U.S. 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 FISCAL YEAR ENDED AUGUST 31, 1998
LANDMARK INTERNATIONAL, INC.
(Name of small business issuer in its charter)
Nevada 0-26578 33-0662114
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File No.) Identification No.)
1720 East Garry Avenue, Suite 201, Santa Ana, California 92705
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 475-4500
Securities registered pursuant to Section 12(b) of the Act: NONE
Name of each exchange on which registered: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.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 Exchange Act during the past 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 there is no 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. [ ]
State issuer's revenues for its most recent fiscal year: $397,363
The aggregate market value of the voting and non-voting common equity held by
non-affiliates was $373,413.30 computed by reference to the average bid and
asked price of such common equity, as of August 31, 1998, was $0.044
The number of shares outstanding of the issuer's common stock, as of August
31, 1998 was 19,986,666.
DOCUMENTS INCORPORATED BY REFERENCE: Initial Form 10-SB filed with the
Commission.
Transitional Small Business Disclosure Format (check one): Yes ... No .X.
FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT ON FORM 10-KSB
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21A OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, AND THE COMPANY DESIRES TO TAKE ADVANTAGE
OF THE "SAFE HARBOR" PROVISIONS THEREOF. THEREFORE THE COMPANY IS INCLUDING
THIS STATEMENT FOR THE EXPRESS PURPOSE OF AVAILING ITSELF OF THE PROTECTIONS
OF SUCH SAFE HARBOR WITH RESPECT TO ALL OF SUCH FORWARD-LOOKING STATEMENTS.
THE FORWARD-LOOKING STATEMENTS IN THIS REPORT REFLECT THE COMPANY'S CURRENT
VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE. THESE FORWARD-
LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, INCLUDING
THOSE DISCUSSED HEREIN, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM HISTORICAL RESULTS OR ANTICIPATED RESULTS. IN THIS REPORT, THE WORDS
"ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS," "FUTURE" AND SIMILAR
EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED
TOCONSIDER THE SPECIFIC RISK FACTORS DESCRIBED BELOW AND NOT TO PLACE UNDUE
RELIANCE ON THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN, WHICH SPEAK ONLY
AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY
REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES
THAT MAY ARISE AFTER THE DATE HEREOF.
PART I
Item 1. Description of Business.
Overview
Within the past ten years the telecommunications industry has experienced
rapid technological advances. The single most important technological
advance is the advent of digital fiber optic and microwave transmission
facilities. Digital facilities provide higher quality lower cost
transmission of long distance calls as compared to the older analog
technology. The rapid development digital technology brought on a surge in
construction of long distance digital facilities by the RBOC's and several
IXC's. As a result of increased capacity and decreased cost, the RBOC's and
IXC's who installed digital transmission facilities began selling excess
capacity wholesale to other smaller IXC's. This over capacity has provided
the IXC's in the second and third tier an opportunity to offer long distance
service equal in quality to that provided by the first tier at competitive
rates.
The competition for customers between IXC's has intensified since the AT&T
divestiture. Competition is based primarily on price. It is anticipated that
with the potential entry of IXC's into the intraLATA market, and the entry
of LEC's into interLATA long distance market, competition will further
increase. Print, television, and radio advertising, as well as telemarketing
are critical to the IXC's in competing for new customers. Although the
largest IXC's maintain their own telemarketing departments, many do not have
the expertise or flexibility to operate telemarketing departments, or cannot
do so on a basis, which is cost effective.
The company has entered into contracts with Pacific Bell and GTE to act as
such firm's non-exclusive sales representatives in the Southern California
counties of Los Angeles, Orange, San Bernardino, San Diego Imperial, Ventura,
and Santa Barbara. Under these contracts, the Company seeks to enroll
business customers of Pacific Bell or GTE in such firms' value added
telecommunications services such as offsite conferencing, telephone call
forwarding, call waiting, voice mail, and telephone answering. A flat fee
compensates the company for each service purchased by the customer, as well
as a residual based on the revenue derived by Pacific Bell or GTE on the
contract. The customer's net price for each service is the same whether it
deals through the Company or directly with Pacific Bell/GTE.
The Company believes, based on discussions with Pacific Bell and GTE
management that Pacific Bell and GTE have outsourced a portion of their
marketing to the Company due to the Company's lower cost structure and the
Company's ability to respond to changes in marketing strategy, or experiment
with marketing strategy, faster than the marketing departments of their
clients. As a result, the Company's involvement enables Pacific Bell and GTE
to better respond to the competitive telephone environment. The company is
seeking to enter into agreements to market long distance services in the
future with various other IXC's, but there can be no assumption that such
contracts will be obtained. In the year ended August 31,1998, the Pacific
Bell and GTE contracts together accounted for approximately 98% of the
Company's revenues.
Telemarketing
Telemarketing includes telephone-based direct sales programs, customer
service programs and consumer research. The ability to implement large
scale, professional telemarketing programs has improved dramatically over the
past ten years with the development of sophisticated call and data management
systems, including specialized computer software, predictive dialers,
automatic call distributors and digital switches. Industry sources estimate
that telemarketing expenditures in 1997 were $73 billion, and the industry
continues to experience substantial growth. The telemarketing industry is
highly fragmented and most independent telemarketers are small, single
facility operations. There are a large number of telemarketing operations in
the United States, although the Company believes that less than 1,000 are
independent telemarketing companies such as SITEL.
The advantage of telemarketing include high response rates, low cost per
transaction, direct interaction with customers and on-line access to detailed
customer or product information to immediately respond to customer inquires.
Significantly, even when a customer chooses not to make a purchase,
telemarketing often permits the client to learn more about the customer's
decision-making process and to update customer information in the client's
database. As a result of these advantages, telemarketing has become one of
the fastest growing forms of direct marketing. According to Direct Magazine,
approximately 45% of direct marketers expect to increase spending on
telemarketing in 1998.
With the proliferation of toll-free 800 numbers, the telephone is becoming
the principal means of providing customer service. Professional
telemarketers make extensive use of computer technology to quickly access
specific customer and product information necessary to successfully address
customer inquires. Customers find the immediate response available via the
telephone a great convenience, while clients are able to gain important
customer feedback and update their customer databases during most service
calls. The Company believes large corporations will continue to find new
ways of enhancing customer service through telemarketing programs.
Increasingly, large corporations are outsourcing their telemarketing
activities as part of an overall effort to focus internal resources on their
core competencies while improving operating efficiencies and reducing costs.
The Company also believes that the trend towards increased regulation of
telemarketing is another reason corporations are seeking outsourcing
relationships with independent telemarketers.
Outbound Sales. Outbound telemarketing refers to direct sales activities
that commence when the Company places call to parties targeted by the client
to offer products or services or to obtain information. In most instances,
the Company receives customer data electronically from its clients. These
files have been selected to match the demographic profile of the targeted
customer for the product or service being offered and contain each targeted
customer's name, address, phone number and other relevant data. The
Company's data management system sorts the records and electronically and
assigns them to one of its outbound call centers. Telephone calls are
controlled by computerized call management systems that utilize predictive
dialers to automatically dial the telephone numbers in the files, determine
if a live connection is made and present connected calls to a telephone
service representative who has been trained for the client's program. When a
call is presented, the customer's name, other information about the customer
and the program script simultaneously appear on the service representative's
computer screen. The service representative then uses the script to solicit
an order for the product or service or to request information that will be
added to the client's database.
Inbound Customer Service. Inbound telemarketing is the process by which a
call from a client's customer is received, identified, routed to a Company
service representative and answered. The information and results of the call
are captured and reported to the Company's clients for order processing,
customer service and data management. Typically, a customer calls a toll-
free "800" number to request product service information, place an order for
an advertised product or service or obtain assistance regarding a previous
order or purchase. To properly handle these functions, the Company will be
required to utilize automated call distributors and digital switches to
identify each inbound call by "800" number and immediately rout the call to a
Company service representative trained for that program. Simultaneously with
receipt of the call, the service representative's computer screen will
display information pertinent to the call. For example, if the call is in
response to a catalog sent to the customer, the service representative will
be able to reference the catalog items and their prices on the computer
screen.
Government Regulation
Telemarketing sales practices are regulated both federally, and at the state
level. The Federal Telephone Consumer Protection Act of 1991 (the TCPA)
prohibits telemarketing firms from imitating telephone solicitations to
residential telephone subscribers before 8:00 a.m. or after 9:00 p.m. local
time, and prohibits the use of automated telephone dialing equipment to call
certain telephone numbers. In addition, the TCPA requires telemarketing
firms to maintain a list of residential customers that have stated that they
do not want to receive telephone solicitations and, thereafter, to avoid
making calls to such customers' telephone numbers.
The federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994
(the TCFAPA) broadly authorizes the Federal Trade Commission (the FTC) to
issue regulations prohibiting misrepresentation in telemarketing sales. In
August 1995, the e FTC issued new telemarketing sales rules. Generally,
these rules prohibit misrepresentation regarding the cost, terms,
restrictions, performance, or duration of products or services offered by
telephone solicitation and otherwise specifically address other perceived
telemarketing abuses in the offering of prizes and the sale of business
opportunities or investments. The Company trains its telephone service
representatives to comply with the TCPA and programs its call management
system to avoid telephone calls during restricted hours or to individuals
maintained on the Company's "do not call" list.
A number of states have enacted or are considering legislation to regulate
telemarketing. For example, telephone sales in certain states cannot be
final unless a written contract is delivered to and signed by the buyer and
may be cancelled within three business days. Several states require
telemarketers to obtain licenses and post bonds. The Company does not
process card payments for any of its customers and does not currently operate
in any states where these requirements are imposed. From time to time, bills
are introduced in Congress which, if enacted, would regulate the use of
credit information. The Company cannot predict whether this legislation will
be enacted and what effect, if any, it would have on the telemarketing
industry.
The telephone industry is also subject to government regulation, primarily by
state public utility commissions. The Company relies on its clients and their
advisers to develop the scripts to be used by the Company in making consumer
solicitations. The Company has never been help responsible for regulatory
noncompliance.
Subsidiaries
The company has one wholly owned subsidiary named Landmark Communications
Inc. (a Nevada Corporation) that does business in the State of California as
Landmark Long Distance Inc.
Employees
The company has 12 employees, including 4 in administration, and 8 in sales.
The Company provides several days of classroom and hand-on training to new
employees, and weekly training classes are mandatory for all sales employees.
The Company considers its employee relations to be good.
Item 2. Description of Property.
The Company leases 700 square feet of commercial office space at 1720 East
Garry Avenue, Suite 201, Santa Ana, California 92705. The monthly rent is
$700 on a one-year lease which expires in November. The Company expects to
renew the lease as the same rent.
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's common stock has been traded in the over-the-counter market
since 1995. It is currently is traded in the over-the-counter market and is
quoted on the OTC Electronic Bulletin Board (symbol "LMKI") maintained by
NASDAQ. The market for the Company's Common Stock has often been sporadic and
limited.
The following table sets forth the high and low bid prices for the Company's
common stock as reported by NASDAQ during the past two years and current
year. The prices reflect interdealer quotations, without retail markup,
markdown or commissions and may not represent actual transactions.
Quarter Ended High Bid Low Bid
8/31/95 5.0 5.0
11/28/95 5.5 5.0
2/29/96 4.375 3.5
5/31/96 4.75 4.25
8/31/96 4.125 4.0
11/30/96 3.875 3.344
2/28/97 1.25 0.063
5/31/97 0.132 0.063
8/31/97 0.125 0.063
11/30/97 0.063 0.01
2/28/98 0.031 0.031
5/31/98 0.031 0.031
8/31/98 0.063 0.025
As of August 31, 1998, the closing bid price of the Company's common shares
was $0.031. As of August 31, 1998, there were 412 holders of record of the
Company's shares.
No dividends have been declared with respect to the Company's common shares
since inception. The Company is not likely to pay any dividends in the
foreseeable future. The Company intends to reinvest any earnings in its
operations.
The transfer agent for the Company's securities is Nevada Agency and Trust
Company, 50 West Liberty Suite 880, Reno, Nevada 89501, 775-322-0626.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Forward Looking Statements
This discussion may contain statements that could be deemed forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act
of 1934 and the Private Securities Litigation Reform Act, which statements
are inherently subject to risks and uncertainties. Forward-looking statements
are statements that include projections, predictions, expectations or beliefs
about future events or results or otherwise are not statements of historical
fact. Such statements are often characterized by the use of qualifying words
(and their derivatives) such as "expect," "believe," "estimate," "plan,"
"project," "anticipate," or other statements concerning opinions or judgment
of the Company and its management about future events. Factors that could
influence the accuracy of such forward-looking statements include, but are
not limited to, the financial success or changing strategies of the Company's
customers, actions of government regulators, the level of market interest
rate and general economic conditions. All forward-looking statements included
herein are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements due to the
factors cited above. As a result of these factors, there can be no assurance
the Company will not experience material fluctuations in future operating
results on a quarterly or annual basis, which would materially and adversely
affect the Company's business, financial condition and results of operations.
Results of Operations.
The Company's operating results have fluctuated in the past due to on again
off again GTE sales promotions and may in the future fluctuate significantly,
depending upon a variety of factors, including variability and length of the
sales cycle associated with GTE's product and service offerings, the receipt
of new value-added network services and consumer services subscriptions and
the introduction of new services by the GTE and its competitors. An
additional factor that may contribute to variability of operating results
include the introduction of the company's new product offering - T-1's for
internet access. So far sales have been good but the sales cycle is longer
than expected. In response to competitive pressures, the Company may take
certain pricing or marketing actions that could have a material adverse
affect on the Company's business. As a result, variations in the timing and
amounts of revenues could have a material adverse affect on the Company's
quarterly operating results. Due to the foregoing factors, the Company
believes that period-to-period comparisons of its operating results are not
necessarily meaningful and that such comparisons cannot be relied upon as
indicators of future performance. In the event that the Company's operating
results in any future period fall below the expectations of securities
analysts and investors, the trading price of the Company's common stock would
likely decline.
Revenue. Revenue totaled approximately $397,363 for the year ending August
31, 1998, a 39% increase over revenue of $285,200 for the year ending August
31, 1997. This increase reflects the improved effectiveness of the sales
force in addressing sales promotion programs being offered by GTE for the
past quarter.
Cost of Revenue. Cost of revenue consists primarily of personnel costs to
maintain and operate the Company's T-1 network, access charges from local
exchange carriers, backbone and Internet access costs, depreciation of
network equipment and amortization of related assets. Cost of revenue
increased for the year ended August 31, 1998 was approximately $51,001, cost
of revenue of $0 for the year ended August 31, 1997. This increase is
attributable to the shift from reselling GTE services to exclusively and also
selling T-1 services. In addition, the increase in cost of revenue to the
overall growth in the size of the network and costs associated with
operations. The Company expects its cost of revenue to continue to increase
in dollar amount, while declining as a percentage of revenue as the Company
expands its customer base.
Sales Expense. Sales expense consists primarily of personnel expenses,
including salary and commissions, and costs of for customer support
functions. Marketing and sales expense was approximately $130,050 for the
year ended August 31, 1998 and $159,751 for the year ended August 31, 1997.
The $29,701 decrease in 1998 reflects a more streamlined and efficient sales
organization and a shift from reselling GTE services to also selling T-1
services. Sales expense as a percentage of revenue decreased to 33% for the
year ended August 31, 1998 from 56% in the year earlier as a result of the
Company's product shift and improved efficiencies. The Company expects sales
expenditures to continue to increase in dollar amount, but to decline as a
percentage of revenue.
General and Administrative Expense. General and administrative expense
consists primarily of personnel expense, rent and professional fees. General
and administrative expense was approximately $220,488 for the year ended
August 31, 1998 and $188,200 for the year ended August 31, 1997. This
increase in expense reflects a increase in personnel and professional fees
necessary to manage the financial, legal and administrative aspects of the
business. General and administrative expense as a percentage of revenue
declined to 55% for the year ended August 31, 1998 from 66% in the year
earlier as a result of the Company's increased revenue. The Company expects
general and administrative expense to increase in dollar amount, reflecting
its growth in operations, but to decline as a percentage of revenue.
Net Income Attributable to Common Stockholders. The Company's net loss
attributable to common stockholders was approximately $11,119 for the year
ended August 31, 1998 as compared to net loss approximately $50,955 for the
year ended August 31, 1997.
The Company expects to focus in the near term on building and increasing its
revenue base, which will require it to significantly increase its expenses
for personnel, marketing, network infrastructure and the development of new
services, and may adversely impact short term operating results. As a result,
the Company believes that it will incur losses in the near term and we cannot
assure you that the Company will be profitable in the future.
Financial Condition
To date, the Company has satisfied its cash requirements primarily through
the debt financings and capitalized lease financings. The Company's principal
uses of cash are to fund working capital requirements and capital
expenditures, to service its capital lease and debt financing obligations,
and to finance and fund acquisitions. Net cash used by operations for the
year ended August 31, 1998 was approximately $40,925 and the cash provided by
operations for the year ended August 31, 1997 was approximately $15,266. Cash
used for operating activities in the year ending August 31, 1998 was
primarily affected by the net loss from operations and the reduction of
accounts receivable as the company was expanding its market share and
improving its infrastructure.
Net cash provided by investing activities for the years ended August 31, 1998
and 1997 was approximately $0 and $0, respectively.
The net cash decrease for the year ended August 31, 1998 was $1,636 as
compared to a net cash increase for the year ended August 31, 1997 of $5,408.
At August 31, 1998, the Company had cash and cash equivalents of
approximately $3,772, and negative working capital of $14,586. The Company
anticipates that it will require additional financing on a continuing basis.
The Company will be required to raise such additional funds through public or
private financing, strategic relationships or other arrangements. We cannot
assure you that such additional funding, if needed, will be available on
terms attractive to the Company, or at all.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. As a result, date-
sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of normal business activities. The Company has reviewed
its products and services, as well as its internal management information
systems in order to identify and modify those products, services and systems
that are not year 2000 compliant.
Based on the Company's assessment to date, the Company has determined that
its internally developed software, including all of its operational,
financial and management information systems software is year 2000 compliant.
The Company's operational, financial and management information systems
software which have not been internally developed have been certified as year
2000 compliant by the third party vendors who have supplied the software.
The equipment and software that runs the Company's data centers are supplied
by Microsoft, Cisco Systems, and Intel Corporation. The Company has
implemented software patches supplied by Microsoft so that the Microsoft
software in these data centers no longer contains any material year 2000
deficiencies. The Company implemented similar patches for the software
supplied by Cisco Systems at the end of 1998. LMCI is building a new
communications network, and, as such, LMCI does not have a technology
infrastructure comprised of legacy software and systems. In building its
communications network, LMCI has adopted a strategy to select technology
vendors and suppliers that provide products that are represented by such
vendors and suppliers to be Year 2000 Ready. In negotiating its vendor and
supplier contracts, LMCI secures Year 2000 representations and warranties
that address the Year 2000 Readiness of the applicable product(s). To date,
LMCI has exclusively used equipment from Cisco Systems within our network
backbone, and Customer Premises Equipment (CPE) from both Cisco Systems and
Flowpoint / Cabletron. Both companies have provided LMCI with sufficient Year
2000 readiness information and test results for the equipment that we have
purchased from these vendors. LMCI has tested and validated the Year 2000
Readiness of the LMCI Network and select external systems, products, and
facilities that are essential components in LMCI's delivery of the Services
by engaging in a product delivery system tests. These system tests have been
performed in a controlled, defined laboratory environment utilizing
procedures to replicate the end-to-end delivery of Services. The Company does
not separately track internal costs incurred to assess and remedy
deficiencies related to the year 2000 problem, however, such costs are
principally the payroll costs for its information systems group. The Company
does not have and is not developing a contingency plan in the event its
systems fail as a result of year 2000 related problems.
However, despite testing by the Company and its vendors, the Company's
products, services and systems may contain undetected errors or defects
associated with year 2000 date functions. In the event any material errors or
defects are not detected and fixed or third parties cannot timely provide the
Company with products, services or systems that meet the year 2000
requirements, the Company's operating results could be materially adversely
affected. Known or unknown errors or defects that affect the operation of the
Company's products, services or systems could result in delay or loss of
revenue, interruption of network services, cancellation of customer
contracts, diversion of development resources, damage to the Company's
reputation, and litigation costs. There can be no assurance that these or
other factors relating to year 2000 compliance issues will not have a
material adverse effect on the Company's business, operating results or
financial condition.
Item 7. Financial Statements.
The financial statements required by this item begin immediately
following the exhibit pages of this report.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
The accounting firm of Timothy L. Steers, CPA, LLC, 4380 SW Macadam, Suite
520, Portland, OR 97201-6403 was engaged on or about June 15, 1999 as the
principal accountant to audit the issuer's financial statements.
The former accountant resigned for non-payment of fees. Such fees were
subsequently paid. No principal accountant's report on the financial
statements for either of the past two years contained an adverse opinion or
disclaimer of opinion, or was modified as to uncertainty, audit scope, or
accounting principles.
The decision to change accountants was made by the board of directors. There
were no any disagreements with the former accountant on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with 16(a) of the Exchange Act.
Name Age Title
William J. Kettle 69 President, Chief Executive Officer, Director
Adela Maria Kettle 52 Vice President, Secretary
John W. Diehl, Jr. 44 Chief Financial Officer
Mr. Kettle has been President, Chief Executive Officer, and Director of the
Company since October 1994. He was President and Chairman of ThriftyTel,
Inc. from 1988 until August 1994. ThriftyTel is engaged in the business of
providing discount long distance telephone services. ThriftyTel filed a
petition in Chapter 11 in 1994 subsequent to Mr. Kettle's disassociation.
From 1981 to 1985, Mr. Kettle served as Secretary, Treasurer and a director
of Sierra College in Los Angeles, California. From 1972 to 1981 he was
President of Bauder College in Sacramento, California. Mr. Kettle attended
Kilgore College and the University of Houston.
Adela Maria Kettle has since September 1994 been Vice President and Secretary
of the Company. >From 1986 through August 1994 she was Executive Vice
President of Sales and Marketing at Thrifty Telecommunicaitons, Inc. From
1981 to 1985, she was Vice President of Sales and Marketing at Sierra College
in Los Angeles, California. From 1970 to 1981 she was employed at Bauder
College in Sacramento, California, ending as Vice President of Sales and
Marketing.
John W. Diehl, Jr. has since September 1994 been an independent accounting
and tax consultant with the Company. He is a Certified Public Accountant
with ten years of public accounting experience, five years in his own
practice and prior to that Director of Internal Audit for Memorial Health
Services, Long Beach for ten years and two years as Director of
Telecommunications after director of audit. He holds a BS in Business
Administration with emphasis in Accounting from the California State
University at Northridge and a Masters in Business Administration from the
University of La Verne.
Compliance with 16(a) of the Exchange Act. Federal securities laws require
the Company's directors, certain of its officers, and persons owning
beneficially more than ten percent (10%) of a registered class of the
Company's equity securities, to file initial reports of ownership and reports
of changes in ownership with the Commission. The Company is required to
disclose any failure of persons, who at any time during the fiscal year, were
directors, officers required to report, or more than ten percent (10%)
beneficial owners, to file timely those reports during the fiscal year. The
Company undertakes the responsibility to file all required reports on behalf
of its directors and officers. To the Company's knowledge, based solely upon
information furnished to the Company by its directors and certain of its
officers, during the fiscal year ended August 31, 1996, the following Company
directors, officers required to report, and greater than ten percent (10%)
beneficial owners did not make all such filings on a timely basis: William
Kettle and Adela Maria Kettle, both as to Form 3 pertaining to the
acquisition of common shares and options listed in Item 10 and 11.
Item 10. Executive Compensation.
Summary Compensation
The following table provides information concerning the compensation of the
named executive officers for each of the Company's last three completed
fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Other Securities
Name Annual Restricted Under- All Other
and Compen- Stock lying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Kettle 1998 $0
Chairman, Chief 1997 $0 40,000 (1) 4,000,000 (2)
Executive Officer 1996 $21,848
Secretary
Adela Maria Kettle 1998 $33,022
Vice President, 1997 $33,099
1996 $0
John W. Diehl, Jr 1998 $3,800 (3)
Chief Financial 1997 $7,950 (3)
Officer 1996 $4,810 (3)
</TABLE>
Footnotes
(1) Award granted as of 12-28-97 for 4,000,000 restricted common shares at
$.01 per share.
(2) Option granted as of 12-28-97 for 4,000,000 restricted common shares at
the last bid price, on November 30, 1997, of $.01 per share.
(3) Payment as an independent consultant.
Option/SAR Grants
The following table shows information regarding grants of stock options in
this last completed fiscal year to the executive officers named in the
Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
[Individual Grants]
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base
Expiration
Name Granted (#) in Fiscal Year Price ($/Sh) Date
(a) (b) (c) (d) (e)
William J. Kettle 4,000,000 100% .01 12-28-
2002
Footnotes
(1) Award granted as of 12-28-97 for 4,000,000 restricted common shares at
$.01 per share.
(2) Option granted as of 12-28-97 for 4,000,000 restricted common shares at
the last bid price, on November 30, 1997, of $.01 per share.
Aggregated option/SAR exercises and fiscal year-end option/SAR Value
The following table shows information concerning each exercise of stock
options (or tandem SARs) and freestanding SARs during the last completed
fiscal year by each of the executive officers named in the Summary
Compensation Table and the fiscal year-end value of unexercised options and
SARs.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<S> <C> <C> <C> <C>
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-The-Money Options/
Exercise Realized Options/SAR's at FY-End (#) SAR's at FY-End($)
Name Exercisable Unexercisable Exercisable Unexercisable
William J. Kettle 0 0 4,000,000 0 136,000 (1) 0
</TABLE>
Footnotes
(1) FY-End Option/SAR Values based on exercise price of $.01 per share and
8-31-98 bid price of $.043 per share.
Long-Term Incentive Plans
The Company has an incentive plan adopted December 5, 1996 that grants 20,000
shares of common stock to each employee with the understanding that if they
quit or are fired with cause within two years they will surrender their stock
back to the company or the Company will have the right to cancel those shares
unilaterally.
There was no compensation paid in the last fiscal year for services as a
director of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the latest fiscal year end, the stock
ownership of each named executive officer, directors, all executive officers
and directors of the Company as a group, and of each person known by the
Company to be a beneficial owner of 5% or more of its Common Stock. Except as
otherwise noted, each person listed below is the sole beneficial owner of the
shares and has sole investment and voting power of such shares. No person
listed below has any option, warrant or other right to acquire additional
securities of the Company except as otherwise noted.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Owner Ownership of Class
William J. Kettle 4,000,000 20.0%
1123 Buckingham Drive
Costa Mesa, CA 92626
A. Maria Kettle 7,500,000 (1) 37.5%
1123 Buckingham Drive
Costa Mesa, CA 92626
Paul Gamberg 2,000,000 10.0%
233 North Rampart
Los Angeles, CA 90026
Bryan L. Turbow 2,000,000 10.0%
1750 E. Garry Ave. #201
Santa Ana, CA 92705
Named Officers and 11,500,000 57.5
Directors As a Group
(1) As Beneficiary of The Chapman Group. William J. Kettle is the Trustee of
The Chapman Group and disclaims beneficial ownership thereof. Adela Maria
Kettle is the wife of William J. Kettle.
Item 12. Certain Relationships and Related Transactions.
Adela Maria Kettle is the wife of William J. Kettle.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibit Table.
3.1 Articles Of Incorporation (1)
3.2 By-Laws (1)
10.1 Agreement For Payment Of Tax Obligations
10.2 Equipment Lease Agreement
16 Letter From Former Accountant
23 Consent Of Expert (*)
24 Power Of Attorney (*)
27 Financial Data Schedule (*)
____________________
(*) Filed herewith.
(1) Previously filed in the original registration statement Form 10-SB.
(b) Reports on Form 8-K filed during the quarter ended August 31, 1998.
None
LANDMARK INTERNATIONAL, INC.
Financial Statements
with Report of Independent Auditors
For the Year Ended August 31, 1998 and 1997
LANDMARK INTERNATIONAL, INC.
Year ended August 31, 1998 and 1997
Contents
Page
Report of Independent Auditors 1
Financial Statements:
Balance sheet 2
Statement of operations 3
Statement of changes in stockholders' equity 4
Statement of cash flows 5
Notes to financial statement 6 -11
REPORT OF INDEPENDENT AUDITOR
To the Stockholders
Landmark International, Inc.
We have audited the accompanying balance sheet of Landmark International,
Inc. as of August 31, 1998 and 1997, and the related statements of operation,
changes in stockholders' equity, and cash flows, for the two years in the
period ended August 31, 1998. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide 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 Landmark International, Inc.
as of August 31, 1998 and 1997 and the results of its operations and its cash
flows for the years then ended in accordance with generally accepted
accounting principles.
August 19, 1999
LANDMARK INTERNATIONAL, INC.
Balance Sheet
August 31
1998 1997
ASSETS
Current assets:
Cash $ 3,772 $ 5,408
Accounts receivable 98,352 48,472
Deferred tax assets 13,650 11,750
Total current assets 115,774 65,630
Equipment less accumulated depreciation 143,161 5,000
and amortization of $3,897
$ 258,93 $ 70,630
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 81,089 $ 44,729
Accrued payroll related liabilities 8,089 6,185
Accrued income taxes 2,000
Capitalized lease obligations due with 39,182
Total current liabilities 130,360 50,914
Capitalized lease obligations 79,778
Commitments and contingencies
Stockholders' equity:
Common stock, $.001; shares authorized 19,987 11,907
50,000,000, shares issued and outstanding
19,986,666 in 1998 (11,906,666 in 1997)
Additional paid-in capital 68,955 36,835
Retained deficit -40,145 -29,026
Total stockholders' equity 48,797 19,716
$ 258,935 $ 70,630
LANDMARK INTERNATIONAL, INC.
Statement of Operations
Years ended August 31
1998 1997
Net sales $ 397,363 $ 285,200
Cost of sales 52,001
Gross profit 345,362 285,200
Selling expense 130,050 159,751
General and administrative expenses 220,488 188,200
Loss from operations -$5,176 -$62,751
Interest expense (income), net 5,843 -46
Loss before provision for income taxes -11,019 -62,705
Provision (benefit) for income taxes 100 -11,750
Net loss $-11,119 $-50,955
Net loss per common share $ -.007 $ -.0043
LANDMARK INTERNATIONAL, INC.
Statement of Changes in Stockholder's Equity
Year ended August 31, 1998
<TABLE>
<CAPTION>
Additional Retained Total
Common stock paid-in equity stockholders'
Shares Amount capital (deficit) equity
<S> <C> <C> <C> <C> <C>
Balance at September 1, 1996 11,366,666 $ 11,367 $37,375 $ 21,933 $ 70,675
Shares issued in exchange for services 540,000 540 -540 - -
Net loss - - - -50,959 -50,959
Balance at August 31, 1997 11,907,666 11,907 36,835 -29,026 7,966
Shares issued in consideration for
equipment 4,000,000 4,000 36,000 - 40,200
Shares issued in exchange for services 4,080,000 4,080 -3,880 - -
Net loss -11,119 -11,119
Balance at August 31, 1998 19,987,666 19,987 68,955 -40,145 $48,797
</TABLE>
LANDMARK INTERNATIONAL, INC.
Statements of Cash Flows
Years ended August 31
1998 1997
Cash flows from operating activities:
Net loss 11,119 50,959
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation 3,897
Deferred income taxes -1,900 -11,750
Changes in assets and liabilities:
Accounts receivable -59,738 77,975
Accounts payable 24,031
Accrued payroll related liabilities 2,000
Accrued income taxes 1,904
40,925 15,266
Cash flows from investing activities-
Decrease (increase) in advances 9,858 -9,858
Cash flows from financing activities:
Repayments of capitalized lease
obligations -10,769
Proceeds from common stock 40,200
29,431
Net (decrease) increase in cash -1,636 5,408
Cash at beginning of year 5,408
Cash at end of year $ 3,772 $ 5,408
Supplemental disclosure of cash flow
Information -
Cash paid during the year for interest $5,843
Supplemental disclosure on noncash investing
and financing activities
Equipment acquired under
capitalized lease agreements $129,729
LANDMARK INTERNATIONAL, INC.
Notes to Financial Statements
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business: Landmark International, Inc. (the "Company") is a Nevada
Corporation engaged in providing communication services to individuals and
businesses.
Equipment: Equipment is carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the depreciable
assets, which range from three to seven years.
Equipment under capitalized lease obligations are carried at estimated fair
market value determined at the inception of the lease. Amortization is
computed using the straight-line method over the original term of the lease
or the estimated useful lives of the assets, whichever is shorter.
Reporting Comprehensive Income: In June 1997, Statement of Financial
Accounting Standards ("SFAS") No. 130, " Reporting Comprehensive Income" was
issued, which established standards for reporting and display of
comprehensive income and its components as separate amounts in the financial
statements. Comprehensive income includes all changes in equity during a
period of an enterprise that results from recognized transactions and other
economic events other than transactions with owners. This statement requires
all items that are to be recognized under accounting standards as components
of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. This
statement affects only financial statement presentation. As of August 31,
1998, the Company does not carry any items required to be disclosed as other
comprehensive income in accordance with the statement.
Revenue Recognition: Fees for services are recognized at month-end as
services are completed and income earned.
Advertising: The Company expenses the cost of advertising as selling
expenses as incurred. Advertising expenses was approximately $2,000 for 1998
(3,300 for 1997).
Income Taxes: Income taxes are accounted for and reported using an asset and
liability approach. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax basis of
assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to effect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the year
in deferred tax assets and liabilities.
Net loss per common share: Net loss per share is computed by dividing net
loss by the weighted average number of common shares outstanding during the
period. The weighted average number of common stock shares outstanding was
15,799,269 for 1998 (11,764,639 for 1997). Stock options outstanding are not
considered common stock equivalents, as the affect on net loss per share
would be anti-dilutive.
Concentration Risk: The Company grants credit to customers in the Southern
portion of the State of California. The Company's ability to collect broker
fees and to fund borrower's transactions are affected both by economic
fluctuations in the geographic areas served by the Company.
Risks and Uncertainties: The process of preparing financial statements in
conformity with generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets, liabilities,
revenues and expenses. Management of the Company has made certain estimates
and assumptions regarding the collectibility of accounts receivable. Such
estimates and assumptions primarily relate to unsettled transactions and
events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
Recently Issued Accounting Pronouncements:
Accounting for Derivative Instruments and Hedging Activities: In June 1998,
SFAS No. 133, " Accounting for Derivative Instruments and Hedging Activities"
was issued. The Statement requires that all derivatives be carried on the
balance sheet at fair value and changes in the fair value of derivatives be
recognized in income when they occur, unless the derivatives qualify as
hedges in accordance with the standard. If a derivative qualifies as a
hedge, a company can elect to use hedge accounting. The type of accounting
to be applied varies depending on the nature of the exposure that is being
hedged, and the standard defines three hedge risks: change in fair value,
change in cash flows and change in foreign currency.
A fair-value hedge represents the hedge of an exposure to changes in the fair
value of an asset, liability or an unrecognized firm commitment. Changes in
fair value hedges are recognized in earnings, as well as the gain or loss on
the hedged item attributable to the hedged risk. Certain criteria must be
met in order for a hedging relationship to qualify as a fair-value hedge.
Accounting for Derivative Instruments and Hedging Activities (continued): A
cash-flow hedge is a hedge of an exposure to variability in cash flows that
is attributable to a particular risk. That exposure may be associated with
an existing recognized asset or liability or a forecasted transaction. The
effective portion of a hedging instrument's gain or loss is initially
reported as a component of other comprehensive income and is reclassified as
a component of earnings in the same period or periods during which the hedge
forecasted transaction affects earnings. As in fair value hedges, certain
criteria must be met in order for a hedging relationship to qualify as a
cash-flow hedge.
A foreign-currency hedge can be a fair-value hedge or a cash-flow hedge of
the foreign currency exposure, therefore it follows the same principles as
those that apply to the accounting for non-foreign hedges with some
particularities defined in the statement.
This statement is effective for the year beginning after September 1, 1999
and cannot be applied retroactively. Management believes that the adoption
of this statement will not have a material effect on the Company's financial
position or results of operations.
Accounting for the Cost of Computer Software Developed for Internal Use: In
March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, " Accounting for the Cost of Computer Software
Developed for Internal Use" ("SOP 98-1"), which will become effective for
financial statements for the year beginning September 1, 1999, with early
adoption encouraged. SOP 98-1 requires the capitalization of eligible costs
of specified activities related to computer software developed or obtained
for internal use. Management does not believe the impact of adoption will
have a material effect on the Company's financial position or results of
operations.
2. Business Combination:
Effective June 1, 1999, the Company acquired Mobilenetics Corporation
("Mobilenetics"), a supplier of communications equipment. The Company issued
10,000,000 shares of its common stock in exchange for all of the outstanding
shares of Mobilenetics. The acquisition will be accounted for as a purchase.
The excess purchase price, if any, over the estimated fair value of the
assets of Mobilenetics will be amortized using the straight-line method over
five years.
The following unaudited pro forma summary presents the consolidated financial
position and results of operations of the Company as if the business
combination occurred on September 1, 1997:
As of August 31, 1998:
Tangible current assets $ 255,500
Total asset s 327,500
Current liabilities 134,900
Total liabilities 164,900
Total stockholders' equity 162,600
For the year ended August 31, 1998:
Net sales 1,033,600
Net income 18,800
Earnings per share .001
The above amounts are based upon certain assumptions and estimates which the
Company believes are reasonable. The pro forma financial position and
results of operations do not purport to be indicative of the results which
would have been obtained had the business combination occurred as of
September 1, 1997 or which may be obtained in the future.
3. Capitalized Lease Obligations:
The Company leases equipment under non-cancelable lease agreements.
Equipment under lease agreements aggregated at August 31, 1998 $129,929, less
accumulated amortization at August 31, 1998 of $3,443.
3. Capitalized Lease Obligations (continued):
Aggregate future minimum lease payments and the present value of minimum
lease payments are as follows:
Years ending August 31,
1999 $ 53,381
2000 53,381
2001 35,588
Total minimum lease payments 142,350
Less amount representing interest 23,390
Present value of minimum lease payments 118,960
Less amounts due within one year 39,182
Long-term capitalized lease obligations $ 79,778
4. Income Taxes
The components of the provision (benefit) for income taxes are as follows for
the years ended August 31:
1998 1997
Federal:
Current $ 1,500 $ -
Deferred - net operating loss carryover (1,600) (10,200)
(100) (10,200)
State of California:
Current 500 -
Deferred - net operating loss carryover (300) (1,550)
200 (1,550)
Provision (benefit) for income taxes $ 100 $ (11,750)
Reconciliation of income taxes computed at the federal statutory rate to the
provision for income taxes is as follows for the year ended August 31, 1998:
Tax at statutory rates $ (1,600) $ (11,724)
Differences resulting from state tax, net of federal benefit, and non-
deductible and other items 1,700 (26)
Effective $ 100 $ (11,750)
5. Common Stock
In December 1997, the Board of Directors authorized the issuance of 4,000,000
shares of common stock to the Chairman of the Company for services rendered.
Also in December 1997, the Chairman of the Company was granted the option to
purchase an additional 4,000,000 shares of the Company's common stock at the
bid price on the date of exercise. The options are exercisable in whole or
in part and expire in December 2002. As of August 31, 1998 4,000,000 shares
of stock were exercisable. The Company has reserved 4,000,000 shares of its
common stock for issuance under this stock option.
In December 1997, the Board of Directors authorized the issuance of 80,000
shares of common stock in exchange for $100 and public relation services.
In December 1996, the Board of Directors authorized the issuance of 20,000 of
common stock to each employee of the Company. The shares are to be
surrendered back to the Company in the event that any employee who received
shares terminated their employment with the Company, or was terminated by the
Company for cause. The Company issued 540,000 shares of its common stock to
these employees for services rendered.
6. Subsequent Events
In December 1998, the Board of Directors authorized the issuance of 4,000,000
shares of common stock to the Chairman of the Company for services rendered.
Also in December 1998, the Chairman of the Company was granted an additional
4,000,000 shares of common stock of the Company exercisable in whole or in
part at the bid price at the date of exercise and expire five year from the
date of issue. The Company has reserved 4,000,000 shares of its common stock
for issuance under this stock option.
In December 1998, the Board of Directors also authorized the issuance of an
aggregate of 900,000 shares of the Company's common stock to three
individuals and a law firm in exchange for services rendered and to be
rendered.
POWER OF ATTORNEY
The Registrant and each person whose signature appears below hereby
authorizes William J. Kettle, the agent for service named in this Report,
with full power to act alone, to file one or more amendments to this Report,
which amendments may make such changes in this Report as such agent for
service deems appropriate, and the Registrant and each such person hereby
appoints such agent for service as attorney-in-fact, with full power to act
alone, to execute in the name and in behalf of the Registrant and any such
person, individually and in each capacity stated below, any such amendments
to this Report.
[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.
LANDMARK INTERNATIONAL, INC.
(Registrant)
Date: 9/14/99
By:/s/_______________________________
William J. Kettle
Chairman, Chief Executive Officer
Date: 9/14/99
By: /s/______________________________
John W. Diehl, Jr.
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/______________________________________________________9/14/99
William J. Kettle Chairman, Director,
Chief Executive Officer
/s/______________________________________________________9/14/99
Adela Maria Kettle Vice President, Secretary
/s/______________________________________________________9/14/99
John W. Diehl, Jr. Chief Financial Officer
EXHIBIT 10.1 - AGREEMENT FOR PAYMENT OF TAX OBLIGATIONS
1. Effective Date: April 30, 1996
2. Parties: Landmark International Inc
Nevada Corporation, hereinafter
Referred to as LII; and Gemini Financial Services Ltd., a Hong Kong based
Corporation, hereinafter referred to as GFS
3. Recitals:
A. LII is a Nevada Corporation, in good standing, with all fees and licenses
paid for.
B. GFS is a Hong Kong corporation, in good standing, with all fees and
licenses paid for.
C. LII's principal place of business is Santa Ana, Orange County, California.
D. LII, a seller of GTE services, incurred debt in the form of unpaid
employee withholding taxes, employer payroll taxes and other associated
payroll tax that are now due and payable to the U.S. Government and the State
of California. In addition, LII incurred debt to accounting services and
debt to a subsidiary for additional unpaid payroll taxes.
E. Due to the nature of the tax and other obligations, LII cannot convert the
presently due tax and other obligations to common stock.
F. GFS has agreed to negotiate with and purchase the claims of all of the
taxing authorities and other debtors as part of LII's restructuring in
exchange for the compensation set forth below, and LII and GFS desire to set
forth their respective duties and responsibilities herein.
NOW, THEREFORE in consideration of the mutual covenants and promises of the
parties hereto, the parties agree as follows:
1. The Recitals set forth above are incorporated herein by this reference.
2. LII shall transfer to GFS three hundred and eighty thousand (380,000)
shares of Reg. S common stock LII to be liquidated by GFS to satisfy the
claims of any and all Federal, State and County and/or Municipal taxing
authority that has a claim against LII and/or any of LII's officers or
directors for and such tax incurred by LII, including any tax obligations
assumed by LII from any of its predecessors in interest. In addition, GFS
shall satisfy the claims of LII's external accountants.
3. GFS shall not enter into any payment agreement with any taxing authority
without first obtaining the approval of the Board of Directors of LII and
approval shall not be unreasonably withheld.
4. GFS shall provide LII with a full accounting of the liquidation of Reg. S.
stock, the payments made to each taxing authority and the balance remaining
to be paid on each claim on a quarterly basis, or more often as requested by
LII.
5. To the extent that GFS is able to negotiate discounts with the taxing
authorities and it is not necessary to liquidate the full number of shares to
fully satisfy the claims of the taxing authorities and obtain complete
releases for LII and any and all of its current and past officers and/or
directors who may have individual liability for such tax, GFS shall be
entitled to retain the balance of the stock as compensation for its efforts.
6. This Agreement shall be governed by the laws of the State of California
and any action to enforce the terms of this Agreement shall be brought in the
Superior Court. The prevailing party or parties in any such litigation shall
be entitled to a reasonable sum for its attorney's fees as determined by the
court in such litigation, together with the costs of the suit. In the event
that any party incurs any expenses in enforcing any of the provisions of this
Agreement, whether in or out of court, the other party agrees to pay such
expenses including reasonable attorney's fee.
7. This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective legal representatives, successors and
assigns. GFS cannot assign its rights or responsibilities under this
Agreement without the approval of LII, which approval may be withheld by LII
for any reason or for no reason at all.
8. This Agreement shall constitute the entire agreement among the parties to
this Agreement with respect to the subject matter set forth above, and
supercedes all prior agreements or understandings, written or oral, of all of
the parties. Any modifications or alteration of this agreement shall be in
writing and shall not be enforceable unless and until it is executed by both
parties to this Agreement. Failure of any party to this Agreement to enforce
at any time any of the provisions of this Agreement shall in no way be
construed to be a waiver of such provisions, nor in any way affect the
validity of this Agreement or any party thereto or any right of any party
thereafter to enforce each and every provision of this Agreement. No waiver
of any breach of this Agreement shall be held to be a waiver of any other
subsequent breach.
IN WITNESS WHEREOF, the parties executed this Agreement on the date set
forth above.
LANDMARK INTERNATIONAL INC. GEMINI FINANCIAL SERVICES LTD.
_________________________________ _______________________________
By: By:
Its: Its:
EXHIBIT 10.2 - EQUIPMENT LEASE AGREEMENT
LMCT AGREEMENT
This Agreement is made and entered into effective this 12th
day of May, 1998, by and between GAMBERG MANAGEMENT, INC., a
California corporation ("GMI"), MOBILENETICS CORPORATION, a
Delaware corporation ("MC"), and LANDMARK INTERNATIONAL, INC., a
Nevada corporation ("LII"), with reference to the following:
1. LII wishes to lease that certain equipment listed on
Exhibit A.1 from GMI (the "GMI Lease") and that certain equipment
listed on Exhibit A.2 from MC (the "MC Lease"), both attached
hereto (collectively the "Equipment")
2. The MC lease will include all "soft costs" such as
installation, first-last, legal and other miscellaneous costs which
have been or will be funded from MC to appropriate vendors no later
than the date of signing of these documents.
3. All "soft costs" will be itemized and supplied separately
from MC to GMI on or before closing date.
4. Closing documents, funding and signatures to this
Agreement must take place no later than May 14, 1998. This
Agreement is deemed effective as of May 8,1998.
FOR AND IN CONSIDERATION of the mutual promises herein contained, the parties
hereto agree to the foregoing statements and the following:
1. LII will do each of the following:
a. Lease the Equipment on the terms and conditions set
forth in the Leases attached hereto as Exhibit B.1
and Exhibit B.2 (the "Leases").
b. Use the Equipment to aggregate and package
bandwidth (high speed access to the information
superhighway).
c. Upon entering into the Leases, sell 2,000,000 shares of its
common stock to Bryan L. Turbow for the sum of $100.
d. Upon entering into the Leases, sell 2,000,000 shares of its
common stock to Paul Gamberg for the sum of $100.
e. While either Lease is effective, LII will not dilute the
shareholdings of either Paul Gamberg or Bryan L. Turbow.
2. LII represents that:
a. It is traded on the NASDAQ Bulletin Board under the
symbol LMKI;
b. There are 50,000,000 shares of LII authorized and
19,600,000 shares of LII issued and outstanding;
c. It has closed at least twelve (12) corporate
accounts at a minimum value of $8,000 per month as
listed on the attached Exhibit C
d. GMI and MC have the right to market the same type of product as
LII, using the same or any other vendor relationships;
e. The shares of stock sold herein are governed by
Section 144;
f. It will clean up its corporate housekeeping to the satisfaction
of the SEC within six (6) months of
entering into the Leases so that its common stock
can trade actively on NASDAQ;
G. It will purchase at the option of MC, on or before
February 15, 1999, the Equipment from the MC Lease
at the remaining calculated "present value" as set
forth in the MC Lease;
h. It will purchase, at the option of GMI, on or
before February 15, 1999, the Equipment from the
GMI Lease at the remaining calculated "present
value" as set forth in the GMI Lease;
i. It will enter into the Security Agreement attached
hereto as Exhibit D, and execute a Financing
statement (Form UCC-1) (which will be filed with
the California Secretary of State), attached hereto
as Exhibit E, putting up its existing and future
customers lists and accounts receivable as security
and collateral in the event of its default under
the terms of this Agreement or the Leases- The
secured party of this Security Agreement shall be
the Mobilenetics-Gamberg Management ("MCGMI), a
joint venture of MC and GMI;
j. It will file for the fictitious business name of
"LMKI" effective at the time it enters into the
Leases. A copy of said filing is attached hereto
as Exhibit F.
3. GMI will purchase the Equipment listed on Exhibit A.1 and
lease it to LII on the terms of the GMI Lease.
4. MC will purchase the Equipment listed on Exhibit A.2 and
lease it to LII on the terms of the MC Lease.
5. If either GMI or MC use credit established by LII with a
company named ICG or any subsequent vendor of circuits, such use
will be secured to LII with the proceeds from the customer base
developed thereby. LII has the first right to purchase the assets
developed thereby if offered for sale in the year 2000 or later.
6. LII will be in breach of this Agreement if it ever states
or implies, orally or in writing, to another or others, that any of the
other parties hereto, or their officers, directors or
shareholders, are part of LII or any of its affiliated entities.
7. Each party hereto agrees to perform any and all further
acts and to execute and deliver any documents which may. Reasonably be
necessary to carry out the provisions of this Agreement-
8. This Agreement may be amended at any time by the written
agreement of the party affected thereby.
9. Any notice required or permitted hereunder shall be
delivered in person or sent by telecopier, air courier or certified
mail, return receipt requested, postage and fees prepaid in all cases,
to the then current address of each party's then principal business
office, to the attention of the Chairman of its Board of Directors or
the president, or to such other address as will have been specified by
prior written notice to the sending party. Notice shall be effective
upon delivery if it is hand delivered; upon receipt if it is
transmitted by telecopier, air courier or registered, certified or
express mail; upon expiration of the third business day after deposit
in the United States mail if mailed from and to an address in the
United States; and upon expiration of the tenth business day after
deposit in the United States mail if mailed from or to an address
outside the United States.
10. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and upon their permitted successors
in interest of any kind whatsoever, their heirs, executors,
administrators, and personal representatives.
11. This Agreement will be governed in all respects by the
laws of the State of California as such laws are applied to
agreements between California residents entered into and to be
performed entirely within California. The parties hereby consent
to the exclusive jurisdiction of the state or federal courts
located in the State of California, County of Los Angeles, for the
resolution of any disputes arising out of this Agreement.
12. This Agreement may be signed in any number of counterparts, each of
which will be an original, but all of which together will constitute
one and the same instrument.
13. Waiver of any default or breach of this Agreement, of any
warranty, representation covenant or obligation contained herein,
shall not be construed as a waiver of any subsequent breach.
14. This Agreement constitutes the entire agreement and
understanding of the parties hereto with respect to the subject
matter hereof and supersedes any and all prior or contemporaneous
agreements and understandings pertaining thereto whether oral or
written.
15. The language of this Agreement shall be construed as to
its fair meaning and not strictly for or against any party.
16. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement
shall be enforceable in accordance with its terms and interpreted
as if such provisions were as excluded.
17. In the event that any dispute among the parties hereto
should result in litigation or arbitration, the prevailing party in
such dispute shall be entitled to recover from the other party all
reasonable fees, costs and expenses of enforcing any right of the
prevailing party, including without limitation, reasonable
attorneys fees and expenses.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date written below.
Date: May 12, 1998
MOILENETICS CORPORATTON
a Delaware corporation
By:
Bryan L. Turbow, President
LANDMARK INTERNATIONAL, INC.
a Nevada corporation
By:
WILLIAM J KETTLE, President
GAMBERG MANAGEMENT, INC.
a California corporation
By:
PAUL GAMBERG, President
EXHIBIT 16 - LETTER FROM FORMER ACCOUNTANT
Brian S. Nathanson, C.P.A.
Member:
American Institute of Certified Public Accountants
Tax Division
California Society of Certified Public Accountants
September 10, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Landmark International, Inc.
SEC File No.: 0-26578
Ladies and Gentlemen:
Relative to the change in auditors, we have read the statements made by
Landmark International, Inc. We understand that these statements are being
filed with the Commission, pursuant to Item 8 of the Company's Form l0-KSB
report to be filed in September 1999. We agree with the statements concerning
our firm in such Form 10-KSB.
Sincerely,
/s/
Brian S Nathanson, CPA
cc: Landmark International, Inc. William Kettle
31O1 West Coast Highway, Suite 210, Newport Beach, California 92663
Telephone: (949)574-8333 Facsimile: (949) 574-8334
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form
1O-KSB of Landmark International, Inc. of our report dated August 19, 1999,
included in the 1998 Annual Report to the Shareholders of Landmark
International, Inc.
TIMOTHY L. STEERS
CERTIFIED PUBLIC ACCOUNTANT, LLC
Portland, Oregon
August 19,1999
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<LEGEND>
This schedule contains summary financial information extracted from the
August 31, 1998 consolidated financial statements and is qualified in its
entirety by reference to such financial statements and the notes thereto.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> AUG-31-1998
<CASH> 3,772
<SECURITIES> 0
<RECEIVABLES> 98,352
<ALLOWANCES> 0
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<CURRENT-ASSETS> 115,774
<PP&E> 147,058
<DEPRECIATION> 3,897
<TOTAL-ASSETS> 258,935
<CURRENT-LIABILITIES> 130,360
<BONDS> 0
0
0
<COMMON> 88,942
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<TOTAL-LIABILITY-AND-EQUITY> 258,935
<SALES> 397,383
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<CGS> 52,001
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<OTHER-EXPENSES> 350,538
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<INTEREST-EXPENSE> 5,843
<INCOME-PRETAX> (11,019)
<INCOME-TAX> 100
<INCOME-CONTINUING> (11,119)
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