-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R5M25EGWYPiayFf/HNR8qUnMDAJ48boV8TKiqGevWB6R3WNyNPo5EmOYn/fxbBcL uq6d5x0l//3xjjFmqa4TNQ== 0001144204-03-008282.txt : 20031210 0001144204-03-008282.hdr.sgml : 20031210 20031210111350 ACCESSION NUMBER: 0001144204-03-008282 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030909 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINGDOM VENTURES INC CENTRAL INDEX KEY: 0001130951 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISC DURABLE GOODS [5090] IRS NUMBER: 880419183 STATE OF INCORPORATION: NV FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-32273 FILM NUMBER: 031046336 BUSINESS ADDRESS: STREET 1: 1045 STEPHANIE WAY CITY: MINDEN STATE: NV ZIP: 89423 BUSINESS PHONE: 775-267-2242 MAIL ADDRESS: STREET 1: 1045 STEPHANIE WAY CITY: MINDEN STATE: NV ZIP: 89423 FORMER COMPANY: FORMER CONFORMED NAME: LEGENDS OF THE FAITH INC DATE OF NAME CHANGE: 20001229 8-K/A 1 form8k_a.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): September 9, 2003 ----------------- KINGDOM VENTURES, INC. (Exact name of registrant as specified in its charter) NEVADA (State of Other Jurisdiction of Incorporation) 000-32273 88-0419183 (Commission File Number) (IRS Employer Identification No.) 1045 STEPHANIE WAY MINDEN, NEVADA 89423 (Address of Principal Executive Offices) (Zip Code) (775) 267-2242 (Registrant's Telephone Number, Including Area Code) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On September 9, 2003, Kingdom Ventures, Inc., through its majority owned subsidiary AACC Acquisition Corporation, Inc., a Nevada corporation, merged with American Association of Christian Counselors, Inc., Texas corporation. As a result of the merger, the shareholder, Tim Clinton of American Association of Christian Counselors, Inc. exchanged all of the outstanding shares of capital stock for consideration consisting of a secured promissory note in the amount of $750,000, a Consulting Agreement requiring $1,250,000 in cash payments to the shareholder and 6,000,000 shares of Kingdom Ventures, Inc. common stock, $.001 par value per share, subject to adjustment for the market price of such shares. AACC Acquisition Corporation, Inc. was the surviving entity and immediately changed its name to American Association of Christian Counselors, Inc. ITEM 7. EXHIBITS. The following Financial Statements for the American Association of Christian Counselors, Inc., a Texas corporation, are filed as pages F-1 through F-8 of this report. Independent Auditors Report F-1 Balance Sheet F-2 Statement of Operations and Retained Earnings F-3 Statement of Cash Flows F-4 Notes to Financial Statements F-5 The unaudited pro forma balance sheet and income statement of Kingdom Ventures, Inc. is filed as pages F-9 through F-10 with this report. The following documents are filed as an Exhibit to this report. 2.1* Agreement and Plan of Merger dated July 31, 2003 by and among Kingdom Ventures, Inc., AACC Acquisition Corporation, Inc., American Association of Christian Counselors, Inc., and Dr. Timothy E. Clinton. 2.2 Consulting Agreement between Kingdom Ventures, Inc. and Dr. Timothy E. Clinton 2.3 Promissory Note between Kingdom Ventures, Inc. and Dr. Timothy E. Clinton 99.1* Press release date September 9, 2003. * Filed with the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 9, 2003 and incorporated by reference herein. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereto duly authorized. KINGDOM VENTURES, INC. Date: December 5, 2003 By: /s/ Gene Jackson -------------------------- Gene Jackson, President and Chief Executive Officer 2 TABLE OF CONTENTS Page Number ------------- Report of Independent Auditors F-1 Audited Financial Statements: Consolidated Balance Sheets F-2 Consolidated Statements of Operations and Accumulated Deficit F-3 Consolidated Statements of Cash Flows F-4 Notes to Consolidated Financial Statements F-5 Wrinkle, Gardner & Company, P.C. Certified Public Accountants PO Box 1707 Friendswood, Texas 77549 (281) 992-2200 Report of Independent Auditors Board of Directors American Association of Christian Counselors, Inc. Forest, Virginia We have audited the accompanying consolidated balance sheets of American Association of Christian Counselors, Inc. (a Texas corporation) as of July 31, 2003 and December 31, 2002, and the related consolidated statements of operations and accumulated deficit and cash flows for the seven months and year then ended. 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 U. S. 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 American Association of Christian Counselors, Inc. as of July 31, 2003 and December 31, 2002, and the results of its operations and its cash flows for the seven months and year then ended in conformity with U. S. generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 7 to the consolidated financial statements, conditions exist which raise substantial doubt about the Company's ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operations. Those conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Wrinkle, Gardner & Company, P. C. Friendswood, Texas December 1, 2003 F-1 AMERICAN ASSOCIATION OF CHRISTIAN COUNSELORS, INC. CONSOLIDATED BALANCE SHEETS
July 31 December 31 2003 2002 ----------- ----------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 0 $ 11,377 Accounts receivable, trade (no allowance for bad debts) 3,488 3,586 Due from related parties and entities 250,370 238,232 Inventory 465,281 202,321 Prepaid expenses 120,067 0 ----------- ----------- Total current assets 839,206 455,516 PROPERTY AND EQUIPMENT, at cost Office furniture and equipment 125,544 125,544 Computer equipment 56,359 53,381 Magazine design 159,355 159,355 Mailshop equipment 48,998 48,998 Leasehold improvements 3,597 3,597 Less: Accumulated depreciation (113,776) (88,245) ----------- ----------- 280,077 302,630 OTHER ASSETS 10,099 10,099 ----------- ----------- Total assets $ 1,129,382 $ 768,245 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and other current liabilities $ 2,951,750 $ 2,097,315 Notes payable 339,567 110,316 Current portion of long-term debt 40,442 56,100 ----------- ----------- Total current liabilities 3,331,759 2,263,731 LONG-TERM DEBT, less current portion 19,516 24,418 MINORITY INTEREST (242,474) (187,664) STOCKHOLDER'S DEFICIT Common stock 1,000 1,000 Accumulated deficit (1,980,419) (1,333,240) ----------- ----------- Total stockholder's deficit (1,979,419) (1,332,240) ----------- ----------- Total liabilities and stockholder's deficit $ 1,129,382 $ 768,245 =========== ===========
See accompanying summary of accounting policies and notes financial statements. F-2 AMERICAN ASSOCIATION OF CHRISTIAN COUNSELORS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Seven months Year Ended Ended July 31, 2003 December 31, 2002 ------------ ------------ Revenues: Memberships $ 1,081,645 $ 3,206,738 Products 1,945,011 5,692,383 Conferences 398,127 941,791 Publications and other revenue 631,605 724,216 ------------ ------------ Total revenues 4,056,388 10,565,128 Cost of revenues (2,725,597) (6,952,924) ------------ ------------ Gross margin 1,330,791 3,612,204 Operating expenses: General and administrative 1,855,013 2,988,407 Depreciation and amortization expense 25,531 56,223 ------------ ------------ Total operating expenses 1,880,544 3,044,630 ------------ ------------ Net earnings before minority interest (549,753) 567,574 Minority interest 54,810 187,664 ------------ ------------ Net earnings (494,943) 755,238 Accumulated deficit at beginning of period (1,333,240) (2,030,552) Distributions to shareholder (152,236) (57,926) ------------ ------------ Accumulated deficit at end of period $ (1,980,419) $ (1,333,240) ============ ============
See accompanying summary of accounting policies and notes financial statements. F-3 AMERICAN ASSOCIATION OF CHRISTIAN COUNSELORS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Seven months Year Ended Ended July 31, 2003 December 31, 2002 ------------- ----------------- OPERATING ACTIVITIES Net earnings $(494,943) $ 755,238 Adjustments to reconcile net earnings to net cash (used in) operating activities: Provision for bad debts 11,592 81,085 Depreciation and amortization 25,531 56,223 Minority interest (54,810) (187,664) Changes in operating assets and liabilities: Accounts receivable, trade (11,494) 140,429 Inventory (262,960) (109,104) Prepaid expenses (120,067) 0 Other assets 0 65,978 Accounts payable and other current liabilities 854,435 (808,935) --------- --------- Net cash (used in) operating activities (52,716) (6,750) INVESTING ACTIVITIES Capital expenditures (2,978) (80,664) Related parties (12,138) 44,563 --------- --------- Net cash (used in) investing activities (15,116) (36,101) FINANCING ACTIVITIES Proceeds from debt 229,250 110,316 Principal payments on debt (20,559) 0 Distributions to shareholder (152,236) (59,926) --------- --------- Net cash provided by financing activities 56,455 50,390 --------- --------- (Decrease) increase in cash and cash equivalents (11,377) 7,539 Cash and cash equivalents at beginning of period 11,377 3,838 --------- --------- Cash and cash equivalents at end of period $ 0 $ 11,377 ========= ========= Supplemental disclosures: Cash paid for interest $ 2,400 $ 7,800 ========= =========
See accompanying summary of accounting policies and notes financial statements. F-4 AMERICAN ASSOCIATION OF CHRISTIAN COUNSELORS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS July 31, 2003 1. BUSINESS American Association of Christian Counselors, Inc. (AACC) (a Texas corporation) was incorporated on October 30, 1991. AACC exists to help professional, pastoral and lay caregivers provide effective Christ-centered soulcare for those seeking direction in life. AACC is committed to assisting Christian counselors whether those counselors are licensed professionals or caring church members with little or no formal training. It is AACC's intention to equip professional, pastoral and lay caregivers with biblical, theological and psychological truth that ministers to the soul of a hurting person and helps them move to personal wholeness, interpersonal competence, mental stability, and spiritual maturity. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Consolidation The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses, income, loss and cash flows of AACC and all companies in which AACC has a controlling voting interest ("subsidiary"), as if AACC and its subsidiary were a single company. Intercompany accounts and transactions between the consolidated companies have been eliminated. Significant accounts and transactions between AACC and its affiliates are disclosed as related party transactions. Use of Estimates The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates that affect the reported amounts of assets, liabilities, sales, and expenses. Actual results could differ from the estimates used. Cash and Equivalents Cash equivalents consist of short-term investments that are readily convertible into cash and have original maturities of three months or less when purchsed. Cash equivalents are carried at cost, which approximates fair value. Fair Value of Financial Instruments The carrying value of AACC's financial instruments approximates fair value. The fair value of financial instruments is generally based on estimates using present value or other valuation techniques. The fair value of long-term borrowings was estimated by discounting future cash flows, including interest payments, using rates currently available for debt of similar terms and maturities, based on AACC's credit standing and other market factors. As of July 31, 2003 and December 31, 2002, the carrying amount of long-term borrowings approximates its fair value. F-5 Allowance for Doubtful Accounts Management has determined that no allowance doubtful accounts is necessary as of July 31, 2003 or December 31, 2002. Inventory Inventories consisting of paper and product merchandise are stated at the lower of unamortized cost or net realizable value. Cost of produced merchandise consists principally of direct production costs and production overhead. These costs are amortized over thirty-six (36) months, the estimated useful life of the product, unless a loss is anticipated for the production, in which case losses are provided in full. Cost is determined using the first-in, first-out method (FIFO). Property and Equipment Property and equipment are presented at cost. Depreciation is computed at rates sufficient to amortize the cost of the assets over their estimated useful lives of five years, using the straight-line method. Segment and Geographic Information AACC operates in one principal business segment across domestic markets. International sales have been insignificant throughout the history of the Company. There were no transfers between geographic areas. Substantially all of the domestic operating results and identifiable assets are in the United States. Concentrations of Credit Risk As of July 31, 2003 and December 31, 2002, there were no customers that represented a significant percentage of sales or accounts receivable. Concentrations with respect to trade receivables are generally limited due to the Company's large number of customers and their geographic and economic dispersion. Financial instruments that potentially subject the Company to credit risks consist primarily of cash accounts on deposit with banks which, at times, may exceed federally insured limits. The Company believes it is not exposed to any significant credit risk related to cash or accounts receivable. Impairment of Long-Lived Assets AACC reviews the carrying values of its long-lived and identifiable intangible assets for possible impairment, at least annually, or whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Advertising AACC expenses advertising costs as they are incurred. Advertising expense for the seven months ended July 31, 2003 totaled $56,000 and for the year ended December 31, 2002 totaled $24,000. New Accounting Standards Effective July 1, 2001, AACC adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS 141 requires that the purchase method of accounting be used for all future business combinations and specifies criteria that intangible assets acquired in a business combination must meet to be recognized and reported apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 will also require that intangible assets with estimable useful lives be amortized over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS No. 121. The adoption of SFAS 141 and SFAS 142 had no material impact on the financial position, results of operations or cash flows of AACC. F-6 AACC adopted the provisions of SFAS No. 143, "Accounting for Asset Retirement Obligations" that records the fair value of the liability for closure and removal costs associated with the legal obligations upon retirement or removal of any tangible long-lived assets. The initial recognition of the liability will be capitalized as part of the asset cost and depreciated over its estimated useful life. SFAS 143 was adopted effective January 1, 2003. The adoption of SFAS 143 had no material impact on the financial position, results of operations or cash flows of AACC. AACC adopted the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," effective in 2002. The adoption of SFAS No. 144 had no material impact on the financial position, results of operations or cash flows of AACC. AACC has adopted the provisions of the Emerging Issues Task Force (EITF) Issue No. 02-16, "Accounting by a Customer (including a Reseller) for Cash Consideration Received from a Vendor." The provisions of EITF No. 02-16 are effective for periods beginning after December 15, 2002 with certain provisions effective for arrangements entered into after November 21, 2002. EITF No. 02-16 provides guidance as to the recognition and classification of monies received from vendors. The adoption of this consensus had no material impact on the financial position, results of operations or cash flows of AACC. In November 2002, the EITF reached a consensus on Issue No. 00-21, "Multiple-Deliverable Revenue Arrangements." EITF No. 00-21 addresses how to account for revenue arrangements with multiple deliverables and provides guidance relating to when such arrangements should be divided into components for revenue recognition purposes. The consensus will be effective for agreements entered into in fiscal 2004 with early adoption permitted. The adoption of this consensus will not have a material impact on AACC's consolidated financial statements. In January 2003, the FASB issued Interpretation No. 46, :The adoption of SFAS No. 144 had no material impact on the financial position, results of operations or cash flows of AACC. "Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin (ARB) No. 51." This interpretation introduces a new consolidation model, the variable interests model, which determines control (and consolidation) based on potential variability in gains and losses of the entity being evaluated for consolidation. The interpretation's consolidation provisions apply immediately to variable interests in variable interest entities (VIE's) created after January 31, 2003 and apply in the first fiscal year or interim period beginning after June 15, 2003 to VIE's acquired before February 1, 2003. The adoption of this interpretation will not have a material impact on AACC's consolidated financial statements. F-7 Revenue Recognition Membership and Renewal Revenue Membership and renewal reveunue is recognized over the term of the membership, which is generally one year, on a straight-line basis. Deferred revenue is recorded as a liability on the accompanying balance sheets. Conference Revenue Conference revenue is recognized at the time the conference takes place. Video and Product Sales Revenue from video and product sales is recorded when the item ships to the customer. Advertising Revenue Advertising revenue is recorded when the publication containing the ad is distributed. Deferred Revenue Deferred revenue represents cash receipts prior to the balance sheet date for events scheduled to occur subsequent to the balance sheet date. AACC typically requires conference registration fees be paid in advance of the conference taking place. As of July 31, 2003 and December 31, 2002, deferred revenue was $1,077,672 and $81,608, respectively. These amounts relate primarily to the World Conference which took place from September 24-27, 2003. Shipping and Handling Costs Shipping and handling costs include book packaging, postage and delivery costs associated with the delivery of videos and other products to customers. These costs are included in cost of goods sold and totaled $1.0 million for the seven months ended July 31, 2003 and $2.6 million for the year ended December 31, 2002. 3. FEDERAL INCOME TAXES The financial statements do not include a provision for federal income taxes because AACC and its subsidiaries are tax exempt. Earnings and losses are included in the owners' income tax returns. State income taxes are not material to the financial statements taken as a whole. F-8
4. LONG-TERM DEBT July 31 December 31 2003 2002 --------------------------------------- Note payable to financial institution, bearing interest at prime plus 1%, monthly installments of $1,535 including interest, balance due November 2003, secured by equipment. $ 3,461 $ 13,913 Note payable to financial institution, bearing interest at prime plus 1%, monthly installments of $502 including interest, balance due October 2003, secured by equipment. 1,158 4,576 Note payable to financial institution, bearing interest at prime plus 1%, monthly installments of $568 including interest, balance due February 2004, secured by assets and guarantee 27,654 29,859 Note payable to financial institution, bearing interest at prime plus 1%, monthly installments of $783 including interest, balance due October 2006, secured by assets and guarantee of shareholder. 27,685 32,171 ------------- -------------- 59,958 80,519 Less: Current portion (40,442) (56,100) ------------- -------------- $ 19,516 $ 24,419 ============= ==============
Future maturities of long-term debt are estimated as follows as of July 31, 2003: 2004 $ 40,442 2005 8,422 2006 8,876 2007 2,218 ------------------ $ 59,958 ================== F-9 5. RELATED PARTY TRANSACTIONS July 31 December 31 2003 2002 -------------------------- Receivables from related parties are as follows: Entity 50% owned by AACC shareholder $ 3,184 $ 3,184 Entity 33.33% owned by AACC shareholder 168,252 168,252 Entity 25% owned by AACC shareholder 10,700 10,700 6. BENEFIT PLANS AACC provides regular full time employees the option of participating in the Company's retirement program after two years of service. AACC matches 100% up to 1% of the employees' yearly salary into their retirement account through a Simple IRA program. Employee contributions are payroll deducted. AACC matching contributions were $1,500 and $6,000 for the seven months ended July 31, 2003 and the year ended December 31, 2002, respectively. 7. GOING CONCERN These statements are presented on the basis that AACC is a going concern. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company has incurred net losses of $2.0 million from inception to July 31, 2003. Should AACC need additional financing, management intends to raise the additional capital through public and/or private equity and/or debt financing. F-10 KINGDOM VENTURES, INC. (FORMERLY LEGENDS OF THE FAITH, INC.) UNAUDITED PRO FORMA BALANCE SHEET January 31, 2003
American Kingdom Association Pro Pro Ventures, Inc. of Christian Forma Forma per 10KSB Counselors, Inc. Adjustments Total ---------------------------------------------------------------- ASSETS Current assets $ 320,836 $ 400,000 $ 0 $ 720,836 Property and equipment, net 126,235 155,000 0 281,235 Other assets, including goodwill 506,386 10,000 4,200,000 4,716,386 ---------------------------------------------------------------- Total assets $ 953,457 $ 565,000 $ 4,200,000 $ 5,718,457 ================================================================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 963,568 $ 2,482,000 $ 2,000,000 $ 5,445,568 Long term liabilities 0 23,000 0 23,000 Minority interest 22,323 (280,000) 0 (257,677) Stockholders' equity (32,434) (1,660,000) 2,200,000 507,566 ---------------------------------------------------------------- Total liabilities and stockholders' equity $ 953,457 $ 565,000 $ 4,200,000 $ 5,718,457 ================================================================
Pro forma adjustments reflect goodwill recorded, notes payable of $2,000,000 and issuance of 6,000,000 shares of common stock valued at $2,200,000 as if transaction had occurred January 31, 2003 and includes all material adjustments considered necessary by management for presentation in accordance with generally accepted accounting principles. F-11 KINGDOM VENTURES, INC. (FORMERLY LEGENDS OF THE FAITH, INC.) UNAUDITED PRO FORMA STATEMENT OF OPERATIONS For the year ended January 31, 2003
American Kingdom Association Pro Pro Ventures, Inc. of Christian Forma Forma per 10KSB Counselors, Inc. Adjustments Total --------------------------------------------------------------------- Revenues $ 3,194,813 $ 10,220,000 $ $ 13,414,813 Expenses 3,384,880 10,060,000 13,444,880 ------------------------------------------------------------------- Loss from operations (190,067) 160,000 (30,067) Other income (expense) (581,090) 0 (581,090) ------------------------------------------------------------------- Net income (loss) before minority interest (771,157) 160,000 (611,157) Minority interest (22,323) 280,000 257,677 --------------------------------------------------------------------- Net income (loss) $ (793,480) $ 440,000 $ 0 $ (353,480) ===================================================================== Net income (loss) per share - basic and diluted $ (0.08) $ (0.03) ===================================================================== Weighted average common shares, basic and diluted 10,394,986 13,394,986
The unaudited pro forma statement of operations for the year ended January 31, 2003 reflects the acquisition by Kingdom Ventures, Inc. of American Association of Christian Counselors, Inc. on September 9, 2003 as if it had occurred on February 1, 2002. The unaudited pro forma statement of operations presented above should be read along with the consolidated financial statements filed on Form 10K-SB as of and for the year ended January 31, 2003 of Kingdom Ventures, Inc. The pro forma financial data do not purport to represent what Kingdom Ventures, Inc.'s consolidated financial position or results of operations would actually have been if such transaction in fact had occurred on February 1, 2002 and are not necessarily representative of Kingdom Ventures, Inc.'s consolidated financial position or results of operations for any future period. Since the acquired entity was not under common control of management prior to its acquisition by Kingdom Ventures, Inc., the historical consolidated results may not be comparable to, or indicative of, future performance. F-12 EX-2.2 3 consul_agreem.txt Exhibit 2.2 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT is entered into as of this August 31, 2003 (the "Agreement"), by and between Kingdom Ventures, Inc., a Nevada corporation (the "Company"), and Dr. Timothy E. Clinton, an individual, an individual resident of the State of Virginia ("Consultant"). The Company and Consultant are sometimes referred to herein collectively as the "Parties" and individually as a "Party." WITNESSETH: WHEREAS, the Company desires that Consultant provide the Company with consulting services relating to certain matters pertaining to the Company Business (as herein defined); and WHEREAS, Consultant wishes to provide the Company with consulting services relating to such matters; NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Parties hereto do hereby agree as follows: 1. Consultant. The Company hereby engages Consultant to serve the Company in the capacity of a consultant. 2. Consulting Services. The Consultant shall perform such services and expertise beyond the scope of the Consultant's obligations under that certain Employment Agreement (the "Employment Agreement") dated as of August 31, 2003 by and among Consultant Company, and AACC Acquisition Corporation, Inc. ("AACC"), relating to the development of additional businesses, expansion of existing businesses, identification of potential acquisition targets, integration of new or existing businesses into the Company, recruitment of directors and employees, and other matters, consistent with the foregoing, from time to time identified by the Board of Directors to the Consultant (the "Company Business"). 3. Consulting Fee. The Company and Consultant agree that Consultant shall not be required to devote a minimum number of hours in the performance of the consulting services and that the consulting services required hereby are beyond the scope and in addition to any obligations of the Consultant arising from any other relationship between the Company and the Consultant. Consultant shall provide services to the Company at such times and places as the Board of Directors shall reasonably request. In consideration of the services to be rendered hereunder by Consultant, the Company shall: a. Immediately upon the execution of this Agreement by the parties hereto, pay to the Consultant the sum of $100,000 in immediately available funds; and b. Pay to the Consultant the sum of $400,000 in eight (8) payments of $50,000 each commencing on September 15, 2003 and continuing on the 15th day of each month thereafter until and including April 15, 2004; and c. Pay to the Consultant the sum of $750,000 in forty-two (42) payments of $17,857 each commencing on May 15, 2004 and continuing on the 15th day of each month thereafter until and including October 15, 2007. 4. Expenses. The Company will reimburse the Consultant for all expenses incurred in connection with the rendering of services under this Agreement. Consultant agrees that all expenses that he incurs must be evidenced by receipts or vouchers and that he will comply with all reimbursement policies or procedures of the Company. In the event that travel is required in any of the services rendered by Consultant hereunder, the Company shall reimburse Consultant for air and auto travel expenses, hotel accommodations, meals, taxis and/or rental cars and such other related miscellaneous expenses, provided such expenses are reasonable and evidenced by receipts or vouchers. 5. Term. The term of this Agreement shall commence on the execution date hereof and end August 31, 2006 or, if earlier, the termination of the Employment Agreement. Notwithstanding the termination of this Agreement, Section 3, and the Company's payment obligation thereunder shall be absolute and not subject to any claims, offsets or defenses, whether based upon any breach by Consultant of any terms or conditions of this Agreement or otherwise, and Sections 9 through 18 shall continue to survive termination of this Agreement. 6. Notice. Any notice, request, consent or communication (collectively a "Notice") under this Agreement shall be effective only if it is in writing and (a) personally delivered or, (b) sent by certified or registered mail, return receipt requested, postage prepaid or, (c) sent by nationally recognized overnight delivery service, with delivery confirmed, or (d) telefaxed or telecopied, with receipt confirmed, addressed as follows: If to Consultant: Dr. Timothy E. Clinton 1639 Rustic Village Road Forest, Virginia 24551 Fax: If to Company: Kingdom Ventures, Inc. Attn: Gene Jackson 1045 Stephanie Way Minden, Nevada 89423 Fax: (775) 267-2661 or to such other address or addresses as shall be furnished in writing by any Party to the other Party. A Notice shall be deemed to have been given as of the date when (i) personally delivered, (ii) three days after when delivered during business hours to said overnight delivery service, properly addressed and prior to such delivery service's cut off time for next day delivery, or (iv) when receipt of the telex or telecopy is confirmed, as the case may be, unless the sending Party has actual knowledge that a Notice was not received by the intended recipient. 2 8. Additional Covenants and Agreements. In addition to his other obligations under this Agreement, Consultant expressly agrees that he shall owe the same obligations to the Company under this Agreement as he owes to AACC pursuant to Section 3.01 and Section 3.05 of the Employment Agreement. The terms of Section 3.01 and Section 3.05 of the Employment Agreement are incorporated herein by this reference as if fully set forth in this Agreement, save that the terms "Employer," as used therein, shall mean herein, the Company. The Company acknowledges and agrees that Consultant shall be free (a) to undertake, engage in, and participate in, the Outside Activities (as defined in the Employment Agreement) and (b) to utilize Employer Confidential Information in connection with the Outside Activities, provided that Consultant complies with all of his obligations under the Employment Agreement to AACC with respect to the Outside Activities. 9. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Virginia. All disputes, controversies or differences which may arise out of, in relation to, or in connection with this Agreement or the breach thereof shall, unless settled by mutual consultation in good faith, be finally settled in the state courts of Virginia or federal courts of the Western District of Virginia. Each Party reserves the right to pursue injunctive relief or other equitable remedies in a court of competent jurisdiction in connection with any breach of the terms of this Agreement. 10. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such provision or invalidity only, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 11. Assignment. This Agreement may not be assigned by Consultant. Neither Consultant, his spouse nor their estates shall have any right to encumber or dispose of any right to receive payments hereunder, it being understood that such payments and the right thereto are nonassignable and nontransferable. The foregoing notwithstanding, in the event that Consultant dies or becomes disabled during the term of this Agreement, all of the payments under Section 3 shall be made to the Consultant's estate or personal representatives. The Company may assign its rights, duties, and obligations under this Agreement to an affiliate, provided that such affiliate expressly assumes of all of the Company's obligations under this Agreement, including without limitation, the Company's payment obligations pursuant to Section 3 above. The Company agrees to, and does hereby, guarantee full payment of all payments owing to Consultant under this Agreement, notwithstanding an assignment of this Agreement to an affiliate. In the event of an assignment of this Agreement by the Company to an affiliate in compliance with this Section 11, such affiliate shall be entitled to enforce all of Company's rights, titles and interests herein, and, subject to the preceding sentence of this Section 11, the Company shall be released from all duties and obligations hereunder from and after the date of such assignment 12. Binding Effect. Subject to the provisions of Section 11 of this Agreement, this Agreement shall be binding upon and inure to the benefit of the Parties hereto, Consultant's heirs and personal representatives, and the successors and assigns of the Company. 3 13. Independent Contractor. Nothing herein shall be construed or deemed to create a joint venture, contract of employment or partnership. It is agreed and understood between the Parties hereto that Consultant is an independent contractor and is not an employee of the Company hereunder. Consultant will be solely responsible for payment of all taxes due or which may become due on monies paid by the Company to Consultant hereunder, specifically including but not limited to income tax (withholding) and FICA. Consultant shall not be entitled to corporate benefits of the Company provided to its employees so long as this Agreement remains in effect. Under no circumstances will either Party act or attempt to act, or represent itself, as an agent of the other Party without prior written authorization, or enter into any contract on behalf of the other Party. 14. Headings. Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 15. No Waiver. Failure by either Party hereto to enforce at any time or for any period of time any provision or right hereunder shall not constitute a waiver of such provision or of the right of such Party thereafter to enforce each and every such provision. 16. Force Majeure. Either Party will be excused for delays in performance under this Agreement if their inability to perform punctually is caused by force majeure. Force majeure as used herein shall mean, cover and include the following: acts of God, strikes, lock-outs, industrial disturbances, acts of the public enemy, wars, blockades, insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, storms, floods, wash-outs, tornadoes, hurricanes, windstorms, arrest and restraint of rulers and people, civil disturbances, boycotts, explosions, breakage or accident to machinery or equipment, and any other causes similar to those above, which are not within the reasonable control of the Party claiming force majeure, and which by the exercise of due diligence such Party is unable to overcome. 17. Drafting. Both Parties hereto acknowledge that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor or against either Party hereto because one is deemed to be the author thereof. 18. No Violation of Applicable Laws. Consultant agrees not to engage in any conduct which would constitute a violation of any Federal law of the United States or any international law including but not limited to the Anti-Bribery and Books and Records Provisions of The Foreign Corrupt Practices Act 15 U.S.C. ss.ss. 78m, 78dd, and 78ff. Consultant further agrees that in the course of fulfilling his duties under this Agreement, he will not to engage in any conduct which would violate or contradict any state or local law. 4 IN WITNESS WHEREOF, this Agreement has been executed and delivered as of the date first above written, to be effective as of the date first set forth above. COMPANY: KINGDOM VENTURES, INC. By: __________________________ Gene Jackson, President CONSULTANT: DR. TIMOTHY E. CLINTON ----------------------------- 5 EX-2.3 4 prom_note.txt PROMISSORY NOTE $750,000.00 Minden, Nevada August 31, 2003 FOR VALUE RECEIVED, the undersigned AACC ACQUISITION CORPORATION, INC., a Nevada corporation (the "Maker"), promises to pay to the order of DR. TIMOTHY E. CLINTON, an individual, at 1639 Rustic Village Road, Forest, Virginia, bearer or assigns (the "Payee") the sum of SEVEN HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($750,000.00), in lawful money of the United States of America, which shall be legal tender, in payment of all debts and dues, public and private, at the time of payment, payable as stipulated herein. This Promissory Note shall bear interest to accrue at the rate of six percent (6%) per annum. All payments under this Promissory Note shall be made without set-off or counterclaim. All payments under this Promissory Note shall be made by certified or bank cashier's check or by wire transfer of immediately available funds to an account designated by the Payee. This Promissory Note shall be paid as follows: a. Principal in the amount of FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($400,000) and accrued interest on this Promissory Note shall be paid on February 29, 2004; and b. Principal in the amount of THREE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($350,000) and accrued interest on this Promissory Note shall be paid on April 30, 2005. Interest will be calculated on the unpaid principal balance to the date of each payment. Payments will be credited first to the accrued but unpaid interest, and then to installments of principal in the inverse order of maturity. The Maker shall have the right to prepay any or all of the indebtedness evidenced hereby without premium or penalty. It is agreed that time is of the essence of this Promissory Note, and the Maker, endorsers, and guarantors expressly agree that in the Event of Default in the payment of any principal or interest when due, or the occurrence of any Event of Default (as hereinafter defined) the Payee may, without demand, notice of presentment of default, notice of acceleration, notice of intention to accelerate or otherwise, all of which are hereby waived by Maker, endorsers and guarantors, declare the entirety of this Promissory Note immediately due and payable. Upon the occurrence of any Event of Default hereunder, the Payee shall also have the right to exercise any and all of the rights, remedies and recourses now or hereafter existing in equity, law, by virtue of statute or otherwise, including, but not limited to, the right to foreclose upon any and all liens and security interests, if any, securing the indebtedness evidenced hereby. Failure to exercise said option shall not constitute a waiver on the part of the Payee of the right to exercise the same at any other time. In the event of default in the making of any payment herein provided, either of principal or interest, or in the event the entirety of this Promissory Note is declared due, interest shall accrue at the rate of the lesser of (a) eighteen percent (18%) per annum or (b) the maximum nonusurious rate of interest which may lawfully be charged Maker under the laws of the State of Nevada or United States Federal Government, as applicable, on the principal balance of the Promissory Note remaining unpaid from such time until paid. 1 This Promissory Note, all interest accrued or accruing hereon, any late charges, all costs incurred by Payee in establishing, determining, continuing or defending the validity or priority of any security interest, pledge or other lien or in pursuing any of its rights or remedies under the Merger Agreement or in connection with any proceeding involving the Payee as a result of any financial accommodation to the Maker, and all reasonable costs and expenses of attorneys and paralegals incurred in any attempts to collect the obligations of the Maker or enforce the rights of the Payee under this Promissory Note (collectively "Indebtedness") are secured by and the Payee is granted a security interest in (i) all property of the Maker from time to time in the possession of the Payee and (ii) all collateral, rights and properties described in each and every deed of trust, mortgage, security agreement, pledge, assignment and other security or collateral agreement which has been, or will at any time(s) later be, executed by the Maker to or for the benefit of the Payee (collectively "Collateral"). This Promissory Note is secured by a Guaranty of even date herewith made by Kingdom Ventures, Inc. in favor of the Payee ("Guaranty") and a Security Agreement of even date herewith between Kingdom Ventures, Inc. and the Payee ("Security Agreement"). All rights and remedies available to Payee under this Promissory Note shall be cumulative of and in addition to all other rights and remedies granted to Payee at law or in equity. Each of the following shall be an "Event of Default" under this Promissory Note: (i) Maker fails to make any payment to the Payee (whether principal, interest, or otherwise) on the Promissory Note when such payment is due; (ii) Maker fails fully and punctually to perform or comply with any covenant other than the payment of money in this Promissory Note and such failure is not corrected within ten (10) days after notice thereof; (iii) A receiver, liquidator, custodian, or trustee of the Maker, or of any material assets thereof is appointed by court order and such order remains in effect on the ninetieth (90th) day after its entry; or a petition is filed, a case is commenced, or relief is ordered against Maker any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect, and is not dismissed within ninety (90) days of such filing, commencement, or order; (iv) Maker files a petition commencing a case in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution, or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition or the commencement of any case against it under any such law; 2 (v) Maker makes an assignment for the benefit of its creditors, or consents to the appointment of a receiver, trustee, custodian, or liquidator thereof, or of all or any material portion of its assets; (vi) An event of default occurs under the Guaranty or pursuant to any security agreement relating to this Promissory Note or the Guaranty; (vii) Maker or any guarantor fail to make when due any payments due to Payee or otherwise perform when performance is due and after the expiration of any grace period any obligation under any other agreement between Maker and Payee or such guarantor and Payee; (viii) Maker shall contest the validity or enforceability of this Promissory Note or shall deny that it has any liability hereunder; (ix) Maker fails to maintain its corporate existences, terminates its existence either voluntarily or through forfeiture of its corporate existence, dissolves, liquidates or otherwise ceases to exist; or (x) Maker sells substantially all of its assets or mergers or consolidates with any other entity in a transaction in which the Maker is not the survivor, or there is a Change in Control of the Maker. As used herein, the term "Change in Control" means any transaction or event, including without limitation any sale, exchange or issuance of stock or assets, merger, consolidation, combination, share exchange or reorganization as a result of which Kingdom Ventures, Inc., a Nevada corporation, does not continue to own, directly and in the aggregate, at least 80% of (a) the combined voting power of all classes of stock of Maker and (b) the total number of shares of all other classes of the stock of Maker. The Maker hereby agree to pay all expenses incurred, including any reasonable attorneys' fees, all of which shall become a part of the principal hereof, if this Promissory Note is in default and placed in the hands of an attorney for collection, or if collected by suit or through any probate, bankruptcy, or any other legal proceedings. Each maker, surety, endorser and guarantor waives demand, grace, notice, presentment for payment, and protest and agrees and consents that this Promissory Note and the liens securing its payment, if any, may be renewed, and the time of payment extended without notice, and without releasing any of the parties. This Promissory Note is to be governed by and construed in accordance with the laws of the State of Nevada. All litigation among the parties hereto with respect to this Promissory Note or any transaction contemplated hereby, shall be conducted in the appropriate federal or state district courts located in the Western District of Virginia. 3 The Maker shall have the right to prepay this Promissory Note at any time without premium or penalty, provided that all accrued and unpaid interest through the date of prepayment is also paid, such prepayments to be applied first to accrued and unpaid interest on the principal amount and the balance, if any, to the reduction of principal. Maker's right to prepay this Promissory Note shall not be deemed as a right to receive a release of any of the liens or security interests, if any, securing payment of this Promissory Note. It is expressly provided and stipulated that notwithstanding any provision of this Promissory Note or any other instrument evidencing or securing the indebtedness evidenced hereby, in no event shall the aggregate of all interest paid by Maker to the Payee hereunder ever exceed the Maximum Nonusurious Rate of Interest (as hereinafter defined) which may lawfully be charged Maker under the laws of the State of Nevada or the United States Federal Government, as applicable, on the principal balance of this Promissory Note remaining unpaid. If under any circumstances the aggregate amounts paid on the indebtedness evidenced by this Promissory Note prior to and incident to the final payment hereof include amounts which by law are deemed interest and which would exceed the Maximum Nonusurious Rate of Interest which could lawfully have been charged or collected on this Promissory Note, Maker stipulates that: (a) any non-principal payment shall be characterized as an expense, fee, or premium rather than as interest, and any excess shall be credited hereon by the holder hereof (or, if this Promissory Note shall have been paid in full, refunded to Maker); and (b) determination of the rate of interest for determining whether the indebtedness evidenced hereby is usurious shall be made by amortizing, prorating, allocating, and spreading, in equal parts during the full stated term of such indebtedness, all interest at any time contracted for, charged, or received from Maker in connection with such indebtedness, and any excess shall be canceled, credited or refunded as set forth in (a) herein. The "Maximum Nonusurious Rate of Interest" which may be charged as herein contemplated shall be the indicated rate ceiling from time to time in effect pursuant to the applicable provisions of the laws of the State of Nevada; provided, however, that Payee may also rely on any alternative Maximum Nonusurious Rate of Interest provided by other applicable laws if such other rates are higher than that allowed by the applicable provisions of the laws of the State of Nevada. This Promissory Note may be transferred or assigned, in whole or in part, by any Payee or subsequent holder at any time. The term Payee as used herein shall include any future holder of this Note, hereinafter provided. This Note shall be binding upon Maker and its successors and assigns and shall inure to the benefit of Payee and its successors and assigns. This Note may be transferred (by endorsement by the holder hereof executing the form of assignment attached as Appendix A hereto) and delivered in the same manner as in the case of a negotiable instrument transferable by endorsement and delivery. Any person in possession of this Note properly endorsed is authorized to represent themselves as absolute owner hereof and is empowered to transfer absolute title hereto by endorsement and delivery hereof to a bona fide purchaser hereof for value. Each prior taker or owner waives and renounces all of his equities or rights in this Note in favor of each such bona fide purchaser, and each such bona fide purchaser shall acquire absolute title hereto and to all rights represented hereby. 4 THIS NOTE, THE MERGER AGREEMENT, THE SECURITY AGREEMENT, GUARANTY AND ALL DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH OR THEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN MAKERS AND PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN MAKER AND PAYEE. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN MAKERS AND PAYEE. AACC ACQUISITON CORPORATION, INC. By: ------------------------------------ John Jackson, President 5 -----END PRIVACY-ENHANCED MESSAGE-----