SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
March 26, 1998
Date of Report
(Date of Earliest Event Reported)
GRAYSTONE WORLD WIDE, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-23498 33-0601487
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction
2506 Regency Lake Drive
Marietta, Georgia 30062
(Address of Principal Executive Offices)
Registrant's Telephone Number
(770) 973-0673
ACHIOTE CORPORATION
1500 Quail Street, Suite #550
Newport Beach, California 92660
(Former Name or Former Address if changed Since Last Report)
<PAGE>
Item 1. Changes in Control of Registrant.
(a) Pursuant to an Agreement and Plan of Reorganization dated March
20, 1998 (the "Plan"), between the Registrant; Graystone World Wide, Inc., a
Nevada corporation ("Graystone Nevada"); and the sole stockholder of Graystone
Nevada (the "Graystone Nevada Stockholder"), the Graystone Nevada Stockholder
became the controlling stockholder of the Registrant in a transaction viewed
as a reverse acquisition, and Graystone Nevada became a wholly-owned
subsidiary of the Registrant. The Plan was treated as a recapitalization of
Graystone Nevada for accounting purposes, and the effective date of the Plan
was March 26, 1998.
The Plan was adopted, ratified and approved by the sole member of
the Board of Directors of the Registrant, Jehu Hand, Esq., by the Board of
Directors of Graystone Nevada and the Graystone Nevada Stockholder.
The source of the consideration used by the Graystone Nevada
Stockholder to acquire his interest in the Registrant was the exchange of 100%
of the outstanding common stock of Graystone Nevada pursuant to the Plan.
The basis of the "control" by the Graystone Nevada Stockholder is
stock ownership. See the table below under Paragraph (b) of this Item.
The former principal stockholder of the Registrant and his number of
pre-split and pre-Plan shares owned and the percentage of ownership of such
outstanding voting securities of the Registrant prior to the completion of the
Plan was Jehu Hand, Esq., President and a director, 245,500 shares or 42%.
This ownership computation takes into account the prior exercise of an option
of Mr. Hand to acquire 155,500 pre-split and pre-Plan shares in conversion of
a promissory note payable to Mr. Hand, all as reported in the Registrant's
10-KSB Annual Report for the year ended March 31, 1997, which has been filed
with the Securities and Exchange Commission and which is incorporated herein
by reference. See Item 7.
Pursuant to the Plan, the Registrant was required:
1. To issue 12,463,000 "unregistered" and "restricted" post-split
shares to the Graystone Nevada Stockholder, in exchange for all of the
outstanding shares of common stock of Graystone Nevada;
2. To effect a forward split of the outstanding common stock of
the Registrant on the basis of two shares for one share, increasing the
580,100 pre-Plan outstanding shares of the Registrant to approximately
1,160,200 shares, depending upon rounding resulting from the forward split;
and
3. Following resignations, in seriatim, of the sole director and
executive officer of the Registrant, to designate and elect, in seriatim,
Donald J. Hallisy, President and a director; and John L. Melcher,
Secretary/Treasurer, to serve until the next respective annual meetings of
stockholders and Board of Directors and until their respective successors are
elected and qualified or until their prior resignations or terminations.
These persons served in these same capacities for Graystone Nevada prior to
the completion of the Plan. Resumes of these persons are included below under
the caption "Management" of Item 2.
Taking into account the shares issued to the Graystone Nevada
Stockholder, the two for one forward split of the pre-Plan outstanding shares
of common voting stock of the Registrant, and 1,058,800 "unregistered" and
"restricted" post-split shares issued to certain consultants as outlined in
Section 1.8 of the Plan and Exhibit I to the Plan, there are or will be
14,682,000 outstanding shares of common stock of the Registrant as a result of
the foregoing.
A copy of the Plan, including any material exhibits and related
instruments, accompanies this Report, which, by this reference, is
incorporated herein; the foregoing summary is modified in its entirety by such
reference. See Item 7.
(b) The following table contains information regarding share
holdings of the Registrant's current sole director and its executive officers
and those persons or entities who beneficially own more than 5% of the
Registrant's common stock, after taking into account the completion of the
Plan, to wit:
Amount and Nature Percent
of Beneficial of
Name Title Ownership Class
Donald J. Hallisy President 12,463,000 84.8%
and Director
John L. Melcher Secretary -0- -0-
Treasurer
Smith Consulting Stockholder 960,000 6.5%
Services, Inc.*
* Smith Consulting Services is a Utah corporation which is wholly-owned
by Karl S. Smith. 353,000 of these shares were acquired under the Plan for
services rendered (see Exhibit I thereto), and 607,000 of these shares were
purchased from the former principal stockholder of the Registrant, Mr. Hand,
in a private transaction.
All directors and executive officers
as a group (2) 84.8%
Item 2. Acquisition or Disposition of Assets.
(a) See Item 1 of this Report. The consideration exchanged under
the Plan was negotiated at "arms length" between the sole director and
executive officer of the Registrant and the Graystone Nevada Stockholder, and
the sole member of the Board of Directors of the Registrant used criteria used
in similar proposals involving the Registrant in the past, including the
relative value of the assets of the Registrant; its present and past business
operations; the future potential of Graystone Nevada; its management; and the
potential benefit to the stockholders of the Registrant. The sole member of
the Board of Directors determined in his good faith that the consideration for
the exchange was reasonable, under these circumstances.
No director, executive officer or person who may be deemed to be an
affiliate of the Registrant had any direct or indirect interest in Graystone
Nevada prior to the completion of the Plan.
(b) The Registrant, through its wholly-owned subsidiary, Graystone
Nevada, intends to continue the business operations intended to be conducted
by Graystone Nevada, which was recently organized on January 16, 1998, and
which are described below under the caption Business. Also see the financial
statements of Graystone Nevada accompanying this Report, which are described
in Item 7.
Business
The Registrant is a new enterprise in the early promotion and
development stage which intends to engage in the manufacturing and marketing
of footwear.
Equipment
The following footwear manufacturing equipment and/or materials were
assigned by Mr. Hallisy to Graystone Nevada, as a contribution to capital,
prior to the completion of the Plan:
INJECTION MOLDING EQUIPMENT:
QTY DESCRIPTION
4 BPI - BTD Injection Molders
4 BPI - 100 Injection Molders
2 BATA Simpax 4 Station Injection Molders
INJECTION MOLDS:
QTY DESCRIPTION
120 Sets of Aluminum Molds - Gesta/Simpax
70 Sets of Aluminum Molds - BPI-100/BTB
ASSORTED EQUIPMENT:
QTY DESCRIPTION
60 Last Racks on Wheels
4 Pallets of Assorted Parts and Hydraulics
780 Pairs of CVO Plastic Molds
1 Platform Scale
SHOE MANUFACTURING EQUIPMENT:
QTY DESCRIPTION
1 Sandt Model P181 Sole Press
1 Allied SE-64 Sole Press
1 Compo Deep Sole Press
1 Poppi Steam/Performa 8 Station
1 Muller Model B Shoe Machine
4 Bostitch Motor Driven Box Stapler
4 Bostich Motor Driven Wire Stitcher
1 Singer 2 Needle
4 Singer Single Needle & Stands
3 Rossley M5 Hy.Buckell Press
CUTTING ROOM:
QTY DESCRIPTION
2 Bata Model MK-1 Single Arm Clicker
2 Atom SE-20 Clicker
1 Column Punching Machine SP-520
1 8 Roll Holder for Traveling Head Press
1 30 Foot Fabric Spreader
MANUFACTURING SUPPLIES:
CUT INSOLES FINISHED:
PAIRS DESCRIPTION
247,600 Mens
333,676 Ladies
201,236 Boys
190,203 Girls
281,684 Childs
YARDS DESCRIPTION
150,000 Binding and Braiding
Management
Names Title or Position Age
Donald J. Hallisy President and Director 65
John L. Melcher Secretary/Treasurer 59
Resumes
Donald J. Hallisy. Mr. Hallisy has served as a Chief Executive
Officer and President of both large and small private companies. Mr. Hallisy
has vast experience in both the footwear and apparel industries. For the past
eighteen years, Mr. Hallisy has been principally involved in the shoe
business. During this time period, Mr. Hallisy developed working
relationships with various shoe manufacturers across Central and South
America. Approximately five years ago, in response to U.S. retailers' desire
to replace their Chinese supply of inexpensive, low quality footwear, Mr.
Hallisy developed "The Made in The Americas" trademark program, a consortium
of Central and South American footwear manufacturers with whom Mr. Hallisy has
been dealing for over a decade. Today, this consortium of footwear
manufacturers is intended to serve as the heart of the contemplated
manufacturing operations for the Registrant.
John L. Melcher. Mr. Melcher is currently responsible for all
phases computer management and office management. Mr. Melcher received his
Bachelor's Degree in Business Management and Computer Science in 1970 from the
University of Wisconsin. Mr. Melcher has spent 25 years with I.B.M. as a
designer of computer applications within the manufacturing arena. Over the
years, he concentrated in the areas of Purchase and Manufacturing Order
Control, Inventory Control and the systems that control these activities. Mr.
Melcher has been involved in all aspects of footwear development and
manufacturing supplies and equipment acquisition for the past four years with
Mr. Hallisy.
Risk Factors
Limited Operating History. The Registrant was founded on May 4,
1992, and Graystone Nevada was formed on January 16, 1998; and accordingly,
each has only a limited operating history upon which an evaluation of the
Registrant and its prospects can be based. Its prospects must be considered
in light of the risks, expenses and difficulties frequently encountered by
companies in their early stage of development, particularly companies in new
and rapidly evolving markets. To address these risks, it must, among other
things, respond to competitive developments. There can be no assurance that
the Registrant will be successful in addressing such risks.
Future Capital Requirements; Uncertainty of Future Funding. The
Registrant presently has extremely limited operating capital. It will require
substantial additional funding in order to realize its goals of commencing
nationwide marketing of its products and services. Depending upon the growth
of its business operations and the acceptance of its products and services,
the Registrant will need to raise substantial additional funds through equity
or debt financing, which may be very difficult for such a speculative
enterprise. There can be no assurance that such additional funding will be
made available to the Registrant, or if made available, that the terms thereof
will be satisfactory to the Registrant. Furthermore, any equity funding will
cause a substantial decrease in the proportional ownership interests of
existing stockholders.
Governmental Regulation. The Registrant is not currently subject to
direct regulation by any government agency, other than regulations applicable
to businesses generally.
No Market for Common Stock; No Market for Shares. There is
currently no market for the Registrant's common stock. Management will seek a
listing of the Registrant's common stock on the OTC Bulletin Board of the
National Association of Securities Dealers, Inc. (the "NASD"), under the
symbol "GWWI"; however, there can be no assurance that such market will ever
develop or be maintained. Any market price that may develop for shares of
common stock of the Registrant is likely to be very volatile, and factors such
as success or lack thereof in developing and marketing the Registrant's
products and services, competition, governmental regulation and fluctuations
in operating results may all have a significant effect. In addition, the
stock markets generally have experienced, and continue to experience, extreme
price and volume fluctuations which have affected the market price of many
small capital companies and which have often been unrelated to the operating
performance of these companies. These broad market fluctuations, as well as
general economic and political conditions, may adversely affect the market
price of the Registrant's common stock in any market that may develop.
Dilution. Dilution usually results from the substantially lower
prices paid by insiders for their securities in a company when compared with
the price being paid by other investors. Donald J. Hallisy received
12,463,000 "unregistered" and "restricted" post-split shares of the Registrant
under the Plan in exchange for all of the outstanding shares of Graystone
Nevada for which Mr. Hallisy paid $1,000 and contributed the equipment
outlined above.
The Board of Directors of the Registrant also adopted a written
compensation agreement pursuant to which post-split shares have been issued
for services rendered by two individual consultants to the Registrant
(collectively, the "Consultants") for an aggregate total of 324,038 shares of
the Registrant's "unregistered" and "restricted" common stock. The
Consultants are as follows, to-wit: Leonard W. Burningham, Esq., 74,778
shares; and Dennis Nielsen, 249,260 shares. Mr. Burningham is one of the
attorneys for Graystone Nevada and Mr. Nielsen is a "due diligence" consultant
to Graystone Nevada. These shares were issued pursuant to Rule 701 of the
Securities and Exchange Commission.
The issuance of the securities to Mr. Hallisy and to these
Consultants, as aforesaid, has and will substantially dilute the interest of
other stockholders in the Registrant.
Future Sales of Common Stock. There is presently no market for the
shares of common stock of the Registrant. See the Risk Factor "No Market for
Common Stock; No Market for Shares," above. There are presently 1,160,200
shares of common stock of the Registrant which are believed to be freely
tradeable in the over-the-counter market. The sale of securities by the
Consultants could also have a substantial adverse effect on any market which
may develop in the Registrant's securities (these shares could be sold under
Rule 144, effectively once the Plan was completed on March 26, 1998), and
potential investors in the Registrant's securities should carefully weigh the
present limited "public float" of the Registrant's securities. Future sales
of securities by Mr. Hallisy pursuant to Rule 144 of the Securities and
Exchange Commission may also have an adverse impact on any market which may
develop in the Registrant's securities. Presently, Rule 144 requires a one
year holding period prior to public sale of "restricted securities" in
accordance with this Rule; Mr. Hallisy could sell an amount equal to 1% of the
total outstanding securities of the Registrant in any three month period under
Rule 144, with the one year holding period to have commenced on March 26,
1998.
Voting Control. By virtue of his ownership of approximately 84% of
the Registrant's outstanding voting securities, Mr. Hallisy has the ability to
elect all of the Registrant's directors, who in turn elect all executive
officers, without regard to the votes of other stockholders. Mr. Hallisy may
be deemed to have absolute control over the management and affairs of the
Registrant.
Dependence on Key Personnel. The Registrant's performance is
substantially dependent on the performance of its executive officers and key
employees. Given the Registrant's early stage of development, the Registrant
is dependent on its ability to retain and motivate high quality personnel,
especially its current management. The Registrant does not have a "key
person" life insurance policy on any of its employees. The loss of the
services of any of its executive officers, especially those of Mr. Hallisy or
other key employees could have a material adverse effect on the business,
operating results or financial condition of the Registrant.
Dividends. The Registrant does not anticipate paying dividends on
its common stock in the foreseeable future. Future dividends, if any, will
depend upon the Registrant's earnings, if any, and other factors not presently
determinable.
Penny Stock. The Registrant's securities may be deemed to be "penny
stock" as defined in Rule 3a51-1 of the Securities and Exchange Commission;
this designation may have an adverse effect on the development of any public
market for the Registrant's shares of common stock or, if such a market
develops, its continuation, as broker-dealers are required to personally
determine whether an investment in the securities is suitable for customers
prior to any solicitation of any offer to purchase these securities.
Penny stocks are securities (i) with a price of less than five
dollars per share; (ii) that are not traded on a "recognized" national
exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ-listed stocks must still meet requirement (i) above); or (iv)
of an issuer with net tangible assets less than $2,000,000 (if the issuer has
been in continuous operation for at least three years) or $5,000,000 (if in
continuous operation for less than three years), or with average annual
revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended,
and Rule 15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Potential investors in the
Registrant's common stock are urged to obtain and read such disclosure
carefully before purchasing any shares that are deemed to be "penny stock."
Further, Rule 15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that
investor. This procedure requires the broker-dealer to (i) obtain from the
investor information concerning his or her financial situation, investment
experience and investment objectives; (ii) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it
more difficult for purchasers of the Registrant's common stock to resell their
shares to third parties or to otherwise dispose of them.
Indemnification of Directors, Officers, Employees and Agents. The
Certificate of Incorporation provides for indemnification to the fullest
extent allowed under the Delaware Corporation Laws Annotated. Generally,
under the Delaware General Corporation Law, a corporation has the power to
indemnify any person who is made a party to any civil, criminal,
administrative or investigative proceeding, other than action by or any right
of the corporation, by reason of the fact that such person was a director,
officer, employee or agent of the corporation, against expenses, including
reasonable attorney's fees, judgments, fines and amounts paid in settlement of
any such actions; provided, however, in any criminal proceeding, the
indemnified person shall have had no reason to believe the conduct committed
was unlawful. It is the position of the Securities and Exchange Commission
that indemnification against liabilities for violations of the federal
securities laws, rules and regulations is against public policy.
Item 3. Bankruptcy or Receivership.
None; not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
There has been no change in the Registrant's certifying accountant
during the past two years; the Registrant has not filed audited financial
statements with any previous 10-KSB Annual Report, claiming an exemption
therefrom under Rule 3-12 of Regulation S-X.
On completion of the Plan with Graystone Nevada, the new sole
director and the executive officers of the Registrant engaged Thurman Shaw &
Company, L.C. of Salt Lake City, Utah, to audit the financial statements of
the Registrant for the previous three years ended March 31, 1997, 1996 and
1995, copies of which have been filed with the Securities and Exchange
Commission as part of the Registrant's 10-KSB Annual Report for the fiscal
year ended March 31, 1997, and which is incorporated herein by reference.
Item 5. Other Events.
See Item 1.
Item 6. Resignations of Directors and Executive Officers.
As a result of the completion of the Plan, Jehu Hand, Esq. resigned
as the sole director and executive officer of the Registrant, and designated,
in seriatim, the sole director and the executive officers of Graystone Nevada
to serve in their same capacities in which they served under Graystone Nevada,
until the next respective annual meetings of stockholders and the Board of
Directors and until their respective successors are elected and qualified or
until their prior resignations or terminations. See Item 1(a).
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Financial Statements from inception (January 18, 1998) to January 31,
1998 (audited) for Graystone Nevada.
Independent Auditor's Report
Balance Sheet
Statement of Operations
Statement of Stockholders' Equity
Statements of Cash Flows
Notes to Financial Statements
(b) Pro Forma Financial Information.
Pro Forma Combined Balance Sheet (Unaudited) of Achiote Corporation
and Graystone World Wide, Inc. as of January 31, 1998.
Pro Forma Combined Notes to Balance Sheet (Unaudited)
Exhibits.
Exhibit
Description of Exhibit* Number
Agreement and Plan of Reorganization 2
Exhibit A - Graystone Stockholder
Exhibit B - Achiote Corporation Financial
Statements for the periods ended
March 31, 1997, 1996 and 1995 *
Exhibit B-1 - Achiote Corporation Unaudited
Financial Statements for the
period ended December 31, 1997 *
Exhibit C - Exceptions to Achiote Financial
Statements
Exhibit D - Graystone World Wide Financial
Statements for the period from
inception (January 16, 1998) to
January 31, 1998 (See Item 7 above)
Exhibit E - Exceptions to Graystone World
Wide Financial Statements
Exhibit F - Investment Letter
Exhibit G - Compliance Certificate of Achiote
Corporation
Exhibit H - Compliance Certificate of
Graystone World Wide, Inc.
Exhibit I - Consultant Shares
Certificate of Amendment to Certificate of 3
Incorporation reflecting name change to
"Graystone World Wide, Inc." and forward
split of shares
Documents Incorporated by Reference*
10-KSB Annual Report for the year ended March 31, 1997.
10-QSB Quarterly Report for the quarter ended December 31, 1997.
* Summaries of any exhibit are modified in their
entirety by this reference to each exhibit.
Item 8. Change in Fiscal Year.
None; not applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
None; not applicable.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
GRAYSTONE WORLD WIDE, INC.
Date: 4/21/98 By /s/ Donald J. Hallisy,
President and Director
<PAGE>
GRAYSTONE WORLD WIDE, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FROM INCEPTION (JANUARY 16, 1998) TO JANUARY 31, 1998
AND
INDEPENDENT AUDITOR'S REPORT
<PAGE>
Independent Auditor's Report
Board of Directors
GRAYSTONE WORLD WIDE, INC.
Marietta, Georgia
I have audited the accompanying balance sheet of Graystone World Wide,
Inc. (A development stage company) as of January 31, 1998 and the
related statements of operations, stockholders' equity and cash flows
from inception (January 16, 1998) to January 31, 1998. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on the financial statements
based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the 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. I believe that my audit
provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Graystone
World Wide, Inc. (A development stage company) as of January 31, 1998,
and the results of its operations and its cash flows from Inception
(January 16, 1998) to January 31, 1998 in conformity with generally
accepted accounting principles.
As discussed on Note 1, the Company has been in the development stage
since its inception on January 16, 1998. The Company has limited
operating capital with current assets exceeding current liabilities by
$323, and no operations. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going
concern.
/s/David T. Thomson P.C.
Salt Lake City, Utah
February 6, 1998
<TABLE>
GRAYSTONE WORLD WIDE, INC.
(A Development Stage Company)
BALANCE SHEET
<CAPTION>
ASSETS
January 31,
1998
<S> <C>
CURRENT ASSETS:
Cash in bank $ 1,000
Total Current Assets 1,000
OTHER ASSETS
Organization costs 677
Total Other Assets 677
TOTAL ASSETS $ 1,677
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 677
Total Current Liabilities 677
STOCKHOLDERS' EQUITY:
Common stock; $.001 par value, 50,000,000
shares authorized, 1,000 shares
issued and outstanding 1
Capital in excess of par value 999
Earnings (deficit) accumulated during the
development stage 0
Total Stockholders' Equity 1,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,677
</TABLE>
<TABLE>
GRAYSTONE WORLD WIDE, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<CAPTION>
From
Inception
(January 16, 1998)
to January 31,
1998
<S> <C>
REVENUE $ 0
EXPENSES 0
NET INCOME (LOSS) $ 0
EARNINGS (LOSS) PER SHARE $ 0.00
</TABLE>
<TABLE>
GRAYSTONE WORLD WIDE, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<CAPTION>
From
Inception
(January 16, 1998)
to January 31,
1998
<S> <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES: $ 0
CASH FLOW FROM INVESTING ACTIVITIES: 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 1,000
Cash provided by financing activities 1,000
NET INCREASE (DECREASE) IN CASH 1,000
CASH - BEGINNING OF PERIOD 0
CASH - END OF PERIOD $ 1,000
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
NET INCOME (LOSS) $ 0
Adjustment to reconcile net income (loss) to net
cash provided (used) by operating activities
Changes in assets and liabilities
Organization costs (677)
Accounts payable 677
Total Adjustments 0
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 0
</TABLE>
<TABLE>
GRAYSTONE WORLD WIDE, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<CAPTION>
From
Inception
Common Stock Capital in (January 16, 1998)
Excess of to January 31,
Shares Amount Par Value 1998
<S> <C> <C> <C> <C>
BALANCE, January 16, 1998
(inception) 0 $ 0 $ 0 $ 0
Shares issued to initial
stockholder for cash, at $1.00
per share, January 1998 1,000 1 999 0
Net income (loss) from
January 16, 1998 (inception)
to January 31, 1998 0 0 0 0
BALANCE, January 31, 1998 1,000 $ 1 $ 999 $ 0
</TABLE>
GRAYSTONE WORLD WIDE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Graystone World Wide, Inc. (The Company) was organized
under the laws of the State of Nevada on January 16, 1998 and has elected a
fiscal year end of March 31st . The Company was formed for the purpose of
engaging in any and all lawful business. The Company has not commenced
planned principle operations and is considered a development stage company as
defined in SFAS No. 7. The Company, has at the present time, not paid any
dividends and any dividends that may be paid in the future will depend upon
the financial requirements of the Company and other relevant
factors.
Net Earnings Per Share - The computation of net income (loss) per
share of common stock is based on the weighted average number of shares
outstanding during the period presented.
Organization Costs - The Company will amortize its organization costs,
which reflect amounts expended to organize the Company, over sixty (60) months
using the straight-line method.
Income Taxes - Due to no operations or net income, at January 31, 1998
no provisions for income taxes has been made. There are no deferred income
taxes resulting from income and expense items being reported for financial
accounting and tax reporting purposes in different periods.
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents. Through January 31,
1998 the Company did not have non-cash investing and financing activities.
Use of 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.
NOTE 2 - COMMON STOCK TRANSACTIONS
The Company on January 23, 1998 sold 1,000 shares of $.001 par value
common stock to the initial stockholder at $1.00 per share for $1,000.
NOTE 3 - RELATED PARTY TRANSACTIONS
An officer of the Company is providing a mailing address to the Company
without charge. This service has been determined by the Company to have only
nominal value. As of January 31, 1998 no compensation has been paid or accrued
to any officers or directors of the Corporation.
<PAGE>
<TABLE>
GRAYSTONE WORLD WIDE, INC.
(FORMERLY ACHIOTE CORPORATION)
GRAYSTONE WORLDWIDE, INC.
Proforma Combined Balance Sheet
(Unaudited)
January 31, 1998
<CAPTION>
Graystone Proforma
Achiote World Wide Increase Proforma
Corporation Inc. (Decrease) Combined
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ - $ 1,000 $ 0 $ 1,000
Total Current Assets $ - $ 1,000 $ 0 $ 1,000
Other Assets
Organization costs $ 286 $ 677 $ 0 $ 963
Accumulated Depreciation $ (286) $ ( -) $ 0 $ (286)
Total Assets $ 0 $ 1,677 $ 0 $ 1,677
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 956 $ 677 (1)$ (155)$ 677
(6)$ (801)
Total Current
Liabilities $ 956 $ 677 $ (956)$ 677
Stockholders' Equity
Preferred stock, $.001 par
value; 1,000,000 shares
authorized; no shares
issued and outstanding $ 0 $ 0 $ 0 $ 0
Common Stock, $.001 par value;
20,000,000 shares authorized;
14,682,360 shares issued and
outstanding 425 1 (1) 155 14,682
(2) 580
(3) 12,787
(3) (1)
(5) 735
Additional paid-in capital 821 999 (1) 646 (6,334)
(2) (580)
(3) 1
(4) (2,202)
(5) 6,613
(6) 155
Retained Earnings (deficit) (2,202) - (4) 2,202 (7,348)
(5) (7,348)
Total stockholders'
Equity (956) 1,000 956 1,000
Total liabilities and
stockholders' equity 0 1,677 0 1,677
</TABLE>
GRAYSTONE WORLD WIDE, INC.
(FORMERLY ACHIOTE CORPORATION)
GRAYSTONE WORLDWIDE, INC.
Proforma Combined Notes to Balance Sheet
(Unaudited)
January 31, 1998
Achiote Corporation-The Company was incorporated under the laws of the State
of Delaware on May 4, 1992 for the purpose of seeking out business
opportunities including acquisitions. The Company is a development stage
company and since inception, the Company's activities have been limited to
organizational matters.
Graystone World Wide, Inc.-The Company was organized under the laws of the
State of Nevada on January 16, 1998. The Company was formed for the purpose
of engaging in any and all lawful business. The Company is a development stage
Company and has not commenced planned principle operations.
Proforma Adjustments-(1) Jehu Hand exercised his convertible option to
purchase 155,500 pre-split shares of common stock of Achiote in consideration
of the sum of $801. (2) Prior to the acquisition, Achiote effected a forward
split of its shares on a 2 for 1 basis. (3) Achiote acquired all of the issued
and outstanding shares of Graystone World Wide, Inc. in exchange for
12,787,398 (post-split) unregistered an restricted shares of previously
authorized but unissued common stock of Achiote. The acquisition has been
treated as a recapitalization transaction. (4)As part of the recapitalization
transaction, the retained earnings of Achiote is eliminated, accounting for
the transaction as if the shares were exchanged by Graystone for the net
assets of Achiote. (5) Achiote issued 734,762 shares of its common stock at a
price of $0.01 per share for a total of $7,348 for services rendered. (6)
Achiote's officer and director paid $155 of outstanding liabilities of the
Company.
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT (the "Plan") is made this day of March, 1998,
between Achiote Corporation, a Delaware corporation ("Achiote"); Jehu Hand,
Esq., the principal stockholder and the sole director and executive officer of
Achiote ("Hand"); Graystone World Wide, Inc., a Nevada corporation
("Graystone"); and the person listed in Exhibit A hereof who is the owner of
record of all of the outstanding common stock of Graystone (the "Graystone
Stockholder").
Achiote wishes to acquire all of the outstanding common stock of
Graystone in exchange for common stock of Achiote in a transaction qualifying
as a tax-free exchange pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended; and
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Exchange of Stock
1.1 Number of Shares. The Graystone Stockholder agrees to
transfer to Achiote at the closing (the "Closing") 100% of the outstanding
securities of Graystone, which are listed in Exhibit A hereof attached hereto
and incorporated herein by reference (the "Graystone Shares"), in exchange for
12,463,000 post-split shares (as outlined below in Section 1.5 hereof) of the
one mill ($0.001) par value "unregistered" and "restricted" common voting
stock of Achiote.
1.2 Delivery of Certificates by Graystone Stockholder. The
transfer of the Graystone Shares by the Graystone Stockholder shall be
effected by the delivery to Achiote at the Closing of stock certificate or
certificates representing the transferred shares duly endorsed in blank or
accompanied by stock powers executed in blank, with all signatures witnessed
or guaranteed to the satisfaction of Achiote and with all necessary transfer
taxes and other revenue stamps affixed and acquired at the Graystone
Stockholder's expense.
1.3 Further Assurances. At the Closing and from time to time
thereafter, the Graystone Stockholder shall execute such additional
instruments and take such other action as Achiote may request in order to
exchange and transfer clear title and ownership in the Graystone Shares to
Achiote.
1.4 Resignation of Present Sole Director and Executive Officer
and Designation of New Directors and Executive Officers. On Closing, the sole
present director and executive officer of Achiote, Jehu Hand, Esq., shall
resign and designate the directors and executive officers nominated by
Graystone to serve in his place and stead, until the next respective annual
meetings of the stockholders and Board of Directors of Achiote, and until
their respective successors shall be elected and qualified or until their
respective prior resignations or terminations.
1.5 Amendment of Charter. The Closing shall be subject to the
Certificate of Incorporation of Achiote being amended to effect a forward
split of its 580,100 currently outstanding shares of common stock on a basis
of two for one (resulting in there being approximately 1,160,200 outstanding
post-split shares [depending upon rounding]), while retaining the present
authorized capital, shares and par value, with appropriate adjustments in the
stated capital and capital surplus accounts of Achiote, and to change the name
of Achiote to "Graystone World Wide, Inc."
1.6 Assets and Liabilities of Achiote at Closing. Achiote shall
have no material assets and no liabilities at Closing, and all costs incurred
by Achiote incident to the Plan shall have been paid or satisfied.
1.7 Funding. At or within a reasonable time of Closing, Achiote
shall use its "best efforts" to raise approximately $500,000 in net proceeds
for the benefit of the reorganized Achiote by the sale of approximately
112,000 "unregistered" and "restricted" shares of its post-split common stock
to certain "accredited investors" in consideration of the sum of $5.00 per
share (which includes payment of approximately $60,000 in expenses incident to
this limited offering), subject to adjustment in the number of shares to be
issued as follows: the shares shall be issued at the lesser of $5.00 or 50% of
the average bid price of all "market makers" for shares of common stock of the
reorganized Achiote on the OTC Bulletin Board of the NASD, for a period of 30
days following the initial quotation of shares of common stock of Achiote on
the OTC Bulletin Board.
1.8 Issuance of Additional Shares. The Company hereby adopts
the written compensation agreement of Graystone providing for the issuance of
20 and 6 shares, respectively, of Graystone, to Messrs. Nielsen and
Burningham, pursuant to Rule 701 of the Securities and Exchange Commission,
and agrees to issue shares of common stock of the Company in lieu thereof, in
the same ratio as being issued to the Graystone Stockholder, or 249,260 and
74,778 shares, respectively; and; the "unregistered" and "restricted" post-
split shares of common stock of the Company outlined in Section 8.3 hereof
shall also be issued simultaneous with the Closing.
Section 2
Closing
The Closing contemplated by Section 1.1 shall be held at the
offices of Leonard W. Burningham, Esq., Suite 205 Hermes Building, 455 East
500 South, Salt Lake City, Utah 84111, unless another place or time is agreed
upon in writing by the parties. The Closing may be accomplished by wire,
express mail or other courier service, conference telephone communications or
as otherwise agreed by the respective parties or their duly authorized
representatives.
Section 3
Representations and Warranties of Achiote and Hand
Achiote and Hand represent and warrant to, and covenant with, the
Graystone Stockholder and Graystone as follows:
3.1 Corporate Status. Achiote is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is licensed or qualified as a foreign corporation in all states in which
the nature of its business or the character or ownership of its properties
makes such licensing or qualification necessary (Delaware only.) Achiote is a
publicly held company, having previously and lawfully offered and sold a
portion of its securities in accordance with applicable federal and state
securities laws, rules and regulations. There is presently no public market
for these or any other securities of Achiote.
3.2 Capitalization. The authorized capital stock of Achiote
consists of 20,000,000 shares of one mill ($0.001) par value common voting
stock, of which 580,100 shares are issued and outstanding, all fully paid and
non-assessable; and 1,000,000 shares of one mill ($0.001) par value preferred
stock, of which no shares are issued and outstanding. There are no outstanding
options, warrants or calls pursuant to which any person has the right to
purchase any authorized and unissued common stock of Achiote.
3.3 Financial Statements. The financial statements of Achiote
furnished to the Graystone Stockholder and Graystone, consisting of financial
statements for the periods ended March 31, 1997, 1996 and 1995, attached
hereto as Exhibit B and incorporated herein by reference, and unaudited
financial statements for the period ended December 31, 1997, attached hereto
as Exhibit B-1 and incorporated herein by reference, are correct and fairly
present the financial condition of Achiote at such dates and for the periods
involved; such statements were prepared in accordance with generally accepted
accounting principles consistently applied, and no material change has
occurred in the matters disclosed therein, except as indicated in Exhibit C,
which is attached hereto and incorporated herein by reference. Such financial
statements do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not misleading.
3.4 Undisclosed Liabilities. Achiote has no liabilities of any
nature except to the extent reflected or reserved against in its balance
sheets, whether accrued, absolute, contingent or otherwise, including, without
limitation, tax liabilities and interest due or to become due, except as set
forth in Exhibit C.
3.5 Interim Changes. Since the date of its balance sheets,
except as set forth in Exhibit C, there have been no (1) changes in financial
condition, assets, liabilities or business of Achiote which, in the aggregate,
have been materially adverse; (2) damages, destruction or losses of or to
property of Achiote, payments of any dividend or other distribution in respect
of any class of stock of Achiote, or any direct or indirect redemption,
purchase or other acquisition of any class of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to employees.
3.6 Title to Property. Achiote has good and marketable title to
all properties and assets, real and personal, reflected in its balance sheets,
and the properties and assets of Achiote are subject to no mortgage, pledge,
lien or encumbrance, except for liens shown therein or in Exhibit C, with
respect to which no default exists.
3.7 Litigation. There is no litigation or proceeding pending,
or to the knowledge of Achiote, threatened, against or relating to Achiote,
its properties or business, except as set forth in Exhibit C. Further, no
officer, director or person who may be deemed to be an affiliate of Achiote is
party to any material legal proceeding which could have an adverse effect on
Achiote (financial or otherwise), and none is party to any action or
proceeding wherein any has an interest adverse to Achiote.
3.8 Books and Records. From the date of this Plan to the
Closing, Achiote will (1) give to the Graystone Stockholder and Graystone or
their respective representatives full access during normal business hours to
all of its offices, books, records, contracts and other corporate documents
and properties so that the Graystone Stockholder and Graystone or their
respective representatives may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Achiote as the Graystone
Stockholder and Graystone or their respective representatives may reasonably
request.
3.9 Tax Returns. Achiote has filed all federal and state income
or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
3.10 Confidentiality. Until the Closing (and thereafter if there
is no Closing), Achiote and its representatives will keep confidential any
information which they obtain from the Graystone Stockholder or from Graystone
concerning the properties, assets and business of Graystone. If the
transactions contemplated by this Plan are not consummated by March 31, 1998,
Achiote will return to Graystone all written matter with respect to Graystone
obtained by Achiote in connection with the negotiation or consummation of this
Plan.
3.11 Investment Intent. Achiote is acquiring the Graystone
Shares to be transferred to it under this Plan for investment and not with a
view to the sale or distribution thereof, and Achiote has no commitment or
present intention to liquidate Graystone or to sell or otherwise dispose of
the Graystone Shares.
3.12 Corporate Authority. Achiote has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to the Graystone Stockholder and Graystone or their
respective representatives at the Closing a certified copy of resolutions of
its Board of Directors authorizing execution of this Plan by its officers and
performance thereunder, and the sole director adopting and delivering such
resolutions is the duly elected and incumbent director of Achiote.
3.13 Due Authorization. Execution of this Plan and performance
by Achiote hereunder have been duly authorized by all requisite corporate
action on the part of Achiote, and this Plan constitutes a valid and binding
obligation of Achiote and performance hereunder will not violate any provision
of the Articles of Incorporation, Bylaws, agreements, mortgages or other
commitments of Achiote.
3.14 Environmental Matters. Achiote has no knowledge of any
assertion by any governmental agency or other regulatory authority of any
environmental lien, action or proceeding, or of any cause for any such lien,
action or proceeding related to the business operations of Achiote. In
addition, to the best knowledge of Achiote, there are no substances or
conditions which may support a claim or cause of action against Achiote or any
of its current or former officers, directors, agents or employees, whether by
a governmental agency or body, private party or individual, under any
Hazardous Materials Regulations. "Hazardous Materials" means any oil or
petrochemical products, PCB's, asbestos, urea formaldehyde, flammable
explosives, radioactive materials, solid or hazardous wastes, chemicals, toxic
substances or related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," or "toxic substances" under any applicable
federal or state laws or regulations. "Hazardous Materials Regulations" means
any regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
3.15 Access to Information Regarding Graystone. Achiote
acknowledges that it has been delivered copies of what has been represented to
be documentation containing all material information respecting Graystone and
its present and contemplated business operations, potential acquisitions,
management and other factors; that it has had a reasonable opportunity to
review such documentation and discuss it, to the extent desired, with its
legal counsel, directors and executive officers; that it has had, to the
extent desired, the opportunity to ask questions of and receive responses from
the directors and executive officers of Graystone, and with the legal and
accounting firms of Graystone, with respect to such documentation; and that to
the extent requested, all questions raised have been answered to its complete
satisfaction.
Section 4
Representations, Warranties and Covenants of Graystone
and the Graystone Stockholder
Graystone and the Graystone Stockholder represent and warrant to,
and covenant with, Achiote as follows:
4.1 Graystone Shares. The Graystone Stockholder is the record
and beneficial owner of all of the Graystone Shares listed in Exhibit A, free
and clear of adverse claims of third parties; and Exhibit A correctly sets
forth the names, addresses and the number of Graystone Shares respectively
owned by the Graystone Stockholder.
4.2 Corporate Status. Graystone is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nevada and is licensed or qualified as a foreign corporation in all states
in which the nature of its business or the character or ownership of its
properties makes such licensing or qualification necessary.
4.3 Capitalization. The authorized capital stock of Graystone
consists of 50,000,000 shares of common voting stock, one mill ($0.001) par
value, of which 1,000 shares are issued and outstanding, all fully paid and
non-assessable. There are no outstanding options, warrants or calls pursuant
to which any person has the right to purchase any authorized and unissued
capital stock of Graystone.
4.4 Financial Statements. The financial statements of Graystone
furnished to Achiote, consisting of audited financial statements from the date
of inception (January 18, 1998) to January 31, 1998, attached hereto as
Exhibit D, and incorporated herein by reference, are correct and fairly
present the financial condition of Graystone as of these dates and for the
period involved, and such statements were prepared in accordance with
generally accepted accounting principles consistently applied. These
financial statements do not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
4.5 Undisclosed Liabilities. Graystone has no material
liabilities of any nature except to the extent reflected or reserved against
in the balance sheet, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities and interest due or to become
due, except as set forth in Exhibit E attached hereto and incorporated herein
by reference.
4.6 Interim Changes. Since the date of these balance sheet,
except as set forth in Exhibit E, there have been no (1) changes in the
financial condition, assets, liabilities or business of Graystone, in the
aggregate, have been materially adverse; (2) damages, destruction or loss of
or to the property of Graystone, payment of any dividend or other distribution
in respect of the capital stock of Graystone, or any direct or indirect
redemption, purchase or other acquisition of any such stock; or (3) increases
paid or agreed to in the compensation, retirement benefits or other
commitments to their employees.
4.7 Title to Property. Graystone has good and marketable title
to all properties and assets, real and personal, proprietary or otherwise,
reflected in these balance sheet, and the properties and assets of Graystone
are subject to no mortgage, pledge, lien or encumbrance, except as reflected
in the balance sheet or in Exhibit E, with respect to which no default exists.
4.8 Litigation. There is no litigation or proceeding pending,
or to the knowledge of Graystone, threatened, against or relating to Graystone
or its properties or business, except as set forth in Exhibit E. Further, no
officer, director or person who may be deemed to be an affiliate of Graystone
is party to any material legal proceeding which could have an adverse effect
on Graystone (financial or otherwise), and none is party to any action or
proceeding wherein any has an interest adverse to Graystone.
4.9 Books and Records. From the date of this Plan to the
Closing, the Graystone Stockholder will cause Graystone to (1) give to Achiote
and its representatives full access during normal business hours to all of its
offices, books, records, contracts and other corporate documents and
properties so that Achiote may inspect and audit them; and (2) furnish such
information concerning the properties and affairs of Graystone as Achiote may
reasonably request.
4.10 Tax Returns. Graystone has filed all federal and state
income or franchise tax returns required to be filed or has received currently
effective extensions of the required filing dates.
4.11 Confidentiality. Until the Closing (and continuously if
there is no Closing), Graystone, the Graystone Stockholder and their
representatives will keep confidential any information which they obtain from
Achiote concerning its properties, assets and business. If the transactions
contemplated by this Plan are not consummated by March 31, 1998, Graystone,
the Graystone Stockholder will return to Achiote all written matter with
respect to Achiote obtained by them in connection with the negotiation or
consummation of this Plan.
4.12 Investment Intent. The Graystone Stockholder are acquiring
the shares to be exchanged and delivered to them under this Plan for
investment and not with a view to the sale or distribution thereof, and the
Graystone Stockholder have no commitment or present intention to liquidate the
Company or to sell or otherwise dispose of the Achiote shares. The Graystone
Stockholder shall execute and deliver to Achiote on the Closing an Investment
Letter attached hereto as Exhibit F and incorporated herein by reference,
acknowledging the "unregistered" and "restricted" nature of the shares of
Achiote being received under the Plan in exchange for the Graystone Shares,
and receipt of certain material information regarding Achiote.
4.13 Corporate Authority. Graystone has full corporate power and
authority to enter into this Plan and to carry out its obligations hereunder
and will deliver to Achiote or its representative at the Closing a certified
copy of resolutions of its Board of Directors authorizing execution of this
Plan by its officers and performance thereunder.
4.14 Due Authorization. Execution of this Plan and performance
by Graystone hereunder have been duly authorized by all requisite corporate
action on the part of Graystone, and this Plan constitutes a valid and binding
obligation of Graystone and performance hereunder will not violate any
provision of the Articles of Incorporation, Bylaws, agreements, mortgages or
other commitments of Graystone.
4.15 Environmental Matters. Graystone and the Graystone
Stockholder have no knowledge of any assertion by any governmental agency or
other regulatory authority of any environmental lien, action or proceeding, or
of any cause for any such lien, action or proceeding related to the business
operations of Graystone or its predecessors. In addition, to the best
knowledge of Graystone, there are no substances or conditions which may
support a claim or cause of action against Graystone or any of its current or
former officers, directors, agents, employees or predecessors, whether by a
governmental agency or body, private party or individual, under any Hazardous
Materials Regulations. "Hazardous Materials" means any oil or petrochemical
products, PCB's, asbestos, urea formaldehyde, flammable explosives,
radioactive materials, solid or hazardous wastes, chemicals, toxic substances
or related materials, including, without limitation, any substances defined as
or included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," or "toxic substances" under any applicable federal or
state laws or regulations. "Hazardous Materials Regulations" means any
regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
4.16 Access to Information Regarding Achiote. Graystone and the
Graystone Stockholder acknowledge that they have been delivered copies of what
has been represented to be documentation containing all material information
respecting Achiote and its present and contemplated business operations,
potential acquisitions, management and other factors; that they have had a
reasonable opportunity to review such documentation and discuss it, to the
extent desired, with their legal counsel, directors and executive officers;
that they have had, to the extent desired, the opportunity to ask questions of
and receive responses from the directors and executive officers of Achiote,
and with the legal and accounting firms of Achiote, with respect to such
documentation; and that to the extent requested, all questions raised have
been answered to their complete satisfaction.
Section 5
Conditions Precedent to Obligations of Graystone, the Graystone Stockholder
All obligations of Graystone and the Graystone Stockholder under
this Plan are subject, at their option, to the fulfillment, before or at the
Closing, of each of the following conditions:
5.1 Representations and Warranties True at Closing. The
representations and warranties of Achiote contained in this Plan shall be
deemed to have been made again at and as of the Closing and shall then be true
in all material respects and shall survive the Closing.
5.2 Due Performance. Achiote shall have performed and complied
with all of the terms and conditions required by this Plan to be performed or
complied with by it before the Closing.
5.3 Officers' Certificate. Graystone and the Graystone
Stockholder shall have been furnished with a certificate signed by the
President of Achiote, in such capacity and personally, attached hereto as
Exhibit G and incorporated herein by reference, dated as of the Closing,
certifying (1) that all representations and warranties of Achiote contained
herein are true and correct; and (2) that since the date of the financial
statements (Exhibit B and B-1 hereto), there has been no material adverse
change in the financial condition, business or properties of Achiote, taken as
a whole.
5.4 Opinion of Counsel of Achiote. Graystone and the Graystone
Stockholder shall have received an opinion of counsel for Achiote, dated as of
the Closing, to the effect that (1) the representations of Sections 3.1, 3.2
and 3.12 are correct; (2) except as specified in the opinion, counsel knows of
no inaccuracy in the representations in 3.5, 3.6 or 3.7; and (3) the shares of
Achiote to be issued to the Graystone Stockholder under this Plan will, when
so issued, be validly issued, fully paid and non-assessable.
5.5 Assets and Liabilities of Achiote. Achiote shall have no
material assets and no liabilities at Closing, and all costs, expenses and
fees incident to the Plan shall have been paid.
5.6 Resignation of Sole Director and Executive Officer and
Designation of New Directors and Executive Officers. The present sole
director and executive officer of Achiote shall resign, and shall have
designated nominees of Graystone as directors and executive officers of
Achiote to serve in their place and stead, until the next respective annual
meetings of the stockholders and Board of Directors of Achiote, and until
their respective successors shall be elected and qualified or until their
respective prior resignations or terminations.
5.7 Forward Split and Name Change of Achiote. The requirements
of Section 1.5 hereof shall have been fully satisfied at Closing.
Section 6
Conditions Precedent to Obligations of Achiote
All obligations of Achiote under this Plan are subject, at its
option, to the fulfillment, before or at the Closing, of each of the following
conditions:
6.1 Representations and Warranties True at Closing. The
representations and warranties of Graystone and the Graystone Stockholder
contained in this Plan shall be deemed to have been made again at and as of
the Closing and shall then be true in all material respects and shall survive
the Closing.
6.2 Due Performance. Graystone and the Graystone Stockholder
shall have performed and complied with all of the terms and conditions
required by this Plan to be performed or complied with by them before the
Closing.
6.3 Officers' and Stockholders' Certificate. Achiote shall have
been furnished with a certificate signed by the President of Graystone,
attached hereto as Exhibit H and incorporated herein by reference, dated as of
the Closing, certifying (1) that all representations and warranties of
Graystone and the Graystone Stockholder contained herein are true and correct;
and (2) that since the date of the financial statements (Exhibit D), there has
been no material adverse change in the financial condition, business or
properties of Graystone, taken as a whole.
6.4 Opinion of Counsel of Graystone. Achiote shall have
received an opinion of counsel for Graystone, dated as of the Closing, to the
effect that (1) the representations of Sections 4.2, 4.3 and 4.13 are correct;
(2) except as specified in the opinion, counsel knows of no inaccuracy in the
representations in 4.6, 4.7 or 4.8; (3) the Graystone Shares to be delivered
to Achiote under this Plan will, when so delivered, have been validly issued,
fully paid and non-assessable.
6.5 Books and Records. The Graystone Stockholder or the Board
of Directors of Graystone shall have caused Graystone to make available all
books and records of Graystone, including minute books and stock transfer
records; provided, however, only to the extent requested in writing by Achiote
at Closing.
6.6 Acceptance by Graystone Stockholder. The terms of this Plan
shall have been accepted by the Graystone Stockholder who own not less than
50.1% of the outstanding Graystone Shares by their execution and delivery of a
copy of the Plan and related instruments.
Section 7
Termination
Prior to Closing, this Plan may be terminated (1) by mutual
consent in writing; (2) by either the sole director of Achiote or Graystone
and the Graystone Stockholder if there has been a material misrepresentation
or material breach of any warranty or covenant by the other party; or (3) by
either the sole director of Achiote or Graystone and the Graystone Stockholder
if the Closing shall not have taken place, unless adjourned to a later date by
mutual consent in writing, by the date fixed in Section 2.
Section 8
General Provisions
8.1 Further Assurances. At any time, and from time to time,
after the Closing, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or otherwise to carry
out the intent and purposes of this Plan.
8.2 Waiver. Any failure on the part of any party hereto to
comply with any of its obligations, agreements or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
8.3 Brokers. Except for 734,762 post-split shares to be issued
as compensation for services rendered as outlined in Exhibit I attached hereto
and incorporated herein by reference, each party represents to the other
parties hereunder that no broker or finder has acted for it in connection with
this Plan, and agrees to indemnify and hold harmless the other parties against
any fee, loss or expense arising out of claims by brokers or finders employed
or alleged to have been employed by he/she/it.
8.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first-class registered or certified mail, return
receipt requested, as follows:
If to Achiote: 1500 Quail Street, Suite 550
Newport Beach, California 92660
With a copy to: Jehu Hand, Esq.
Hand & Hand
Suite 200, The Pavilion
24901 Dana Point Harbor Drive
Dana Point, California 92629
If to Graystone: 2506 Regency Lake Drive
Marietta, Georgia 30062
With a copy to: Leonard W. Burningham, Esq.
455 East 500 South, #205
Salt Lake City, Utah 84111
If to the Graystone
Stockholder: To the Addresses listed in
Exhibit A
8.5 Entire Agreement. This Plan constitutes the entire
agreement between the parties and supersedes and cancels any other agreement,
representation, or communication, whether oral or written, between the parties
hereto relating to the transactions contemplated herein or the subject matter
hereof.
8.6 Headings. The section and subsection headings in this Plan
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Plan.
8.7 Governing Law. This Plan shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware, except to
the extent pre-empted by federal law, in which event (and to that extent
only), federal law shall govern.
8.8 Assignment. This Plan shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided
however, that any assignment by any party of its rights under this Plan
without the prior written consent of the other parties shall be void.
8.9 Counterparts. This Plan may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement and
Plan of Reorganization effective the day and year first above written.
ACHIOTE CORPORATION
Date: 3/20/98 By /s/ Jehu Hand, Esq, President
Date: 3/20/98 /s/ Jehu Hand, Esq.
GRAYSTONE WORLD WIDE, INC.
Date: 3/23/98 By /s/ Donald J. Hallisy, President
GRAYSTONE STOCKHOLDER
Date: 3/23/98 /s/ Donald J. Hallisy
<PAGE>
EXHIBIT A
Number of Shares of
Number of Shares Achiote
Owned of to be
Name and Address Graystone Received in Exchange
Donald J. Hallisy 1,000 12,463,000
2506 Regency Lake Dr.
Marietta, Georgia 30062
<PAGE>
EXHIBIT B
ACHIOTE CORPORATION
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED
MARCH 31, 1997, 1996 AND 1995 (AUDITED)
Attached to the Registrant's 10-KSB Annual Report for the fiscal
year ended March 31, 1997.
<PAGE>
EXHIBIT B-1
ACHIOTE CORPORATION
UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED DECEMBER 31, 1997
Attached to the Registrant's 10-QSB Quarterly report for the
quarter ended December 31, 1997.
<PAGE>
EXHIBIT C
Jehu Hand, Esq. has exercised his convertible option to purchase
155,500 pre-split shares of common stock of the Company in consideration of
the sum of $801; and
Mr. Hand has also agreed to contribute to capital, at the Closing,
any amounts owed to him by the Company, for advances, services or otherwise.
<PAGE>
EXHIBIT D
GRAYSTONE WORLD WIDE, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (JANUARY 16, 1998)
TO JANUARY 31, 1998
See Item 7 of this Report.
<PAGE>
EXHIBIT E
None.
<PAGE>
EXHIBIT F
Achiote Corporation
1500 Quail Street, Suite 550
Newport Beach, California 92660
Re: Exchange of shares of Graystone World Wide, Inc., a
Nevada corporation ("Graystone"), for shares of
Achiote Corporation, a Delaware corporation ("Achiote"
or the "Company")
Dear Ladies and Gentlemen:
Pursuant to that certain Agreement and Plan of Reorganization (the
"Plan") between the undersigned, Graystone, the sole stockholder of Graystone
and Achiote, I acknowledge that I have approved this exchange; that I am aware
of all of the terms and conditions of the Plan; that I have received and
personally reviewed a copy of the Plan and any and all material documents
regarding the Company, including, but not limited to Articles of
Incorporation, Bylaws, minutes of meetings of directors and stockholders,
financial statements and reports filed with the Securities and Exchange
Commission during the past twelve months. I represent and warrant that no
director or officer of the Company or any associate of either has solicited
this exchange; that I am an "accredited investor" as that term is known under
the Rules and Regulations of the Securities and Exchange Commission (see
Exhibit "A" hereto); and/or, I represent and warrant that I have sufficient
knowledge and experience to understand the nature of the exchange and am fully
capable of bearing the economic risk of the loss of my entire cost basis.
I further understand that immediately prior to the completion of
the Plan, Achiote had little, if any assets, of any measurable value, and that
in actuality, the completion of the Plan and the exchange of my shares of
Graystone for shares of Achiote results in a decrease in the actual percentage
of ownership that my shares of Graystone represented in Graystone prior to the
completion of the Plan.
I understand that you have and will make books and records of your
Company available to me for my inspection in connection with the contemplated
exchange of my shares, options or warrants, and that I have been encouraged to
review the information and ask any questions I may have concerning the
information of any director or officer of the Company or of the legal and
accounting firms for the Company. I understand that the accountant for the
Company is Thurman Shaw & Co., LC, Certified Public Accountants, 215 South
State Street, Salt Lake City, Utah 84111, Telephone 801-359-2428; and that
legal counsel for Achiote is Jehu Hand, Esq., Suite 200, The Pavilion, 24901
Dana Point Harbor Drive, Dana Point, California 92629, Telephone #(714) 489-
2400; Mr. Hand is also the sole director and executive officer of Achiote.
I also understand that I must bear the economic risk of ownership
of any of the Achiote shares, options or warrants for a long period of time,
the minimum of which will be one (1) year, as these shares are "unregistered"
shares and may not be sold unless any subsequent offer or sale is registered
with the United States Securities and Exchange Commission or otherwise exempt
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), or other applicable laws, rules and regulations.
I intend that you rely on all of my representations made herein
and those in the personal questionnaire (if applicable) I provided to
Graystone for use by Achiote as they are made to induce you to issue me the
shares of Achiote under the Plan, and I further represent (of my personal
knowledge or by virtue of my reliance on one or more personal
representatives), and agree as follows, to-wit:
1. That the shares being acquired are being received for
investment purposes and not with a view toward further distribution;
2. That I have a full and complete understanding of the phrase
"for investment purposes and not with a view toward further distribution";
3. That I understand the meaning of "unregistered" shares and
know that they are not freely tradeable;
4. That any stock certificate issued by you to me in connection
with the shares being acquired shall be imprinted with a legend restricting
the sale, assignment, hypothecation or other disposition unless it can be made
in accordance with applicable laws, rules and regulations;
5. I agree that the stock transfer records of your Company
shall reflect that I have requested the Company not to effect any transfer of
any stock certificate representing any of the shares being acquired unless I
shall first have obtained an opinion of legal counsel to the effect that the
shares may be sold in accordance with applicable laws, rules and regulations,
and I understand that any opinion must be from legal counsel satisfactory to
the Company and, regardless of any opinion, I understand that the exemption
covered by any opinion must in fact be applicable to the shares;
6. That I shall not sell, offer to sell, transfer, assign,
hypothecate or make any other disposition of any interest in the shares,
options or warrants being acquired except as may be pursuant to any applicable
laws, rules and regulations;
7. I fully understand that my shares which are being exchanged
for shares of the Company are "risk capital," and I am fully capable of
bearing the economic risks attendant to this investment, without
qualification; and
8. I also understand that without approval of counsel for
Achiote, all shares of Achiote to be issued and delivered to me in exchange
for my shares of Graystone shall be represented by one certificate only and
which such certificate shall be imprinted with the following legend or a
reasonable facsimile thereof on the front and reverse sides thereof:
The shares, options or warrants of stock represented
by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be
sold or otherwise transferred unless compliance with
the registration provisions of such Act has been made
or unless availability of an exemption from such
registration provisions has been established, or
unless sold pursuant to Rule 144 under the Act.
Any request for more than one stock certificate must be
accompanied by a letter signed by the requesting stockholder setting forth all
relevant facts relating to the request. Achiote will attempt to accommodate
any stockholders' request where Achiote views the request is made for valid
business or personal reasons so long as in the sole discretion of Achiote, the
granting of the request will not facilitate a "public" distribution of
unregistered shares of Achiote.
You are requested and instructed to issue a stock certificate as
follows, to-wit:
Donald J. Hallisy
2506 Regency Lake Drive
Marietta, Georgia 30062
Dated this 23rd day of March, 1998.
Very truly yours,
/s/ Donald J. Hallisy
<PAGE>
EXHIBIT G
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Achiote Corporation, a Delaware
corporation ("Achiote"), represents and warrants the following as required by
the Agreement and Plan of Reorganization (the "Plan") between Achiote and
Graystone, a Nevada corporation ("Graystone"), and the sole stockholder of
Graystone (the "Graystone Stockholder"), to-wit:
1. That he is the President of Achiote and has been authorized
and empowered by its Board of Directors to execute and deliver this
Certificate to Graystone and the Graystone Stockholder;
2. Based upon his personal knowledge, information, belief and
opinions of counsel for Achiote regarding the Plan:
(i) All representations and warranties of Achiote
contained within the Plan are true and correct;
(ii) Achiote has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Achiote as set forth in its
financial statements for the periods ended March 31,
1997, 1996 and 1995, except as set forth in Exhibit C
to the Plan.
ACHIOTE CORPORATION
By /s/ Jehu Hand, Esq., President
/s/ Jehu Hand, Esq., Personally
<PAGE>
EXHIBIT H
CERTIFICATE OF OFFICER PURSUANT TO
AGREEMENT AND PLAN OF REORGANIZATION
The undersigned, the President of Graystone World Wide, Inc., a
Nevada corporation ("Graystone"), represents and warrants the following as
required by the Agreement and Plan of Reorganization (the "Plan") between
Graystone, its sole stockholder (the "Graystone Stockholder") and Achiote
Corporation, a Delaware corporation ("Achiote"), to-wit:
1. That he is the President of Graystone and has been
authorized and empowered by its Board of Directors to execute and deliver this
Certificate to Achiote;
2. Based on his personal knowledge, information, belief:
(i) All representations and warranties of Graystone
contained within the Plan are true and correct;
(ii) Graystone has complied with all terms and provisions
required of it pursuant to the Plan; and
(iii) There have been no material adverse changes in the
financial position of Graystone as set forth in its
financial statements for the period from inception to
January 31, 1998, except as set forth in Exhibit E to
the Plan.
GRAYSTONE WORLD WIDE, INC.
By /s/ Donald J. Hallisy, President
/s/ Donald J. Hallisy, Personally
<PAGE>
EXHIBIT I
Name of Consultant Number of "Unregistered" Post-Split Shares
Smith Consulting Services, Inc. 353,000
Alliance Consulting, Inc. 381,762
Total: 734,762
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
ACHIOTE CORPORATION
(a Delaware corporation)
ACHIOTE CORPORATION, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
1. The following resolution has been unanimously adopted by the
Board of Directors and a majority of the stockholders of the Corporation in
accordance with Section 242 of the Delaware General Corporation Law for the
purpose of amending the corporation's Certificate of Incorporation. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the
Corporation be amended by changing the Articles thereof number
"FIRST" and "FOURTH" so that, as amended, said Articles shall be
and read as follows:
FIRST: The name of the corporation is Graystone World Wide,
Inc.
FOURTH: The total number of shares of all classes which the
Corporation is authorized to have outstanding is Twenty One
Million (21,000,000) shares of which stock Twenty Million
(20,000,000) shares in the par value of $.001 each, amounting in
the aggregate of Twenty thousand Dollars ($20,000) shall be common
stock and of which One Million (1,000,000) shares in the par value
of $.001 each, amounting in the aggregate to One Thousand Dollars
($1,000) shall be preferred stock. Effective on March 31, 1998, or
upon filing of this amendment with the Delaware Secretary of
State, whichever is sooner, the common stock shall be
reconstituted such that two new shares of common stock shall be
issued in exchange for each one outstanding share. Any fractional
shares otherwise required to be issued shall be rounded to the
nearest whole share. The Board of Directors is authorized,
subject to limitations prescribed by law, to provide for the
issuance of the authorized shares of preferred stock in series,
and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of
shares to be included in each such series and the qualifications,
limitations or restrictions thereof. The authority of the board
with respect to each series shall include, but not be limited to,
determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series,
whether dividends shall be cumulative, and, if so,
from which date or dates, and the relative rights of
priority, if any, of payment of dividends on shares of
that series;
(c) Whether that series shall have voting rights, in
addition to the voting rights provided by law, and, if
so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such
conversion, including provision for adjustment of the
conversion rate in such events as the Board of
Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, t he terms and conditions of
such redemption, including the date or date upon or
after which t hey shall be redeemable, and the amount
per share payable in case of redemption, which amount
may vary under different conditions, and at different
redemption rates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and,
if so, the terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event
of voluntary or involuntary liquidation, dissolution
or winding up of the corporation, and the relative
rights of priority, if any, of payment of shares of
that series;
(h) Any other relative rights, preferences and limitations
of that series, unless otherwise provided by the
certificate of determination.
FURTHER RESOLVED, that the capital of said Corporation
shall be revised by reason of said amendment to transfer
from surplus to capital an amount equal to the number of new
common shares issued in the recapitalization times their par
value.
2. That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, ACHIOTE CORPORATION has caused this
certificate to be signed by its duly authorized officer, this 18th day of
March, 1998.
ACHIOTE CORPORATION
/s/ Jehu Hand, President and Secretary
