SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the year ended December 31, 1998
Commission File No. 0-24684
LONE WOLF ENERGY, INC.
(Name of small business issuer in its charter)
Colorado
(State or other jurisdiction of Incorporation or Organization)
73-1550360
(IRS Employer Identification Number )
2400 NW 30th, #814
0klahoma City, Oklahoma 73112
(405) 946-5972
(Address,including zip code and telephone number, including area Code of
registrant's executive offices)
K&S VENTURES, INC.
(Former Name of Registrant)
Securities registered under Section 12 (b) of the Exchange Act: none
Securities registered under Section 12 (g) of the Exchange Act:
Common Stock, $0.001 par value
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $ -0-
State the aggregate market value of the voting stock held by
non-affiliates, computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days: As of March 31, 1999: $2,188,000.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of March 31, 1999 there
were 11,170,000 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
<PAGE>
PART I
Item 1. Description of Business
Lone Wolf Energy, Inc. (the "Registrant" or `Company") was incorporated on
March 4, 1991 in the state of Colorado and was formerly known as K&S Ventures.
In February 1999 the Company signed a Master Equipment Sales Agreement with
Eagle Capital, Inc. (OTCBB: ECIC) to sell specialized equipment used in
producing patented IMSI blocks for mortarless dry stack construction. The
Agreement calls for the Company to provide ten mobile block plants and five
portable Q-Bond plants over the next thee years.
Employees
During the year ended December 31, 1998, the Company had no full-time
employees.
Item 2. Description of Property
Facilities
The Company maintains its principal office at 2400 NW 30th, #814, Oklahoma
City, OK 73112. Its officers provide the office space free of charge to the
Company. The Company owns no other property.
Item 3. Legal Proceedings
There are no material legal proceedings that are pending or have been
threatened against the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters
Market Information
The Company began trading on the OTC Bulletin Board in October 1998 under
the symbol LWEI.
Indicate, as applicable, that such over-the-counter market quotations
reflect interdealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions. Where there is an absence of
an established public trading market, reference to quotations shall be qualified
by appropriate explanation.
The bid price has ranged from $0.025 to $0.50 since trading was approved in
the fourth quarter of 1998.
Sales of Common Stock During 1998
During the fourth quarter of 1998, 6,500,000 shares of the Company's common
stock were issued to certain individuals in exchange for services rendered and
forgiveness of debts in prior periods. The stock issued was at $0.001 per share.
In addition during the fourth quarter of 1998, 420,000 shares of common stock
were exchanged to certain third parties for services and $420 cash.
Common Stock Dividend During 1998
There were no common stock dividends during 1998.
Common Stock Subject to Options or Warrants
There are no outstanding options or warrants to purchase common stock of
the Registrant. There are no securities convertible into common stock of the
Registrant
Common Stock that could be sold pursuant to Rule 144
Of the 11,170,000 shares outstanding, 11,170,000 shares are eligible, as of
the date of this report, for sale under Rule 144 of the Securities Act.
Holders
As of December 31, 1998, the Company had 119 shareholders of record.
Cash Dividends
The Company has not paid any cash dividends on its Common Stock and does
not foresee that such dividends will be paid in the future.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation
Plan of Operations
The Company plans to purchase certain specialized equipment to be sold to
Eagle Capital, Inc. (OTCBB: ECIC) for use in producing blocks to be used in the
IMSI mortarless block system. Such equipment sales will give a guaranteed
monthly payment to the Company plus production payments for blocks produced in
excess of a certain amount each month.
Subsequent to the end of the year of this report, the Company signed a
Master Equipment Sales Agreement with Eagle to provide ten mobile blocks plants
and five portable Q-Bond plants over the next three years. Financing has been
arranged for the first machine, which has been manufactured. The Company plans
to use the profits from this venture to acquire or establish other business
ventures as it sees fit.
<PAGE>
Item 7. Financial Statements
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of Lone Wolf Energy, Inc.:
We have audited the balance sheet of Lone Wolf Energy, Inc., a Colorado
corporation, as of December 31, 1998 and 1997 and the related statements of
operations, stockholders' equity, and cash flows for the years then ended. The
Company is considered to be a development stage enterprise, beginning January
14, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts disclosed 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Lone Wolf Energy, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years then ended and from the inception of the development stage in
conformity with generally accepted accounting principles.
HENDERSON, SUTTON & COMPANY P. C.
/s/ HENDERSON, SUTTON & COMPANY P. C.
----------------------------------------
Certified Public Accountants
March 30, 1999
<PAGE>
LONE WOLF ENERGY, INC.
A Development Stage Company
(Formerly K&S Ventures, Inc.)
BALANCE SHEETS
December 31, 1998 AND 1997
December 31, December 31,
1998 1997
------------ ------------
ASSETS
Current Assets
Cash $282 $0
------------- ------------
TOTAL ASSETS $ 282 $0
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 0 $6,972
------------- ------------
Total Liabilities 0 6,972
------------- ------------
Stockholders' Equity
Preferred Stock, $0.001 par value,
20,000,000 shares authorized, No shares
issued and outstanding $0 $0
Common Stock, $0.001 par value, 100,000,000
shares authorized, 11,170,000 shares issued
and outstanding at December 31, 1998 and
4,250,000 shares issued and outstanding at
December 31, 1997 11,170 4,250
Additional Paid in Capital 45,941 19,165
Retained Earnings (Deficit) (19,557) (19,557)
Deficit Accumulated During The Development Stage (37,272) (10,830)
------------- ------------
Total Stockholders' Equity 282 (6,972)
------------- ------------
TOTAL LIABILITIES' AND STOCKHOLDERS' EQUITY $282 $0
============= ============
The accompanying notes are an integral part of the Financial Statements
<PAGE>
LONE WOLF ENERGY, INC.
A Development Stage Company
(Formerly K&S Ventures, Inc.)
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998 and 1997
And from inception of the development stage
From Inception
of the
Development December 31, December 31,
Stage 1998 1997
-------------- ------------ ------------
Revenue $0 $0 $0
Expenses
Legal 18,398 11,425 6,973
Accounting 6,270 4,907 1,363
Consulting 6,500 6,500 0
Transfer Agent 3,862 1,368 2,494
Telephone 1,712 1,712 0
Miscellaneous 530 530 0
-------------- ------------ ------------
Total Expenses 37,272 26,442 10,830
-------------- ------------ ------------
Net Loss Accumulated During
the Development Stage (37,272) (26,442) (10,830)
-------------- ------------ ------------
Weighted Average Shares
Outstanding - 4,516,154 2,520,833
-------------- ------------ ------------
Loss Per Share - $0.00 $0.00
-------------- ------------ ------------
The accompanying notes are an integral part of the Financial Statements
<PAGE>
LONE WOLF ENERGY, INC.
A Development Stage Company
(Formerly K&S Ventures, Inc.)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998 and 1997
And from inception of the development stage
From
Inception
of the
Development December 31, December 31,
Stage 1998 1997
------------ ------------ ------------
Operating Activities:
Net Loss ($37,272) ($26,442) ($10,830)
Change in Accounts Payable 0 (6,972) 6,972
------------ ------------ ------------
Cash Used In Operating
Activities (37,272) (33,414) (3,858)
------------ ------------ ------------
Financing Activities:
Sale of Common Stock 100,420 420 100,000
Less: Issue Costs (100,000) 0 (100,000)
Common Stock Issued
for Services Rendered 6,500 6,500 0
Contribution of Capital
by Stockholders 30,634 26,776 3,858
------------- ------------ ------------
Cash Provided By Financing
Activities 37,554 33,696 3,858
------------- ------------ ------------
Investing Activities 0 0 0
------------- ------------ ------------
Change in Cash 282 282 0
Cash at Beginning of Period 0 0 0
------------- ------------ ------------
Cash at End of Period $282 $282 0
------------- ------------ ------------
The accompanying notes are an integral part of the Financial Statements
<PAGE>
LONE WOLF ENERGY, INC.
A Development Stage Company
(Formerly K&S Ventures, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1998 and 1997
Deficit
Shares Accumulated
of Additional During the Total
Common Common Paid in Development Accumulated Stockholders
Stock Stock Capital Stage Deficit Equity
------------------------------------------------------------------
Balance at
December 31,
1996 10,000 $100 $19,457 $0 $(19,557) $0
Common Stock
Issued for
Cash 90,000 900 99,100 0 0 100,000
Less: Issue
Costs 0 0 (100,000) 0 0 (100,000)
Change in
Par Value 0 (900) 900 0 0 0
Stock
Dividend
Issued in
1997 4,150,000 4,150 (4,150) 0 0 0
Capital
Contributed
by Share-
holders 0 0 3,858 0 0 3,858
Net Loss 0 0 0 (10,830) 0 (10,830)
---------------------------------------------------------------------
Balance at
December 31,
1997 4,250,000 $4,250 $19,165 $(10,830) $(19,557) $(6,972)
---------------------------------------------------------------------
Common Stock
Issued for
Cash 420,000 420 0 0 0 420
Common Stock
Issued for
Services
Rendered 6,500,000 6,500 0 0 0 6,500
Capital
Contributed
by Share-
holders 0 0 26,776 0 0 26,776
Net Loss 0 0 0 (26,442) 0 (26,442)
---------------------------------------------------------------------
Balance at
December
31, 1998 11,170,000 $11,170 $45,941 $(37,272) $(19,557) $282
---------------------------------------------------------------------
The accompanying notes are an integral part of the Financial Statements
<PAGE>
LONE WOLF ENERGY, INC.
A Development Stage Company
(Formerly K&S Ventures, Inc.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Organization
Lone Wolf Energy, Inc. (formerly K&S Ventures, Inc.) was incorporated on
March 4, 1991 in the state of Colorado. In February 1999 the Company signed a
Master Sales Agreement with Eagle Capital, Inc. (OTCBB: ECIC) to sell
specialized equipment used in producing patented IMSI blocks for mortarless dry
stack construction. The agreement calls for the Company to provide ten mobile
block plants and five portable Q-Bond plants over the next three years.
Basis of Accounting
Assets, liabilities, equity, revenue and expenses are recorded under the
accrual method of accounting in conformity with generally accepted accounting
principles.
Cash and cash equivalents
The Company considers all cash and marketable securities as cash
equivalents.
Income Taxes
For the years prior to 1997, the Company was taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under the provisions of the Code, all
losses or taxable income flowed to the stockholders of the Company. In January
1997, the Company's standing as a Subchapter S corporation, as defined by the
Internal Revenue Code, was changed because of the purchase of common stock
during 1997 by a corporate shareholder. Beginning with the year ended December
31, 1997, the Company will be considered a "C" corporation for income tax
purposes.
Fiscal Year End
The Company's fiscal year end is December 31.
Earnings (Loss) per Share
Primary income (loss) per share is calculated by dividing net income (loss)
by the weighted average shares of common stock of the Company outstanding during
the period (See Note 5).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. STOCKHOLDERS' EQUITY
Issuance of Common Stock
During the first quarter of 1997, 90,000 shares of the Company's common
stock was purchased by Lone Wolf Exploration, Inc., a non-affiliated privately
held Oklahoma corporation ("LWX"), in exchange for $100,000 in cash. The
transaction resulted in LWX owning 90% of the issued and outstanding common
stock of the Registrant. In connection with the transaction, the Company paid
fees in the amount of $100,000 to certain unrelated third parties.
During 1998 6,500,000 shares were issued at 0.001 for services rendered by
related parties and stockholders.
Change in Par Value
In June 1997, the par value of the Company's common stock was changed from
$0.01 per share to $0.001 per share.
Common Stock Dividend
In June 1997, the Board of Directors of the Company declared a common stock
dividend for the purpose of increasing the number of common shares outstanding.
The stock dividend resulted in each shareholder of the Company owning 42.5
shares for each share owned, which increased the common stock outstanding from
100,000 shares to 4,250,000 shares.
3. INCOME TAXES
The deferred tax assets and liabilities are as follows:
Net operating loss carryforward $ 14,909
Less: valuation allowance 14,909
----------
Net deferred tax asset $ 0
----------
As of December 31, 1998, the Company has a net operating loss carryforward
of approximately $37,000 for income tax purposes and expires as follows:
Year of Loss Expires Carryforward Amount Deferred Tax Asset
or (Liability)
1997 2012 $11,000 $4,332
1998 2013 26,000 10,577
------------------- ---------------------
$37,000 $14,909
------------------- ---------------------
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%.
4. DEVELOPMENT STAGE OPERATIONS
The Company is a development stage enterprise. Its primary focus since
inception of the new operating plan has been raising capital.
5. EARNINGS (LOSS) PER SHARE
Common Shares Outstanding 11,170,000
Effect of using weighted average common and common
equivalent shares outstanding (6,653,846)
-------------------
Weighted average common shares outstanding 4,516,154
-------------------
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Company changed from Cross and Robinson, Certified Public Accountants
to Henderson, Sutton & Company P.C. because the partner in charge of the audit
switched from Cross and Robinson to Henderson, Sutton & Company P.C. and the
Company wanted to follow his change for consistency purposes. There were no
disagreements withCross and Robinson with regard to accounting procedures and
financial disclosure.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors are elected for one-year terms or until the next annual meeting
of shareholders and until their successors are duly elected and qualified.
Officers serve at the discretion of the Board of Directors.
The officers and directors devote only such time as is necessary to the
operations of the Company. Each officer and director maintains outside
employment at non-affiliated companies.
The Directors and Officers of the Registrant as of the date of this report
are as follows:
Name Age Position
-------------------------------- ---------- -------------------------------
Marc W. Newman 29 President and Director
Douglas A. Newman 51 Vice President, Secretary,
and Director
-------------------------------- ---------- -------------------------------
Marc W. Newman, has been President and a Director of the Company since
November 1998. From July 1998 to November 1998 Mr. Newman was a private
investment consultant. From 1992 to July 1998 Mr. Newman was a registered
investment broker. Prior to that time Mr. Newman was a full time student.
Douglas A. Newman, have been Vice President, Secretary and a Director of
the Company since November 1998. From 1991 to 1998 Mr. Newman was Chairman, Vice
President and Secretary of Hospital Rehabilitation Services, Inc. a privately
held company he co-founded, which provided contract Physical Therapy services to
hospitals in Tennessee, Alabama, Illinois and North Carolina. From 1985 to 1990
Mr. Newman was Chairman, CFO, Secretary and a Director of Wedding Information
Network, Inc. (NASDAQ: WINN), a franchisor and operator of "The Wedding Pages",
a leading publication for bridal planning and direct marketing to brides to be.
Prior to his employment with Wedding Information Network, Inc., Mr. Newman was a
partner in the CPA firm of Newman and Nanfito in Omaha, Nebraska. Douglas Newman
is the father of Marc Newman, President of the Company.
Item 10. Executive Compensation
For the years ended December 31, 1998 and 1997, the Company paid no salary
or compensation to its executive officers. During those periods, there were no
bonus or incentive plans in effect, nor were there any liabilities incurred for
the payment of compensation to the officers of the Company related to past,
present or future services.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table lists the beneficial ownership of the Company's voting
securities by each person known by the Company to be the beneficial owner of
more than 5% of such securities, as well as by all directors and officers of the
issuer. Unless otherwise indicated, the shareholders listed possess sole voting
and investment power with respect to the shares shown:
Amount and
Nature of
Title of Name and Address Beneficial Shares Percent
Class of Beneficial Owner Ownership Owned of Class
--------- ------------------------------------------ ----------------------
Common Joyce Boyer Beneficial 983,000 8.80%
8310 E. 107th Pl. Owner
Tulsa, OK 74133
Common Gifford M. Mabie Beneficial 721,700 6.46%
8908 S. Yale Ave. #409 Owner
Tulsa, OK 74137
Common Rhonda R. Vincent Beneficial 573,500 5.13%
8908 S. Yale Ave. #409 Owner
Tulsa, OK 74137
Common Amy Renteria Beneficial 1,080,000 9.67%
4201 W. Memorial, #9101 Owner
Oklahoma City, OK 73120
Common Pearl L. Wray Beneficial 1,040,000 9.31%
8310 E. 107th Pl. Owner
Tulsa, OK. 74133
Common Marc W. Newman Officer/ 1,605,434(1) 14.37%
2400 NW 30th, #814 Director
Oklahoma City, OK 73112
Common Douglas A. Newman Officer/ 1,110,000 9.94%
2400 NW 30th, #814 Director
Oklahoma City, OK 73112
All Officers and Directors 2,715,434 24.31%
Common as a group (2 persons)
(1) 1,000,000 shares are held beneficially, 400,000 shares are held in trust
controlled by Mr. Newman for his sons Christian and Brandon, 205,434 shares are
held in Newboy, Inc., a corporation controlled by Mr. Newman.
Item 12. Certain Relationships and Related Transactions
For the year ended December 31, 1998 consulting agreements were entered
into between the company and certain related parties in exchange for shares of
common stock. There were no related party transactions noted for the year ended
December 31,1997.
Item 13. Exhibits and Reports on form 8-K.
a. Exhibits
Exhibit No. Page
-------------------------------------------------- ------------------
10.0 Master Equipment Sales Agreement with 15-20
Eagle Capital, Inc.
23.0 Consent of Henderson, Sutton & Company P. C. 21
24.0 Power of attorney Included on Signature
Page of this
Form 10-KS
27.0 Financial Data Schedule For electronic
filing only
b. Reports on Form 8-K
On November 10, 1998, a form 8-K was filed reporting the following items:
1. On October 27, 1998, the Company's common stock was cleared for trading
on the over-the-counter market under the symbol "LWEI".
2. On November 4, 1998 the Board of Directors approved the issuance of
common stock in satisfaction of obligations incurred with consultants to the
Company as follows:
*Marc Newman 5,500,000 shares
Gifford M. Mabie 521,700 shares
Rhonda R. Vincent 373,500 shares
Frederick K. Slicker 104,800 shares
The shares designated to Marc Newman were issued as follows to persons who
rendered services to him in relevant to the Company's business:
*Marc Newman 1,400,000 shares
Douglas A. Newman 1,080,000 shares
Pearl Wray 1,040,000 shares
Joyce Boyer 850,000 shares
Amy Renteria 1,080,000 shares
Chuck Richardson 50,000 shares
*Includes 400,000 shares issued to Mr. Newman's sons Christian and Brandon.
3. On November 4, 1998 Rhonda R. Vincent resigned as a director and officer
of the Company. The Board elected Marc W. Newman to fill the Board vacancy.
4. On November 4, 1998, Gifford M. Mabie resigned as a director and officer
of the Company. The Board elected Douglas A. Newman, father of Marc Newman, to
fill the vacancy.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LONE WOLF ENERGY, INC.
/s/ DOUGLAS A. NEWMAN
----------------------
By: Douglas A. Newman,
Vice President and Secretary
Date: April 1, 1999
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below hereby constitutes and appoints Rhonda R. Vincent, his or her true
and lawful attorneys-in-fact and agents, to sign any or all amendments to this
Report on Form 10-KSB, and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto the attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he or she might or
could do in person hereby ratifying and confirming that said attorney-in-fact
and agent may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Exchange Act of 1934, this Report on
Form 10-KSB has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Capacity Date
-----------------------------------------------------------------------------
/s/ MARC W. NEWMAN President and Director April 1, 1999
-------------------------
Marc W. Newman
/s/ DOUGLAS A. NEWMAN Vice President, Secretary, April 1, 1999
-------------------------- and Director
Douglas A. Newman
<PAGE>
Exhibit 10.0
MASTER EQUIPMENT SALES AGREEMENT
This Master Equipment Sales Agreement (the "Agreement") entered into this
26th day of February, 1999, by and between Eagle Capital International, Ltd., a
Nevada corporation ("Eagle") and Lone Wolf Energy, Inc., a Colorado corporation
("Lone Wolf").
W I T N E S S E T H :
In consideration of the mutual covenants contained herein, the parties
agree as follows:
1. Definitions. The following capitalized terms, when used herein, shall
have the meanings ascribed to them:
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person.
"Block" means one (1) unit of the masonry end-product of a Block Plant.
"Business Day" means any calendar day in which federally chartered United
States banks are open for substantially all banking business.
"Foam Insert" shall mean one (1) set of insulation inserts for each Block,
manufactured by a Foam Production Plant.
" Foam Production Plant" shall mean a trailer (if applicable) and related
machinery necessary for the manufacture of Foam Inserts to be used in connection
with the fabrication of the IMSI System
"IMSI" means Integrated Masonry Systems International, Ltd.
"IMSI System" shall mean a patented block wall insulated reinforced masonry
system, using mortarless dry-stacked construction techniques and having ICBO
(International Conference of Building Officials) approval status, owned by IMSI.
"Initial Block Plant" means that certain Block Plant, Serial Number 990226,
manufactured by Fleming Mfg. Co. and currently locating at Fleming's facilities
in Cuba, Missouri.
"Installment Sales Agreement" means the agreement attached hereto as
Exhibit "A," the terms of which are incorporated herein by this reference.
"Minimum Installment Sales Payments" is defined in the Installment Sales
Agreement.
" Block Plant" shall mean a trailer (if applicable) and related machinery
necessary for the manufacture of Blocks to be used in connection with the
fabrication of Products.
"Person" means any individual, partnership, firm, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated association or government entity or any department, agency or
political subdivision thereof, domestic or foreign.
"Plant" shall mean either a Block Plant, a Foam Production Plant, or a
Surface Bonding Production Plant.
"Production Payments" is defined in the Plant Installment Sales Agreement.
"Products" means Blocks, Foam Inserts and Surface Bonding used in
connection with the IMSI System or equivalent technology.
"Security Agreement" means the Security Agreement attached as Exhibit "D,"
the terms of which are incorporated herein by this reference.
"Surface Bonding Production Plant" shall mean a trailer (if applicable) and
related machinery necessary for the manufacture of Surface Bonding to be used in
connection with the fabrication of Products.
"Surface Bonding" means the structure coating end-product from a Surface
Bonding Production Plant.
"Second Block Plant" means the next Block Plant Eagle will request Lone
Wolf to furnish under this Agreement after the Initial Block Plant.
2. Eagle Licenses. IMSI is granting Eagle all licenses and contractual
rights necessary with respect to the IMSI System to allow Eagle to fulfill all
of its obligations under this Agreement.
3. Purchase and Sale of Plants. Eagle hereby agrees to purchase a minimum
of ten (10) Block Plants and five (5) Surface Bonding Plants from Lone Wolf, and
such number of Foam Production Plants from Lone Wolf as Eagle may determine in
its sole discretion, and Lone Wolf hereby agrees to sell all such Plants to
Eagle subject to the following procedures:
(a) With respect to each Plant Eagle desires to purchase from Lone Wolf
under this Agreement, Eagle shall provide Lone Wolf with a written description
of the Plant and the name of the Person who will be issuing the Third-Party
Guarantee prior to the second payment that Lone Wolf is required to make to the
Plant manufacturer. Eagle agrees that, except for the Second Block Plant, it
will order Plants from Lone Wolf under this Agreement not more frequently than
one (1) Plant every three (3) months, nor less frequently than one (1) Plant
every six (6) months. Eagle agrees that it will not request Lone Wolf to furnish
the Second Block Plant under this Agreement until after tenth (10th) Business
Day following the date of this Agreement, unless Lone Wolf gives prior consent
in writing.
(b) Within ten (10) Business Days after Lone Wolf's receipt of the
information described in Section 3(a), Lone Wolf will provide Eagle with written
notice of its decision whether to furnish the Plant requested. In the event Lone
Wolf provides written notice to Eagle that it will not furnish the Plant or
fails to provide written notice to Eagle of its decision within the said period,
Eagle shall have the right to obtain the Plant from another source without
affecting Eagle's obligation to purchase the remaining Plants hereunder;
however, in the event Lone Wolf declines an aggregate of three (3) requests by
Eagle for a Block Plant, this Agreement may be terminated by Eagle, upon written
notice to Lone Wolf, without liability to either party.
(c) Eagle shall be responsible for ordering each Plant from the
manufacturer of its choice, for negotiating the purchase price, delivery date
and other terms concerning of the Plant, and for securing the third-party
guarantee of the Installment Sales Agreement for the Plant.
(d) With respect to each Plant Lone Wolf agrees to furnish under Section
3(b),
(i) Upon receipt of Lone Wolf's written notice that it will furnish a Plant
pursuant to Eagle's request under this Agreement, Eagle and Lone Wolf shall
execute an Installment Sales Agreement and a Security Agreement, and Eagle shall
pay Lone Wolf ten thousand dollars ($10,000), which amount shall be credited by
Lone Wolf to Eagle as part of Eagle's obligation to pay the first four (4)
Minimum Sales Payments pursuant to Section 3(d)(iv) below.
(ii) Eagle shall furnish (A) a third-party guarantee acceptable to Lone
Wolf or, (B) at Eagle's option, a pledge acceptable to Lone Wolf of part or all
of its income stream sufficient to secure payment of its obligations under the
Installment Sales Agreement and this Agreement, provided such acceptance by Lone
Wolf shall not be unreasonably withheld, or (C) at Eagle's option, any
alternative arrangement to (A) or (B) that is acceptable to Lone Wolf.
(iii) Except as provided in Section 6, Eagle shall provide Lone Wolf with
the third-party guarantee or pledge of part or all of its income stream as
provided in Section 3(d)(ii) above prior to the time Lone Wolf's second payment
is due and payable to the Plant manufacturer; and
(iv) Prior to shipment of the Plant from the manufacturer, Eagle shall
furnish Lone Wolf with a copy of the executed agreement between the user of the
Plant and the purchaser of the Products to which the Plant relates.
4. Eagle Certificate of Deposit Security Agreement.
(a) With respect to each Plant purchased by Eagle hereunder, Eagle shall
pledge and deliver to Lone Wolf as security for Eagle's performance under the
Plant's Installment Sales Agreement an amount sufficient to pay the first four
(4) Minimum Installment Sales Payments under the Installment Sales Agreement.
(b) Lone Wolf shall use the amount paid by Eagle pursuant to the foregoing
Section 4(a) to pay the first two Minimum Installment Sales Payments under the
Plant's Installment Sales Agreement. The portion not used to pay the first two
Minimum Installment Sales Payments shall remain in the possession of lone Wolf
(or Lone Wolf's Lender) for the duration of the term of the Plant's Installment
Sales Agreement, in an interest bearing certificate of deposit or certificates
of deposit providing the highest rate of interest available at Federal Bank
Centre, Broken Arrow, Oklahoma. Upon termination of the Plant's Installment
Sales Agreement, the Principal amount shall be returned to Eagle.
(c) As long as the shall not have occurred an Event of Default under the
Plant's Installment Sales Agreement, Eagle shall have the right to receive all
interest earned from such certificates of deposit.
5. Exception for Initial Block Plant. With respect to the Initial Plant,
Eagle shall furnish (A) a third-party guaranty acceptable to Lone Wolf or, (B)
at Eagle's option, a pledge acceptable to Lone Wolf of part or all of its income
stream sufficient to secure payment of its obligations under the Installment
Sales Agreement and this Agreement, provided such acceptance by Lone Wolf shall
not be unreasonably withheld, or (C) at Eagle's option, any alternative
arrangement to (A) or (B) that is acceptable to Lone Wolf, at the time Eagle
shall pledge and deliver to Lone Wolf as security for Eagle's performance under
the Plant's Installment Sales Agreement an amount sufficient to pay for the
first four Minimum Sales Payments under the Installment Sales Agreement. Lone
Wolf shall be under no obligation to ship the Plant from Cuba, Missouri until
Eagle has furnished Lone Wolf a third-party guarantee or pledge with respect to
the Plant.
6. Damages. In the event Eagle should breach its obligation to purchase any
Plant under this Agreement, Eagle shall be liable to Lone Wolf for all of the
still unrealized profits Lone Wolf would have made from the Plant had Lone Wolf
sold the Plant under an Installment Sales Agreement, which profit shall be equal
to the sum of (i) the aggregate of all remaining Minimum Installment Sales
Payments Lone Wolf would have received under the Installment Sales Agreement for
the Plant, minus the aggregate of all monthly payments of principal and interest
Lone Wolf would have paid to finance the purchase of the Plant; and (ii) the
aggregate of all Production Payments Lone Wolf would have received under the
Installment Sales Agreement, based on actual production of such Plant, if any,
during remainder of the original term of the Installment Sales Agreement.
7. Notices. All notices required or given under this Agreement shall be in
writing and shall be deemed given (i) when received, if personally delivered;
(ii) the day after it is sent, if sent by a recognized expedited delivery
service with next-day delivery requested; or (iii) five days after it is sent,
if mailed, postage prepaid, via certified mail, return receipt requested. In
each case, notice shall be sent to:
If to Lone Wolf: 2400 N.W. 30th, No. 814
Oklahoma City, Oklahoma 73112
Attn: Marc Newman
If to Eagle: 954 East 7145 South, Ste. B-202
Salt Lake City, Utah 84047
Attn: Douglas Alan Dent
or such other addresses as such party shall have specified by notice in writing
to the other party.
8. General.
(a) This Agreement constitutes the whole and entire agreement between the
parties pertaining to the subject matter hereof, and supersedes all prior
agreements or understandings between the parties with respect to such subject.
This Agreement may not be modified except by an instrument in writing signed by
all parties.
(b) The validity, construction and enforcement of, and the remedies under,
this Agreement shall be governed in accordance with the laws of Oklahoma, except
any choice of law provision of Oklahoma law shall not apply if the law of a
state or jurisdiction other than Oklahoma would apply thereby.
(c) The parties to this Agreement agree that jurisdiction and venue of any
action brought to enforce, or to construe or determine the validity of, any term
or provision contained in this Agreement shall properly lie in (i) the District
Court of Tulsa County, Oklahoma, or the United States District Court for the
Northern District of Oklahoma, and (ii) the District Court of Salt Lake County,
Utah, or the United States District Court for the District of Utah. Such
jurisdiction and venue are merely permissive; jurisdiction and venue shall also
continue to lie in any court where jurisdiction and venue would otherwise be
proper. The parties further agree that the mailing by certified mail, return
receipt requested, or the delivery by any recognized expedited delivery service,
of any process required by either such court shall, when received, constitute
valid and lawful service of process against them, without the necessity for
service by any other means otherwise provided by statute or rule of court.
(d) Except as otherwise provided in Section 7, neither party shall be
liable to the other for special, collateral, exemplary, punitive, indirect,
incidental, speculative or consequential damages (including, without limitation,
loss of profits or revenues, loss of savings, loss of use, loss of goodwill,
interruption of business, or claims of customers or other third parties) related
to this Agreement, whether or not such damages occur prior or subsequent to, or
are alleged as a result of, the breach of any of the provisions of this
Agreement, or because of tortious conduct, even if the party from whom the
damages is sought has been advised of the possibility of such damages, and in no
event shall either party's aggregate liability exceed the total amount of
out-of-pocket loss actually suffered by the other party.
(e) This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. No party
may assign its obligations hereunder without the prior written consent of the
other party hereto. Lone Wolf shall have the right to pledge its rights under
this Agreement and any agreement delivered in connection herewith without need
of Eagle's consent.
(f) The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
(g) Each party to this Agreement shall bear its own expenses incurred in
connection with negotiation, preparation and execution of this Agreement and the
transactions contemplated herein.
(h) The terms of this Agreement shall remain confidential between the
parties, except when disclosure is required by law.
(i) This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument. Any signature delivered by facsimile transmission shall be deemed a
valid and binding signature for all purposes hereof.
(j) If any action is brought to enforce, or to construe or determine the
validity of, any term or provision of this agreement, the prevailing party shall
be entitled to reasonable attorney's fees and costs of the action.
(k) In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal. or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions hereof, and this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein.
In Witness Whereof, the parties have executed this Agreement as of the date
first written above.
Lone Wolf Energy, Inc.
By: /s/ MARC NEWMAN
Marc Newman, President
Eagle Capital International, Ltd.
By
Title:
<PAGE>
Exhibit 23.0
CONSENT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders of Lone Wolf Energy, Inc.
We hereby do consent to the inclusion of the December 31, 1998 independent
auditor's report in the Lone Wolf Energy, Inc. FORM 10-KSB for the year ended
December 31, 1998.
Henderson, Sutton & Company P. C.
/s/ Henderson, Sutton & Company, P. C.
----------------------------------------
Certified Public Accountants
March 30, 1999
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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0
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<COMMON> 11,170
<OTHER-SE> (10,888)
<TOTAL-LIABILITY-AND-EQUITY> 282
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