SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) August 16, 1996
K.L.S. Enviro Resources, Inc.
(Exact name of registrant as specified in its charter)
Nevada 33-62268 75-2460365
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3220 North Freeway, Fort Worth, Texas 76111
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 624-4844
<PAGE>
Item 1. Changes in Control of Registrant
On August 16, 1996, SMD, L.L.C. (the "Purchaser") acquired 2,561,000
shares of the Registrant's common stock together with 100,000 shares of
the Registrant's Series A preferred stock that are convertible into an
additional 500,000 shares of the Registrant's common stock. The
securities were acquired from the Estate Of James Robert Bell (the
"Estate") for a purchase price of $.48 per share (including $.48 per
share of common stock into which the preferred stock is convertible),
with the purchase price payable in four installments on February 16,
1997, August 16, 1997, February 16, 1998 and August 16, 1998. The
Purchaser is owned and controlled by Thomas A. Murdock, Roger D.
Dudley, and Stephen M. Studdert, each of whom is a director, executive
officer and shareholder of fonix Corporation ("Fonix"). Thomas A.
Murdock became a director of the Registrant on July 10, 1996.
As part of the same transaction, and on the same terms and conditions
as those agreed to between the Purchaser and the Estate, Raymond H.
Kurzon acquired one million shares of the Registrant's common stock
from the Estate. Mr. Kurzon is Chairman Of The Board and Chief
Executive Officer of the Registrant. As a result of this transaction,
he owns 1,730,539 shares, or 16.7 percent, of the outstanding common
stock of the Registrant. The Registrant and Mr. Kurzon previously
agreed that Mr. Kurzon will convert $180,000 of the Registrant's debt
owed to Mr. Kurzon into 450,000 shares of the Registrant's common
stock. Upon consummation of that conversion, Mr. Kurzon will own
2,180,539 shares, or 20.2 percent of the Company's outstanding common
stock.
As of May 14, 1996, the Registrant had a note payable in the amount of
$710,000 payable to fonix Corporation. On August 16, 1996, the
Registrant and fonix Corporation modified their financing arrangement
pursuant to which the $710,000 note was cancelled and replaced by
another $710,000 note, and the Registrant executed three additional
notes payable to fonix Corporation in the amounts of $450,000, $150,000
and $590,000 for funds previously advanced, for an aggregate
indebtedness to fonix Corporation of $1,900,000. All of these notes are
payable on demand, bear interest at the rate of 12 percent per annum
from the respective dates on which the funds were advanced, and are
secured by all the Registrant's assets except for certain real property
owned by the Registrant. The $710,000 note to fonix Corporation is
convertible at the option of fonix Corporation into 2,366,667 shares of
the Registrant's common stock at $0.30 per share, and the other notes
are convertible into an aggregate of 2,975,000 shares of common stock
at $0.40 per share. The proceeds of these promissory notes were used to
purchase two additional drilling rigs, to refurbish an existing rig, to
purchase additional inventory and equipment for the Registrant's
drilling and hydraulics business, and to pay certain indebtedness of
the Registrant, including certain accounts payable and $443,000 of a
$623,000 note payable to the Estate of James Robert Bell, in return for
which the Estate released the Registrant from an obligation to pay the
Estate $241,688 in accrued interest and preferred stock dividends. This
transaction with the Estate was consummated on August 16, 1996. The
other $180,000 of the $623,000 note payable to the Estate of James
Robert Bell was transferred by the Estate to Raymond H. Kurzon, the
Chief Executive Officer and a director of the Registrant, in exchange
for a real estate limited partnership interest assigned by Mr. Kurzon
to the Estate. The Registrant's Board Of Directors and Mr. Kurzon have
agreed that the Registrant will retire this $180,000 debt by issuing
450,000 shares of its common stock to Mr. Kurzon at the rate of $0.40
per share.
<PAGE>
As a result of these transactions, the Purchaser beneficially owns
3,061,000 shares, or 28.2 percent, of the outstanding common stock of
the Registrant; and Fonix has the right to acquire, through conversion
of its notes payable from the Registrant, 5,341,667 shares, or
beneficial interest of 34.0 percent, of the Registrant's common stock.
The owners of the Purchaser disclaim beneficial ownership of any of the
Registrant's securities owned by Fonix. Fonix disclaims beneficial
ownership of any securities of Registrant owned by the Purchaser.
However, based on the relationship of the owners of the Purchaser with
Fonix, the Purchaser and Fonix may be deemed to be the beneficial
owners of an aggregate of 51.9 percent of the Registrant's common
stock.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 30, 1996 K.L.S. ENVIRO RESOURCES, INC.
By: /s/ Merlyn W. Dahlin
----------------------------
Merlyn W. Dahlin, Vice President
