SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1999 Commission File No. 0-6034
-----------
STANSBURY HOLDINGS CORPORATION
(Exact Name as Specified in Its Charter)
STATE OF UTAH 87-0281239
- --------------------------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification Number)
676 LOUIS DRIVE, WARMINSTER, PA 18974 UNITED STATES
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(Address of Principal (Country)
Executive Offices)
Registrant's telephone number, including area code:
(215) 328-9566
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Indicate by check mark whether the registrant (1) has 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 shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
at least the past 90 days.
YES____ NO X
Indicate the number of shares outstanding of the issuer's classes of common
stock as of the latest practicable date.
At February 9, 1999 there were outstanding: 24,899,585 common shares, $0.25 par
value.
<PAGE>
STANSBURY HOLDINGS CORPORATION
INDEX TO FORM 10QSB
Page
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Plan of Operations 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Changes in Securities 24
Item 3. Defaults Under Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 25
Item 6. Exhibits and Reports of Form 8-K 25
2
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PART I - FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS
3
<PAGE>
STANSBURY HOLDINGS CORPORATION
BALANCE SHEET
March 31, 1999
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, 1999 JUNE 30, 1998
(UNAUDITED) (AUDITED)
----------------- -------------------
ASSETS
<S> <C> <C>
Current Assets
Cash $ 35,612 $ 1,685
Other Receivables 21,198 --
------------ ------------
Total Current Assets 56,810 1,685
Property & Equipment
Building 25,386 27,017
Mineral Property 11,833,355 11,833,355
Development Costs 3,139,105 3,139,105
------------ ------------
Total Property and Equipment 14,997,846 14,999,477
Other Assets
Other Assets 26,000 20,000
------------ ------------
Total Other Assets 26,000 20,000
TOTAL ASSETS $ 15,080,656 $ 15,021,162
============ ============
LIABILITIES AND CAPITAL
Current Liabilities
Notes Payable-Short Term $ 765,870 $ 169,863
Current Portion Long-Term Debt 1,605,100 1,605,100
Accounts Payable 333,297 276,898
Accrued Interest 1,824,330 2,597,820
------------ ------------
Total Current Liabilities 4,528,597 4,649,681
Long-Term liabilities
NotesPayable-Noncurrent 641,371 1,086,677
------------ ------------
Total Notes Payable-Noncurrent 641,371 1,086,677
Capital
Common Stock 6,224,784 6,009,823
Common Stock to Issue 175,000 50,000
Capital in Excess of Par 7,535,330 7,535,330
Deferred Interest (586,771) (586,771)
Retained Earnings (2,434,804) (2,705,175)
Net Income (1,002,850) (1,018,403)
------------ ------------
Total Capital 9,910,689 9,284,804
TOTAL LIABILITIES AND CAPITAL $ 15,080,656 $ 15,021,162
============ ============
</TABLE>
4
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STANSBURY HOLDINGS CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 1999* MARCH 31, 1999*
------------------ -----------------
<S> <C> <C>
Revenues $ -- $ --
Cost of Sales -- --
----------- -----------
Gross Profit -- --
Expenses
Consulting Fees $ 30,142 $ 107,354
Legal 49,588 132,899
Accounting 16,575 65,339
Office Supplies & Expense 5,511 10,061
Other Office Expense 6,344 8,005
Mining Leases -- 17,400
Advertising and Promotion 90,995 183,904
Interest 691,187 1,108,333
License and Permits 7,722 3,612
Professional Fees 59,254 61,372
Depreciation Expense Building 544 1,631
Utilities 683 2,868
Transfer Agent Fees 15,858 17,487
Travel & Entertaiment 28,447 44,666
----------- -----------
Total Expenses 1,002,850 1,764,932
----------- -----------
Operating Income (Loss) (1,002,850) (1,764,932)
Other Income
Cancellation of Debt -- 2,056,474
----------- -----------
NET INCOME ( LOSS) $(1,002,850) $ 291,543
</TABLE>
* Comparable figures for the corresponding period in 1998 are unavailable.
5
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STANSBURY HOLDINGS CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1999
------------------ -----------------
<S> <C> <C>
Cash Flows From Operating Activiities
Net Income(Loss) $(1,002,850) $ 285,925
Depreciation 544 1,631
Stock Issued for services and Interest -- 214,961
Increase (Decrease) in Short-Term Debt 311,007 596,007
Increase (Decrease) in Accounts Payable (14,362) 56,399
Increase (Decrease) in Accrued Interest 672,958 (773,490)
----------- -----------
Total Adjustments From Operating Activities 970,147 95,508
----------- -----------
Net Cash Provided by Operations (32,703) 381,433
Cash Flow From Investing Activities
Decrease (Increase) in Development Costs -- --
Decrease (Increase) in Other Receivables 1,085 (21,198)
Decrease (Increase) in Other Assets (1,500) (6,000)
----------- -----------
Net Cash Used in Investing Activities (415) (27,198)
Cash Flow From Financing Activiities
Increase(Decrease) in Notes Payable, Non-Current 65,655 (445,307)
Increase(Decrease) in Common Stock -- 125,000
----------- -----------
Net Cash Used in Financing Activities 65,655 (320,307)
Net Increase(Decrease) in Cash $ 32,536 $ 33,927
=========== ===========
Summary
Cash Balance End of Period 35,612 35,612
Cash Balance Beginning of Period 3,076 1,685
----------- -----------
Net Increase(Decrease) in Cash $ 32,536 $ 33,927
=========== ===========
</TABLE>
6
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STANSBURY HOLDINGS CORPORATION
Notes to Financial Statements
March 31, 1999 and June 30, 1998
Note 1: Summary of Significant Accounting Policies
Organization:
Stansbury Holdings Corporation (the "Company") was chartered as a business
corporation by the State of Utah on May 7, 1969, under the name Stansbury Mining
Corporation. The corporate name was changed to Stansbury Holdings Corporation by
a filing in the office of the Secretary of State of Utah on March 22, 1990.
In June 10, 1985, as part of an approved Plan of Reorganization under a Chapter
11 proceeding pursuant to the Federal Bankruptcy Act, the authorized capital of
the Company was changed, by an Amendment of its Articles of Incorporation, to
$6,250,000, being 25,000,000 shares of one class having a par value of $0.25 per
share.
The principal business activity of the Company, since its reorganization under
Chapter 11 of the Federal Bankruptcy Code in 1985, has been vermiculite mineral
exploration and development. The principal project of the Company is the
Hamilton Vermiculite Project in Ravalli County, Montana, as to which the Company
commenced acquisition shortly prior to the Reorganization in 1985.
Basis of Presentation:
In management's opinion, the accompanying unaudited financial statements of
Stansbury Holdings Corporation contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the Company's
financial position and the results of its operations. (The results of operations
or cash flows which may be reported for the remainder of 1999.)
The accompanying unaudited interim condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission for the reporting on Form 10-QSB. Pursuant to such rules and
regulations, certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The condensed financial
statements should be read in conjunction with the Audited Financial Statements
and the Notes to the Audited Financial Statements included in the Company's
Annual Report on Form 10-KSB/A for the year ended June 30, 1998. With the
exception of the gain from extinguishment on debt discussed below and in Note 3,
no material events, changes in operation or changes in accounting principles or
practices have occurred since the close of the Company's fiscal year ended June
30, 1998. All amounts included in these financial statements are expressed in
United States Dollars.
7
<PAGE>
Note 1: Summary of Significant Accounting Policies (Continued)
In the past, the Company has issued financial statements showing the Hamilton
Vermiculite Project at the value established for it in the Chapter 11
proceedings in 1985, which was based upon an evaluation of the projects value by
an appraisal. The significant difference between those past financial statements
(1991 to 1996) and these financial statements is the restatement of the value of
the Hamilton Vermiculite Project in terms of historic costs of the project's
acquisition and development funds expended on the project subsequent to its
acquisition (see further this Note and Notes 6 & 12).
Principles of Consolidation:
In the past, the financial statements of the Company have been consolidated with
subsidiaries and affiliates. However, at the present the Company has no
subsidiaries and is involved with no affiliates.
Therefore, all assets material to this financial statement are held by the
Company.
Cash and Cash Equivalents:
The Company considers highly liquid investments with original maturities of
three months or less to be cash equivalents.
Undeveloped Vermiculite Mineral Projects:
The Company uses the full cost method of accounting for undeveloped mineral
projects. Accordingly, all costs associated with the acquisition of undeveloped
projects, including directly related overhead costs, are capitalized. Once
projects are developed, the capitalized costs will be amortized on the
unit-of-production method using estimates of proven reserves (See Notes 6 and
12).
In addition, the costs are separated into cost centers on a state-by-state
basis. The capitalized costs for each cost center are subject to "ceiling test",
which limits such costs to the lower of (i) cost, or (ii) estimated fair market
value, of the projects (see Note 6).
In cases where the exploration and production activities of the Company are
conducted jointly with others, the financial statements reflect only the
Company's and its consolidated subsidiaries' proportionate interest in such
activities.
Other Assets, Stock Listing and Issuance Costs:
Costs associated with stock issuance and the listing of the Company's common
stock on the NASDAQ Bulletin Board are charged against the proceeds derived from
the issuance of shares in the year of issuance (see Note 7).
8
<PAGE>
Note 1: Summary of Significant Accounting Policies (Continued)
Income Taxes:
The Company has adopted the provisions of Statement of Accounting Standards No.
109, "Accounting for Income Taxes" which incorporates the use of asset and
liability approach of accounting for income taxes. The asset and liability
approach requires the recognition of deferred tax assets and liabilities for
future consequences of temporary differences between the financial reporting
basis and tax basis of assets and liabilities. Because the question as to going
concern as discussed in Note 2 and subsequent events as discussed in Note 12 and
the explanation in the next paragraph, no value of a possible net operating loss
is recognized on the financial statements.
No income tax returns have been filed since June 30, 1991. Federal income taxes
generally do not allow deductions of expenses not paid within 12 months. Most
debt has not been paid year after year. Most cash paid out has been for
capitalized development costs. Even though the majority of expenses are accrued
interest on notes, management is of the opinion that forgiveness of debt and
interest has been so frequent and of a nature that precludes most expenses and
interest from tax deduction. Consequently, management is of the opinion that the
probable net operating loss is under $2,000,000, expiring at various dates
through 2012.
Depreciation:
Depreciation of real estate improvements is calculated using the straight-line
method over the useful lives of the related assets. For the building at Victor
Siding, Montana, that is part of the Hamilton Vermiculite Project, a 20 year
useful life is used.
Net Income (Loss) Per Common Share:
Net Income (Loss) Per Common Share is based upon the fully diluted 24,899,585
shares at December 31, 1998 and 24,039,290 shares at June 30, 1998, the number
of common shares as of the last business day of the financial statement period,
assuming conversion of all outstanding options and warrants (see Note 4). The
Company had no revenues from operations. Operating income (loss) from operations
for the six months ended December 31, 1998 was ($767,699), or ($0.03) per share.
After other income of $2,056,474 from gain on forgiveness of debt, book income
(loss) was $1,288,775, or $0.05 per share.
Gain on Forgiveness of Debt:
Due to the cash flow shortages the Company has faced over the past several
fiscal periods, large portions of the accounts and notes payable have been
satisfied by negotiation at less than the face value and/or an issuance of the
Company's common stock. As the Company has employed this strategy on a recurring
basis, and the gain from the forgiveness of debt arising from these negotiated
settlements has not been characterized as extraordinary in the accompanying
financial statements. However, the Company has negotiated a settlement with its
largest creditor in November, 1998 through an Accord and Satisfaction with
Merwin U. Steward as Liquidator of Southern American
9
<PAGE>
Insurance Company and Commercial Surety and Insurance Corporation
("Liquidator")(See Note 3). As a result of this settlement, the Company recorded
gain from the forgiveness of debt of $2,056,474. This is recorded as such in the
unaudited financial statements, however due to the significance of the
settlement amount, the gain may be reclassified as an extraordinary event in the
audited financial statements at June 30, 1999.
Reclassifications:
The asset value of the Hamilton Vermiculite Project has been reclassified to
reflect its cost basis and capitalized development costs (See Note 6).
Certain Accounts Payable in the amount of $75,892, which had been carried on the
financial statements since 1991 without backup data, were accordingly written
off at June 30, 1997. Of that amount, 25% ($18,992), was established as an
Accounts Payable reserve and added back to Accounts Payable in the event any of
those creditors should make valid claims. The reserve will be written down in
two installments over the next two fiscal years. Accordingly, one half, or
$9,496, was written off June 30, 1998 and the remaining portion will be written
at June 30, 1999. The Company had no data to establish or verify the propriety
of the claims eliminated, and determined that many of the listed claimants were
no longer de jure entities.
See also Note 11, Correction in accounting errors and prior period adjustments.
Note 2: Going Concern Statement
The Company has been inactive and non-operating for years; consequently, it is
questionable as to whether or not it can remain a going concern. The primary
activity in the past few years has been to preserve and maintain mineral leases
and claims. No actual mining has occurred since the Company acquired such
properties in 1984. Also, refer to Note 6 regarding the Hamilton Vermiculite
Project. Recovery of the carrying amount on the financial statements of
$14,972,460 as of June 30, 1997, of the mineral property and related development
costs is dependent upon the success of the future operations and the Company's
ability to obtain financing through borrowing and capital stock sales.
The Company has had no income since 1991, and has utilized proceeds of loans
from shareholders and the issuance of capital stock for meeting its operating
capital commitments.
In June of 1996, the Company's Board of Directors and management were changed
(Note 5 and Note 12). New management has recognized the need to place mineral
properties into production, in order to generate revenues, and is actively
seeking to acquire mineral properties that are either (i) in active production,
or (ii) permitted to the extent that active production can immediately commence.
Such a plan has lead to the identification of several properties for which
active negotiations for acquisition or participation by joint venture, are
currently being conducted (Note 12).
10
<PAGE>
Note 2: Going Concern Statement (Continued)
The Company continues to evaluate the production potential of its mineral
property (the "Hamilton Vermiculite Project"), but has determined that certain
limitations imposed by the Environmental Impact Statement as approved and issued
for that project (Notes 6 and 10) limiting production to a six month season per
year, will sufficiently impact the profitability of such an operation that other
alternatives must be reviewed. Accordingly, the Company has considered dropping
certain mining claims and the costs associated with the maintenance thereof,
while preserving the core of the project as permitted by the EIS (Note 12). The
Hamilton Vermiculite Project is currently pledged as collateral for a number of
mortgages (Notes 8 and 12). The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts and the amount or classification of liabilities that might result should
the Company be unable to develop and operate the mineral property, or other
mineral properties.
The Company has not obtained the necessary financing to meet it working capital
requirements to operate the mineral property which is the Company's major asset,
and there can be no assurance that the Company will be successful in obtaining
the necessary financing.
The Company in is negotiations with a financially able entity as a prospective
joint venture partner for the development of the Company's vermiculite projects,
but if this joint venture is not consummated the Company will need to obtain
capital from other sources.
Note 3: Related Party Transactions
The New Management Team (see Note 5) was established during June of 1997, the
last month of the fiscal year ending June 30, 1997. No consulting or salary
payments were made to the New Management Team by the Company for services
provided the Company for the fiscal year ending June 30, 1997. These amounts
were accrued and partial payments have been made in calendar 1999. See Note 12
with respect to the financial arrangements with the New Management Team.
On August 25, 1998, the Company entered into an Accord and Satisfaction with
Merwin U. Steward as Liquidator of Southern American Insurance Company and
Commercial Surety and Insurance Corporation ("Liquidator"). At that time the two
companies in liquidation held interest in a first mortgage on the properties of
the Hamilton Vermiculite Project (fee lands and mining claims), with an amount
due in excess of $2,056,474 principal and interest inclusive.
Under the terms of the Accord and Satisfaction, the Company was to pay the sum
of $130,000 to the liquidator, in consideration of the Liquidator releasing all
claims against the Company, including security interests in properties of the
Company.
In October, 1999, the Company raised the required $130,000 through a convertible
debenture issued to Nevada Vermiculite L.L.C., (See Item II Development Stage
Activities) which debenture, among other provisions, allowed Nevada Vermiculite
to substitute of record for the Liquidator with respect to certain security
interests, as collateral for the $130,000. This collateral included 500,000
shares
11
<PAGE>
Note 3: Related Party Transactions (Continued)
and an option, subject to shareholder approval, of an additional 5 million
shares at par.
The $130,000 was paid into an escrow pending closing on the Accord and
Satisfaction in October, 1999, and funds were distributed to the Liquidator in
Closing on the Accord and Satisfaction in December, 1999, upon the Liquidator's
providing the Closing Agent all requisite documentation described in the Accord
and Satisfaction. As a result of the closing on the Accord and Satisfaction, the
Company was able to discharge debts of $2,056,474, principal and interest
inclusive, for the payment of $130,000. This discharged amount of $2,056,474 is
included in the gain on forgiveness of debt on the accompanying financial
statements on The Statement of Operations, and the $130,000 is included as a
long-term note payable on the Balance Sheet.
The Company remains liable to Nevada Vermiculite L.L.C. for the sum of $130,000,
plus interest accruing thereon from October 24, 1998, at 12% per annum, due July
5, 2000, as provided by the terms of the debenture issued to Nevada Vermiculite
L.L.C., by the Company. As mentioned above, the Debenture contains other terms
of inducement, and conversion rights of principal and accrued interest at par.
Mr. Aldine J. Coffman and Dr. James Hindman, directors and officers of the
Company, each have 12.5% interest in Nevada Vermiculite L.L.C.
Note 4: Stockholders' Equity
The Company was organized by the issuance of its common stock. Over the prior
years including 1998, stock was issued for cash and non-cash consideration.
Non-cash consideration includes debt discharge and debt assumption.
Common Stock
As of June 30, 1998, common stock consisted of authorized capital of 25,000,000
shares having a par value of US $0.25. Shares issued and outstanding were
24,899,585 and 24,039,290 on December 31, 1998 and June 30, 1998, respectively.
An analysis of common stock issued during fiscal years ending June 30, 1998 and
1997 follows:
Year Shares Value
1998
Issued for cash -- --
Issued for property -- --
Issued for debt 2,560,478 $ 640,120
12
<PAGE>
Note 4: Stockholders' Equity (continued)
1997
Issued for cash -- --
Issued for property -- --
Issued for debt 1,193,764 $ 298,441
Note 5: Change in Management and Management Plans for the Company
In June, 1997, a group of investors and shareholders, generally denoted as the
"Committee for New Management", arranged a funding mechanism for the Management
of the Company to be directed by Edward J. Stanojev, Jr., and others associated
with him.
A new Board of Directors, comprising Mr. Stanojev, Dr. James R. Hindman, Jeffrey
L. Wertz, as new members, and Mr. Martin J. Peskin, as a continuing member, was
established.
This new Board of Directors appointed a "New Management Team", comprised of Mr.
Stanojev as Chairman, Chief Executive Officer, and President; James R. Hindman,
Ph.D., and a recognized expert in vermiculite exploration, mining and milling,
as Vice President and Chief Operating Officer; and Mr. Wertz, as Vice-President
and Chief Financial Officer. (see Note 12 for Compensation for the New
Management Team).
Certain secured creditors have agreed to subordinate their secured positions in
the Hamilton Project up to an amount equal to $1,000,000 of working capital
infusion. As of June 30, 1998, the funding through this facility had not been
drawn upon.
This New Management Team has sought to move the Company forward into the
production and marketing of vermiculite and its products (see Note 2).
Note 6: Undeveloped Mineral Projects
The Company has, since 1984, been focused upon the acquisition and development
of vermiculite ore reserves in mineral properties located primarily in the
western United States.
The Hamilton Vermiculite Project:
As of June 30, 1998, the Hamilton Vermiculite Project consisted of 64 owned
unpatented lode mining claims, 11 owned mill site claims, and a parcel of fee
land with improvements. The Mining Claims are located in the Gird's Creek
unorganized Mining District, Ravalli County, Montana. In the fall of 1998, the
Company located an additional 22 unpatented lode mining claims in Ravalli
13
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Note 6: Undeveloped Mineral Projects (continued)
County, Montana, resulting in the Company obtaining control of all of the
surface vermiculite exposures and proven reserves associated with the Hamilton
Project.
The fee land (1.24 acres) and improvements are located at Victor Siding, Ravalli
County, Montana. The mining claims are administered by the Bureau of Land
Management, of the Department of the Interior, for the United States Forest
Service, of the Department of Agriculture. Surface matters are administered by
the US Forest Service.
In 1993, a final Environmental Impact Statement was issued to the Company under
its then trade name of Western Vermiculite Company in connection with the
Company's application for an operating permit for the Hamilton Vermiculite
Project. The costs of the EIS approached several million dollars of expenditures
from 1985 to 1991.
The project has been extensively drilled and assayed and two ore bodies, the ABM
Ridge Ore Body (defined in 41 drill holes) and the Horse Ridge Ore Body (defined
in 43 drill holes), have been delineated. Combined, the proven minable
vermiculite reserves in these two ore bodies is 6.5 million tons at a grade of
10.09% vermiculite.
The Hamilton Vermiculite Project was appraised in 1985 at $34,577,270 (and
again, in 1992, at $35,000,000). Through June 30, 1996, the value of $34,577,270
has been reflected on the Company's financial statements as the original asset
value of the Hamilton Vermiculite Project (in lieu of acquisition costs). In
1997, the Hamilton Vermiculite Project was appraised at $51,000,000, largely
reflecting the increase in market value of vermiculite concentrate from 1985 to
1997. From the foregoing, the Company has determined that the cost basis
accounting for the project (see below) does not exceed its estimated fair market
value of the Project.
Management is attempting to raise financing for the development of the Hamilton
Vermiculite Project, and is in discussions with several potential joint venture
development partners who would contribute the financing required.
At present, the Company has not obtained the necessary financing to meet its
working capital requirements and to operate the Hamilton Vermiculite Project,
which is the Company's major asset. There can be no assurance that the Company
will be successful in obtaining the necessary financing. Also, as discussed in
Note 12, the United States Forest Service required that an Environmental Impact
Statement ("EIS") be issued for the Hamilton Vermiculite Project prior to
granting an operating permit to the Company. The EIS was completed in 1993. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts and the amount or
classification of liabilities that might result should the Company be unable to
develop and operate the Hamilton Vermiculite Project and continue as a going
concern.
14
<PAGE>
Note 7: Other Assets
The Company has on deposit with the Montana Department of Lands a refundable
balance of $20,000, in connection with its operating permit application for the
Hamilton Vermiculite Project.
Note 8: Notes Payable, Long Term Debts, and Accounts Payable
Certain unidentified obligations of the Company have been carried forward year
after year since before 1991, and are believed by the New Management of the
Company to have been, in fact, satisfied or otherwise no longer owing (in some
cases being barred by the statute of limitations). Management is investigating
the circumstances of these payables and other liabilities in order to take such
action in the future to delete such items where appropriate from the liabilities
of the Company. Of such amounts $75,892 of Accounts Payable were identified by
management as unlikely to be due and payable. At June 30, 1997, New Management
wrote off 75% of such amount, or $56,900, with the remaining 25%, or $18,992,
left in Accounts Payable as a reserve against any payables so written off to be
determined to be valid. Of that amount, one half, or $9,496 was written off at
June 30, 1998, with the remaining half to be written off $9,496 at June 30,
1999.
15
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Note 8: Notes Payable, Long Term Debts, and Accounts Payable (continued)
Notes Payable and Long Term Debts
Notes payable and long term debts are summarized as follows:
(a) Mortgages Payable: March 31, 1999 June 30, 1998
Mortgages payable to life insurance
company in liquidation, bearing
interest at 10% per annum,
past due and in default (Note 11) $ -- $ 550,000
Mortgages payable to shareholders
of Company, interest prepaid 449,000 449,000
---------- ----------
Total Mortgages Payable $ 449,000 $ 999,000
========== ==========
(b) Unsecured Notes Payable:
Notes payable to life insurance
company in liquidation (Note 11) $ -- $ 95,961
Notes payable to corporations 434,968 304,968
Notes payable to shareholders
including former officers
(Note 11) 1,751,711 1,291,848
---------- ----------
Total Notes Payable $2,186,679 $1,692,777
========== ==========
Total term debt $2,635,679 $2,861,640
========== ==========
16
<PAGE>
Note 8: Notes Payable, Long Term Debts, and Accounts Payable (Continued)
Summary Notes & Term Debt
<TABLE>
<S> <C> <C>
Notes payable $ -- $ 169,863
Current portion-long-term debt 1,605,100 1,605,100
Long term portion-long-term debt 641,371 1,086,677
---------- ----------
Total $2,246,471 $2,861,640
========== ==========
Accrued Interest Payable,
Accrued interest payable, all current, is for:
March 31, 1999 June 30, 1998
Mortgage payable $ -- $1,562,253
Unsecured notes payable 1,151,372 1,035,567
---------- ----------
Total $1,151,372 $2,597,820
========== ==========
</TABLE>
Note 9: Claims, Litigation and Judgments
Claims and Possible Claims:
(b) With respect to the EIS (see also notes 5 and 9), over 100 administrative
appeals were filed in opposition to the approval of the Final Draft of the EIS,
all of which were rejected by the Regional Office of the US Forest Service,
which decision of rejection further was upheld on appeal to the Chief Forester
of the US Forest Service. The time for administrative appeal of the EIS, or
further challenge to it, has expired.
Litigation:
The only pending litigation against the Company is by Ellsworth, Wiles &
Chalphin, P.C., filed in the Court of Common Pleas, Bucks County, Pennsylvania,
on September 14, 1998. James G. Wiles ("Wiles) acted as former counsel to the
Company through as a partner in Ellsworth, Wiles & Chalphin, P.C. The complaint
alleges $69,654.95 is due for legal services rendered by Wiles on behalf of the
Company. This amount has been recorded as a liability of the Company in its
balance sheet, with an additional $4,408 allowed for litigation costs for a
total amount of $74,063 being recorded in the financial statements as a note
payable. However, a counter claim has been filed against Wiles alleging that no
amount is due, and furthermore that Wiles failed to protect the best interest of
the Company by failure to have required tax returns filed timely.
17
<PAGE>
Note 9: Claims, Litigation and Judgments (Continued)
Judgments of Record affecting Title to Hamilton Project:
A claim of lien filed by the State of Montana in January, 1993 for $658 is
reflected on the financial statements as an account payable.
A judgment obtained by Dorsey & Whitney, a general partnership, in December,
1994 for $52,683 is reflected on the financial statements as a note payable.
A judgment obtained by Southampton Metals Ltd. ("Simon Grant-Rennick"), under a
settlement with Company, upon which a current unpaid balance exists of $5,600 is
included on the financial statements as a note payable.
Other Judgments: (All included in the financial statements as accounts payable)
A Judgment obtained by Mike Bauernfiend, obtained in Bergen County, N.J. for
$7,000.
A Judgement obtained by Martineau & Co., in Salt Lake County, Utah, for $8,000.
A Judgment obtained by Bruce Blessington, in Salt Lake County, Utah for $26,293.
Note 10: Other Income
Cancellation of Debt: From 1985 (year the Company filed Bankruptcy) to the
present, the Company continues efforts to raise sufficient funds to develop the
Hamilton Vermiculite Project. Creditors frequently were not paid off, or would
settle for smaller amounts or no payment at all. Or, a debt may ultimately be
canceled because of the statute of limitations. The amounts reported on the
statements of operations as "Other Income -cancellation of debt" arise for these
reasons. New Management is of the opinion there remain debts as of December 31,
1998 that may later on be identified as cancellation of debt (See Notes 1 and
3).
Note 11: Corrections in Accounting Errors & Prior Period Adjustments
New Management identified three significant accounting errors in the financial
statements. These require prior period adjustments including fiscal year ending
June 30, 1997.
In 1989 the Company had a $447,000 offering of long-term debt due December, 1992
and secured with a second position in the mineral rights. Interest on the debt
was prepaid in full by issuing stock for interest. The financial statements,
however, accounted for the debt at $496,000 not $447,000. In addition, the
financial statements over the years reported the long-term debt as bearing
interest
18
<PAGE>
Note 11: Corrections in Accounting Errors & Prior Period Adjustments (continued)
at 23% cumulative instead of non-interest bearing.
From 1988 forward, the company continues borrowing funds. New Management has
determined the accrued interest on these loans should be computed on the basis
of simple interest. However, the Company had been compounding the interest
(interest on interest). The total impact on the financial statements, which are
restated are:
<TABLE>
<CAPTION>
CURRENT PORTION INTEREST EXPENSE
LONG-TERM ACCRUED INTEREST (ACCUMULATED
DEBT PAYABLE DEFICIT)
--------------- ---------------- ----------------
<S> <C> <C> <C>
June 30, 1997 $ 0 $ 696,085 $ 696,085
Prior to June 30, 1997 49,000 791,376 791,376
Total Overstatement $ 49,000 $1,487,461 $1,487,461
========== ========== ==========
</TABLE>
Note 12: Commitments and Contingencies
Royalty and Lease Agreements: 22 of the unpatented lode mining claims are leased
to the Company under a lease assigned to the Company during June, 1986 (the
"Chamberlain Lease") in connection with the settlement of obligations owed to
the Green International, Inc., Shareholders Liquidation Trust. The lease
contains an option to purchase the claims at a purchase price of $1,000,000
during the term of the lease and any extension. The current lease expires on
November 15, 1997, and is renewable for an additional consecutive ten year term
upon five days' notice. The lease provides for a royalty payment to the Lessors
of $2.00 per ton of vermiculite concentrate, or 3 1/3 percent of the selling
price, whichever is greater, of vermiculite ore mined from the 22 claims. An
addendum to the lease extends this royalty to another 18 claims held by the
Company. A minimum royalty of $1,500 per quarter is provided for in the lease.
All royalty payments attributable to the 22 claims are to be a credit on the
purchase price of the option to purchase the claims [See note 11(a)].
Annual Claim Maintenance Fees: In 1993, the federal government substituted a fee
of $100 per claim in lieu of the former requirement for labor assessments, to
maintain title to the claims. Responsible for the maintenance of 96 claims, the
Company has an annual obligation of $9,600 in order to preserve its title to the
claims.
Environmental Impact Statement: In May of 1993, the US Forest Service and the
Montana Department of State Lands issued a Final Environmental Impact Statement
for the Western Vermiculite Project (the "Hamilton Property"). The EIS was
required in response to the Company's application for an operator's permit to
develop the Hamilton Vermiculite Project. To date, no evaluation of the cost
required to effect the implementation of the Plan of Operations, from an
administrative and permitting perspective has been undertaken by the Company,
and no reserve of
19
<PAGE>
Note 12: Commitments and Contingencies (Continued)
funds has been allocated for that purpose.
Insurance: The Company discontinued its insurance coverages during fiscal 1991
and has been uninsured since that time.
Income Tax: The company has not filed any federal or state income tax returns
since June 30, 1990. The total amount due is estimated to be under $3,000. This
is not reflected on the financial statements.
Securities Matters: The Company's Common Shares were delisted from NASDAQ
National Market System on January 21, 1992. The Company shares currently trade
on the NASDAQ Electronic Bulletin Board.
Note 13: Subsequent Events
(a) In November, 1997, the Chamberlain Lease of 22 unpatented lode mining claims
in Hamilton Vermiculite Project expired, and was not renewed; the Company holds
the remaining claims (numbering 74 claims, of which 63 are lode mining claims
and 11 are mill site claims). In the opinion of New Management, the claims no
longer leased by the Company, while containing a large quantity of low grade ore
(at or below the cut-off grade for current vermiculite operations), do not
impact the Company's financial position, since the bulk of this ore was not
within the bounds of the mining operation permitted by the EIS, and had no
present commercial value. In September, 1998, the 22 claims were abandoned by
the previous owners. The Company subsequently located 22 claims covering the
same area and is now the owner of the entire claim group.
(b) In July, 1998, the Liquidator of the first mortgagee insurance company
holding a lien upon the Hamilton Vermiculite Project has made an offer in
settlement of all claims, for $130,000, which offer the Company has accepted,
and on October 28, 1998 it was fully funded and closed (See Note 1). Certain
other mortgagors and note holders (holding in the aggregate principal balances
of $496,000) have agreed to accept common stock of the Company for accrued
interest on their notes through February 1, 2001, and to extend the maturity
until February 1, 2001.
20
<PAGE>
PART I
ITEM 2 - PLAN OF OPERATIONS
PLAN OF OPERATIONS
General
The Company is currently directing its efforts to (i) initiating a
mining and milling operation at its Hamilton Vermiculite property, (ii)
acquiring other vermiculite resources and related businesses that will provide a
significant market presence in the vermiculite industry, and (iii) exploring
other power and mining acquisitions or joint ventures. Situations that are
currently being investigated include the acquisition of an inactive vermiculite
mine and mill in southern Montana, the acquisition of an active mine and mill in
Brazil, and the acquisition and relocation of small electric plants. It is the
intent of the Company to engage in the exfoliation of vermiculite concentrates
and the preparation and marketing of vermiculite products, and perhaps to expand
into energy production and distribution. To this end the Company is engaging in
discussions with potential joint venture partners to construct and operate one
or more vermiculite exfoliation facilities, with potential sellers of energy
plants, and with banks regarding financing.
The Company's mining experts have recommended that mining and milling
operations at the Hamilton property be incrementally phased in with the first
stage being a small pilot plant designed to produce up to 1,000 tons per month
of coarse sized vermiculite concentrates. The Company believes that this will
allow for a much more rapid and cost effective way to begin producing
vermiculite concentrates to market and to use as feed material at such time as
the Company becomes involved in the processing of vermiculite into end user
products.
The Company intends to perform additional drilling programs on the
claims on the Hamilton property as part of the joint venture. Current ore
reserve estimates are based solely on the results of a drilling program
performed in 1986. Although the results of this program are considered valid,
the area covered by the drilling program was only a fraction of the mapped and
inferred vermiculite deposit.
Current Market and Competition
All of the vermiculite that is now being mined in the United States
comes from mines in Virginia and South Carolina. W.R. Grace & Company has a
large vermiculite operation near Enoree, South Carolina, which is capable of
producing approximately 100,000 short tons of vermiculite concentrate per year.
Virginia Vermiculite Ltd. produces vermiculite from a mine near Woodruff, South
Carolina, and from a mine near Louisa, Virginia. The Company believes that the
combined output of Virginia Vermiculite Ltd. is approximately 90,000 tons per
year. Both Grace and Virginia Vermiculite consider their reserve and production
data to be confidential so the Company's estimates of their production are
approximations.
There is one other small mining operation in South Carolina. This
operation was for many
21
<PAGE>
years known and Patterson Vermiculite and was recently sold to Palmetto
Vermiculite. This operation has historically produced vermiculite at the rate of
15,000 tons per year. The sum total of all three companies is an estimated
maximum production capacity of 205,000 short tons per year.
The Company believes that vermiculite produced from the Hamilton
property will be competitive with the South Carolina and Virginia mines, which
source vermiculite throughout the western United States and Canada. There is no
vermiculite mine currently active in the western United States. One small
operation near Dillon, Montana has produced approximately 4,000 tons of
concentrate during short periods of operation in recent years. This operation
has a production capacity estimated to be only 6,000 short tons per year and it
is currently inactive.
At one time, Grace also operated a mine and mill near Libby, Montana.
The Libby operation was the largest vermiculite mine and mill in the history of
commercial vermiculite and had annual production exceeding 225,000 tons of
concentrate. The Libby operation was terminated and the land reclaimed over 10
years ago.
Currently, substantially all of the vermiculite imported into the
United States and Canada comes from either the Peoples Republic of China or the
Republic of South Africa. The amount of vermiculite arriving at ports in
California and Washington is quite small and relatively high priced. Although
the possibility of larger and lower cost shipments of imported vermiculite
landing on the Pacific Coast is possible, the information available to the
Company at this time is insufficient to allow it to reasonably predict its
potential impact on the marketability of Hamilton vermiculite.
Acquisitions
On December 30, 1998, Stansbury announced that it has had discussions
with the principal owner and operator of a mining and milling operation in
Brazil, with a goal to conclude the proposed acquisition in March 1999, and a
general term sheet had been exchanged.
While at the present stage of negotiations, the terms remain nonbinding
on the parties; the understanding contemplates that the Company will provide an
initial mill expansion to increase the production of vermiculite concentrate to
50,000 tons per year. The Company believes that the reserves of the project are
in the range of 10 million tons of ore.
Development Stage Activities
In October of 1998, Nevada Vermiculite provided the funding to
Stansbury to discharge the debt to its largest creditor, Southern American
Insurance Corporation in Liquidation. The creditor Southern American Insurance
Company had been in liquidation under the supervision of the Utah State
Insurance Commission since 1991. The liability to this creditor from principal
and accrued interest were in excess of $2,056,474. This liability, which dates
back to the late 1980s, had been secured by a first mortgage on the vermiculite
claims at the Hamilton site, the Company's major asset. The liability has been
settled, and released of record. The amount of the settlement was $130,000,
which the Company raised through the issuance of a convertible note in that
amount to
22
<PAGE>
Nevada Vermiculite.
In December of 1998, the Company entered into negotiations to form a
joint venture with Nevada Vermiculite. The purpose of the joint venture is to
commence mining and milling operations of worldwide vermiculite concentrates
during 1999. The intended joint venture will be known as International
Vermiculite L.L.C., a Delaware limited liability company.
Nevada Vermiculite, of whom Stansbury directors Aldine J. Coffman and
James R. Hindman, are minority shareholders, is owned by Messrs. Coffman and
Hindman and the principals of Channel and Basin Reclamation, Inc. ("Channel &
Basin"). Channel & Basin owns and operates three large-scale sand and gravel
operations with revenues of approximately $12 million per year. The Company
believes that Nevada Vermiculite will bring the capital, equipment and
operational expertise to contribute to the mining and milling efforts of the
joint venture.
Liquidity
The Company has been inactive and nonoperating for years; consequently,
it is questionable as to whether or not it can remain a going concern. The
primary activity in the past few years has been to preserve and maintain mineral
leases and claims. No actual mining has occurred since the Company acquired such
properties in 1984. The Company has had no income since 1991, and has utilized
proceeds of the issuance of debt securities and the issuance of capital stock
for meeting its operating capital commitments. The Company has not obtained the
necessary financing to meet its working capital requirements, and there can be
no assurance that the Company will be successful in obtaining the necessary
financing. The Company has entered into a joint venture to facilitate the
development of its vermiculite mining assets. The Company intends to issue
additional debt securities for working capital and for the cash portion of
acquisitions it is currently negotiating. The Company expects to issue capital
stock for the majority of the purchase price of these possible acquisitions.
There can be no guarantee that the Company will consummate any acquisitions of
additional vermiculite mines or any power plants; however, the Company has begun
discussions with banks regarding financing necessary for certain acquisitions.
There can be no guarantee any such bank financing will be available to the
Company, or, if it is available, that it will be at interest rates and terms
acceptable to the Company.
YEAR 2000 COMPLIANCE
The Company is currently negotiating a joint venture pursuant to which
it expects that it will commence active mining and milling operations during
calendar 1999. The Company has not yet begun to institute active operations, to
select vendors, to purchase equipment, including either information technology
("IT") equipment or non-IT systems, nor secure customers; therefore, the Company
cannot yet measure the consequences of its not being prepared for the Year 2000,
the cost of its not being prepared for the year 2000, the cost of its becoming
prepared, or the risks the Company faces from preparation for or failure to be
prepared for the Year 2000, nor is it yet able to devise any contingency plans.
23
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The only pending action against the Company is by Ellsworth, Wiles &
Chalphin, P.C., filed in the Court of Common Pleas, Bucks County, Pennsylvania,
on September 14, 1998. James G. Wiles ("Wiles") acted as former counsel to the
Company as partner in Ellsworth, Wiles & Chalphin, P.C. The complaint alleges
$69,654.95 is due for legal services rendered by Wiles on behalf of the Company.
However, a counterclaim has been filed against Wiles alleging that no amount is
due, and furthermore that Wiles failed to protect the best interest of the
Company by failure to have required tax returns filed timely.
Judgments of record affecting title to the Hamilton Project include: a
claim of lien filed by the State of Montana in January, 1993, for $658,
reflected on the financial statements as an account payable, and a judgment
obtained by Dorsey & Whitney, a general partnership, in December, 1994, for
$52,683 in principal, along with prejudgment interest of $32,527, the total
amount of which is $85,210 is accruing at 12% interest from December 1994; at
June 30, 1998 principal and accrued interest totaled $121,977.
A judgment was obtained by Southampton Metals Ltd. ("Simon
Grant-Rennick"), under a settlement with the Company, upon which remains a
current unpaid balance of $5,600, which balance is included on the financial
statements as a note payable.
Other judgments against the Company, which appear in the financial
statements as accounts payable, include a judgment obtained by Mike Bauernfiend,
in Bergen County, New Jersey for $7,000, a judgment obtained by Martineau & Co.,
in Salt Lake City, Utah, for $8,000, and a judgment obtained by Bruce
Blessington, in Salt Lake County, Utah, for $26,293. These judgments remain due
and payable by the Company as of June 30, 1998.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
24
<PAGE>
ITEM 5 - OTHER INFORMATION
During 1999, the Company's management conducted a review of the
Company's past sales of promissory notes ("Notes"). Management concluded that
although the Company sought to comply with applicable federal and state
securities laws in its sale of these Notes, the attempts to comply may not have
met the obligations imposed on the Company by the Securities Act of 1933, as
amended and certain state securities laws (collectively, the "Securities Laws").
Based on the foregoing, and Management's ongoing efforts to bring the
Company into compliance with the Securities Laws and to limit the potential
liability of the Company in connection with the sale of the Notes, the Company
will be offering all purchasers of the Notes ( the "Note Holders") the right to
rescind their purchase of the Notes.
The Company had granted to each Note Holder for each dollar in
principal amount of the purchased Notes, the purchased Notes plus four shares of
the Company's common stock (the "Associated Stock").
The right to rescind is set forth in, and referred to as, the
"Rescission Offering" (the Rescission Offering is attached for filing as an
Exhibit to this Form 10-QSB). Under the Rescission Offering, the Company will
pay to each Note Holder who chooses to accept the Rescission Offer and rescind
his or her purchase of the Notes and any shares of the Company's common stock
received in connection with the sale of the Notes an amount equal to the
consideration paid for the Note, adjusted by the Interest Adjustment. The
"Interest Adjustment" is the amount of the interest the Company has paid on the
Note less the interest at the applicable statutory rate in the state in which
the Note Holder resides from the date of the purchase of the Note.
The Company will also be making a matched Note Offering to the Note
Holders. This Note Offering will be made to the previous purchasers of the
Company's promissory notes under the same terms as the original Note. The
current aggregate amount of promissory notes outstanding, and which the
Rescission Offering and matched Note Offering include, is $2,047,710.31. The
Company plans to solicit additional investment through the Note Offering in
compliance with the relevant federal and state securities laws.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) 27.1 Financial Data Schedule
99.4 Recession Offering
99.5 Notes Offering
(b) There were no reports on Form 8 -K filed during the three
months ended March 31, 1999.
25
<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.
DATED: MAY 14, 1999 STANSBURY HOLDINGS CORPORATION
BY: /s/ ALDINE J. COFFMAN, JR.
--------------------------------------
ALDINE J. COFFMAN, JR., CHIEF
EXECUTIVE OFFICER AND PRESIDENT
BY: /s/ JEFFERY L. WERTZ
--------------------------------------
JEFFERY L. WERTZ, CHIEF
FINANCIAL OFFICER AND VICE PRESIDENT
26
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27.1 Financial Data Schedule
99.4 Recession Offering
99.5 Notes Offering
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 33,927
<SECURITIES> 0
<RECEIVABLES> 21,198
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,000
<PP&E> 0
<DEPRECIATION> 1,631
<TOTAL-ASSETS> 59,494
<CURRENT-LIABILITIES> (121,084)
<BONDS> (445,306)
0
0
<COMMON> 274,961
<OTHER-SE> 410,923
<TOTAL-LIABILITY-AND-EQUITY> 59,494
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 656,599
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,108,333
<INCOME-PRETAX> (1,764,932)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,764,932)
<DISCONTINUED> 0
<EXTRAORDINARY> 2,056,474
<CHANGES> 0
<NET-INCOME> 291,543
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
EXHIBIT 99.4
RESCISSION OFFER TO CERTAIN NOTE HOLDERS
OF STANSBURY HOLDINGS CORPORATION
Stansbury Holdings Corporation (the "Company") hereby offers to certain
purchasers of the Company's promissory notes, which are more specifically
described below (the "Notes"), the right to rescind their acquisition of the
Company's Notes. Any Noteholder that wants to rescind their purchase of the
Notes will receive in exchange for the Notes and any of the Company's common
stock received in connection with the purchase of the Notes ("Associated Stock")
a payment equal to the purchase price of the Notes adjusted by the Interest
Adjustment. The "Interest Adjustment" is the amount of the interest the Company
has paid on the Note (the "Note Interest Paid") less the interest at the
applicable statutory rate in the state in which the Noteholder resides (the
"Statutory Rate") from the date of purchase of the Note. The rescission offer
set forth above is referred to as the "Rescission Offer." The Notes that are the
subject of the Rescission Offer include $485,462.31 in principal amount of Notes
with a 90 day term (the "90-day Notes") sold between March 9, 1998 and the date
of this Rescission Offer, $197,000 in principal amount of Notes with a 180 day
term (the "180-day Notes") sold between March 1, 1999 and the date of this
Rescission Offer, and $1,365,248 in principal amount of Notes with a five year
term (the "5-year Notes") sold between November 19, 1991 and the date of this
Rescission Offer (collectively, these 90-day Notes, 180-day Notes, and 5-year
Notes are the Notes). During 1999, the Company's management conducted a review
of the Company's past sale of Notes. Management concluded that although the
Company sought to comply with applicable federal and state securities laws in
its sale of the Notes, the attempts to comply may not have met the obligations
imposed on the Company by the Securities Act of 1933, as amended (the "1933
Act") and certain state securities laws (collectively, the "Securities Laws").
The Rescission Offer is being made as part of the Company's on-going effort to
bring the Company into compliance with the Securities Laws and to limit the
potential liability of the Company in connection with its sale of the Notes. The
Company is currently accruing the payment of its interest obligations under the
Notes.
The Company has granted to each Noteholder for each dollar in principal
amount of the purchased Notes, the purchased Notes plus four shares of its
common stock. As of May 11, 1999, four shares of the Company's common stock is
worth $1.40 (based on the last trade price of $0.35 for the Company's common
stock). The value of four shares of the Company's common stock based on the
recent last trade plus one dollar in principal value of the Notes is equal to
$2.40. Based on the foregoing, the Company believes that at May 11, 1999, the
value of $1.00 invested by a Noteholder in the Notes and Associated Stock
received by a Noteholder is $2.40.
The Company will pay to each Noteholder who chooses to accept the
Rescission Offer and rescind his or her purchase of Notes and Associated Stock
an amount equal to the consideration paid for the Note, less the amount of
interest paid on the Note, and Company will pay interest on the amount due based
on the applicable Statutory Rate. Each Noteholder who accepts the Rescission
Offer must also return to the Company any shares of Associated Stock that he or
she received, and waive any rights to receive any shares that he or she is
entitled to receive in connection with the purchase of Notes or the conversion
of Notes. Each Noteholder received four shares, or the right to receive four
shares, of the Company's common stock in connection with their purchase of the
Notes. The Rescission Price will be paid within thirty days of submission of the
Request for Rescission and tender of common stock to the Company.
<PAGE>
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKE ANY RECOMMENDATION
TO ANY NOTEHOLDER AS TO WHETHER TO ACCEPT THE RESCISSION OFFER OR TO
RETAIN THE NOTES AND ASSOCIATED STOCK PURCHASED FROM THE COMPANY. EACH
NOTEHOLDER MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO ACCEPT
THE Rescission OFFER, OR WHETHER TO RETAIN THE NOTES AND ASSOCIATED
STOCK.
If a Noteholder decides that he or she might not want to accept the
Rescission Offer, he or she should review the accompanying Offering Memorandum
for the acquisition of the Notes. The Noteholder may elect to retain his or her
investment in the Notes and Associated Stock. The terms of the purchase of Notes
and Associated Stock pursuant to the Offering Memorandum are designed to be the
same as contained in the original offering of Notes and Associated Stock to the
Noteholders. After review of the accompanying Offering Memorandum, if a
Noteholder elects to retain his or her Note and Associated Stock investment, he
or she should complete and submit to the Company the Confidential Purchaser
Questionnaire and Subscription Agreement contained in the Offering Memorandum.
For a Noteholder to rescind his or her Note and Associated Stock
purchase and accept the Rescission Offer, the Noteholder must tender his or her
Note(s) and Associated Stock pursuant to this Rescission Offer and submit them
with a properly completed Request for Rescission in the form attached hereto.
The properly completed Request for Rescission, Note(s) and Associated Stock must
be received by the Company at its principal office (676 Louis Drive, Warminster,
Pennsylvania 18974) on or before 5:00 p.m., New York time, on or before June 30,
1999 (the "Expiration Date"). Documentation received by the Company other than
at the address specified above or after 5:00 p.m. on the Expiration Date,
incomplete or invalid documentation, or documentation purporting to accept the
Rescission Offer in a manner not permitted by the terms of the Rescission Offer
will not be deemed to constitute acceptance of the Rescission Offer.
The Request for Rescission and stock certificates may be delivered by
hand or courier service, or by mail. Each stock certificate must be duly
endorsed in blank by the registered holder thereof and the signature should be
guaranteed by an eligible guarantor institution (banks, stockbrokers, savings
and loan associations, and credit unions with membership in an approved
signature guarantee medallion program). The method of delivery of all documents
is at the election and risk of the Noteholder. If delivery is by mail,
registered mail, return receipt requested, properly insured, is recommended. The
Company will seek to notify Noteholders who submit incomplete or invalid
Requests for Rescission to the Company by mailing notice of the same to the
Noteholder's last known address prior to deeming the Rescission Offer rejected
by the Noteholder.
Tenders of shares made pursuant to the Rescission Offer may be
withdrawn by written notice to the Company at any time prior to the Expiration
Date.
EXHIBIT 99.5
STANSBURY HOLDINGS CORPORATION
NOTE OFFERING MEMORANDUM
<PAGE>
CALIFORNIA INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE CALIFORNIA CORPORATIONS CODE BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE CALIFORNIA CORPORATIONS CODE, IF SUCH REGISTRATION IS
REQUIRED.
DELAWARE INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE DELAWARE SECURITIES ACT BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE DELAWARE SECURITIES ACT, IF SUCH REGISTRATION IS
REQUIRED.
FLORIDA INVESTORS:
EACH FLORIDA RESIDENT WHO SUBSCRIBES FOR THE PURCHASE HEREIN HAS THE
RIGHT, PURSUANT TO SECTION 517.061(11)(A)5 OF THE FLORIDA STATUTES (THE "FLORIDA
SECURITIES INVESTOR PROTECTION ACT"), TO WITHDRAW HIS SUBSCRIPTION FOR THE
PURCHASE WITHIN THREE BUSINESS DAYS AFTER THE EXECUTION AND DELIVERY OF THE
SUBSCRIPTION AGREEMENT OR PAYMENT FOR THE SECURITIES HAS BEEN MADE, WHICHEVER IS
LATER, AND RECEIVE A FULL REFUND OF ALL MONIES PAID. WITHDRAWAL AND REFUND WILL
BE WITHOUT ANY FURTHER LIABILITY TO ANY PERSON. TO ACCOMPLISH THIS WITHDRAWAL, A
SUBSCRIBER MUST SEND A LETTER OR FAX TO THE COMPANY AT 676 LOUIS DRIVE,
WARMINSTER, PENNSYLVANIA 18974, FAX NO.(215) 328-9560, INDICATING HIS INTENTION
TO WITHDRAW. SUCH LETTER MUST BE SENT AND POSTMARKED, AND ANY FAX, COURIER OR
HAND DELIVERY MUST BE RECEIVED, PRIOR TO THE END OF THE AFOREMENTIONED THIRD
BUSINESS DAY. IT IS PRUDENT TO SEND SUCH LETTER BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME
IT WAS MAILED, UNLESS SAME IS PERSONALLY DELIVERED. IF THE REQUEST IS MADE
VERBALLY TO THE COMPANY (IN PERSON OR BY TELEPHONE TO AN OFFICER OR DIRECTOR OF
THE COMPANY AT (215) 328-9566, A WRITTEN
<PAGE>
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE
REQUESTED.
MARYLAND INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE MARYLAND SECURITIES ACT BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE MARYLAND SECURITIES ACT, IF SUCH REGISTRATION IS
REQUIRED.
MASSACHUSETTS INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE MASSACHUSETTS SECURITIES ACT BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE MASSACHUSETTS SECURITIES ACT, IF SUCH REGISTRATION IS
REQUIRED.
MINNESOTA INVESTORS:
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER CHAPTER 80A OF THE MINNESOTA SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION OR AN
EXEMPTION THEREFROM.
NEW JERSEY INVESTORS:
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE BUREAU OF
SECURITIES OF THE STATE OF NEW JERSEY, NOR HAS THE BUREAU PASSED ON OR ENDORSED
THE MERITS OF THIS OFFERING. THE FILING OF THE OFFERING WITHIN DOES NOT
CONSTITUTE APPROVAL OF THE ISSUE OR THE SALE THEREOF BY THE BUREAU OF
SECURITIES. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
OKLAHOMA INVESTORS:
<PAGE>
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE OKLAHOMA SECURITIES ACT. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OF THEM UNDER THE
SECURITIES ACT OF 1933 AND/OR THE OKLAHOMA SECURITIES ACT, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR ACTS.
PENNSYLVANIA INVESTORS:
UNDER THE PROVISIONS OF SECTION 207(M)(2) OF THE PENNSYLVANIA
SECURITIES ACT OF 1972, A PENNSYLVANIA RESIDENT WHO ACCEPTS AN OFFER TO PURCHASE
SECURITIES EXEMPTED FROM REGISTRATION BY SECTION 203(D) DIRECTLY FROM AN ISSUER
OR AFFILIATE OF AN ISSUER SHALL HAVE THE RIGHT TO WITHDRAW HIS ACCEPTANCE
WITHOUT INCURRING ANY LIABILITY TO THE SELLER OR ANY OTHER PERSON WITHIN TWO
BUSINESS DAYS FROM THE DATE OF RECEIPT BY THE ISSUER OF HIS WRITTEN BINDING
CONTRACT OF PURCHASE OR, IN THE CASE OF A TRANSACTION IN WHICH THERE IS NO
WRITTEN BINDING CONTRACT OF PURCHASE, WITHIN TWO BUSINESS DAYS AFTER HE MAKES
THE INITIAL PAYMENT FOR THE SECURITIES BEING OFFERED.
EACH PERSON ENTITLED TO EXERCISE THE RIGHT TO WITHDRAW GRANTED BY
SECTION 207(M), AND WHO WISHES TO EXERCISE SUCH RIGHT, MUST WITHIN THE
AFOREMENTIONED TWO BUSINESS DAYS CAUSE A WRITTEN NOTICE OR TELEGRAM TO BE SENT
TO THE COMPANY AT THE ADDRESS PROVIDED IN THE PLACEMENT OFFERING MEMORANDUM
INDICATING HIS INTENTION TO WITHDRAW. SUCH LETTER OR TELEGRAM MUST BE SENT AND
POSTMARKED ON OR PRIOR TO THE AFOREMENTIONED SECOND BUSINESS DAY. IF YOU ARE
SENDING A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO ENSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE TIME IT WAS
MAILED. SHOULD YOU MAKE THIS REQUEST ORALLY, YOU MUST ASK FOR WRITTEN
CONFIRMATION THAT YOUR REQUEST HAS BEEN RECEIVED.
ALL PENNSYLVANIA INVESTORS WILL BE REQUIRED TO AGREE IN WRITING THAT
THEY WILL NOT SELL THESE shares WITHIN TWELVE MONTHS AFTER THE DATE OF PURCHASE
OF SUCH shares.
RHODE ISLAND INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
<PAGE>
SECURITIES ACT OF 1933, AS AMENDED, OR THE RHODE ISLAND UNIFORM SECURITIES ACT
BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY
OF THE OFFERING. THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE RHODE ISLAND UNIFORM SECURITIES ACT,
IF SUCH REGISTRATION IS REQUIRED.
TEXAS INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE TEXAS SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS
THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING. THESE
SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR
ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF TEXAS, IF SUCH REGISTRATION IS REQUIRED. THE
UNITS OFFERED HEREBY ARE BEING OFFERED AND SOLD IN TEXAS IN RELIANCE UPON THE
EXEMPTION UNDER SECTION 109.13 OF THE TEXAS SECURITIES ACT. TEXAS INVESTORS ARE
SUBJECT TO THE ADDITIONAL SUITABILITY REQUIREMENT IMPOSED BY THE REGULATIONS OF
THE TEXAS SECURITIES BOARD; THE TOTAL COST OF THE PROPOSED INVESTMENT SHALL NOT
EXCEED 20% OF THE INVESTOR'S NET WORTH (OR JOINT NET WORTH WITH THE INVESTOR'S
SPOUSE) AT THE TIME OF SALE.
VIRGINIA INVESTORS:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE VIRGINIA SECURITIES ACT BY REASON OF SPECIFIC
EXEMPTIONS THEREUNDER RELATING TO THE LIMITED AVAILABILITY OF THE OFFERING.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY
PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE VIRGINIA SECURITIES ACT, IF SUCH REGISTRATION IS
REQUIRED.
RESTRICTION ON RESALE
THESES SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFER
AND RESALE, AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
INVESTORS ARE REQUIRED TO BEAR THE FINANCIAL RISKS OF
<PAGE>
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
<PAGE>
NOTE OFFERING TO CERTAIN NOTEHOLDERS
OF STANSBURY HOLDINGS CORPORATION
$ 485,462.31 in 90-day Notes
$1,197,000.00 in 180-day Notes
$1,365,248.00 in 5-year Notes
Stansbury Holdings Corporation (the "Company") is offering $485,462.31
in principal amount of promissory notes with a 90 day term (the "90-day Notes"),
$1,197,000.00 in principal amount of promissory notes with a 180-day term (the
"180-day Notes"), and $1,365,248.00 in principal amount of promissory notes with
a 5 year term (the "5-year Notes") (collectively, the 90-day Notes, 180-day
Notes, and 5-year Notes are referred to as the "Notes").
The Notes are offered in part for the persons who have previously
purchased the Company's promissory notes. These prior purchasers of the
Company's promissory notes are being offered the right to rescind their purchase
and either receive the return of their consideration (as explained in the
Company's Recession Offer to the purchasers of those promissory notes) or to
elect to continue their investment through this Note Offering. The Notes are
also offered to investors who wish to purchase the Notes other than as a
continuation of their investments in existing promissory notes of the Company.
A purchaser of the Notes will receive the Note and four shares of the
Company's common stock for each $1 in principal amount of the Note purchased. A
summary of the terms of the Notes follows.
<PAGE>
<TABLE>
<CAPTION>
90-day Note 180-day Note 5-year Note
<S> <C> <C>
Note plus 4 shares of Note plus 4 shares of Note plus 4 shares of
common stock for each $1 common stock for each $1 common stock for each $1
of principal amount of the of principal amount of the of principal amount of the
Note Note Note
</TABLE>
<TABLE>
<CAPTION>
90 day term 180 day term 5 year term
<S> <C> <C>
Company may convert to Company may convert to Original period for
common stock: interest common stock: interest Company redemption has
converted at amount due, converted at amount due, passed. No conversion
principal converted at principal converted at feature
125% of the principal 125% of the principal
amount amount
Secured by a first lien on
Unsecured Unsecured the Company's claim to the
Hamilton vermiculite
project
</TABLE>
<PAGE>
The Company intends to use the proceeds from the sale of the Notes for
working capital (see discussion of use of proceeds, below).
In making an investment in the Notes, the associated common stock to be
received in connection with the purchase of the Notes, and the common stock to
be received if the principal and interest of the any Notes are converted to
common stock (collectively, the "Associated Stock"), purchasers of the Notes and
Associated Stock must rely on their own examination of the Notes and Associated
Common Stock, and the terms of this Note Offering. Neither the Securities and
Exchange Commission nor any state securities commission has passed upon the
accuracy or completeness of these offering materials or upon an investment in
the debt or equity of the Company. The Notes and Associated Stock are offered
pursuant to an exemption from the necessity to register the offering with the
Securities and Exchange Commission; however, the Securities and Exchange
Commission has not made an independent determination that the offering of the
Notes or the Associated Stock is exempt from registration. The Notes and
Associated Stock are intended only for persons or entities who or which do not
have a need for liquidity with respect to their investment and who or which can
afford to lose a portion or all of their invested funds.
No person has been authorized to give any information or to make any
representations other than those contained or specifically provided for in these
offering materials, and if given or made, such information or representations
must not be relied upon. These offering materials do not constitute an offer to
sell or solicitation of an offer to buy any securities other than the Notes and
Associated Stock offered hereby, nor an offer of the Notes or Associated Stock
to any person in any state or jurisdiction in which, or to any person to whom,
such offer would be unlawful. Without limiting any obligation that may arise to
provide additional information in the event of material changes involving the
Company, neither the delivery of these offering materials nor any sale made
hereunder shall under any circumstance create an implication that there has been
no change in the affairs of the Company subsequent to the date hereof.
The Company's most recent proxy statement and report to shareholders,
which includes its most recent annual report on Form 10-KSB, and the Company's
most recent quarterly report on Form 10-QSB, is included with and is
incorporated as part of these offering materials.
<PAGE>
The following table sets forth the information concerning the estimated
use of proceeds from the sale of the Notes. The Company has assumed, in
estimating its use of proceeds, that no current holders of its promissory notes
will accept its recision offer, and that the Company will sell $500,000 in
additional amounts of Notes pursuant to this Notes Offering. The Company's
assumptions may or may not be correct. The amounts set forth below are estimates
and may vary from the actual amount available to the Company and from actual
expenditures.
AMOUNT OF ADDITIONAL FUNDS AVAILABLE
FROM THIS NOTE OFFERING
- -----------------------
180-day Notes $1,000,000
USE OF ADDITIONAL FUNDS
- -----------------------
Cash portion for
planned purchase of vermiculite mine $ 500,000
Working capital $ 500,000
<PAGE>
CONFIDENTIAL PURCHASER QUESTIONNAIRE
AND
SUBSCRIPTION AGREEMENT
<PAGE>
CONFIDENTIAL PURCHASER QUESTIONNAIRE
STANSBURY HOLDINGS CORPORATION
(THE "COMPANY")
The purpose of this Questionnaire is to determine whether you meet the
standards determined by the Company for the purchase of Notes. Your answers
will, at all times, be kept strictly confidential. However, each person who
subscribes to purchase Notes from the Company hereby agrees that the Company may
present this Questionnaire to such parties as it deems appropriate to establish
the availability under any federal or state securities laws of an exemption from
registration of the private placement of the Notes. The Company will rely on the
accuracy of your responses to the following questions. You are reminded that you
have indemnified the Company against loss in the event any of your responses
contain material misrepresentations or omissions of material information.
Please complete the Questionnaire as thoroughly as possible and sign,
date and return one copy to the Company. Questions applicable only to
individuals should be omitted by entity investors.
1. Name:__________________________________________________________________
Age or date of formation:______________________________________________
Number of dependents:__________________________________________________
State where registered to vote:________________________________________
State of issuance of driver's license:_________________________________
Citizenship or jurisdiction of formation:______________________________
2. Home Address and Telephone Number:
_______________________________________________________________________
_______________________________________________________________________
3. Business Address and Telephone Number:_________________________________
_______________________________________________________________________
<PAGE>
4. Describe your current employment, including the company by which you
are employed, and its principal business and your job responsibilities
and functions.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
5. Describe your principal employment or business activities during the
last five years.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
6. If an individual investor, is your NET WORTH, including homes, home
furnishings and automobiles, but excluding all current debts and
obligations to pay money, in excess of $1,000,000. Yes_____ No_____
If an entity investor, are your total assets in excess of $5,000,000.
Yes_____ No_____
7. If you are an individual investor, does your individual income or your
and income with your spouse for 1997 and 1998 and the income which you
reasonably expect for 1999 satisfy the levels below:
INCOME INCOME WITH SPOUSE
------ ------------------
1997 $200,000 $300,000
1998 $200,000 $300,000
1999 $200,000 $300,000
Either my income or my income with my spouse satisfies the above
levels. Yes_____ No_____ .
8. If an individual investor, do you expect your current level of income
to significantly decrease in the foreseeable future? Yes No .
9. Do you have any other investments or contingent liabilities which you
reasonably anticipate could cause you to need sudden cash requirements
in excess of cash readily available to you? Yes_____ No_____
10. If the investor is a corporation, partnership, association, trust or
unincorporated organization, the undersigned represents that it has not
been formed for the specific purpose of making the investment
contemplated herein.
<PAGE>
11. If the investor is a partnership, association or unincorporated
organization that has been in existence for less than one year, supply
the following information:
(a) Date organized:_______________________________________________
(b) Number of partners:___________________________________________
(c) Purpose of organization:______________________________________
(d) Types of prior Investment:____________________________________
REPRESENTATIONS AND WARRANTIES:
I understand that the Company will be relying on the accuracy and
completeness of my responses to the foregoing questions and I represent and
warrant to the Company as follows:
(i) The answer to the above questions are complete and correct
and may be relied upon by the Company in determining whether the Offering in
which I propose to participate is exempt from registration under federal and
state securities laws;
(ii) I will notify the Company immediately of any material
change in any statement made herein occurring prior to the closing of any
purchase by me of an interest in the Company; and
(iii) I am able to bear the economic risk of the investment
for an indefinite period of time and, at the present time, could afford a
complete loss of such investment.
<PAGE>
IN WITNESS WHEREOF, I have executed this Confidential Purchaser
Questionnaire this ______ day of __________________, 1999.
INDIVIDUAL:
____________________________________
Subscriber's Name
____________________________________
Subscriber's Signature (*)
____________________________________
*If investment is taken in joint names, both must sign.
ENTITY:
____________________________________
Name of Entity
By:_________________________________
Its:________________________________
<PAGE>
SUBSCRIPTION AGREEMENT
TO: The Board of Directors
Stansbury Holdings Corporation (the "Company")
GENTLEMEN:
1. SUBSCRIPTION. The undersigned hereby irrevocably subscribes
for and agrees to purchase the principal amount of promissory notes (the
"Notes") of Stansbury Holdings Corporation (the "Company") set forth on the
Signature Page attached hereto, and described in the Note Offering Memorandum
dated May 15, 1999 (the "Memorandum").
2. PAYMENT.
(a) The undersigned agrees to pay a sum equal to the face
value of the Notes and is delivering herewith either canceled promissory notes
of the Company in like amount or a check in the principal amount of the Note
payable to the order of the Company or has wire transferred such funds; and
(b) The undersigned understands that if the undersigned's
subscription is rejected for any reason, all documents will be returned promptly
along with the undersigned's funds without interest and without any deductions.
3. REPRESENTATIONS AND WARRANTIES. By executing this Subscription
Agreement, the undersigned further:
(a) acknowledges that the undersigned has received and
carefully read the Memorandum is familiar with and understands the Memorandum,
and has based his or her decision to invest on the information contained in the
Memorandum, and has not been furnished with any other offering literature or
prospectus which is inconsistent or contradictory in any material way with the
Memorandum;
(b) represents and warrants that he or she is acquiring
the Notes and associated common stock for his or her own account for investment
purposes and not with a view to resale or distribution and that he or she will
not sell or otherwise transfer the Notes or associated common stock except in
accordance with restrictions on transfer contained in the Memorandum;
(c) represents and warrants that he or she has such
knowledge and experience in financial and business matters that he or she is
capable of evaluating the merits and risks of the prospective investment;
(d) represents and warrants that he or she is able to
bear the economic risk of losing his or her entire investment in the Notes;
<PAGE>
(e) represents and warrants that his or her investment in
the Notes is suitable for him or her and that his or her overall commitment to
investments which are not readily marketable is not disproportionate to his or
her net worth, and his or her investment in the Notes will not cause such
overall commitment to become excessive;
(f) represents and warrants that if an individual, (i) he
or she is at least 21 years of age, (ii) he or she is a citizen of the United
States, (iii) he or she has adequate means of providing for his or her current
needs and personal contingencies, (iv) he or she has no need for liquidity in an
investment in the Notes, (v) he or she maintains his or her domicile and is not
a transient or temporary resident at the address shown below, (vi) all of his or
her investments in and commitments to non-marketable securities and similar
investments are, and after his or her purchase of the Notes will be, reasonable
in relation to the undersigned's net worth and current needs, and (vii) the
personal financial information provided by the undersigned accurately reflects
his or her financial condition with respect to which he or she does not
anticipate any material adverse changes;
(g) understands that the Company shall have the right, in
its sole discretion, to accept or reject this subscription, in whole or in part,
at any time prior to acceptance, or to allocate to him or her less than the
principal amount of Notes he or she has subscribed for; the Company will notify
him or her whether this subscription is accepted or rejected; in the event this
subscription is rejected, any payment will be returned without interest or
charge and all of the undersigned's obligations hereunder shall terminate;
(h) understands that the Notes and associated common
stock have not been registered under the Securities Act of 1933, as amended (the
"1933 Act"), and, as the result thereof, are subject to substantial restrictions
on transfer, which restrictions are described in the Memorandum, and that the
offering and sale of the Notes and associated common stock are exempt from
registration under the 1933 Act by virtue of Section 3(b) of the 1933 Act and
Regulation D promulgated thereunder;
(i) agrees and understands that he or she will not sell
or otherwise transfer any Notes or associated common stock or any interest
therein unless the Notes or associated common stock (as applicable) are
registered under the Securities Act of 1933, as amended and any other applicable
federal or state securities laws or the undersigned obtains an opinion of
counsel which is satisfactory to the Company (both as to the issuer of the
opinion and the form and substance thereof) that the Notes or associated common
stock (as applicable) may be transferred in reliance on an applicable exemption
from such registration requirements;
(j) understands that (i) the Company has no obligation to
register the Notes or associated common stock for resale under any federal or
state securities laws or to take any action which would make available any
exemption from the registration requirements of such laws, and (ii) the
undersigned therefore may be precluded from selling or otherwise transferring or
disposing the Notes or associated common stock or any portion thereof for an
indefinite period of time or at any particular time and may therefore have to
bear the
<PAGE>
economic risk of investment in the Notes for an indefinite period of time;
(k) agrees that if and to the extent required by an
underwriter of the Company's shares in an initial public offering, the
undersigned will execute a "lock-up" agreement regarding some or all of his or
her common stock thereby agreeing not to sell such shares for a period of time
after completion of the public offering whether or not such shares are included
in the public offering;
(l) understands that no federal or state agency has
approved or disapproved the Notes or associated common stock, passed upon or
endorsed the merits of the Offering thereof, or made any finding or
determination as to the fairness of the Notes for investment;
(m) acknowledges that all material documents, records,
and books pertaining to this investment have on request been made available to
him or her and his or her advisers and that he or she has had the opportunity to
ask questions of, and receive answers from, an officer of the Company concerning
the Company and this Offering;
(n) acknowledges that if he or she is purchasing the
Notes subscribed for hereby in a fiduciary capacity, the above representations
and warranties shall be deemed to have been made on behalf of the person or
persons for whom he or she is so purchasing;
(o) acknowledges that the Company has made available to
him or her the opportunity to ask questions of, and receive answers regarding
the Company's proposed business operations and this Offering to the extent it
possesses such information, or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information given to him or
her;
(p) ACKNOWLEDGES THAT HE OR SHE UNDERSTANDS THAT IF HE OR
SHE IS A FLORIDA RESIDENT, PURSUANT TO SECTION 517.06l(11)l(a)(5) OF THE FLORIDA
STATUTES, WHEN SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, FLORIDA
INVESTORS HAVE A THREE DAY RIGHT OF RESCISSION; IF A FLORIDA RESIDENT HAS
EXECUTED A SUBSCRIPTION AGREEMENT, HE OR SHE MAY ELECT, WITHIN THREE BUSINESS
DAYS AFTER SIGNING THE SUBSCRIPTION AGREEMENT, TO WITHDRAW FROM THE SUBSCRIPTION
AGREEMENT AND TO RECEIVE A FULL REFUND AND RETURN (WITHOUT INTEREST) OF ANY
MONEY PAID BY HIM OR HER; TO ACCOMPLISH SUCH WITHDRAWAL, A FLORIDA RESIDENT NEED
ONLY SEND A LETTER TO THE COMPANY AT THE ADDRESS SET FORTH IN THE MEMORANDUM
INDICATING HIS OR HER INTENTION TO WITHDRAW; SUCH LETTER MUST BE SENT AND
POSTMARKED PRIOR TO THE END OF THE AFOREMENTIONED THIRD BUSINESS DAY; IF A
FLORIDA RESIDENT SENDS A LETTER, IT IS PRUDENT TO SEND IT BY CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO INSURE THAT IT IS RECEIVED AND ALSO TO EVIDENCE THE
TIME AND DATE WHEN IT IS MAILED;
<PAGE>
(q) understands that the Notes and associated common
stock are being offered and sold in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that the
Company and the principals and controlling persons thereof are relying upon the
truth and accuracy of the representations, warranties, agreements,
acknowledgments, and understandings set forth herein in order to determine the
applicability of such exemptions and the suitability of the undersigned to
acquire Notes;
(r) if the investor is a trust, 401(k) plan, IRA, or
qualified retirement plan, the undersigned is the person with authority to make
investment decisions for such entity; and
(s) represents and warrants that the information set
forth herein concerning the undersigned is complete, true and correct.
4. ACKNOWLEDGMENT AND UNDERSTANDING. The undersigned acknowledges
that he or she understands the meaning of the representations made by him or her
in this Subscription Agreement, and that such information must be true and
correct inasmuch as the Company is relying upon the accuracy of such
information. The undersigned hereby agrees to indemnify and hold the Company
harmless from and against any and all loss, costs, expenses, judgments, damages
and liabilities (including, without limitation, court costs and attorneys' fees)
arising out of any material omission or misrepresentation or breach of warranty
or agreement under this Subscription Agreement, any purchaser questionnaire
submitted by the undersigned, or in connection with the sale or distribution by
the undersigned of the Notes and associated common stock in violation of the
1933 Act or other applicable laws.
5. SURVIVAL. The representations and warranties shall survive
execution and delivery of this Subscription Agreement and the undersigned's
investment on the Company.
6. GOVERNING LAW. This agreement shall be governed by,
interpreted under, and construed in accordance with, the internal laws of the
State of Florida applicable to agreements made and to be performed within the
State of Florida without regard to the principles of conflicts-of-law thereof.
7. GENDER. References in this Subscription Agreement to male or
female genders shall apply to the neuter gender if the subscriber is an entity
unless the context clearly indicates otherwise.
Exact name in which the note and stock certificate should be issued:
____________________________
Principal amount of Note
Subscribed for: INDIVIDUAL:
$_____________ _________________________
<PAGE>
__________________________ I am enclosing existing Company
Subscriber's Name promissory notes in the principal amount
(Please Print) of:
$_____________
__________________________
Subscriber's Signature (*) I am enclosing a check in the amount of
$_____________
__________________________ _____________________________
Social Security Number
_____________________________
Date
_____________________________
Date
*If investment is taken in joint names, both must sign.
ENTITY:
__________________________
Name of Entity
By:_______________________
Its:______________________
__________________________
Federal Employer
Identification Number
__________________________
Date
EXHIBITS
The Company's Proxy Materials, including its Annual Report on Form 10-KSB for
the year ended December 31, 1998
The Company's Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999
<PAGE>
The form of the 90-day Note
The form of the 180-day Note
The form of the 5-year Note
