless the dividend on the Series A
Shares for the current year is declared and paid, and any dividend unpaid on
the Series A Shares for any prior years is also paid.
(c) Redemption. The Corporation, by resolution of its Board of Directors, may
at any time commencing June 2, 1997, and from time to time thereafter, upon
giving at least 30 days' prior written notice to the holders of Series A
Shares as shown on the books of the Corporation, redeem all or part of the
Series A Shares at $6.00 per share, plus the amount of any dividend accrued
but unpaid thereon for that part of the year of redemption up to the date of
redemption and any preceding years, whether or not earned or declared. There
shall be no right on the part of the holders of the Series A Shares to compel
the Corporation to redeem such shares. Nothing contained herein regarding the
redemption of shares by the Corporation shall abrogate or alter any of the
rights of holders of shares of the Corporation upon liquidation as hereinafter
provided.
<PAGE> 14
In the event that fewer than all of the outstanding Series A Shares are to be
redeemed, the number of shares to be redeemed shall be determined by the Board
of Directors of the Corporation, and the shares to be redeemed shall be
determined pro rata, by lot, or by any other method determined to be equitable
by the Board of Directors of the Corporation. In the event the Corporation
shall redeem the shares of Series A, each notice of redemption shall state:
(i) the redemption date; (ii) the number of shares of Series A to be redeemed
and, if fewer than all of the shares held by such holder are to be redeemed,
the number of shares to be redeemed from such holder; (iii) the redemption
price; (iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that dividends on the
shares to be redeemed shall cease to accrue on such redemption date.
Upon surrender in accordance with such notice of the certificates for any
shares to be redeemed (properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require and if the notice has
so stated), such shares shall be redeemed by the Corporation at the applicable
redemption price. In case fewer than all of the shares represented by any such
certificate are redeemed, a new certificate representing the shares of Series
A not redeemed shall be issued to the holder thereof, without any cost to the
holder thereof.
Dividends on the Series A Shares so called for redemption shall cease to
accrue, such shares shall no longer be deemed outstanding, and all rights of
the holders thereof as Series A shareholders of the Corporation (except the
right to receive the redemption price from the Corporation) shall cease on the
redemption date, unless the Corporation should default in payment of the
redemption price. Any Series A Shares that shall at any time be redeemed
shall, after such redemption, be deemed canceled.
(d) Conversion. Commencing May 1, 1997, and during the period of time between
any notice by the Corporation of redemption of the Series A Shares and the
redemption date, each holder of Series A Shares shall have the right to
convert each of the holder's Series A Shares into five Common Shares by giving
to the Corporation, at least five days prior to the date on which such
conversion is intended to be effected, written notice of the exercise of this
privilege, accompanied by the certificate for the Series A Shares to be
converted, duly endorsed with signature guaranteed. The conversion ratio of
five Common Shares for each share of Series A shall be subject to: (i)
appropriate and proportionate adjustments to account for the following with
respect to the Common Shares: stock dividends, stock splits, reverse stock
splits, and any similar adjustments in the Common Shares; and (ii) such
adjustment (by way of increase only) as may be necessary so that as of May 1,
1997 each of the shares of Series A shall be convertible into a number of
Common Shares (including fractions rounded to the third digit to the right of
the decimal point) that when multiplied by the Average Price of the Common
Shares (as hereinafter defined) produces a result of $7.50. If less than all
of the Series A Shares represented by a certificate surrendered for conversion
are to be converted pursuant to the election of the holder thereof, the
Corporation shall issue a new certificate for the balance of the Series A
Shares without expense to the holder.
For purposes of this Section 4, the phrase "Average Price of the Common
Shares" shall mean the arithmetic average (rounded to the nearest whole penny)
for the 10 full trading days ending with May 1, 1997 (the "Measuring Period"):
of (i) the average of the highest and lowest quoted selling prices per share
for the Common Shares on a national securities exchange or exchanges (or on
the principal such exchange), if the Common Shares are admitted to trading on
<PAGE> 15
such exchange or exchanges for the period of time encompassing the Measuring
Period [whether or not the Common Shares shall at that time also be admitted
for quotation on the National Association of Securities Dealers Automatic
Quotation System or other comparable system (the "NASDAQ System")]; (ii) the
average of the highest and lowest quoted selling prices per share for the
Common Shares in the National Market System ("NMS") list of securities on the
NASDAQ System, if the Common Shares are within such NMS list of securities for
the period of time encompassing the Measuring Period; or (iii) the average of
the low bid and high asked prices per share for the Common Shares in the over
the counter market as reported by the National Quotation Bureau, Inc. or any
successor thereto, if the Common Shares are not so admitted to trading or an
exchange or exchanges, or with such NMS list of securities.
(e) Voting and Preemptive Rights. (i) Except as is required by the Utah
Corporation Act, the Series A Shares have no voting rights. (ii) Holders of
the Series A Shares shall not have any preemptive rights.
(f) Liquidation Preference. (i) Upon the dissolution, liquidation or winding
up of the Corporation, the holders of Series A Shares then outstanding shall
be entitled to be paid out of the assets of the Corporation available for
distribution to its shareholders all amounts to which such holders are
entitled pursuant to subparagraph (ii) of this subsection (f) before any
payment shall be made to the holders of any class of capital stock of the
Corporation ranking, upon liquidation, junior to the Series A Shares. In the
event the assets of the Corporation available for distribution to the holders
of shares of Series A upon any dissolution, liquidation or winding up of the
Corporation shall be insufficient to pay in full all amounts to which such
holders are entitled pursuant to subparagraph (ii) of this subsection (f), no
such distributions shall be made on account of the Common Shares or any shares
of any other class or series of Preferred Shares ranking junior to the Series
A Shares; (ii) Upon the dissolution or voluntary or involuntary liquidation or
winding up of the Corporation, the holders of record of Series A Shares shall
be entitled to receive out of the assets of the Corporation, before any
payment or distribution shall be made on the Common Shares or any other class
of Preferred Shares ranking junior to the Series A Shares upon liquidation,
the amount of $5.00 per share, plus the amount of any dividend accrued but
unpaid thereof for that part of the year of dissolution up to the date of
dissolution and any preceding years, whether or not earned or declared; (iii)
After any payment to the holders of the Series A Shares of the full
preferential amounts provided for in this subsection (f), the remaining assets
of the Corporation shall be distributed among and paid to the holders of the
Common Shares, share and share alike, in proportion to their shareholders; and
(iv) The merger or consolidation of the Corporation into or with any other
corporation, or of any other corporation into or with the Corporation, and the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or assets
of the Corporation shall not be deemed to be a dissolution, liquidation or
winding up, voluntary or involuntary, for purposes of this subsection (f).
(g) Other Stock. For purposes of this Section 4, any shares of any series,
class or classes of capital stock of the Corporation shall be deemed to rank:
(i) Prior to the Series A Shares, either as to dividends or upon liquidation,
if the holders of such classes of capital stock shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution, liquidation
or winding up of the Corporation, as the case may be, in preference or
priority to the holders of Series A [it being understood that, pursuant to the
final paragraph of this subsection (g), no such prior shares are to be
authorized or issued by the Corporation]; (ii) On a parity with the Series A
<PAGE> 16
Shares, either as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates, redemption or liquidation prices per
share or sinking fund provisions, if any be difference from those of Series A,
if the holders of such shares shall be entitled to the receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in proportion to their respective dividend
rates or liquidation prices, without preference or priority, one over the
other, as between the holders of such shares and the holders of shares of
Series A [it being understood that, pursuant to the final paragraph of this
subsection (g), no such parity shares are to be authorized or issued by the
Corporation]; and (iii) Junior to the shares of Series A, either as to
dividends or upon liquidation, if such class shall be Common Shares or if the
holders of shares of Series A shall be entitled to the receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders of
shares of such series, class or classes.
The Series A Shares shall rank prior to the Common Shares as to dividends and
upon dissolution as set forth herein. The Corporation has not and shall not
authorize or issue any share of any class of capital stock ranking prior to or
on a parity with the Series A Shares as to dividends or upon liquidation; and
shall not authorize the reclassification of any authorized capital stock of
the Corporation into any such prior shares; or authorize or issue any
obligation or security convertible into or evidencing the right to purchase
any such prior shares. The Corporation may authorize and issue additional
series of Preferred Shares ranking junior to the Series A Shares.
(h) No Sinking Fund. There are no sinking fund requirements for the Series A
Shares.
(i) Certificates. The certificates representing Series A Shares shall contain
the following conspicuous statement: "[o]n the written request of any
shareholder, the Corporation shall furnish, without charge, a full written
statement of the designations, preferences, limitations, and relative rights
applicable to each class of capital stock of the Corporation, the variations
in preferences, limitations, and relative rights determined for each series
thereof, and the authority of the Board of Directors of the Corporation to
determine variations for any existing or future class or series."
The foregoing amendment (the "Amendment") was adopted and approved by the
Board of Directors of the Corporation by unanimous written consent, dated and
effective April 20, 1995, as contemplated by, among other sections, Section
16-lOa-602(1) and Section 16-10a-602(4) of the Utah Revised Business
Corporation Act. The Amendment was duly adopted without action by the
shareholders of the Corporation, and such shareholder action was not required.
The Amendment does not alter or revoke the preferences, limitations, or
relative rights granted to or imposed upon any wholly unissued class or series
of shares of capital stock of the Corporation, but none of the shares of such
class or series of shares so affected has been issued.
IN WITNESS WHEREOF, these Articles of Amendment are executed on April 20,
1995.
DATA 1, INC.
By: /S/ O. Howard Davidsmeyer, Chairman
and Chief Executive Officer
<PAGE>
<PAGE> 17
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION [RECEIVED
MAY 26 1999
OF Utah Div. of Corp. Comm. Code]
DATA 1, INC.
Article I, and Article IV, Section 1., of the Articles of Incorporation
of DATA 1, INC., a Utah corporation (the "Corporation"), are hereby further
amended and restated in their entirety to read as follows:
Article I of the Article of Incorporation of Data 1, Inc., a Utah
Corporation, is hereby further amended and restated in its entirety to read as
follows:
ARTICLE I - NAME
The name of this corporation is Diversified Resources Groups, Inc.
Article IV, Section 1., of the Articles of Incorporation of Data 1, Inc.,
a Utah corporation, is hereby further amended and restated in its entirely to
read as follows:
ARTICLE IV - CAPITAL STOCK
Section 1. Authorized Shares. The aggregate number of shares of capital
stock authorized to be issued by the Corporation is 101,000,000, divided into
two classes. The designation of each class, the number of shares of each
class, and the par value of the shares of each class are as set forth herein.
Number Par Value
Class of Shares Per Share
---------- ---------- ----------
Common Shares 100,000,000 $0.001
Preferred Shares 1,000,000 $0.010
The foregoing amendment ("Amendment") was adopted and approved by the written
consent, dated and effective May 17, 1999, of the holders of more than a
majority of the Corporation's 42,252,753 shares of $0.001 (one mill) par value
voting Common Stock then outstanding in accordance with the provisions of the
Utah Revised Business Corporation Act. The holders of the 42,252,753 shares of
$0.001 (one mill) par value Common Stock were the only voting group entitled
to vote on the Amendment, and each of these shares was entitled to one vote.
The total number of undisputed votes cast for the Amendment by this voting
group was 24,707,997, and the number of votes cast for the Amendment by such
voting group was sufficient for approval by that group.
IN WITNESS WHEREOF, these Articles of Amendment are executed on May 17,
1999.
Effective 5:00 o'clock DATA 1, INC.
p.m. on May 17, 1999.
By: /s/Richard L. Sovich, Vice President and
Secretary
<PAGE> 1
EXHIBIT 3.02
BY- LAWS
Of
DIVERSIFIED RESOURCES GROUP, INC.
ARTICLE I. Offices
The principal office of the corporation in the state of Florida shall be
located in the city of Sarasota, County of Sarasota. The corporation may have
such other offices, either within or without the state of Florida as the board
of directors may require from time to time. The registered office of the
corporation, required by the Utah Business Corporation Act to be maintained in
the state of Utah may be but need not be, identical with the principal office
and the address of the registered office may be changed from time to time by
the board of directors.
ARTICLE II. Shareholders
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held on the second Tuesday of the month of July in each year, beginning with
the year 1985 at the hour of 2:00 p.m., or at such other time on such other
day within such Monday as shall be fixed by the board of directors, for the
purpose ofelecting directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be
a legal holiday such meeting shall be held on the next succeeding business
day. If the election of directors shall not be held on the day designated
herein for any annual meeting of the shareholders, or at any adjournment
thereof, the board of directors shall cause the election to be held at a
special meeting of the shareholders as soon thereafter as conveniently may be.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the president at the request of the holders of not less than one tenth of all
outstanding shares of the corporation entitled to vote at the meeting.
Section 3. Place of Meeting. The board of directors may designate any place,
either within or without the state of Utah as the place of meeting for any
annual meeting or for any social. meeting called by the board of directors. A
waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, either within or without the state of Utah as the place
for holding of such meeting. If no designation is made, or if a special
meeting were otherwise called, the place of meeting shall be the principal
office of the corporation.
Section 4. Notice of Meeting. Written notice stating the place, day and hour
of the meeting and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall, unless otherwise prescribed by statute, be
delivered not less than 10 nor more than 50 days before the date of the
meeting, either personally or by mail, by or at the direction of the
president, or the secretary, or the officer or other persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his address as it appears
on the stock transfer books of the corporation, with postage thereon prepaid.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purposes of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled
<PAGE>
<PAGE> 2
to receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors of the
corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, 50 days. If the stock transfer
books shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books shall be closed
for at least 10 days immediately preceding such meeting. In lieu of closing
the stock transfer books, the board of directors may fix in advance a date as
the record date for any such determination of shareholders, such date in any
case to be not more than 50 days and, in case of a meeting of shareholders,
not less than ten days prior to the date oil which the particular action,
requiring such determination of shareholders, is to be taken. If the stock
transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 6. Voting Record. The officer or agent having charge. of the stock
transfer books for shares of the corporation shall make a complete record of
the shareholders entitled to vote at each meeting of shareholders or any
adjournment thereof, arranged in alphabetical order, with the address of and
the number of shares held by each. Such record shall be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any shareholder during the whole time of the meeting for the purposes thereof.
Section 7. Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At such ad-
journed meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. The shareholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote in
person or by proxy executed in writing by the shareholder or by his duly
authorized attorney in fact. Such proxy shall be filed with the secretary of
the corporation before or at the time of the meeting. No proxy shall be valid
after 11 months from the date of its execution, unless otherwise provided in
the proxy.
Section 9. Voting of Shares. Subject to the provisions of section 12 of this
Article II, each outstanding share entitled to vote shall be entitled to one
vote upon each matter submitted to a vote at a meeting of shareholders.
Section 10. Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by such officer, agent or proxy as the
bylaws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such other corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without a transfer of such shares
<PAGE>
<PAGE> 3
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to Vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares of its own stock held by the corporation, nor shares
held by another corporation if a majority of the shares entitled to vote for
the election of directors of such other corporation are held by the
corporation, shall be voted at any meeting or counted in determining the total
number of outstanding shares at any given time for purposes of any meeting.
Section 11. Informal Action by Shareholders. Any action required or permitted
to be taken at a meeting of the shareholders may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by
all of the shareholders entitled to vote with respect to the subject matter
thereof.
Section 12. Cumulative Voting. At each election for directors every
shareholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are directors to be elected and for whose election he has a right to
vote, or to cumulate his votes by giving one candidate as many votes as the
number of such directors multiplied by the number of his shares shall equal,
or by distributing such votes on the same principle among any number of such
candidates.
ARTICLE III. Board of Directors
Section 1. General Powers. The business and affairs of the corporation shall
be managed by its board of directors.
Section 2. Number, Tenure and Qualifications. The number of directors of the
corporation shall be five. Each director shall hold office until the next
annual meeting of shareholders and until his successor shall have been elected
and qualified. Directors need not be residents of the state of Utah or
shareholders of the corporation.
Section 3. Regular Meetings. A regular meeting of the board of directors shall
be held without other notice than this bylaw immediately after, and at the
same place as, the annual meeting of shareholders. The board of directors may
provide, by resolution, the time and place either within or without the state
of Utah for the holding of additional regular meetings without other notice.
than such resolution.
Section 4. Special Meetings. Special meetings of the board of directors may be
called by or at the request of the president or any two directors. The person
or persons authorized to call special meetings of the board of directors may
fix any place, either within or without the state of Utah as the place for
holding any special meeting of the board of directors called by them.
<PAGE>
<PAGE> 4
Section 5. Notice. Notice of any special meeting shall be given at least 2
days previously thereto by written notice delivered personally or mailed to
each director at his business address, or by telegram. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail, so
addressed, with postage thereon paid. If notice were given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any director may waive notice of any meeting. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the board of directors need
be specified in the notice or waiver of notice of such meeting.
Section 6. Quorum. A majority of the number of directors fixed by section 2 of
this Article III shall constitute a quorum for the transaction of business at
any meeting of the board of directors, but if less than such majority is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
Section 7. Manner of Acting. The act of the majority of the directors present
at a meeting at which a quorum is present shall be the act of the board of
directors.
Section 8. Action Without a Meeting. Any action required or permitted to be
taken by the board of directors at a meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by
all of the directors.
Section 9. Vacancies. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of directors. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election by the board of directors for a term of
office continuing only until the next election of directors by the
shareholders.
Section 10. Compensation. By resolution of the board of directors, each
director may be paid his expenses, i.e. any, of attendance at each meeting of
the board of directors, and may be paid a stated salary as director or a fixed
sum for attendance at each meeting of the board of directors or both. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation thereto.
Section 11. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting or
unless he shall tile his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
ARTICLE IV. Officers
Section 1. Number. The officers of the corporation shall be a president, one
or more vice-presidents (the number thereof to be determined by the board of
<PAGE>
<PAGE> 5
directors), a secretary, and a treasurer, each of whom shall be elected by
the board of directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the board of directors. Any 2
or more offices may be held by the same person, except the offices of
president and secretary.
Section 2. Election and Term of Office. The officers of the corporation to be
elected by the board of directors shall be elected annually by the board of
directors at the first meeting of the board of directors held after each
annual meeting of the shareholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have been removed in the manner hereinafter
provided.
Section 3. Removal. Any officer or agent may be removed-by the board of
directors whenever in its judgment the best interests of the corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment of an
officer or agent shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by the board of
directors for the unexpired portion of the term.
Section 5. President. The president shall be the principal executive officer
of the corporation and, subject to the control of the board of directors,
shall in general supervise and control all of the business and affairs of the
corporation. He shall, when present, preside at all meetings of the
shareholders and of the board of directors. He may sign, with the secretary or
other proper officer of the corporation thereunto authorized by the board of
directors, certificates for shares of the corporation and deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these
bylaws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
Section 6. The Vice Presidents. In the absence of the president or in the
event of his death, inability or refusal to act the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the president, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the president. Any vice-president may sign, with
the secretary or an assistant secretary, certificates for shares of the
corporation; and shall perform such other duties as from time to time may be
assigned to him by the president or by the board of directors.
Section 7. The Secretary. The secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the board of directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep
<PAGE>
<PAGE> 6
a register of the address of each shareholder which shall be furnished to the
secretary by such shareholder; (e) sign with the president, or vice-president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (f) have general
charge of the stock transfer books of the corporation; and (g) in general
perform all duties incident to the office of secretary and such other duties
as from time to time may be assigned to him by the president or by the board
of directors.
Section 8. The Treasurer. The treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositories as shall be
selected in accordance with the provisions of Article V of these bylaws; and
(c) in general perform all of the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to him by the
president or by the board of directors. If required by the board of directors,
the treasurer shall give a bond for the faithful discharge of his duties in
such sum and with such surety or sureties as the board of directors shall
determine.
Section 9. Assistant Secretaries and Assistant Treasurers. The assistant
secretaries, when authorized by the board of directors, may sign with the
president or a vice-president certificates for shares of the corporation the
issuance of which shall have been authorized by a resolution of the board of
directors. The assistant treasurers shall respectively, if required by the
board of directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the board of directors shall determine.
The assistant secretaries and assistant treasurers, in general, shall perform
such duties as shall be assigned to them by the secretary or the treasurer,
respectively, or by the president or the board of directors.
Section 10. Salaries. The salaries of the officers shall be fixed from time to
time by the board of directors and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of the
corporation.
ARTICLE V. Contracts, Loans, Checks and Deposits
Section 1. Contracts. The board of directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the corporation
and no evidence of indebtedness shall be issued in its name unless authorized
by a resolution of the board of directors Such authority may be general or
confined to specific instances.
Section 3. Checks, Drafts, etc. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
Section 4. Deposits. All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in such banks,
trust companies or other depositaries as the board of directors may select.
<PAGE>
<PAGE> 7
ARTICLE VI. Certificates for Shares and Their Transfer
Section 1. Certificates for Shares. Certificates representing shares of the
corporation shall be in such form as shall be determined by the board of
directors. Such certificates shall be signed by the president or a vice-
president and by the secretary or an assistant secretary and sealed with the
corporate seal or a facsimile thereof. The signatures of such officers upon a
certificate may be facsimiles if the certificate is manually signed on behalf
of a transfer agent or a registrar, other than the corporation itself or one
of its employees. Each certificate for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All certif-
icates surrendered to the corporation for transfer shall be cancelled and no
new certificate shall be issued until the former certificate for a like number
of shares shall have been surrendered and cancelled, except that in case of a
lost, destroyed or mutilated certificate a new one may be issued therefor upon
such terms and indemnity to the corporation as the board of directors may
prescribe.
Section 2. Transfer of Shares. Transfer of shares of the corporation shall be
made only on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the
corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
ARTICLE VII. Fiscal Year
The fiscal year of the corporation shall begin on the 1st day of January and
end on the 31st day of December in each year.
ARTICLE VIII. Dividends
The board of directors may, from time to time, declare and the corporation may
pay dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law and its articles of incorporation.
ARTICLE IX. Corporate Seal
The board of directors shall provide a corporate seal, which shall be circular
in form and shall have inscribed thereon the name of the corporation and the
state of incorporation and the words Corporate Seal.
ARTICLE X. Waiver of Notice
Whenever any notice is required to be given to any shareholder or director of
the corporation under the provisions of these bylaws or under the provisions
of the articles of incorporation or under the provisions of the Utah Business
Corporation Act, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice.
ARTICLE XI. Amendments
These bylaws may be altered, amended or repealed and new bylaws may be adopted
by the board of directors or by the shareholders at any regular or special
meeting.
<PAGE>
<PAGE> 8
ARTICLE XII. Executive Committee
Section 1. Appointment. The board of directors by resolution adopted by a
majority of the full board may designate two or more of its members to
constitute an executive committee. The designation of such committee and the
delegation thereto of authority shall not operate to relieve the board of
directors, or any member thereof, of any responsibility imposed by law.
Section 2. Authority. The executive committee, when the board of directors is
not. in session shall have and may exercise all of the authority of the board
of directors except to the extent if any, that such authority shall be limited
by the resolution appointing the executive committee and except also that the
executive committee shall not have the authority of the board of directors in
reference to amending the articles of incorporation, adopting a plan of merger
or consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation or
a revocation thereof, or amending the bylaws of the corporation.
Section 3. Tenure and Qualifications. Each member of the executive committee
shall hold office until the next regular annual meeting of the board of
directors following his designation and until his successor is designated as a
member of the executive committee and is elected and qualified.
Section 4. Meetings. Regular meetings of the executive committee may be held
without notice at such times and places as the executive committee may fix
from time to time by resolution. Special meetings of the executive committee
may be called by any member thereof upon not less than 1 day's notice stating
the place, date and hour of the meeting, which notice may be written or oral,
and if mailed, shall be deemed to be delivered when deposited in the United
States mail addressed to the member of the executive committee at his business
address. Any member of the executive committee may waive notice of any meeting
and no notice of any meeting need be given to any member thereof who attends
in person. The notice of a meeting of the executive committee need not state
the business proposed to be transacted at the meeting.
Section 5. Quorum. A majority of the members of the executive committee shall
constitute a quorum for the transaction of business at any meeting thereof,
and action of the executive committee must be authorized by the affirmative
vote of a majority of the members present at a meeting at which a quorum is
present.
Section 6. Action Without a Meeting. Any action required or permitted to be
taken by the executive committee at a meeting may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed by
all of the members of the executive committee.
Section 7. Vacancies. Any vacancy in the executive committee may be filled by
a resolution adopted by a majority of the full board of directors.
Section 8. Resignations and Removal. Any member of the executive committee may
be removed at any time with or without cause by resolution adopted by a
majority of the full board of directors. Any member of the executive committee
may resign from the executive committee at any time by giving written notice
to the president or secretary of the corporation, and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary
to make it effective.
<PAGE>
<PAGE> 9
Section 9. Procedure. The executive committee shall elect a presiding officer
from its members and may fix its own rules of procedure, which shall not be
inconsistent with these bylaws. It shall keep regular minutes of its
proceedings and report the same to the board of directors for its information
at the meeting thereof held next after the proceedings shall have been taken.
ARTICLE XIII. Emergency Bylaws
The emergency bylaws provided in this Article XIII shall be cooperative during
any emergency in the conduct of the business of the corporation resulting from
an attack on the United States, force majeure or act of God, notwithstanding
any different provision in the preceding articles of the bylaws or in the
articles of incorporation of the corporation or in the Utah Business
Corporation Act. To the extent not inconsistent with the provisions of this
article, the bylaws provided in the preceding articles shall remain in effect
during such emergency and upon its termination the emergency bylaws shall
cease to be operative.
During any such emergency:
(a) A meeting of the board of directors may be called by any officer or
director of the corporation. Notice of the time and place of the meeting shall
be given by the person calling the meeting to such of the directors as it may
be feasible to reach by any available means of communication. Such notice
shall be given at such time in advance of the meeting as circumstances permit
in the judgment of the person calling the meeting.
(b) At any such meeting of the board of directors, a quorum shall consist of
the directors.
(c) The board of directors, either before or during any such emergency, may
provide, and from time to time modify, lines of succession in the event that
during such an emergency any or all officers or agents of the corporation
shall for any reason be rendered incapable of discharging their duties.
(d) The board of directors, either before or during any such emergency, may,
effective in the emergency, change the head office or designate several
alternative head offices or regional offices, or authorize the officers so to
do.
No officer, director or employee acting in accordance with these emergency
bylaws shall be liable except for willful misconduct.
These emergency bylaws shall be subject to repeal or change by further action
of the board of directors or by action of the shareholders, but no such repeal
or change shall modify the provisions of the next preceding paragraph with
regard to action taken prior to the time of such repeal or change. Any
amendment of these emergency bylaws may make any further or different
provision that may be practical and necessary for the circumstances of the
emergency.
DATED this 11th day of August 1999.
SECRETARY
<PAGE> 1
EXHIBIT 4
Specimen Stock Certificate
of Diversified Resources Group, Inc.
------------------------------------
Cusip No. 25532P 10 8
Diversified Resources
Group, Inc.
Number Authorized Common Stock: 100,000 Shares Shares
------ Par Value: $.001 ------
Xxxx Xxxx
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
Shares of DIVERSIFIED RESOURCES GROUP, INC. Common Stock
transferable on the books of the Corporation in person or by duly authorized
attorney upon surrender of this Certificate properly endorsed. This
Certificate is not valid until countersigned by the Transfer Agent and
registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
Mathew A. Veal [CORPORATE SEAL] O. Howard Davidsmeyer
- -------------- ---------------------
Secretary President
Not valid unless countersigned by transfer agent
Countersigned:
Standard Registrar & Transfer Company, Inc.
12528 South 1840 East, Draper, Utah 84020
By [authorized signature]
<PAGE> 1
EXHIBIT 10.01
CONSULTING FEE AGREEMENT
Agreement dated July 7, 1999, by and among Cordless Power Corporation, its
subsidiaries and assigns, a Florida corporation, whose principal place of
business is located at 355 Interstate Boulevard, Sarasota, Florida, 34240 (the
"Company") and United Funding Solutions, Inc., a Florida corporation whose
principal place of business is located at 235 Sunrise Avenue, Suite C24, Palm
Beach, Florida, 33480 (the "Consultant").
BACKGROUND INFORMATION
The Company desires to retain the services of the Consultant to provide
consulting services to the Company and the Consultant desires to provide such
services upon the terms and conditions set forth herein. Accordingly, in
consideration of the mutual covenants hereinafter set forth, and superceding
all agreements, written or oral pertaining to battery sales and services
between the companies, the parties agree as follows:
OPERATIVE PROVISIONS
1. Consultant Services. Subject to the terms and conditions of this
Agreement, the Consultant shall provide consulting services to the Company in
connection with its battery projects. The Consultant has no minimum or
maximum time limits in performing its duties hereunder. The Consultant is
required to assist the Company on an as-needed basis in the successful
management of its battery operations. Consultant shall retain one (1) seat on
the Parent Corporation's Board of Directors, (Diversified Resources Group,
Inc., "DRGI").
2. Compensation. The Company shall pay the Consultant according to the
following schedule: $100,000.00 per year, paid bi-weekly.
-- 10,000,000 post-reverse DRGI shares, subject to the terms and conditions
below.
2.1 Grant of Stock. In consideration of service to the Company and for good
and valuable consideration, the Company grants to the Grantee 10,000,000 post-
reverse shares of the Company's common stock which equates to an initial value
of $250,000.00 based upon a $0.025 stock price (the "Performance Shares") in
accordance with, and subject to, the terms and conditions of the Plan, and
subject to the conditions described below. The Grantee's rights with respect
to the Performance Shares shall be governed by the terms of the Plan.
Allocation of all consideration among the Grantee shall be by notification
signed by both parties.
2.2 Adjustments in Number of Shares. In the event that the shares of the
Company's common stock are changed into or exchanged for a different number of
kind of shares of the Company or other securities of the Company by reason of
merger, consolidation, recapitalization, reclassification, stock split, stock
dividend or combination of shares, the number and kind of adjustment made by
the Company's Board of Directors shall be final and binding upon the Grantee,
the Company and all other interested persons.
2.3 Vesting. The Grantee's interest in the Performance Shares will become
fully vested and nonforfeitable upon the Grantee's achievement of the
provisions listed in 2.4.
<PAGE> 2
2.4 Gross Profit Condition. It shall be a condition to the vesting of the
Performance Shares that the Company attain certain target gross profit (the
"Gross Profit Condition"). If the Gross Profit (defined below) of the Company
reaches the levels set forth in the chart below at any time within five (5)
years from the date hereof, the percentage of the grant set forth opposite
such prices below shall be deemed to have satisfied the Stock Price Condition.
Percentage of
Gross Profit Grant Satisfied
------------ ---------------
$0.00 10%
$1,000,000.00 20%
$2,000,000.00 30%
$3,000,000.00 40%
$4,000,000.00 50%
$5,000,000.00 60%
$6,000,000.00 70%
$7,000,000.00 80%
$8,000,000.00 90%
$9,000,000.00 100%
2.5 Issuance of Stock Certificates. A certificate representing the
Performance Shares (or the portion thereof that has vested and become
nonforfeitable) will be transferred to the Grantee as soon as practicable
after satisfaction of all conditions to the grant. Grantee will instruct the
Company as to the names of issuance of shares, and shall expedite delivery on
the fastest means available.
2.6 Dividend Rights. If a cash dividend or other distribution is declared on
shares of the Company's common stock after a Stock Price Condition has been
satisfied (a "Condition Satisfaction Date"), but before the Grantee's interest
in the Performance Shares is forfeited or becomes fully vested and
nonforfeitable, the Company will pay the cash dividend or distribution
directly to the Grantee with respect to that portion of the grant that has
satisfied the Stock Price Condition. If a stock dividend is declared after a
Condition Satisfaction Date, but before the Grantee's interest in the
Performance Shares is forfeited or becomes fully vested and nonforfeitable,
the stock dividend will be treated as part of the grant of that portion of the
related Performance Shares that has satisfied the Stock Price Condition, and
the Grantee's interest in such stock dividend will be forfeited or become
nonforfeitable at the same time as the Performance Shares with respect to
which the stock dividend was paid is forfeited or becomes nonforfeitable. The
disposition of each other form of dividend that may be declared after a
Condition Satisfaction Date, but before the Grantee's interest in the
Performance Shares is forfeited or becomes fully vested and nonforfeitable,
will be made in accordance with such rules as the Board of Directors may adopt
with respect to such dividend.
2.7 Voting Rights. The Grantee will be allowed to exercise voting rights
with respect to those Performance Shares that have satisfied the applicable
Stock Price Condition, even though the Grantee's interest in the Performance
Shares has not yet become fully vested and nonforfeitable.
3. Expenses. The Company shall reimburse the Consultant for all ordinary and
necessary out-of-pocket expenses incurred on behalf of the Company. The
Consultant shall furnish such receipts or other evidence of payment of such
expenses as may be reasonably necessary to substantiate the same.
<PAGE> 3
4. Confidential Information. The Consultant acknowledges that in the course
of performance of this Agreement, it will have access to and will acquire
Confidential Information (as hereinafter described) concerning the Company,
its business and operations. The Consultant agrees that it will not disclose
any Confidential Information to third parties or use any Confidential
Information for any purpose other than the performance of this Agreement
except as disclosure may be necessary or appropriate in the course of
performing this Agreement and except for disclosures made to affiliated
companies and all necessary Officers, Directors, Employees and Advisors. The
term "Confidential Information" shall include all information relating to the
business of the Company and all processes, services and other activities
engaged in by the Company during the term of this Agreement; provided,
however, that the term "Confidential Information" shall not include any
information which at the time of disclosure to the Consultant is in the public
domain, or which subsequently becomes a part of the public domain by
publication or otherwise through no fault of the Consultant, or which the
Consultant can show was in its possession or in the possession of any of its
employees at or prior to the time of disclosure, or which is subsequently
disclosed to the Consultant or its employees by a third party not in violation
of any rights or obligations owed by such third party to the Company.
5. Indemnification. Each party to this Agreement (hereinafter an
"Indemnifying Party") hereby agrees to indemnify each of the other parties to
this Agreement (hereinafter an "Indemnified Party") for and hold the
Indemnified Party harmless against the following: (a) any and all loss,
liability or damage resulting from any breach or non-fulfillment of any
agreement or obligation of the Indemnifying Party under this Agreement; and
(b) any and all actions, suits, proceedings, damages, assessments, judgments,
settlements, costs and expenses, including reasonable attorneys' fees,
incurred by the Indemnified Party as a result of the failure or refusal of the
Indemnifying Party to defend any claim incident to or otherwise honor the
foregoing provisions after having been given notice of and an opportunity to
do so.
If any claim or liability shall be asserted against an Indemnified Party which
would give rise to a claim by the Indemnified Party against an Indemnifying
Party for indemnification under the provisions of this Paragraph 5, the
Indemnified Party shall promptly notify the Indemnifying Party in writing of
the same and, subject to the prior approval of the Indemnified Party, which
approval shall not be unreasonably withheld, the Indemnifying Party shall be
entitled at its own expense to compromise or defend any such claim. The
Indemnifying Party shall keep the Indemnified Party informed of developments
with respect to such claim, including any litigation, and the Indemnified
Party shall not compromise or settle any action, claim, demand or litigation
without the prior written consent of the Indemnifying Party, in breach of
which the Indemnified Party shall have no right to indemnification under this
Agreement in respect of such compromise or settlement.
6. Term; Termination. This Agreement shall be in effect for five (5) years.
This Agreement shall remain in effect unless and until terminated as
hereinafter provided. This Agreement may be terminated (a) by the Consultant
with cause upon forty-five (45) days notice in writing to the Company; and (b)
by the Company with cause upon forty-five (45) days notice in writing to the
Consultant if the Consultant fails to perform its obligations under this
Agreement and shall fail to cure such default prior to the effective date of
termination.
<PAGE> 4
7. Independent Contractor. The Company and the Consultant agree that the
Consultant is an independent contractor under the terms and conditions of this
Agreement and shall not be deemed to be the Company's agent for any purpose
whatsoever and is not granted any right or authority under this Agreement to
assume or create any obligation or liability, whether expressed or implied,
absolute or contingent, on the Company's behalf, or to bind the Company in any
manner.
8. Miscellaneous Provisions
8.1 Notices: All notices or other communications required or permitted to be
given pursuant to this Agreement shall be in writing and shall be considered
as properly given or made if hand delivered, mailed from within the United
States by certified or registered mail, or sent by prepaid telegram to the
applicable addresses appearing in the preamble to this Agreement, or to such
other address as a party may have designated by like notice forwarded to the
other parties hereto. All notices, except notices of change of address, shall
be deemed given when mailed or hand delivered and notices of change of address
shall be deemed given when received.
8.2 Binding Agreement; Non-Assignability: Each of the provisions and
agreements herein contained shall be binding upon and inure to the benefit of
the personal representatives, heirs, devisees, successors and permitted
assigns of the respective parties hereto, however none of the rights or
obligations attaching to any party shall be assignable, without the express
written consent of the non-assigning party.
8.3 Entire Agreement: This Agreement, and the other documents referenced
herein, constitute the entire understanding of the parties hereto with respect
to the subject matter hereof, and no amendment, modification or alteration of
the terms hereof shall be binding unless the same be in writing, dated
subsequent to the date hereof and duly approved and executed by each of the
parties hereto.
8.4 Severability: Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any
reason whatever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.
8.5 Headings: The headings of this Agreement are inserted for convenience and
identification only, and are in no way intended to describe, interpret, define
or limit the scope, extent or intent hereof.
8.6 Counterparts: This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.7 Application of Florida Law: This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
laws of the State of Florida. Venue for all purposes shall be deemed to lie
within Sarasota County, Florida.
8.8 Legal Fees and Costs: If a legal action is initiated by any party to this
Agreement against another, arising out of or relating to the alleged
performance or non-performance of any right or obligation established
hereunder, or any dispute concerning the same, any and all fees, costs and
expenses reasonably incurred by each successful party or his assigns, or its
legal counsel in investigating, preparing for, prosecuting, defending against,
<PAGE> 5
or providing evidence, producing documents or taking any other action in
respect of, such action shall be the joint and several obligation of and shall
be paid or reimbursed by the unsuccessful party.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first written above.
Diversified Resources Group, Inc.
By:/S/ O. Howard Davidsmeyer, Chairman
Cordless Power Corporation
By: /S/Christopher R. Beck, President
United Funding Solutions, Inc.
By: /S/Rebecca K. Grieco, President
<PAGE> 1
EXHIBIT 10.02 - QUINTILES AGREEMENT
[QUINTILES LETTERHEAD]
July 1, 1999
Mr. Carl Smith, III
Vice President, Business Development
Tampa Bay Financial, Inc.
355 Interstate Boulevard
Sarasota, FL 34240
RE: Agreement to Perform Consulting Services
Dear Mr. Smith:
Pursuant to discussions with Quintiles, Inc. (hereinafter "Quintiles"), Tampa
Bay Financial, Inc. (hereinafter "TBF") has requested that Quintiles provide
strategic consulting services (the "Services") for TBF (the "Project") as
defined in Exhibit 1 attached hereto. Quintiles agrees that its consulting
services will be conducted in compliance with all applicable laws, rules, and
regulations, and with the standard of care customary in the contract research
organization industry. The Services under this Letter Agreement ("the
Agreement") shall be performed by Quintiles on an as-needed basis, primarily
by Patrick T. Doolan at a rate of three hundred ten ($310.00) US dollars per
hour, Richard Phillips Ph.D. at a rate of two hundred and five ($205) US
dollars per hour, Douglas Hunt at a rate of one hundred ninety ($190.00) US
dollars per hour, and Joan Helton at a rate of one hundred thirty ($130.00) US
dollars per hour. Pursuant to this Agreement, Quintiles and TBF anticipate
that Quintiles will provide less than three hundred (300) hours of consulting
services. If it becomes apparent that Quintiles will be providing more than
300 hours of Services on this Project, the parties agree to negotiate a more
comprehensive agreement containing a more detailed description of the Services
(the "Comprehensive Agreement"). This Agreement will remain in effect and
govern the Services until and unless it is superceded by execution of a
Comprehensive Agreement. The parties agree that fees for Services rendered
under this Agreement shall not exceed sixty thousand ($60,000.00) US dollars
without TBF's express authorization.
Upon execution of this Agreement, a payment of twenty thousand ($20,000.00) US
dollars is due, which sum will be held by Quintiles as a deposit for the full
duration of the Services. Thereafter, TBF shall pay Quintiles a fee for its
Services based on the time actually devoted to the Project by Quintiles
personnel at Quintiles' Standard Billing Rates as in effect from time to time,
which rates are subject to change on January 1 of each calendar year. Attached
as Exhibit 2 and made a part of this Agreement is Quintiles' current Billing
Rates Schedule. In addition, TBF will reimburse Quintiles for its out-of-
pocket expenses incurred in connection with the Project. These expenses will
include a standard charge of fifteen percent (15 %) to cover record-keeping
and administrative costs.
Quintiles will invoice TBF monthly for fees, costs, and expenses, and TBF
shall pay each invoice within thirty (30) days of receipt. Upon completion of
the Services, the remaining balance of the deposit will be applied to any
outstanding balance owed to Quintiles and the excess will be promptly refunded
to TBF. If any portion of an invoice is disputed, then TBF shall pay the
undisputed amounts and the parties shall use good faith efforts to reconcile
the disputed amount as soon as practicable. TBF shall pay Quintiles interest
in an amount equal to 1.5% per month (or the maximum lesser amount permitted
<PAGE> 2
by law) of all undisputed amounts owing hereunder and not paid within thirty
(30) days of the receipt of the invoice. If TBF fails to pay any invoice
within sixty (60) days, Quintiles reserves the right to apply all or any
portion of the deposit to any or all amounts then outstanding, including those
sums not yet sixty (60) days old, and to require TBF to restore the deposit to
its original balance.
Payment of invoices shall be sent to the following address:
Quintiles, Inc.
P.O. Box 890062
Charlotte, NC 28289-0062
Invoices shall be mailed to TBF at the following address:
Tampa Bay Financial, Inc.
355 Interstate Boulevard
Sarasota, FL 34240
Attention: Accounts Payable
In addition, it is recognized that during the course of this Agreement,
Quintiles may be exposed to data and information that is confidential and
proprietary to TBF, and that TBF may be exposed to information that is
confidential and proprietary to Quintiles. Each party agrees that it will
maintain in strict confidence any confidential information obtained from the
other party and will not reveal, publish, or otherwise disclose it to any
third party without the disclosing party's prior written consent, unless
required to do so by law or regulation. These obligations of confidentiality
and nondisclosure shall remain in effect for a period of ten (10) years after
the termination of this Agreement.
For the purposes of this Agreement, the parties hereto are independent
contractors and nothing contained in this Agreement shall be construed to
place them in the relationship of partners, principal and agent,
employer/employee, or joint venturers. Neither party shall have the power or
right to bind or obligate the other party, nor shall it hold itself out as
having such authority. During the term of this Agreement and for one year
thereafter, TBF will not directly or indirectly solicit or hire any employee
of Quintiles or its affiliates who has performed or is performing Services for
TBF pursuant to this Agreement.
Quintiles disclaims any and all warranties, express or implied. Neither
Quintiles, nor its affiliates, nor any of its or their respective directors,
officers, employees or agents shall have any liability of any type (including,
but not limited to, contract, negligence, and tort liability), for any
special, incidental, indirect or consequential damages, including, but not
limited to the loss of opportunity, loss of use, or loss of revenue or profit,
in connection with or arising out of this Agreement or the Services performed
by Quintiles hereunder even if such damages may have been foreseeable to
Quintiles. TBF shall indemnify and hold harmless Quintiles from any damages or
expenses (including attorney fees) that Quintiles incurs due to third-party
claims relating to the Services performed pursuant to this letter, except to
the extent such claims are caused by the negligence or willful misconduct of
Quintiles.
This Agreement shall be construed, governed, interpreted, and applied in
accordance with the laws of the State of North Carolina, exclusive of its
conflicts of law provisions. The failure to enforce any right or provision
herein shall not constitute a waiver of that right or provision. This
<PAGE> 3
Agreement contains the entire understandings of the parties with respect to
the subject matter herein, and supersedes all previous agreements (oral and
written), negotiations and discussions. Any modifications to the provisions
herein must be in writing and signed by the parties.
If the above-stated terms are acceptable to TBF, please indicate your
agreement by signing below.
Sincerely,
QUINTILES, INC. TAMPA BAY FINANCIAL, INC.
By: /S/ By: /S/
Name: Robert L. Smith, Jr. Name: Carl Smith
Title: Vice President Title: Chairman
Date: 7/1/99 Date: 7/15/99
<PAGE>
<PAGE> 4
EXHIBIT 1
SCOPE OF WORK
The parties hereto agree that the services to be provided by Quintiles to TBF
include, but are not be limited to, the following listed items:
>Provide an effective strategy to address this stage of the project.
>Evaluate existing documentation including: (1) the patent, (2) the
specifications for the test kit, (3) the materials and components of the test
kit, (4) the conditions under which the evaluations of the test kit and its
components were carried Out, and (5) any and all additional information that
may exist and be used to validate the necessary claims for the Virotest
screening test kit.
>Provide a detailed written analysis of the evaluation that includes all
pertinent findings and expert recommendations and conclusions specific to the
commercial viability of the Virotest saliva based HIV test kit.
Quintiles agrees to immediately notify TBF, in writing, of any findings by
Quintiles during the above stated evaluation that may cause further evaluation
to be unnecessary.
Quintiles anticipates completing its obligations under this agreement within
ninety (90) days from the date of this Agreement.
<PAGE>
<PAGE> 5
EXHIBIT 2
1999 Quintiles' Americas CR0 Services Group Standard Rate Schedule (In US
Dollars).
Category 1999 Hourly Rate
- -------- ----------------
President/CEO Level 438
Chief Scientific Officer 400
President/Thought Leader 375
Senior Executive Level 340
Expert Scientist/Senior Regulatory Consultant/
Executive Medical & Technical 310
Executive Level 285
Senior Regulatory, Chief Scientist, Senior Medical,
Executive Project Management, Senior Management 250
Medical/Management/Regulatory Consultation 220
Senior Project Management, Statistical Design, Senior Statistical
Planning and Analysis, Quality Systems Consultation, Senior Scientists 190
Project Management 160
Project Management, Regulatory Support, Medical Analyses, Scientist 150
Monitoring Management, Site Selection, Statistical Interpretation,
Senior Statistical Analysis, Quality Assurance 130
Senior Monitoring, Data Management Design, Statistical Programming
and Analysis, Regulatory Documentation Preparation 110
Medical Coding, Monitoring, Data Management, In-house Monitoring,
Technical Writing 90
Clinical Services Support, Medical Writing Support, Statistical
Medical Writing Quality Control 65
Data Processing 60
Administrative Support 50
Clerical Support 35
*Senior-level scientists and consultants are billed at individual rates, which
are equivalent to (or, in certain cases, lower than), the rates designated
above for the applicable professional categories. A partial listing, showing
the primary individuals at these senior levels is contained on the
accompanying schedule.
<PAGE> 1
EXHIBIT 10.03
STATE OF NORTH CAROLINA
COUNTY OF WAKE
CONTRACT FOR THE PURCHASE AND SALE OF REAL PROPERTY
This Contract (the "Contract") is made and entered into as of the Effective
Date (as hereinafter defined) by and between MATHENY DEVELOPMENT, LLC, its
nominees and assigns (hereinafter "Buyer") and PCF FALLS, LLC (hereinafter
"Seller').
WITNESSETH:
WHEREAS, Seller is the owner in fee simple of approximately 607.74 acres of
real property in Wake County, North Carolina, more fully described in Exhibit
A attached hereto and made a part hereof (hereinafter the "Property").
WHEREAS, subject to the terms and conditions of this Contract, Buyer desires
to purchase the Property from Seller.
FOR AND IN CONSIDERATION OF the premises, the mutual promises and covenants
set forth herein, and for other good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, Buyer hereby agrees to purchase
the Property described in Paragraph 1 below from Seller, and Seller hereby
agrees to sell and convey such Property to Buyer, all in accordance with the
following terms and conditions:
1. Description of Property. The Property which is the subject of this
Contract is described on Exhibit A attached hereto and shall be conveyed
together with all rights and appurtenances pertaining thereto, including,
without limitation, all right, title and interest, if any, of Seller in and to
the right-of-way of any road(s) abutting the Property.
2. Earnest Money Deposit; Feasibility Period. Within three (3) business days
after the Effective Date of this Contract (as defined in Paragraph 16 hereof),
Buyer will designate the sum of $100,000.00, currently being held by Investors
Title Exchange Corporation ("ITEC"), as an earnest money deposit. Any
interest earned on this earnest money deposit shall inure to the benefit of
and be paid to Buyer regardless of how the principal of this earnest money
deposit is distributed or paid.
Buyer shall have until 5 p.m. on the 60th day after the Effective Date, as
hereinafter defined (hereinafter the "Feasibility Period") within which to
make feasibility studies of the Property, including, without limitation, the
right to go upon the land to examine its surface and subsurface to whatever
extent Buyer may deem necessary for Buyer's purposes. If Buyer, in Buyer's
sole opinion, determines that the Property is not suitable for Buyer's use,
Buyer may terminate this Contract and receive a return of the earnest money
and except for Buyer s obligations under Paragraph 6 hereof, neither party
shall have any further liability or obligation to the other. Buyer shall
notify Seller of Buyer's intent to terminate or proceed with this Contract
within three (3) business days after the end of the Feasibility Period. If
Buyer terminates this Contract, Buyer shall provide Seller copies of all
studies that Buyer caused to be performed on the Property. If Buyer fails to
notify Seller of Buyer's intent to terminate this Contract, then Buyer shall
be deemed to have elected to terminate this Contract. If Buyer notifies Seller
of Buyer's intent to proceed with this Contract, the earnest money shall then
be nonrefundable, and shall belong to Seller except for Seller's default.
<PAGE> 2
Within three (3) business days after the Effective Date of this Contract,
Seller shall provide Buyer with copies of or make available to Buyer to copy
any information concerning the Property or any proposed development thereof in
the possession of Seller or his agents or attorneys, including, without
limitation, any of the following information or documents relating to the
Property or the development of same: any and all engineering studies,
feasibility studies or reports, environmental reports, wetlands studies,
surveys, soils reports, aerial photographs, engineering or design work or
plans, site plans, leases, contracts, easements or other agreements affecting
the Property, information regarding the availability of utilities and access
to the Property, zoning information, requirements which may be imposed by any
governmental or quasi-governmental entity, any other written information or
documents which Seller reasonably believes will or might have a materially
adverse affect on the Property or Buyer's ability to develop the same. For
purposes of this provision, the term "reasonably believes" shall be construed
to mean that such written information or documents would be material to Seller
if Seller were to develop the Property.
3. Closing and Seller's Title. The purchase and sale of the Property shall be
closed (the "Closing") on or before the 30th day after the date on which the
last of the conditions precedent set forth in Paragraph 8 hereof is satisfied
or waived (the "Closing Date"), at the office of Buyer's Attorney in Raleigh,
North Carolina, provided, however, unless Buyer extends the Closing Date
pursuant to the provisions of Paragraph 8 hereof, in no event shall the
Closing Date be later than July 31, 1999. Buyer shall notify Seller in
writing of the scheduled Closing Date not less than twenty-five (25) days
before such date. Notwithstanding the above or anything in this Contract to
the contrary, Seller may by notifying Buyer at any time prior to 20 days
before the scheduled Closing Date, postpone the closing to December 1, 1999;
provided however if Buyer is ready and able to close prior to December 1,
1999, and Seller exercises this option to extend the Closing, Seller shall
make reasonable accommodations for Buyer to get access and control of the
Property so Buyer can start its improvements. For the avoidance of any
confusion, if Buyer is ready and able to close and timely notifies Seller of a
Closing Date, and Seller exercises its option to extend the Closing Date,
Buyer shall not be obligated to pay any extension fees pursuant to the
provisions of Paragraph 8 hereof that would be due after the date Buyer has
designated as the Closing Date.
Seller shall convey to Buyer indefeasible fee simple title to the Property at
Closing by special warranty deed, which title shall be free and clear of all
liens, encumbrances and judgments, except for: C') ad valorem taxes not yet
due and payable; (ii) applicable zoning ordinances; (iii) rights-of-way of
existing public roads and streets; (iv) general service line and utility
easements, if any, which are recorded and are non-specific in describing
locations of lines; (v) those exceptions listed on Exhibit B attached hereto,
and (vi) such other easements and encumbrances as have been specifically
approved and accepted in writing by Buyer (hereinafter individually and
collectively referred to as the "Permitted Title Exceptions"). Title shall be
insurable at standard rates by a title insurance company licensed to do
business in the State of North Carolina and acceptable to Buyer. without any
exceptions except for the Permitted Title Exceptions. Seller agrees that, so
long as this Contract is in effect, Seller will not grant any easements,
permits or licenses unless approved in writing by Buyer, which approval shall
not be unreasonably withheld. Seller shall execute and deliver at Closing an
Affidavit and Indemnification Agreement in form reasonably required by Buyer's
title insurance company (the "Title Company") showing: (x) that all labor and
materials, if any, furnished to the Property prior to the Closing Dare, have
<PAGE> 3
been paid by Seller, (y) Seller has not entered into any undisclosed
unrecorded leases or other agreements affecting the Property, and (z) to the
best of Seller's knowledge, there are no parties in possession or having a
right to possession of any part of the Property, all of which shall be to the
Title Company's reasonable satisfaction so that Purchaser will receive
affirmative coverage in its owner's policy and/or Seller's mortgagee policy
against any and all filed or unfiled lien claims and the rights of parties in
possession. Additionally, at Closing, Seller shall execute a FIRPTA Affidavit.
Buyer shall receive full possession of the Property at Closing.
Ad valorem taxes and current assessments for the year in which Closing occurs
shall be prorated as of the day of Closing on a calendar year basis. Any
assessments or taxes due and payable for prior years, including deferred or
rollback taxes, shall be paid in full by Seller without proration.
Within five (5) business days after the Effective Date of this Contract,
Seller shall provide to Buyer's Attorney copies of all title insurance
policies and opinions on title covering Property in the possession of Seller
or its attorneys or agents and copies of all exceptions shown thereon
(hereinafter collectively the "Title Documents"). Buyer shall have thirty-five
(35) days from the Effective Date to conduct such title examination as Buyer
may deem appropriate and to notify Seller in writing of any objections to
title other. than the Permitted Title Exceptions ("Buyer's Title Objections").
Within five (5) business days after receipt of Buyer's Title Objections,
Seller shall notify Buyer in writing as to whether Seller intends to cure such
defects. If Seller is unable or elects not to cure such objections Buyer may,
at its option, within five (5) business days after having received notice
thereof from Seller, elect in writing to Seller and 1TEC to either: (i)
continue this Contract in full force and effect, notwithstanding such
objections; or (ii) terminate this Contract, receive a return of the earnest
money, and except for Buyer's obligations under Paragraph 6 hereunder, neither
party shall have any further liability or obligation to the other. Failure of
Buyer to make a written election within the 5-day period shall constitute an
election to terminate this Contract.
If, after the effective date of Buyer's Title Objections and prior to Closing,
Buyer determines that there are additional title objections that were not of
record as of the effective date of Buyer's title examination, Buyer shall
promptly notify Seller of same. Provided the additional title objections are
the result of a knowing act or omission of Seller, Seller shall endeavor in
good faith to promptly cure all such title objections and shall notify Buyer
in writing of the cure or of Seller's inability to cure such objections. If
Seller is unable or elects not to cure such objections prior to Closing ,
Buyer may, at its option, exercise either of the options set forth in the
immediately preceding paragraph.
4. Purchase Price. The Purchase Price to be paid by Buyer to Seller for the
Property shall be $21 ,000,000.00.
The Purchase Price shall be paid at closing as follows:
(a) 25% of the Purchase Price by a purchase money promissory note, with
interest at either (i) the prime rate of interest per annum charged by Central
Carolina Bank & Trust Company or at the option of Buyer (ii) 300 basis points
above LIBOR, with interest payable annually on the anniversary date of the
note, with the unpaid principal balance and accrued, unpaid interest due and
payable in full at the end of the 5th year after the date of the note, and
secured by a second priority purchase money deed of trust on the Property.
<PAGE> 4
Buyer shall make its interest rate selection at Closing. Buyer may prepay the
note, in part or in full, at any time without penalty. If Buyer acquires the
Property with only an acquisition loan, Seller will, at any time prior to the
maturity date, subordinate the purchase money deed of trust to Buyer's
development loan for the Property. The note and deed of trust shall provide
for release of property upon payment to Seller of the greater of (1) a per
acre (or any portion of an acre) release fee equal to 120% of the total amount
of the note divided by 420, or (ii) a per lot release fee equal to 120% of the
total amount of the note divided by the total number of lots on Buyer's
approved master plan. Such release fee shall be applied as a prepayment of
principal on the note. The term "lot" as used herein shall have the same
meaning as defined in Section 10-2002 of the Raleigh City Code.
(b) the remainder of the Purchase Price, adjusted for the proration of taxes
and any other applicable adjustments, shall be paid by official bank check or
other immediately available funds at Closing.
5. Survey/Engineering Plans. As part of the documents to be provided
pursuant to Paragraph 3, above, Seller shall, at its expense, provide Buyer
with two (2) copies of the existing boundary survey of the Property prepared
by The John R. McAdams Company, and a Surveyor's Report acceptable to Buyer's
title insurance company.
6. Buyer Rights of Entry. Buyer, its agents, employees, contractors and
subcontractors, shall have the right, at any time after the Effective Date and
prior to Closing, to enter upon the Property for the purpose of causing boring
test and other reasonable tests and studies to be performed thereon and for
the further purpose of performing surveying, architectural and engineering
work thereon; provided, always, that if this transaction does not close, Buyer
shall repair any and all unreasonable damage to the Property caused by such
tests or studies. Buyer shall indemnify arid save and hold Seller harmless
from and against all loss, cost, expense, suits or claims that may be based
upon any injury to any person or property that may occur on the Property
arising out of the performance of any test or work specified herein.
7. Condemnation. If, at any time after the expiration of the Feasibility
Period and prior to Closing, all or an aggregate of 20 acres or more of the
Property shall be taken or affected by condemnation or rights of eminent
domain or like process, or shall be threatened therewith, and the same, in
Buyer's reasonable opinion, would have a materially adverse impact upon
Buyer's proposed development of the Property, Buyer may, within 10 days after
having received notice thereof from Seller, elect in writing to Seller and
ITEC to either: (i) continue this Contract in full force and effect,
notwithstanding such taking or threatened taking in which event (or if less
than 20 acres of the Property is taken or affected) at Closing Seller shall
assign, transfer and set over to Buyer all of Seller's right, title and
interest in and to any awards that may be made for such taking; or (ii)
terminate this Contract, receive a refund of the earnest money. and except for
Buyer's obligations under Paragraph 6 hereunder, neither party shall have any
further liability or obligation to the other. Failure of Buyer to make a
written election within the 10-day period shall constitute an election to
terminate this Contract. Seller agrees to promptly notify Buyer of any
threatened condemnation action against the Property. Seller warrants to Buyer
that Seller currently does not know of any condemnation action or threatened
condemnation action against the Property.
<PAGE> 5
8. Contingencies. It is a condition precedent to Buyer's obligation to close
the purchase of the Property pursuant to this Contract that each of the
following contingencies must be satisfied:
(a) final approval from the City of Raleigh of Buyer's master plan for the
development of the Property with such plan to be approved by mutual agreement
of Buyer and Seller prior to the end of the Feasibility Period. Seller agrees
to cooperate with Buyer, at no cost to Seller, in Buyer's efforts to obtain
approval of the modified plan, including, without limitation, executing any
documents required by the City of Raleigh to be signed by the owner of the
Property;
(b) final approval from the City of Raleigh of Buyer's site plan for Phase I
of the project, such Phase to be designated by mutual agreement of Buyer and
Seller prior to Closing;
(c) final approval from all necessary governmental entities for the
construction of a golf course on a portion of the Property;
(d) final approval by all appropriate 8overnmental entities of Buyer's plan to
provide sanitary sewer service as required to service the entire development;
(e) final approval by all appropriate governmental entities of Buyer's plan to
provide a water distribution system to service the entire development;
(f) final approval of all appropriate governmental entities of Buyer's plan to
provide a storm water discharge system to service the entire development;
(g) approval of all appropriate private and governmental entities of Buyer's
plan to provide underground telephone, cable television, electric power and,
if applicable, natural gas to service the entire development;
(h) Buyers receipt of financing for its entire plan of development at a rate
of not more than the prime rate of interest charged by Central Carolina Bank
and Trust Company plus one percent (1%); and
(i) No moratorium or limitation has been imposed by any governmental entity
with jurisdiction over the Property regarding development of the Property,
provision of sanitary sewer or water service to the Property, or issuance of
building permits or certificates of occupancy, nor has any governmental entity
imposed new or additional fees not in existence as of the date of this
Contract which, in the opinion of the Buyer, adversely impact Buyer's proposed
development of the Property.
If, Buyer is unable, despite its good faith efforts, to have the contingencies
set forth in subparagraphs (a) through (h) satisfied on or before July 31,
1999, or if there exists on July 31, 1999, a moratorium or limitation in
contravention of Paragraph 8(1) hereof, Buyer may, at its option: (i) waive in
writing any unsatisfied contingency and close the purchase of the Property;
(ii) terminate this Contract with all earnest money being paid to Seller; or
(iii) extend the Closing date by up to three (3) one-month consecutive periods
to allow Buyer additional time to satisfy the contingencies, provided, that,
each time, Buyer must notify Seller in writing of Buyer's need to extend prior
to July 21, 1999 or the expiration of the previous expiration period as the
case may be, and with each such written 1-month extension notice, Buyer shall
pay directly to Seller a nonrefundable extension fee of $76,562.00 which
extension fee shall belong to Seller. Each extension fee paid shall apply
toward the purchase price. If after the extensions, the contingencies still
<PAGE> 6
have not been completed or met, then Buyer may either: (i) waive in writing
any unsatisfied contingency and close the purchase of the Property; or (ii)
terminate this Contract, with Seller keeping all earnest money and extension
monies previously paid.
9. Seller's Representations and Warranties. Seller's representations and
warranties shall survive the Closing and passing of title to the Property to
Buyer for a period of 180 days. whether made in this Paragraph or elsewhere
herein:
(a) Seller has full authority to enter into this Contract and to execute all
documents contemplated hereby, and Seller's execution, delivery and
performance of this Contract will not violate the provisions of any agreement
to which Seller is a party or by which they, or any of them, are bound.
(b) Seller has not filed for relief as a debtor under any state receivership
laws or federal bankruptcy laws.
(c) To the best of Seller's knowledge, there are no actions, suits or
proceedings, pending or threatened, against Seller with respect to or
affecting, directly or indirectly, the Property or any rights with relation to
the Property, at law or in equity, before any federal, state, municipal or
other governmental agency or instrumentality, nor is Seller aware of any facts
which might result in any action, suit or proceeding or result in any Federal
or State civil or criminal forfeiture of all or any part of the Property. To
the best of Seller's knowledge, Seller is not in default with respect to any
order or decree of any court or of any such governmental agency or
instrumentality. To the best of Seller's knowledge there are no rights of
possession outstanding in anyone except Seller. To the best of Seller's
knowledge, (i) no part of the Property is subject to a lease agreement, either
oral or written, and (ii) no part of the Property is subject to a right of
first refusal or other right which Seller or any predecessor in title may have
granted to other persons or parties as to the Property, or any part thereof,
whether written or verbal. To the best of Seller's knowledge, except as may be
disclosed in the materials made available to Buyer pursuant to Paragraph 2
hereof, no written notice, has been received by Seller that any governmental
or quasi-government agency or authority intends to impose any special or other
assessment against the Property or any part thereof.
(d) Seller shall transfer the Property to Buyer in its present condition,
excepting normal wear and matters beyond Seller's control between the date
hereof and Closing.
(e) (i) Seller has not used the Property for the disposal of hazardous or
toxic waste materials: nor, (ii) to the best of Seller's knowledge, except as
disclosed in the materials made available to Buyer pursuant to Paragraph 2
hereof, has the Property ever contained nor does it currently contain any
hazardous or toxic waste materials in violation of any federal, state or local
environmental laws, rules or regulations (hereinafter the "Environmental
Laws"), nor has any "clean-up" of the Property occurred pursuant to the
Environmental Laws which could give rise to (a) liability on the part of Buyer
to reimburse any governmental authority for the costs of such clean-up or (b)
a lien or encumbrance on the Property, nor (iii) has Seller received any
notice from any governmental authority with respect to any violation of the
Environmental Laws or clean-up on the Property, nor is Seller aware of any
such contemplated notices.
<PAGE> 7
(f) Except as disclosed in the materials made available to Buyer pursuant to
Paragraph 2 hereof, to the best of Seller's knowledge, neither Seller nor
Seller's predecessors in title have made any commitment to or agreement with
any governmental or private entity which would impose an obligation upon Buyer
to make any contribution or dedication of money or property or to construct,
install or maintain any improvement of a public or private nature on or off
the Property, other than any requirement that might be imposed in connection
with approval of Buyer's plan for development of the Property.
(g) All representations and warranties of Seller contained in this Contract,
whether under this paragraph or elsewhere, shall be true as of the Closing
Date as if those representations and warranties were made at such time and, if
requested, Seller agrees to execute and deliver to Buyer an affidavit at
Closing certifying that all of the representations and warranties made in this
Contract are true and accurate as of that date.
As used in this Paragraph 9, the terms "to the best of Seller's knowledge,"
"to Seller's knowledge, "nor is Seller aware," and any similar term with
respect to the knowledge of Seller shall mean only the actual knowledge of
David C. Falk, Sr. of Drucker & Falk, LLC, and shall not mean the knowledge of
any other person or any other type of knowledge.
10. Buyer's Representations and Warranties. Buyer's representations and
warranties shall survive the closing and passing of title to the Property to
Buyer, whether made in this Paragraph or elsewhere herein:
(a) Buyer has full authority to enter into this Contract and to execute all
documents contemplated hereby, and Buyer's execution, delivery and performance
of this Contract will not violate the provisions of any agreement to which
Buyer is a party or by which it is bound. At closing, Buyer shall deliver to
Seller such evidence of such authority as may be reasonably requested by
Seller.
(b) All representations and warranties of Buyer contained in this Contract,
whether in this paragraph or elsewhere, shall be true as of the Closing Date
as if those representations and warranties were made at such time and, if
requested, Buyer agrees to execute and deliver to Seller an affidavit at
Closing certifying that all of the representations and warranties made in this
Contract are true and accurate as of that date.
11. Default by Buyer. If Buyer defaults in the performance of its obligations
hereunder as to closing of the purchase of the Property, Seller may obtain the
earnest money deposit from ITEC and retain the same as full and complete
liquidated damages, but this shall not prohibit Seller from making a claim
against Buyer for any claim arising under Paragraph 6 hereof. Notwithstanding
the foregoing, Buyer shall have the right, at its option, to pay the amount of
the earnest money directly to Seller, in which case Seller shall, as a
condition of receipt of such monies, execute any and all documents required by
ITEC to release the reservation of monies held by ITEC as earnest money
hereunder.
Seller and Buyer have negotiated and hereby acknowledge and agree that the
actual damages which Seller would suffer on account of default of Buyer under
this Contract are difficult, if not impossible to ascertain, and both parties
agree that the receipt by Seller of the earnest money paid by Buyer
constitutes a reasonable estimate of the actual damages Seller would suffer in
the event of a default by Buyer.
<PAGE> 8
Notwithstanding the foregoing, if Buyer's failure to close the purchase of the
Property is the due to termination by Buyer as set forth in Paragraphs 3 or 7
hereof, Buyer shall be entitled to a refund of the earnest money deposit.
Seller shall not have the right of specific performance of Buyer's obligations
under this Contract, except for Buyer's obligation to restore the Property as
set forth in Paragraph 6 hereof.
12. Default by Seller. If Seller is able but unwilling to convey title as
provided herein. or if Seller is otherwise in default of his obligations
hereunder, Buyer shall have the right to have specific performance of this
Contract but not damages, or Buyer may terminate this Contract and have the
earnest money returned to it, as its sole remedies. Notwithstanding the above,
if Seller defaults after it has exercised its option to extend the Closing
Date pursuant to Paragraph 3 hereof, Buyer. if it elects to terminate the
Contract, may recover from Seller those actual, direct, out-of-pocket expenses
incurred by Buyer subsequent to Buyer's scheduled Closing Date, provided such
out-of-pocket expenses were directly related to the improvement of the
Property. In any action to enforce Seller's or Buyer's obligations hereunder,
the prevailing party shall be entitled to recover the costs of such action,
including reasonable attorneys' fees.
13. Additional Provisions. This Contract is subject to the following general
terms and provisions:
(a) Closing Costs. Seller shall pay for the preparation of the deed, the
excise stamps to be affixed thereto, and for preparation and recording of any
necessary releases. All other closing costs shall be borne by Buyer or Seller
as is the custom in Raleigh, North Carolina. Each party shall pay his or its
own attorney's fees.
(b) Notices. AU notices required or permitted to be given hereunder, shall be
in writing and may be: (i) band delivered by the sender; (ii) sent by local or
overnight courier service: (iii) sent by facsimile to the facsimile number
specified below; or (iv) sent by certified or registered mail, return receipt
requested, and addressed as follows:
If intended for SELLER:David C. Falk, Sr.
Drucker & Falk, LLC
7200 Stonehenge Drive, Suite 211
Raleigh, NC 27613-1620
Facsimile No.: (919) 846-9771
with a copy to:Howard P. Satisky, Esq.
Satisky & Sllverstein, L.L.P.
900 Ridgefleld Drive, Suite 250
Raleigh, NC 27609
Facsimile No.: (919) 790-1560
If intended for BUYER:James M. Matheny
105 Fairway Valley Court
Cary, NC 27513
Facsimile No.:
with a copy to:Richard W. Moore
Perry, Patrick, Farmer & Michaux, P.A.
3716 National Drive, Suite 100
Raleigh, NC 27612
Facsimile No.:
<PAGE> 9
If intended for ITEC: Investors Title Exchange Corporation
121 North Columbia Street
Chapel Hill, NC 27514
Facsimile No.:
or to such other address(es) as any of the foregoing may provide to the other
by notice given as provided herein. Notices may be given on behalf of any
party by such party's attorney.
Any notice hand delivered or sent by facsimile, shall be deemed given and
received as of the date of the hand delivery or facsimile provided if
delivered by facsimile, sender has received a confirmation of the facsimile.
Any notice sent by courier service shall be deemed given arid received one (1)
business day after delivery to the courier service. Notice mailed as above
provided shall be deemed given and received by the addressee on the third
business day after the same is posted.
(c) Brokers. Seller and Buyer each warrants that neither has done any act
which might require the payment of any commission, finders' fee or any other
fee to any third party with respect to the transaction contemplated herein,
except for a brokerage fee to Drucker & Falk, LLC, which is the responsibility
of Seller. Buyer agrees to indemnify, defend and hold Seller harmless from all
costs (including reasonable attorney's fees), commissions or charges claimed
through Buyer by any realtor, broker or agent with respect to the sale of the
Property and the negotiation thereof. Seller agrees to indemnify, defend and
hold Buyer harmless from all costs (including reasonable attorney's fees),
expenses and commission or charges claimed through Seller by any realtor,
broker or agent with respect to the sale of the Property and the negotiation
thereof.
(d) Risk of Loss. The risk of loss or damage by fire, act of God or other
casualty shall remain with Seller until Closing and delivery of the deed.
Seller agrees that be will not commit or permit waste upon the Property.
(e) Binding Effect. This Contract shall be binding upon the parties and their
respective heirs, successors and assigns.
(f) Assignment. Either party shall have the right to assign all of his or its
rights and to delegate all of his or its obligations hereunder to any person,
firm or entity, and such assignee shall be entitled to all of the rights and
powers and shall assume all of the obligations of the assignee hereunder. The
assigning party shall promptly notify the other party and the ITEC of such
assignment.
(g) Construction. This Contract is a North Carolina contract and shall be
interpreted and enforced in accordance with the laws of the State of North
Carolina. This Contract embodies the entire agreement of the parties with
respect to the Property and may not be altered, amended or rescinded except by
written agreement signed by all parties.
Notwithstanding the presumption of law whereby an ambiguity or conflict in
provisions shall be construed against the drafter, the parties hereto hereby
agree that although one party may have generated this Contract, both parties
have been afforded the opportunity to consult with counsel of his or its own
choosing, this Contract has been heavily negotiated, and they have equally
participated in the drafting of this Contract. Therefore, such presumption
shall not be applied if any provision or term of this Contract requires
judicial interpretation.
<PAGE> 10
Captions contained herein are for the purpose of reference only and shall not
be deemed to be in any manner interpretive of any provision of this Contract.
Any reference herein to the singular shall include the plural, and. any
reference to any gender shall include the neuter and the other gender.
In the event any act is to be performed by either party within a stated time
period and the last day on which said act may be so performed falls an a
Saturday, Sunday or legal holiday, the deadline shall be extended to and
include the next following work day.
In the event that any provision of this Contract is held by a court of
competent jurisdiction to be invalid or void, such provision shall be deemed
severable from the remaining provisions of the Contract and shall not be
deemed to nullify or affect any other provision hereof. If any such provision
is deemed invalid due to its scope or breadth, such provision shall be deemed
valid to the extent of the scope or breadth permitted by law.
(h)Buyer warrants and represents that it has filed Articles of Organization
for Buyer to the North Carolina Secretary of State, but has not received
confirmation from the Secretary of State of filing. If the effective date of
the organization of Buyer is later than the date on which Buyer executes this
Contract, Buyer shall, for purposes of this Contract, be deemed to have been
formed as of the date of such execution, and this Contract shall be binding on
both parties hereto.
If, for any reason, Buyer is not formed, the Buyer under this Contract shall
be deemed to be
JAMES M. MATHENY.
14. No Merger. All warranties, representations and covenants contained herein
shall survive the Closing of the purchase and sale of the Property for a
period of 180 days, except the provisions of Paragraph 6 and the warranties of
title made by Seller in the special warranty deed to be delivered pursuant to
this Contract shall survive indefinitely.
15. Time of Essence. The Parties agree that TIME IS OF THE ESSENCE in the
performance of all agreements and obligations hereunder for which specific
time periods are provided.
16. Effective Date. This Contract shall become effective only upon execution
by all parties identified below. The Effective Date of this Contract shall be
the last date upon which this Contract is signed by any of the signatories
thereto, as shown by the date next to such signature.
17. Tax-Deferred Exchange. In the event Buyer or Seller desires to effect a
tax-deferred exchange in connection with the conveyance of the Property, Buyer
and Seller agree to cooperate in effecting such exchange; provided, however
that the exchanging party shall be responsible for all additional costs
associated with such exchange, and provided further, that a non-exchanging
party shall not assume any additional liability with respect to such tax-
deferred exchange. Seller and Buyer shall execute such additional documents,
at no cost to the non-exchanging party, as shall be required to give effect to
this provision.
18. Extension of Dunn Road. Provided the required right-of-way is made
available by the appropriate governmental agencies or by adjoining property
owners other than Seller at no cost to Seller, Seller at its expense, shall
improve Dunn Road to the City of Raleigh standards from its intersection with
<PAGE> 11
Falls of Neuse Road to a point half way between Tract IV as shown on the
survey referenced in Paragraph 5 and the Property. Subject to the availability
of right-of-way as set forth in the above sentence, such improvement shall be
completed prior to or simultaneously with Buyer's improvement of the portion
of Dunn Road abutting the Property. Seller agrees at no cost to Seller to use
its best efforts to get any additional right-of-way needed from other property
owners adjacent to that portion of Dunn Road to be built by Seller, dedicated
to the City of Raleigh by such property owners. Seller and Buyer agree to
split any reimbursement monies for Dunn Road on a pro-rata basis based on the
linear feet of Dunn Road being improved by each party.
IN WITNESS WHEREOF, each of the parties hereto have executed this Contract
under seal, as of the Effective Date.
BUYER: MATHENY DEVELOPMENT, LLC (Seal)
By: /S/ James M. Matheny Date: 4/8/99
SELLER: PCF FALLS, LLC
By: /S/ David C. Falk, Sr., Manager Date: 4/8/99
<PAGE> 1
EXHIBIT 10.04
STATE OF NORTH CAROLINA)
ASSIGNMENT OF CONTRACT FOR THE PURCHASE
COUNTY OF WAKE AND SALE OF REAL PROPERTY
This Assignment Of Contract For The Purchase And Sale Of Real Property (the
"Assignment") is made and entered into as of the Effective Date as set forth
in Paragraph 11 hereof, by and between MATHENY DEVELOPMENT, LLC, a North
Carolina Limited Liability Company, as Assignor, and DIVERSIFIED RESOURCES
GROUP, INC., a Utah Public Company, as Assignee.
WITNESSETH:
Whereas, Assignor has entered into that certain Contract For The Purchase And
Sale Of Real Property, dated April 8, 1999, [as amended by that certain First
Amendment To Contract For The Purchase And Sale Of Real Property dated
___________ 1999](collectively, the "Contract"), by virtue of which Assignor
agreed to purchase from PFC Falls, TIC ('PFC"), and PFC agreed to sell to
Assignor approximately 607.74 acres of real property located in Wake County,
North Carolina, which property is more fully described in the Contract (the
"Property");
WHEREAS, Assignor now desires to assign its rights and delegates its
obligations under the Contract to Assignee, and Assignee desires to accept
such assignment and delegation;
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Assignment. Subject to the fulfillment by Assignee of its obligations
hereunder, Assignor does hereby sell, assign, transfer and convey to Assignee,
without recourse, all of Assignor's right and interest in and delegate all of
Assignor's obligations as Buyer under the Contract.
2. Acceptance and Assumption. By execution hereof, Assignee accepts such
assignment and assumes and agrees to faithfully perform all duties,
obligations and liabilities of Assignor under the Contract, including, but not
limited to, the obligation to pay the extension fees required by Paragraph 8
of the Contract, to pay the Purchase Price, and to faithfully perform all of
its obligations under this Assignment.
3. Notice To PFC. Within five (5) business days after execution of this
Assignment by both parties, Assignor shall give PFC notice of this Assignment
(without disclosing the terms thereof) as required by Paragraph 13(f) of the
Contract.
4. Consideration. As the consideration to be given by Assignee to Assignor for
this Assignment, Assignee agrees that:
a) Assignee shall pay to Assignor, at the time of Assignee's closing of its
purchase of the Property, the sum of Two Million Dollars ($2,000,000.00), by
wire transfer, official bank check, or other immediately available funds;
b) Assignee shall, at or prior to the time of Assignee's closing of its
purchase of the Property, enter into a Development Management Agreement with
Assignor, in the form attached hereto as Exhibit A and incorporated herein;
<PAGE> 2
c) Assignee shall, at or prior to the time of Assignee's closing of its
purchase of the Property, enter into an Exclusive Listing Agreement with
Assignor, in the form attached hereto as Exhibit B and incorporated herein, by
virtue of which Assignor will pay Assignee a commission equal to five percent
(5%) of the gross sale price of any property within the Property sold by
Assignee to any third party, except the property sold to Ocean Golf Group, LLC
as provided in subparagraph e below.
d) Assignee shall, at or prior to the time of Assignee's closing of its
purchase of the Property, enter into an Performance Incentives Agreement with
Assignor, in the form attached hereto as Exhibit C and incorporated herein;
and
e) Assignee shall, at or prior to the time of Assignee's closing of its
purchase of the Property, enter into an Offer To Purchase And Contract with
Ocean Golf Group, LLC (the "Golf Group"), in the form attached hereto as
Exhibit (J) and incorporated herein, by virtue of which the Golf Group will
purchase and acquire from Assignee certain land within the Property.
f) At the time of closing of Assignee's acquisition of the Property, Assignee
shall pay to Assignor, or take such action as is necessary to cause the Escrow
Agent to release to Assignor, the $100,000.00 held by Escrow Agent as an
earnest money deposit to the Contract.
Each of the agreements described in subparagraphs b, c, d and e of this
Paragraph 4 shall be deemed coupled with an interest and may not be terminated
by Assignee for any reason absent Assignor's breach thereof.
5. Representations of Assignor. Assignor hereby represents and warrants to
Assignee as follows:
a) Assignor is a Limited Liability Company organized and in good standing
under the laws of the State of North Carolina.
b) Assignor's execution and delivery of this Assignment and its performance of
its obligations hereunder have been authorized by all necessary Company action.
The person signing this Assignment on behalf of the Company is duly authorized
to do so.
c) The Contract constitutes the entire agreement between Assignor and PFC
regarding the purchase and sale of the Property. The Contract is in full force
and effect and has not been modified or amended except as set forth in the
preamble hereof. Neither Assignor nor, to Assignor's knowledge, PFC is in
default under the Contract and, to Assignor's knowledge, no event has occurred
which, by the passage of time or otherwise, might result in a default under the
Contract by either Assignor or PFC.
e) Assignor has paid to Perry, Patrick, Farmer & Michaux, P.A., as Escrow Agent,
the sum of $100,000.00 as an earnest money deposit under the Contract.
f) The Feasibility period set forth in the Contract has expired and Assignor has
informed PFC of its intent to proceed with the Contract.
6. Representations of Assignee. Assignee hereby represents and warrants to
Assignee as follows:
a) Assignor is a Public Company organized and in good standing under the laws of
the State of Utah and is authorized to conduct business in the State of North
Carolina.
<PAGE> 3
Assignee's execution and delivery of this Assignment and the performance of its
obligations hereunder have been authorized by all necessary Company action. The
person signing this Assignment on behalf of the Company is duly authorized to do
so.
7. Assignee's Failure To Close. If Assignee fails to close the purchase and sale
of the Property for any reason other than breach of the Contract by PFC or
Assignor's undisclosed breach of the Contract, and provided that Assignee is not
in default under this Assignment, Assignee shall reassign the Contract to
Assignor, deliver to Assignor, at no cost to Assignor, copies of all documents
and things obtained or generated by Assignee in furtherance of the Contract, and
pay to Assignor, as liquidated damages, the sum of $2,100,000.00, and, upon such
assignment, delivery, and payment, neither party shall have any further rights
or obligations hereunder.
If PFC breaches the Contract, Assignee, at its option, may either take all
necessary action to obtain specific performance of the Contract, in which event
this Assignment shall remain in full force and effect, or reassign the Contract
to Assignor, deliver to Assignor, at no cost to Assignor, copies of all
documents
and things obtained or generated by Assignee in furtherance of the Contract, and
pay to Assignor, as liquidated damages, the sum of $2,200,000.00, and, upon such
assignment, delivery, and payment, neither party shall have any further rights
or obligations hereunder.
8. Notices. Notices required or permitted to be given under this assignment
shall be in writing and may be: (i) hand delivered by the sender; (ii) sent by
nationally-recognized overnight courier service; or (iii) sent by certified or
registered mail, return receipt requested, and addressed as follows:
If intended for ASSIGNOR: James M. Matheny
105 Fairway Valley Court
Cary, NC 27513
If intended for ASSIGNEE: Howard 0. Davidsmeyer
Chairman/CEO
Diversified Resources Group, Inc.
355 Interstate Boulevard
Sarasota, FL 34240
or to such other person and/or address as either party may provide to the other
in writing as provided herein for purpose of notice
A party sending any notice hereunder shall also send a copy to Escrow Agent, as
follows:
Richard W. Moore
Perry, Patrick, Farmer & Michaux, P.A.
3716 National Drive, Suite 100
Raleigh, NC 27612
Any notice hand delivered or sent by courier service shall be deemed given and
received upon actual receipt. Notice mailed as above provided shall be deemed
given and received by the addressee on the third business day after the same is
posted.
9. Assignment. Assignee may not assign its rights and obligations under the
Contract or this Assignment to any person or entity other than Assignor without
the prior written consent of Assignor.
<PAGE> 4
10. Construction. This Assignment is a North Carolina contract and shall be
interpreted and enforced in accordance with the laws of the State of North
Carolina. Any action to enforce this the provisions of this Assignment shall be
filed in a court of competent jurisdiction in Wake County, North Carolina.
This Assignment embodies the entire agreement between the parties hereto with
respect to the Property and the matters set forth herein. This Assignment can be
modified or amended only by a document duly executed on behalf of both of the
parties hereto.
The captions used herein are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of the intent of
this Assignment or any section thereof.
Unless the context clearly intends to the contrary, words singular or plural in
number shall be deemed to include the other and pronouns having a masculine or
feminine gender shall be deemed to include the other. The term person shall be
deemed to include an individual, corporation, partnership, trust, unincorporated
organization, government and governmental agency or subdivision, as the context
shall require.
Notwithstanding the presumption of law whereby an ambiguity or conflict in
provisions shall be construed against the drafter, the parties hereto hereby
agree that although one party may have generated this Assignment, each party has
been afforded the opportunity to consult with counsel of its own choosing, and
each has participated in the drafting of this Assignment. Therefore, such
presumption shall not be applied if any provision or term of this Assignment
requires judicial interpretation.
If any term, covenant or condition of this Assignment or the application thereof
to any person or Circumstance shall be determined to be invalid or
unenforceable,
the remainder of the Assignment or the application of such term or provision to
persons or circumstances, other than those to which it is held invalid or
unenforceable, shall not be affected thereby and each term shall be valid arid
enforceable to the fullest extent permitted by law, so long as such invalidity
does not materially adversely affect the consideration to be given by Assignee
to Assignor hereunder.
11. Effective Date. This Assignment shall become effective only upon execution
by both Assignor and Assignee. If this Assignment is not executed by Assignee
and
returned to Assignor by 5:00 p.m. or it shall be null and void and of no further
force and effect. The Effective Date of this Assignment shall be the last date
upon which it is signed by any of the signatories thereto, as shown by the date
of each party's execution set forth below.
IN WITNESS WHEREOF, the parties have each executed this Assignment under seal,
as of the day and year first above written.
ASSIGNOR: MATHENY DEVELOPMENT, LLC(Seal)
By:/S/ James M. Matheny, Manager Date: [Sic]
ASSIGNEE: DIVERSIFIED RESOURCES GROUP, INC.
By: /S/ [Sic]
(Name) (Title) (Date)
<PAGE> 1
Exhibit 10.05
Westminster Homes
A Washington Homes Company
August 3, 1999
VIA FACSIMILE & FIRST CLASS MAIL
Matheny Development, LLC
Mr. Mike Matheny
105 Fairway Valley Court
Cary, North Carolina 27513
Re: Approximately 150 +/- Multi-Family lots located at Falls of River in Wake
County, Raleigh North Carolina (the "Property")
Dear Mr. Matheny:
Westminster Homes, Inc. (the "Purchaser") is interested in purchasing the
above referenced Property from James M. Matheny or its affiliate (the
"Seller"). This letter is intended to confirm its interest and to set forth
below general terms and conditions to be included in a Lot Purchase Agreement
between the parties (the "Agreement").
1. Purchase Price: The purchase price shall be Forty Thousand ($40,000) per
"Fully Finished" buildable lot, (the "Lot(s)"). The Purchase price shall
escalate at the rate of 6% per annum commencing on one hundred eighty (180)
days after the first takedown.
2. Takedown: The initial, closing of 10 Lots (the "Initial Closing") shall
occur within thirty (30) days of Seller's satisfaction of the Conditions to
Closing (hereinafter defined). The remainder of the Lots will be settled upon
at a rate of 8 per quarter commencing one hundred eighty (180) days after the
Initial Closing and continuing thereafter until all Lots are purchased.
Purchaser reserves the right to accelerate the Takedown schedule.
3. Brokerage: Neither the Purchaser nor the Seller has been represented by a
broker or real estate agent.
4. Terms: All cash at respective settlements.
5. Deposit: Within ten (10) business days of ratification of the Agreement,
Purchaser shall deposit the amount of One Hundred Thousand Dollars
($100,000.00) with an. escrow agent designated by Purchaser.
6. Feasibility Study Period: The Purchaser shall have a period of sixty (60)
days from execution of the Agreement, in which to evaluate the Property for
its intended use, conduct tests and studies of the Property, and obtain the
required corporate approval. In the event that Purchaser does not proceed with
the Agreement in its sole and absolute discretion, the initial deposit of One
Hundred Thousand Dollars ($100,000.00) shall be immediately returned to
Purchaser and a copy of the Purchaser's proposed site plan wi1l be forwarded
to the Seller.
7. Conditions to Closing: (i) Title to the "Property" shall be good and
marketable, without defects or restrictions that would interfere with
Purchaser's construction and sale of single family homes, (ii) installation of
base course asphalt (iii) installation of utilities including water, sewer,
<PAGE> 2
electric, telephone and gas (iv) receipt of building permits (v) zoning and
site plan approval, and (vi) satisfaction of any proffers (or other
restrictions), by Seller.
8. Costs: Transfer and recordation taxes to be paid equally by Purchaser and
Seller. Agricultural transfer tax, if any, shall be paid by Seller. The
Purchaser shall pay the impact fees required to be paid at building permit.
9. Data/Plans: Within five (5) days of execution of this letter agreement,
Seller shall deliver to Purchaser, at no charge to Purchaser for the use
thereof, copies of all architectural, engineering, appraisal and marketing
data and/or plans and a Phase I Environmental study caused to be prepared in
connection with the Property.
10. Fully Finished: It is expressly understood by the parties hereto that
Purchaser's intent to purchase is based on the Lots being sold on a "Fully
Finished" basis. Fully Finished shall mean that the building pads shall be on
grade and all site, utility and development work, will be done by the Seller
at its cost and that no other work, other than house construction, foundation
plantings and installation of leadwalks shall be required of Purchaser.
11. Development Schedule: Seller shall complete the work as to a number of
lots sufficient to enable the initial settlement by following the execution
of this letter agreement, and shall thereafter complete such work as to
additional lots such as will enable buyer to meet its closing obligations,
specific in Section 3 of this letter.
Assuming the foregoing meets with your approval, please sign and return to my
office the enclosed copy of this letter no later than August 30th , 1999 so
that we may instruct our attorney to prepare the Agreement which will be based
on the foregoing basic business terms.
In light of the considerable expense we will be undertaking in connection with
the Agreement, your signature hereto indicates your binding agreement not to
offer the Property or any part thereof for sale to others and to negotiate the
Agreement on the terms and conditions set forth herein in good faith.
Sincerely,
WESTMINSTER HOMES, INC.
/S/Robert Hutson Date: 8/3/99
Vice President
Accepted and agreed to:
Matheny Development, LLC
By:/S/ Date: 8/3/99
James Mike Matheny
<PAGE>
<PAGE> 3
Westminster Homes
A Washington Homes Company
August 3, 1999
VIA FACSIMILE & FIRST CLASS MAIL
Matheny Development, LLC
Mr. Mike Matheny
105 Fairway Valley Court
Cary, North Carolina 27513
Re: Approximately 175 +/- Single Family lots located at Falls of River in
Wake County, Raleigh North Carolina (the "Property")
Dear Mr. Matheny:
Westminster Homes, Inc. (the "Purchaser") is interested in purchasing the
above referenced Property from James M. Matheny or its affiliate (the
"Seller"). This letter is intended to confirm its interest and to set forth
below general terms and conditions to be included in a Lot Purchase Agreement
between the parties (the "Agreement").
1. Purchase Price: The purchase price shall be Sixty-five Thousand ($65,000)
per "Fully Finished" buildable lot, (the "Lot(s)"). The Purchase price shall
escalate at the rate of 6% per annum commencing on hundred eighty (180) days
after the first takedown.
2. Takedown: The initial closing of 10 Lots (the "Initial Closing") shall
occur within thirty (30) days of Seller's satisfaction of the Conditions to
Closing (hereinafter defined). The remainder of the Lots will be settled upon
at a rate of 8 per quarter commencing one hundred eighty (180) days after the
Initial Closing and continuing thereafter until all Lots are purchased.
Purchaser reserves the right to accelerate the Takedown schedule.
3. Brokerage: Neither the Purchaser nor the Seller has been represented by a
broker or real estate agent.
4. Terms: All cash at respective settlements.
5. Deposit: Within ten (10) business days of ratification of the Agreement,
Purchaser shall deposit the amount of One Hundred Thousand Dollars
($100,000.00) with an escrow agent designated by Purchaser.
6. Feasibility Study Period: The Purchaser shall have a period of sixty (60)
days from execution of the Agreement, in which to evaluate the Property for
its intended use, conduct tests and .studies of the Property, and obtain the
required corporate approval. In the event that Purchaser does not proceed with
the Agreement in its sole and absolute discretion, the initial deposit of One
Hundred Thousand Dollars ($100,000.00) shall be immediately returned to
Purchaser and a copy of the Purchaser's proposed site plan will be forwarded
to the Seller.
7. Conditions to Closing: (i) Title to the 'Property" shall be good and
marketable, without defects or restrictions that would interfere with
Purchaser's construction and sale of single family homes, (ii) installation of
base course asphalt (iii) installation of utilities including water, sewer,
electric, telephone and gas (iv) receipt of building permits (v) zoning and
site plan approval, arid (vi) satisfaction of any proffers (or other
restrictions), by Seller.
<PAGE> 4
8. Costs: Transfer and recordation taxes to be paid equally by Purchaser and
Seller. Agricultural transfer tax, if any, shall be paid be Seller. The
Purchaser shall pay the impact fees required to be paid at building permit.
9. Data/Plans: Within five (5) days of execution of this letter agreement,
Seller shall deliver to Purchaser, at no charge to Purchaser for the use
thereof, copies of all architectural, engineering, appraisal and marketing
data and/or plans and a Phase I Environmental study caused to be prepared in
connection with the Property.
10. Fully Finished: It is expressly understood by the parties hereto that
Purchaser's intent to purchase is based on the Lots being sold on a "Fully
Finished" basis. Fully Finished shall mean that the building pads shall be on
grade and all site, utility and development work, will be done by the Seller
at its cost and that no other work, other than house construction, foundation
plantings and installation of leadwalks shall be required of Purchaser.
11. Development Schedule: Seller shall complete the work as to a number of
lots sufficient to enable the initial settlement by following the execution of
this letter agreement, and shall thereafter complete such work as to
additional lots such as will enable buyer to meet its closing obligations,
specific in Section 3 of this letter.
Assuming the foregoing meets with your approval, please sign and return to my
office the enclosed copy of this letter no later than August 30th, 1999 so
that we may instruct our attorney to prepare the Agreement which will be based
on the foregoing basic business terms.
In light of the considerable expense we will be undertaking in connection with
the Agreement, your signature hereto indicates your binding agreement not to
offer the Property or any part thereof for sale to others and to negotiate the
Agreement on the terms and conditions set forth herein in good faith.
Sincerely,
WESTMINSTER HOMES, INC.
/S/ Robert Hutson Date: 8/3/99
Vice President
Accepted and agreed to:
Matheny Development, LLC
By: /S/ Date: 8/3/99
James Mike Matheny
Title: President
<PAGE> 1
EXHIBIT 10.06
America calls us home
US Home
LISTED ON THE New York STOCK EXCHANGE
Special Projects Division
800 WEST MAIN STREET
FREEHOLD, NEW JERSEY 07728
May 26, 1999
Mike Matheny
105 Fairway Valley Ct.
Cary. N.C. 27513
RE: Letter of Intent - Falls River
Dear Mike:
This letter of intent will serve to set forth the basic terms and conditions
of a proposal by U.S. Home Corporation ("Purchaser") to purchase from Matheny
Development L.L C., ("Seller"), 300 fully developed lots and a fully developed
recreational parcel in the Property as described in Exhibit A, attached,
located in the City of Raleigh. Wake County, North Carolina.
Purchase Price: The fully developed per lot purchase price is to be Fifty Five
Thousand (S55.000) Dollars.
Terms: The entire Purchase price will be paid as follows:
Settlement as to the first 15 lots ("Initial Settlement") shall take place 10
days from the time all the conditions of settlement are met. Settlement of the
next 15 1ots shall take place within 90 days thereafter. Subsequent settlement
of 15 lots shall take place in 3 month intervals. In the event that Purchaser
settles on more lots that is required hereunder, those excess lots shall be
credited to subsequent settlements. Title to the recreational center parcel
shall be delivered to Purchaser simultaneously with the first settlement.
Earnest Money Deposit: Within five (5) business days after receipt by
Purchaser of a fully executed Contract for the Purchase of Land (the
"Contact'), Purchaser will place the sum of Fifty Thousand Dollars ($50,000)
as an earnest money deposit (the 'initial Deposit") in an escrow account with
a title company to be named at a later date (the "Title Company"). Upon the
commencement of land development by Seller, Purchaser shall place an
development by Seller. Purchaser shall place an additional. deposit of Two
Hundred Fifty Thousand Dollars ("the Additional Deposit") in the escrow
account. The deposits shall be in a federally insured interest bearing account
and all interest shall accrue to the benefit of Purchaser. The Contract
extending this transaction. shall provide that receipt of the Deposit as
liquidated damages shall be the Seller's sole and exclusive remedy in the
event of Purchaser's default. At the time of purchase of each lot $l, 000 of
the Deposit plus any interest earned on that $1,000 of the Deposit while in
escrow (the "Escrow interest") will be applied to the purchase of each lot.
Notwithstanding the above, Purchaser shall have, at its sole discretion, the
right to post a Letter of Credit, in a form reasonably acceptable to Seller,
in lieu of cash, for the Initial Deposit and the Additional Deposit.
<PAGE> 2
Feasibility Period: Purchaser's obligation to purchase the property will be
contingent upon approval by Purchaser, within a ninety (90) day review period,
of an economic feasibility study of the Property by the Purchaser and a
physical inspection of the Property by Purchaser (the "Feasibility Period").
Seller agrees to grant to Purchaser the license to enter upon the Property.
Approval or disapprova1 of the feasibility of the transaction shall be at the
absolute and sole discretion of Purchaser. In the event that Purchaser fails
to notify Seller within the Feasibility Period of Purchaser's approval or
disapproval, the Title Company shall automatically return the Deposit to
Purchaser and thereupon neither Purchaser nor Seller shall have any further
right or obligations hereunder.
Title: Title to all lots contained within the Property shall be, at time of
settlement, good of record and in fact marketable, fully insurable at standard
rates by the Title Company, free of all liens, mortgages, deeds of trust,
conditions, easements, restrictions and right of ways. The Contract shall
contain a provision pursuant to which Purchaser will deliver a commitment for
title insurance and object to those encumbrances that materially interfere
with the use or enjoyment of the Property.
Studies and Other Materials: Seller shall furnish Purchaser with copies or
originals of all reports or other documents involving the Property in the
Seller's possession or control including but not limited to environmental
reports, legal notices and all other documents that relate to the Property.
Prorations and Other Costs: Taxes, general and special, are to be adjusted to
the date of settlement. Special assessments against the Property for public
improvements authorized, pending, or completed prior to closing and any HOA
assessments against the lots to be purchased shall be adjusted to the date of
closing and thereafter assumed by the Purchaser. Seller shall pay deficit
charges, any farmland development tax, recapture tax rollback tax or any other
tax relating to the Property prior to the date, of settlement Seller shall pay
for a title examination, preparation of deeds, transfer taxes and fees. And
one half of the cost of the premium of title insurance.
Representations and Warranties: In the Contract the Seller will make various
representations and warrantees to the Purchaser including, among other things:
1. Seller has good, indefeasible and marketable title to the Property.
(ii) Seller is not aware of any latent or patent defects in the Property.
(iii) Seller is not aware of any toxic or hazardous substance being situated
on the Property, and Seller shall provide Purchaser, at Seller's own expense,
with a current Phase I Environmental Assessment.
2. Conditions to Closing: In the Contract, in addition to the condition that
Seller's representations and warranties remain true and correct at the time of
closing. Seller shall agree to express conditions precedent to purchaser's
obligation to close, including among other things:
(i) No government or utility moratorium or prohibition shall exist restricting
or impairing the development of the lots contained within the Property, or the
construction of residences thereon, and building permits as to each unfinished
lot shall be immediately available, with no conditions attached thereto, other
than payment of nominal permit fees.
(ii) Title to each "finished" lot to be acquired by the Purchaser will be as
required by the Contract.
(iii) No change in zoning of the Property shall have occurred or shall be
pending or threatened.
<PAGE> 3
(iv) Seller will have prepared plans and specific lots for the development of
the lots into "finished lots" contained within, the Property and will obtain any
and all necessary approvals from applicable governmental and quasigovernmental
authorities.
(v) Seller shall have made all required improvements to the lots in accordance
with the approved plans, which improvements shall include, but shall not be
limited to. all streets, curbs, gutters. storm drains, street signs, grading,
common area landscaping, gas, sewer. water and other utilities.
(vi) All work shall be completed in a first class, workmanlike manner in a form
satisfactory to the appropriate governmental agencies, so that no building
permit
or certificate of occupancy for any of the lots contained within the Property
will be withheld by virtue of. defect or deficiency of the site work.
(vii) All utility services shall have been provided to the lot lines.
(viii) Seller shall provide building pads to accommodate Purchaser's product
line
dimensions. The building pad shah be graded to within eight (8) inches of the
proposed slab finished floor. Where compaction is necessary, Seller shall
properly compact all building pads and driveway locations and provide a copy of
all compaction reports. prepared by a registered soils engineer, to Purchaser.
All walkout basement lots should be balanced so that there is sufficient, but
not excess, dirt available to backfill lots.
Brokerage Commission: Seller shall pay at closing any brokerage commission.
Assignment: Purchaser shall be entitled, at Purchaser's sole option and
discretion, to assign the Contract to any entity in which Purchaser, or an
affiliate of the purchaser, i.e., a fifty (50) percent owner. It is understood
by the parties that this instrument constitutes only a letter of intent and that
neither Seller nor Purchaser shall have any liability in connection with the
transaction described above until such time as a Contact relating to such has
been prepared and executed by both parties. In the event that a definitive
Contract for the purchase of the Property is not executed within sixty (60) days
following the effective date of this letter, Seller and purchaser shall be
relieved of any further obligations to negotiate to effectuate the transaction
contemplated hereby. This proposal shall expire unless a copy executed by Seller
indicating Seller's approval is delivered to Purchaser within fourteen (14) days
after the date hereof.
If the foregoing correctly reflects your understanding of our mutual intentions,
please execute and return a copy of this letter to the undersigned.
Sincerely,
U.S. Home Corporation
By: /S/ James G. Migliore
Title: President, Special Projects Division
AGREED AND ACCEPTED THIS
____DAY OF _________, 1999.
By:
Title: /S/ J. Mike Matheny
<PAGE> 1
EXHIBIT 10.07
SQUIRES HOMES
3701 National Drive / Suite 101
Raleigh, North Carolina 27612
Phone (919) 881 9350 * Fax (919) 761-8286
May 27, 1999
Matheny Development, LLC
Attn: Mr. Mike Matheny
105 Fairway Valley Court
Cary, North Carolina 27513
LETTER of INTENT
Dear Mike;
Please accept this letter as an expression of Squire Homes intent to enter
into a Land Purchase Agreement for lots in a yet to be named golf community
north of the Falls River Subdivision In Raleigh, North Carolina. The Purchase
Agreement will include verbiage commonly found in agreements of this nature
and will also provide for the following terms and conditions:
1 .Squires Homes will purchase from 150 to 200 lots suitable for a single-
family dwelling at a cost of S60, 000+-.
2. Squires Homes will purchase from 100-150 lots suitable for multi-family
housing at a cost of 340,000+-,
3. Lot dimensions are to be arrived at through mutual consent and should be
designed to fit our current product offering.
4. Terms for the purchase of said lots shall be arrived at shall be arrived at
through mutual consent.
5. Upon acceptance of this latter you will agree to provide Squires Homes with
a sixty- (60) day priced in which to conduct due diligence.
6. This agreement is contingent upon the approval of our parent company.
Beazer Homes, USA, Inc.
7. This offer is contingent on the approval of our parent company, Beazer
Homes, USA, Inc.,
Mike, as you know, I have been very excited about your plans for this land. I
believe your vision here will insure a successful and inspiring new
alternative for home buyers in North Raleigh,
I look forward to your response.
Very truly yours,
/S/ Robert Polanco
Raleigh Division President
If these terms are acceptable to you, please acknowledge with your signature
below.
Matheny Development LLC
By: /S/ Mike Matheny
<PAGE> 1
EXHIBIT 10.08
DRUCKER & FALK, LLC
7200 Stonehenge Drive, Suite 211, Raleigh, NC 27613-1620
Tel: (919) 846.7300 FAX: (919) 846-9771
May 28, 1999
Via Facsimile: 919 462-8646 and US. Mail
Mr. James M. (Mike) Matheny
Matheny Development, LLC
105 Fairway Valley Court
Cary, North Carolina 27513
Dear Mike:
This is to confirm that Drucker & Falk, dba PCF Falls, LLC, has a verbal
gentleman's agreement with Duke University Health Systems concerning the use
of approximately twenty-five (25) acres of land at the intersection of Falls
of the Neuse Road and Dunn Road (Falls River PUD). Drucker & FaIk and Duke
University health systems are considering the development of a retirement
community at that location, such as the project currently underway at
Fearrington Village. There has been no definitive timeline for this project.
If PCF Falls, LLC elects not to follow through with the project, the land will
be offered first to Matheny Development, LLC for consideration to purchase.
Sincerely,
/S/ Robert C. Lippard
Director of Senior Housing
<PAGE>
<PAGE> 2
DRUCKER & FALK, LLC
7200 Stonehenge Drive. Suite 211,
Raleigh, NC 27613-1620
Tel: (919) 846-7300 FAX: (919) 846-9771
May 28, 1999
Via Facsimile: 919 462-8646 and US. Mail
Mr. James M. (Mike) Matheny
Matheny Development, LLC
105 Fairway Valley Court
Cary, North Carolina 27513
Re: Proposed Apartment Site:
Falls River PUD Apartment Land
Wake County, North Carolina
Dear Mike:
Enclosed you find a Letter of Intent which outlines the basic terms under
which we would like to purchase the above referenced property. Drucker & Falk
is very interested in acquiring this site. If the proposed terms are
acceptable, please return an executed copy to my attention.
Best regards,
/S/ Bobby B. Stovall
<PAGE>
<PAGE> 3
DRUCKER & FALK, LLC
7200 Stonehenge Drive, Suite 211
Raleigh, NC 27613-1620
Tel: (919) 846-7300 FAX: (919) 846-9771
May 28, 1999
Via Facsimile: 919 462-8646 and U.S. Mail
Mr. James M. (Mike) Matheny
Matheny Development, LLC
105 Fairway Valley Court
Cary, North Carolina 27513
Re: Proposed Apartment Site:
Falls River PUD Apartment Land
Wake County, North Carolina
Dear Mike:
The following Letter of Intent outlines the interest of Drucker & Falk, LLC
and/or assigns to purchase fee simple title to the above referenced Property
on the basic terms and conditions set forth herein, subject to entering into a
binding purchase agreement. The terms herein are based on information you
supplied us.
Real Property: Acreage to be determined zoned for multi-family use in Wake
County, North Carolina in the Falls River PIJD.
Zoning: Appropriate zoning for a minimum of 200 units and not more than 250
units.
Price: $10,000 per unit
Terms: All cash at closing
Earnest Money: Twenty five thousand dollars ($25,000.00) in either cash or
irrevocable Letter of Credit upon execution of Sale and Purchase Agreement
(applicable to Purchase Price). Twenty five thousand dollars ($25,000.00) in
either cash or irrevocable Letter of Credit upon expiration of due diligence
(applicable to Purchase Price).
Inspection Period: The Buyer shall have the opportunity to conduct such
inspections and investigations of the property as it may require, in its sole
discretion, for the first two (2) months after execution of the Purchase and
Sale Agreement. Such inspections and investigations may include, without
limitations, soil and environmental tests, survey, zoning, comprehensive plan
change, annexation and governmental permitting matters, as well as detailed
review of the economic viability of developing the property. If Buyer's
inspections and investigations are not satisfactory, the Buyer may elect to
terminate the agreement and Buyer shall receive a refund of all deposits.
Deliveries by Seller:. Except as the time period may be otherwise specified
below, within fifteen (15) days of the date of execution of a Purchase
Agreement by both parties hereto, Seller shall provide, at Seller's sole cost
and expense, the following:
<PAGE> 4
A. A preliminary commitment for title insurance in the full amount of the
Purchase Price, together with copies of all exceptions referred to therein.
B. A boundary survey and copies of all soils studies, current subdivision
reports, all Homeowner Association documents, if any, and all engineering
studies in Seller's possession or control which might affect the feasibility
of the development of the Project
Closing: Closing shall take place on or before two hundred ten (210) days
after the expiration of the inspection period. However, the purchaser will be
granted three (3) thirty (30) day extensions of the Closing Date by paying
$10,000.00 for each thirty (30) day period. The extension fees are applicable
to Purchase Price unless closing does not occur.
Contingencies:
1) Zoning
2) Availability of utilities
3) All applicable permits necessary to build the project (i.e., Building, site
plan, DEP, Water Management, Department of Transportation, Cot-p of Engineers,
etc.)
4) Platting
5) Developer shall construct the access road to the project and will stub
utilities to the property line.
Purchase Agreement: A bona fide purchase agreement shall be submitted by
Purchaser within fifteen (15) working days of the completion of the rezoning
for the site. It being understood that if Seller executes this Letter of
Intent, Purchaser will incur costs in its preparation for planning and
development of the Project. Seller agrees that this Letter of Intent shall
constitute an exclusive arrangement between the parties hereto, and from and
after the date of the execution of the Letter of Intent hereto, the Seller,
its agents, affiliates or employees shall not negotiate for, or otherwise deal
in the sale or lease of the Property with anyone other than Purchaser.
Except as stated in the paragraph above, this Letter of Intent is not intended
to be a legally binding agreement of purchase and sale but rather an outline
of the business aspects from which Purchaser and Seller would like the
purchase agreement drafted. The Seller's acceptance of the terms of this
Letter of Intent signifies its agreement to proceed in good faith with the
Purchase under these fundamental terms.
Please indicate your acceptance on the line provided below. A purchase
agreement will be forthcoming when the site and zoning has been defined.
Sincerely,
DRUCKER & FALK, LLC
Drucker & Falk, Inc., its Manager
By: /S/ Bobby Stovall
Director of Acquisitions
The foregoing is hereby accepted:
SELLER:
By:
Its:
Date:
Exhibit 21
List of Subsidiaries
Of Diversified Resources Group, Inc.
------------------------------------
Data-1, a Delaware corporation, incorporated July 1992 (inactive)
Memory 1, a Florida corporation, incorporated February 1996 (inactive)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> SEP-30-1999 DEC-31-1998
<CASH> 48,791 2,475
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 7,081 200
<CURRENT-ASSETS> 55,872 2,675
<PP&E> 96,161 90,661
<DEPRECIATION> (87,682) (65,972)
<TOTAL-ASSETS> 294,936 42,576
<CURRENT-LIABILITIES> 177,855 316,886
<BONDS> 0 0
0 0
0 0
<COMMON> 5,595,260 4,070,056
<OTHER-SE> (5,551,130) (4,512,614)
<TOTAL-LIABILITY-AND-EQUITY> 294,936 42,576
<SALES> 20,378 17,273
<TOTAL-REVENUES> 25,778 36,683
<CGS> 20,613 11,554
<TOTAL-COSTS> 979,173 714,356
<OTHER-EXPENSES> 306,175 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 10,094 0
<INCOME-PRETAX> (1,290,277) (689,227)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 100,000 5,956,183
<CHANGES> 0 0
<NET-INCOME> (1,190,277) 5,266,956
<EPS-BASIC> (0.01) 0.17
<EPS-DILUTED> (0.01) 0.17
</TABLE>
<PAGE> 1
EXHIBIT 99.01 - FINAL DECREE OF BANKRUPTCY COURT
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
In re: Chapter 11 Case [STAMP] Filed
Case No. 97-15827-8P1 July 13, 1999
DATA 1, Inc. Clerk U.S. Bankruptcy Court
Tampa, FL
RECEIVED July 14 1999
Debtor(s)/
FINAL DECREE
THIS CAUSE came on for consideration, upon the Court's own motion for the
purpose of considering the entry of a Final Decree in the above-captioned
reorganization proceeding. The Court considered the record and finds that the
Plan of Reorganization heretofore submitted by the above-named Debtor(s) has
been accepted by the requisite majority of creditors in number and amount;
that said Plan was duly confirmed by this Court; that the terms of the Plan
relating to payment to creditors who are entitled to said payment pursuant to
the said confirmed Plan have been complied with; and that the Plan did not
require the Court to retain jurisdiction until the full consummation of the
Plan. Accordingly, it is
ORDERED, ADJUDGED AND DECREED that, except as otherwise provided for in the
Plan or Order Confirming the Plan, the confirmation of the Plan vests all of
the property of the estate in the Debtor(s), free and clear of all claims and
interests of creditors, of equity security holder and general partners. It is
further
ORDERED, ADJUDGED AND DECREED that, except as otherwise provided for in the
Plan or Order confirming Plan and in Section 1141(d)(2)(3) of the Bankruptcy
Code, the above-named Debtor(s) is/are released from all dischargeable debts.
It is further
ORDERED, ADJUDGED AND DECREED that the Creditors' Committee be and hereby is
discharged from any further duties. It is further
ORDERED, ADJUDGED AND DECREED that this case be and hereby is closed.
DONE AND ORDERED at Tampa, Florida on July 13, 1999.
/S/ Alexander L. Paskay
Chief Bankruptcy Judge
c:
Debtor(s): DATA 1, INC.;, 1748 INDEPENDENCE BLVD., #D1, SARASOTA, FL 34234
Attorney for Debtor(s): CAMILLE J. JURILLO, RIDEN EARLE & KIEFNER, P.A. 100
SECOND AVE., S., No. Tower #400, ST. PETERSBURG, FL 33701
Assistant United States Trustee: TIMBERLAKE ANNEX, SUITE 1200, 501 E. Polk
Street, Tampa, FL 33602
L.B.R. 1007-2 Parties in Interest
I CERTIFY THAT THIS ORDER WAS SERVED BY U.S. MAIL TO CAMILLE JURILLO, ESQ.
ATTORNEY FOR DEBTOR, FOR SERVICE TO BE EFFECTED UPON THE PARTIES LISTED ON
7/13/99 (DATE) By Deputy Clerk [Pat S]
