-----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, LhBoP+/fIZqah2RArOQy28+L1eNZUA6plJDFMShXXlaCpMlS5TEFQpQCSEG+v7df g6oKgy64WYIUgqQVoMdUSg== /in/edgar/work/20000615/0000910680-00-000416/0000910680-00-000416.txt : 20000919 0000910680-00-000416.hdr.sgml : 20000919 ACCESSION NUMBER: 0000910680-00-000416 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000417 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000615 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED CEILING SUPPLIES INC CENTRAL INDEX KEY: 0001098332 STANDARD INDUSTRIAL CLASSIFICATION: [9995 ] IRS NUMBER: 841516192 STATE OF INCORPORATION: CO FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-28663 FILM NUMBER: 655834 BUSINESS ADDRESS: STREET 1: 345 W 62ND AVE STREET 2: UNIT B CITY: DENVER STATE: CO ZIP: 80216 BUSINESS PHONE: 3034405356 MAIL ADDRESS: STREET 1: 345 W 62ND AVE STREET 2: UNIT B CITY: DENVER STATE: CO ZIP: 80216 8-K 1 0001.txt FORM 8-K FOR ADVANCED CEILING SUPPLIES CORP. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 8-K Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April _, 2000 UNITED VENTURES GROUP, INC. ------------------------------------------------------------------ (Exact Name of Registrant as Specified in its Charter Post-Merger) ADVANCED CEILING SUPPLIES CORP. ------------------------------- (Prior name of corporation pre-merger)
Colorado 0-27773 84-1516192 ----------------- ---------------- ----------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation pre-merger) File No.) Identification No. pre-merger) Delaware 65-0675444 ---------------- ---------------- (State or Other Jurisdiction of (IRS Employer Incorporation post-merger) Identification No. post-merger) 2338 Broadway, #100, Boulder, CO 80304 - ------------------------------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 422-8127 ITEM 1. CHANGES IN CONTROL OF REGISTRANT. --------------------------------- On April 7, 2000, the Registrant completed a merger with United Ventures Group, Inc. ("UVGI"). The transaction was consummated pursuant to a Share Purchase Agreement (the "Agreement") that was entered into by and among United Ventures Group, Inc., a Delaware corporation, Advanced Ceiling Supplies Corp., a Colorado corporation (the "Registrant"), and certain shareholders of Advanced Ceiling Supplies Corp. on April 3, 2000. Pursuant to the Agreement, UVGI acquired 660 shares of common stock of the Registrant for $163.69 per share, which constituted 98.2% of the issued and outstanding common stock of the Registrant. UVGI purchased the remaining 12 shares of common stock of the Registrant at $163.69 per share from certain other shareholders of the Registrant pursuant to various Sale Agreements dated April 6, 2000. The Registrant was subsequently merged with and into UVGI and the Registrant's name was changed to United Ventures Group, Inc.. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. ------------------------------------- Upon the consummation of the transaction described in Item 1, the Registrant acquired the business and operations of UVGI. UVGI was incorporated in May 1996 under the name Travelnet International, Corp. UVGI manufactures, designs and distributes a wide assortment of 14 karat gold earrings, charms, bracelets and rings in the United States, some of which are accented with colored gem stones. UVGI offers its customers a large selection of jewelry styles, consistent product quality and prompt delivery of product orders. Its customers include mass merchandisers such as JC Penny and Sears, discount stores, home shopping networks such as QVC, warehouse clubs such as Jan Bell and jewelry wholesalers and distributors. In fiscal 1997 and 1998, UVGI generated sales from approximately 100 customers. Its five largest customers, on an aggregated basis, accounted for approximately 60% and 53% of net sales, respectively. UVGI currently offers over 1000 styles of gold charms, earrings, bracelets and rings, with the majority of its products retailing between $50 and $300. Its products are intended to appeal to consumers who are value conscious as well as fashion conscious. UVGI maintains an in-house design staff to create new designs for its products and to work closely with its senior officers and marketing personnel to develop new products meeting the needs of its customers. UVGI updates its product catalogue each year by adding new designs and eliminating less popular styles. Substantially all of its jewelry is manufactured by UVGI at its plant in New York City. UVGI believes it has appropriate equipment and facilities at its plant for gold casting, gold stamping and tool manufacturing and, therefore, the ability to finish the production of a product commencing with its design in under four weeks. This enables it to rapidly produce customer samples embodying new fashion trends. UVGI markets and sells its jewelry primarily through its in-house sales force from its showroom in its New York City facility, through direct presentations at customer's locations and through the use of catalogues and trade show exhibitions. ITEM 3. BANKRUPTCY OR RECEIVERSHIP. None. ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT None. ITEM 5. OTHER EVENTS None. ITEM 6. RESIGNATION AND APPOINTMENT OF DIRECTORS The following directors of the Registrant were appointed simultaneously with the consummation of the transaction described in Item 1 herein. Isaac Nussen became a director of the Registrant on April 7, 2000. He has served as President, CEO and a director of UVGI since November 1998. Since 1993 he also served in the same positions for Jarnow Corporation, a subsidiary of UVGI. He is responsible for the marketing and sales of the Registrant. Mr. Nussen served as an executive officer of other jewelry manufacturing companies for over 25 years. George Weisz (a.k.a. Ghidale Weisz) became a director of the Registrant on April 7, 2000. George Weisz has served as Chief Operating Officer, Vice President and Secretary of UVGI since November 1998. Since 1993 he also served in the same positions for Jarnow Corporation. He is responsible for day to day operations the Registrant, including development and manufacturing. Mr. Weisz served as an executive officer of other jewelry manufacturing companies for over 25 years. Eric J. Rothschild became a director of the Registrant on April 7, 2000. He previously served as a director of UVGI since November 1998. For the past five years, and prior thereto, he has been a self-employed physician and a member of Orangeburg Orthopedic Associates. Israel Braun became a director of the Registrant on April 7, 2000. He previously served as a director of UVGI since November 1998. Since 1990, he has served as the President of American Computer Forms, Inc., a distributor of stationery and computer paper. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. FINANCIALS: 7(a) Report of Independent Auditors Consolidated Balance Sheet of the Company for the year ended December 31, 1999. Consolidated Statements of Operations for years ended December 31, 1998 and 1999. Consolidated Statements of Cash Flows for years ended December 31, 1998 and 1999. Consolidated Statements of Stockholders' Equity of the Company for years ended December 31, 1997, 1998 and 1999. Notes to these Financial Statements 7(b) Pro Forma Financial Data Introduction Unaudited Pro Forma Consolidated Balance Sheets as of March 31, 2000. Unaudited Pro Forma Consolidated Income Statements as of March 31, 2000. Notes to these Financial Statements. EXHIBITS:
Exhibit No. Description ------- ----------- 10.1 Share Purchase Agreement dated April 3, 2000, by and among UVGI, Advanced Ceiling and the shareholders of Advanced Ceiling. 10.2 Plan of Merger dated April 7, 2000. 10.3 Form of Acceptance and Sale Agreement dated April 3, 2000. 27.1 Financial Data Schedule 99.1 Financials
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 hereunto duly authorized. Dated: April 7, 2000 UNITED VENTURES GROUP, INC. By: /s/ Isaac Nussen -------------------- President EXHIBIT INDEX -------------
Exhibit No. Description ------- ----------- 10.1 Share Purchase Agreement dated April 3, 2000, by and among UVGI, Advanced Ceiling and the shareholders of Advanced Ceiling. 10.2 Plan of Merger dated April 7, 2000. 10.3 Form of Acceptance and Sale Agreement dated April 3, 2000. 99.1 Financials 27.1 Financial Data Schedule
EX-10.1 2 0002.txt SHARE PURCHASE AGREEEMENT EXHIBIT 10.1 SHARE PURCHASE AGREEMENT ------------------------ This Share Purchase Agreement ("Agreement"), dated as of April 3, 2000 among Scott Deitler, Jim Toot, Lawrence Deitler and Jim Hult (collectively, "Sellers"), Advanced Ceiling Supplies Corp. ("Advanced Ceiling") and United Venture Group, Inc. ("Buyer") a Delaware Corporation. W I T N E S S E T H: A. WHEREAS, Advanced Ceiling is a corporation duly organized under the laws of the State of Colorado. B. WHEREAS, Buyer wishes to purchase 100% of the outstanding common shares of Advanced Ceiling free and clear of liens and encumbrances from Sellers (the "Purchase Shares"). C. WHEREAS, the parties intend to subsequently merge Advanced Ceiling, the wholly-owned subsidiary, with and into the Buyer. NOW, THEREFORE, it is agreed among the parties as follows: ARTICLE I THE CONSIDERATION ----------------- 1.1 Subject to the conditions set forth herein, Sellers shall sell and Buyer shall purchase 660 shares of common stock of Advanced Ceiling. The transactions contemplated by this Agreement shall be completed simultaneously herewith. The purchase price for the shares to be paid by Buyer to Sellers is $200,000 in cash, and 400,000 shares of common stock of the Buyer (the "Consideration"). ARTICLE II CONVEYANCE OF SHARES -------------------- 2.1 The Purchase Shares shall be delivered and conveyed by Sellers to Buyer simultaneously herewith, with duly executed stock powers, upon receipt of the Consideration. ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS AS TO ADVANCED CEILING --------------------------------------------------------------------------- Sellers and Advanced Ceiling each hereby, jointly and severally, represent, warrant and covenant to Buyer as follows: 3.1 Advanced Ceiling is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, and has the corporate power and authority to own or lease its properties and to carry on its business as it is now being conducted. The Articles of Incorporation and Amendments and Bylaws of Advanced Ceiling, copies of which have been delivered to Buyer, are complete and accurate, and the minute books of Advanced Ceiling, copies of which have also been delivered to Buyer, contain a record, which is complete and accurate in all material respects, of all meetings, and all corporate actions of the shareholders and Board of Directors of Advanced Ceiling. 3.2 The authorized capital stock of Advanced Ceiling consists of 50,000,000 shares of common stock. There are 660 shares of Common Stock issued and outstanding. All such shares of capital stock of Advanced Ceiling are validly issued, fully paid and nonassessable. Advanced Ceiling has no outstanding options, warrants, or other rights to purchase, or subscribe to, or other securities convertible into or exchangeable for any shares of capital stock of Advanced Ceiling, or contracts or arrangements of any kind relating to the issuance, sale or transfer of any capital stock or other equity securities of Advanced Ceiling. All of the outstanding shares of capital stock of Advanced Ceiling have been offered, issued, sold and delivered in compliance with applicable federal and state securities laws and none of such securities were, at the time of issuance, subject to preemptive rights. 3.3 Advanced Ceiling does not own nor has it ever owned any outstanding shares of capital stock or other equity interests of any partnership, joint venture, trust, corporation, limited liability company or other entity and there are no obligations of Advanced Ceiling to repurchase, redeem or otherwise acquire any capital stock or equity interest of another entity. 3.4 This Agreement has been duly authorized, validly executed and delivered on behalf of the Sellers and Advanced Ceiling and is a valid and binding agreement and obligation of the Sellers and Advanced Ceiling enforceable against each Seller, jointly and severally, and against Advanced Ceiling in accordance with its terms, subject to limitations on enforcement by general principles of equity and by bankruptcy or other laws affecting the enforcement of creditors' rights generally, and the Sellers and Advanced Ceiling each have complete and unrestricted power to enter into and, upon the appropriate approvals as required by law, to consummate the transactions contemplated by this Agreement. 3.5 Neither the making of nor the compliance with the terms and provisions of this Agreement and consummation of the transactions contemplated herein by Advanced Ceiling will conflict with or result in a breach or violation of the Articles of Incorporation or Bylaws of Advanced Ceiling, or of any material provisions of any indenture, mortgage, deed of trust or other material agreement or instrument to which Advanced Ceiling is a party or by which it or any of its material properties or assets are bound, or of any material provision of any law, statute, 2 rule, regulation, or any existing applicable decree, judgment or order by any court, federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over Advanced Ceiling, or any of its material properties or assets, or will result in the creation or imposition of any material lien, charge or encumbrance upon any material property or assets of Advanced Ceiling pursuant to the terms of any agreement or instrument to which Advanced Ceiling is a party or by which Advanced Ceiling may be bound or to which any of Advanced Ceiling property is subject and no event has occurred with which lapse of time or action by a third party could result in a material breach or violation of or default by Advanced Ceiling. 3.6 Except as disclosed herein, and based upon the representations and warranties of the Buyer set forth herein, no authorization, consent, approval, exemption or other action by or notice to any government entity or filing with or consent of any governmental body is required for the sale of the Purchase Shares to Buyer pursuant to this Agreement. 3.7 There is no claim, legal action, arbitration, governmental investigation or other legal or administrative proceeding, nor any order, decree or judgment in progress, pending or in effect, or to the best knowledge of the Sellers threatened against or relating to Advanced Ceiling or affecting any of its assets, properties, business or capital stock. There is no continuing order, injunction or decree of any court, arbitrator or governmental authority to which Advanced Ceiling is a party or by which Advanced Ceiling or its assets, properties, business or capital stock are bound. 3.8 Advanced Ceiling has accurately prepared and filed all Federal, state and other tax returns required by law, domestic and foreign, to be filed by it, has paid or made provisions for the payment of all taxes shown to be due and all additional assessments, and adequate provisions have been and are reflected in the financial statements of Advanced Ceiling for all current taxes and other charges to which Advanced Ceiling is subject and which are not currently due and payable. None of the Federal income tax returns of Advanced Ceiling have been audited by the Internal Revenue Service or other foreign governmental tax agency. Advanced Ceiling has no knowledge of any additional assessments, adjustments or contingent tax liability (whether federal or state) pending or threatened against Advanced Ceiling for any period, nor of any basis for any such assessment, adjustment or contingency. 3.9 Sellers are the legal, beneficial and registered owners of the Purchase Shares, free and clear of any liens, charges, encumbrances, voting trusts, shareholder agreements or rights of any kind granted to any person or entity, or any interest in or the right to purchase or otherwise acquire any of the Purchase Shares from the Sellers at any time upon the happening of any stated event and may transfer such shares without the consent of any third party. Upon closing of the transactions contemplated hereby, the Buyer will acquire all right, title and interest in the Purchase Shares, free and clear of all liens, charges or encumbrances and will have all of Seller's entire right, title and interest in and to the Purchase Shares. All Purchase Shares owned by Sellers is set forth hereto on Schedule 3.9. 3.10 Advanced Ceiling has delivered to Buyer audited financial statements dated August 31, 1999. All such statements, herein sometimes called "Advanced Ceiling Financial Statements" are (and will be) complete and correct in all material respects and, together with the notes to these financial statements, present fairly the financial position and results of operations 3 of Advanced Ceiling for the periods indicated. All financial statements of Advanced Ceiling have been prepared in accordance with generally accepted accounting principles. 3.11 As of the date hereof, the total indebtedness of Advanced Ceiling is $7,500.00. Advanced Ceiling and the Sellers hereby, jointly and severally, represent and warrant that all outstanding indebtedness of Advanced Ceiling shall have been paid and released prior to the closing of the transactions hereby and that there are no outstanding liens, charges or encumbrances on the assets of Advanced Ceiling. 3.12 Since the dates of the Advanced Ceiling Financial Statements, there have not been any material adverse changes in the business or condition, financial or otherwise, of Advanced Ceiling. Advanced Ceiling does not have any material liabilities, commitments or obligations, secured or unsecured except as shown on updated financials (whether accrued, absolute, contingent or otherwise). 3.13 Advanced Ceiling is not a party to any contract performable in the future. 3.14 The representations and warranties of the Sellers and Advanced Ceiling shall be true and correct as of the date hereof. 3.15 Advanced Ceiling shall deliver to Buyer, all of its corporate books and records for review. 3.16 Advanced Ceiling has no employee benefit plan in effect at this time. 3.17 No representation or warranty by Advanced Ceiling or the Sellers in this Agreement, or any certificate delivered pursuant hereto contains any untrue statement of a material fact or omits to state any material fact necessary to make such representation or warranty not misleading. 3.18 Sellers or Advanced Ceiling have delivered, to Buyer true and correct copies of a Form 10SB declared effective by the Securities and Exchange Commission ("SEC") and each of its other reports to shareholders filed with the SEC for the year ended December 31, 1999. Advanced Ceiling is a registered company under the Securities Exchange Act of 1934, as amended. 3.19 Advanced Ceiling has duly filed all reports required to be filed by it under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the "Federal Securities Laws"). No such reports, or any reports sent to the shareholders of Advanced Ceiling generally contained any untrue statement of material fact or omitted to state any material fact required to be stated therein or necessary to make the statements in such report, in light of the circumstances under which they were made, not misleading. 3.20 Each Seller is an "accredited investor" as such term is defined in Rule 501(a) promulgated under the Securities Act of 1933, as amended. 4 3.21 Each Seller is acquiring the shares of common stock of Buyer comprising the Consideration for the account of such Seller, for investment purposes only, and not with a view towards the resale or redistribution thereof. 3.22 The Sellers have not received any general solicitation or general advertising regarding the shares of Buyer's common stock comprising the Consideration. ARTICLE IV REIMBURSEMENT; TERMINATION OF REPRESENTATION AND ------------------------------------------------ WARRANTIES AND CERTAIN AGREEMENTS; INDEMNIFICATION -------------------------------------------------- 4.1 In the event upon merger the Buyer is not deemed registered under the Securities Exchange Act of 1934, as amended, Sellers will return to Buyer $100,000 of the Consideration, provided, that, Buyer has filed audited financial statements as of the end of its last fiscal year with the Securities and Exchange Commission. 4.2 The respective representations and warranties of the parties hereto shall survive this Agreement for three years and the covenants shall survive hereafter. 4.3 The right to indemnification, payment of Damages (as defined in section 4.5) or other remedy based on any representation, warranty, covenant or obligation of a party hereunder shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation. 4.4 The waiver of any condition to a party's obligation to consummate the transactions contemplated hereunder, where such condition is based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy based on such representation, warranty, covenant or obligation. 4.5 Advanced Ceiling and each of the Sellers, jointly and severally, shall indemnify and hold harmless the Buyer, and each of its representatives, employees, officers, directors, stockholders, controlling persons and affiliates (collectively, the "Buyer Indemnified Persons") for, and will pay to the Buyer Indemnified Persons, the amount of, any loss, liability, claim, damage (including, without limitation, incidental and consequential damages), cost, expense (including, without limitation, interest, penalties, costs of investigation and defense and the reasonable fees and expenses of attorneys and other professional experts) or diminution of value, whether or not involving a third-party claim (collectively, "Damages"), directly or indirectly arising from, attributable to or in connection with: (a) any representation or warranty made by the Sellers and Advanced Ceiling in this agreement or any of the Sellers' and Advanced Ceiling closing deliveries, that is, or was at the time made, false or inaccurate, or any breach of, or misrepresentation with respect to, any such representation or warranty; and 5 (b) any breach by any of the Sellers or Advanced Ceiling of any covenant, agreement or obligation of the Sellers contained in this agreement. (c) any claims or litigation relating to Advanced Ceiling now pending or threatened or which may hereafter be brought against Buyer and/or Advanced Ceiling based upon events occurring prior to the date hereof and not attributable to the acts of the Buyer. (d) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, losses, liabilities and reasonable legal and other expenses incident to any of the foregoing. 4.6 The Sellers and Advanced Ceiling shall have no liability for indemnification with respect to any representation or warranty, unless, on or before the [third] anniversary of the date hereof, the Buyer notifies the Sellers of a claim specifying the basis thereof in reasonable detail to the extent then known by the Buyer. A claim with respect to any covenant, agreement or obligation contained in this agreement, may be made at any time without any time limitation. 4.7 Promptly after receipt by an indemnified party of written notice (the "Notice of Claim") of the commencement of any action, suit or proceeding against it, or written threat thereof, such indemnified party will, if a claim is to be made against an indemnifying party under either of said sections, as applicable, give notice to the indemnifying party of the commencement of such action, suit or proceeding. The indemnified party shall furnish to the indemnifying party in reasonable detail such information as the indemnified party may have with respect to such indemnification claims (including copies of any summons, complaint or other pleading which may have been served on it and any written claim, demand, invoice, billing or other document evidencing or assenting the same). Subject to the limitations set forth in this section, no failure or delay by the indemnified party in the performance of the foregoing shall reduce or otherwise affect the obligation of the indemnifying party to indemnify and hold the indemnified party harmless except to the extent that such failure or delay shall have materially and adversely affected the indemnifying party's ability to defend against, settle or satisfy any action, suit or proceeding the claim for which the indemnified party is entitled to indemnification hereunder. The foregoing shall not apply to the extent inconsistent with the provisions of section 4.8 relating to Proceedings. 4.8 If the claim or demand set forth in the Notice of Claim given by the indemnified party is a claim or demand asserted by a third party, the indemnifying party shall have 30 days after the Date of Notice of Claim to notify the indemnified party in writing of its election to defend such third party claim or demand on behalf of the indemnified party (the "Notice Period"); provided, however, that the indemnified party is authorized to file any motion, answer or other pleading which it deems necessary or appropriate to protect its interests during the Notice Period. If the indemnifying party elects to defend such third party claim or demand, the indemnified party shall make available to the indemnifying party and its agents and representatives all records and other materials which are reasonably required in the defense of such third party claim or demand and shall otherwise cooperate (at the sole cost and expense of the indemnifying party) with, and assist (at the sole cost and expense of the indemnifying party) the indemnifying party in the defense of, such third party claim or demand, and so long as the 6 indemnifying party is diligently defending such third party claim in good faith, the indemnified party shall not pay, settle or compromise such third party claim or demand. If the indemnifying party elects to defend such third party claim or demand, the indemnified party shall have the right to control the defense of such third party claim or demand, at the indemnified party's own expense. If the indemnifying party does not elect to defend such third party claim or demand or does not defend such third party claim or demand in good faith, the indemnified party shall have the right, in addition to any other right or remedy it may have hereunder at the indemnifying party's expense, to defend such third party claim or demand. 4.9 The term "Date of Notice of Claim" shall mean the date the Notice of Claim is effective pursuant to section 5.5 of this Agreement. 4.10 A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the party from whom indemnification is sought. 4.11 Any legal action or proceeding with respect to this Agreement or any matters arising out of or in connection with this Agreement or the transactions contemplated hereby or the documents executed and delivered in connection herewith, and any action for enforcement of any judgment in respect thereof may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Agreement, the parties each hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts and appellate courts thereof. The parties irrevocably consent to service of process out of any of the aforementioned courts in any such action or proceeding in accordance with the notice provisions set forth in Section 5.5. The parties each hereby irrevocably waive any objection that it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement or the transactions contemplated hereby or the documents execute and delivered in connection herewith brought in the courts referred to above and hereby further irrevocably waive and agree, to the extent permitted by applicable law, not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law. ARTICLE V MISCELLANEOUS ------------- 5.1 This Agreement embodies the entire agreement between the parties, and there have been and are no agreements, representations or warranties among the parties other than those set forth herein or those provided for herein. 5.2 To facilitate the execution of this Agreement, any number of counterparts hereof may be executed, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one instrument. 7 5.3 All parties to this Agreement agree that if it becomes necessary or desirable to execute further instruments or to make such other assurances as are deemed necessary, the party requested to do so will use its best efforts to provide such executed instruments or do all things necessary or proper to carry out the purpose of this Agreement. 5.4 This Agreement may not be amended except by written consent of both parties. 5.5 Any notices, requests, or other communications required or permitted hereunder shall be delivered personally or sent by overnight courier service, prepaid, addressed as follows: To Sellers: copy to: To United Venture Group, Inc. c/o Copy to: Parker Chapin LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 Attention: Mitchell S. Nussbaum, Esq. or such other addresses as shall be furnished in writing by any party, and any such notice or communication shall be deemed to have been given as of the date received. 5.6 No press release or public statement will be issued relating to the transactions contemplated by this Agreement without prior approval of Buyer and Sellers. However, Advanced Ceiling may issue at any time any press release or other public statement it believes on the advice of its counsel it is obligated to issue to avoid liability under the law relating to disclosures, but the party issuing such press release or public statement shall make a reasonable effort to give the other party prior notice of and opportunity to participate in such release or statement. 5.7 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall be considered one and the same agreement. This Agreement may be executed by facsimile signatures. 8 5.8 This Agreement shall be governed by and construed in accordance with and enforced under the laws of the state of New York applicable to agreements made and to be performed entirely in that state. IN WITNESS WHEREOF, the parties have executed this Agreement this 3rd day of April. SELLERS: /s/ Scott Deitler ---------------------------------- Scott Deitler /s/ Jim Toot ---------------------------------- Jim Toot /s/ Lawrence Deitler ---------------------------------- Lawrence Deitler /s/ Jim Hult ---------------------------------- Jim Hult ADVANCED CEILING SUPPLIES CORP. By:/s/ Scott Deitler ---------------------------------- Scott Deitler, President UNITED VENTURE GROUP, INC. By: /s/ Isaac Nussen ---------------------------------- Isaac Nussen, President 9 SCHEDULE 3.9 ------------ SELLERS PURCHASE SHARES OWNED ------- --------------------- Scott Deitler Jim Toot Lawrence Deitler Jim Hult 10 EX-10.2 3 0003.txt PLAN OF MERGER EXHIBIT 10.2 PLAN OF MERGER OF ADVANCED CEILING SUPPLIES CORP. AND UNITED VENTURE GROUP INC. The undersigned, being all of the directors of United Venture Group Inc., a Delaware corporation, hereby authorize and approve the following Plan of Merger: 1. United Venture Group Inc., which is a business corporation of the State of Delaware and is the parent corporation and the owner of all of the outstanding shares of Advanced Ceiling Supplies Corp., which is a business corporation of the State of Colorado and the subsidiary corporation, hereby merges Advanced Ceiling Supplies Corp. into United Venture Group Inc. pursuant to the provisions of the Colorado Business Corporation Act and of the laws of the jurisdiction of organization of United Venture Group Inc. 2. The separate existence of Advanced Ceiling Supplies Corp. shall cease at the effective time and date of the merger and United Venture Group Inc. shall continue its existence as the surviving corporation pursuant to the provisions of the laws of the jurisdiction of its organization. 3. The issued shares of Advanced Ceiling Supplies Corp. shall not be converted in any manner, but each said share which is issued at the effective time and date of the merger shall be surrendered and extinguished. 4. The Board of Directors and the proper officers of United Venture Group Inc. are hereby authorized, empowered, and directed to do any and all acts and things, and to make, execute, deliver, file and/or record any and all instruments, papers and documents which shall be or become necessary, proper or convenient to carry out or put into effect any of the provisions of this plan of merger or of the merger herein provided for. Date: April 7, 2000 DIRECTORS: /s/ Isaac Nussen ---------------------- Isaac Nussen /s/ George Weisz ---------------------- George Weisz /s/ Eric J. Rothschild ---------------------- Eric J. Rothschild /s/ Israel Braun ---------------------- Israel Braun -2- EX-10.3 4 0004.txt FORM OF ACCEPTANCE AND SALE AGREEMENT Exhibit 10.3 FORM OF ACCEPTANCE AND SALE ADDENDUM Gentlemen: I understand that United Venture Group, Inc., a Delaware corporation (the "Company") is offering to purchase common shares of stock of Advanced Ceiling Supplies, Inc., ("Shares") for $163.69 per share pursuant to a Share Purchase Agreement(the "Agreement") dated April 3, 2000. I hereby agree to sell ___________ shares of common stock of Advanced Ceiling Supplies, Inc. for $163.69 per share to United Venture Group, Inc. In order to induce the Company to accept my agreement herein, I advise you as follows and acknowledge: 1. Receipt of copies of 8-K dated April 6, 2000 and such other documents as I have requested: I hereby acknowledge that I have received the documents (as may be supplemented from time to time) relating to the Company and that I have carefully read the information and that I understand all of the material contained therein, and agree to the terms, as described therein. 2. Availability of Information. I hereby acknowledge that the Company has made available to me the opportunity to ask questions of, and receive answers from the Company and any other person or entity acting on its behalf, concerning the terms and conditions of the purchase and the information contained in the corporate documents and to obtain any additional information, to the extent the Company possesses such information or can acquire it without unreasonable effort or expense, necessary to verify the accuracy of the information provided by the Company and any other person or entity acting on its behalf. 3. Representations and Warranties. I represent and warrant to the Company (and understand that it is relying upon the accuracy and completeness of such representations and warranties in connection with the availability of an exemption 2 for the sale of the shares from the registration requirements of applicable federal and state securities laws) that: a) That United Venture Group, Inc. has purchased control (660 shares) of Advanced Ceiling Supplies, Inc. from directors and major shareholders. There is no public market for the shares I am selling of Advanced Ceiling Supplies, Inc., and there is no certainty that such a market will ever develop. There can be no assurance that I will be able to sell or dispose of the shares. Moreover, no assignment, sale, transfer, exchange, or other disposition of the shares can be made other than in accordance with all applicable securities laws or an exemption therefrom. b) I understand that the company is relying on the private sale exemption under Section 4(1) of the Securities Act of 1933 and the exemption to Rule 13e(3) under the Securities Exchange Act of 1934 to make the purchase and that all shareholders are receiving $163.69 per share. c) I adopt and agree to the terms and provisions of the Share Purchase Agreement to the extent applicable to me. 4. Purchase Procedure. I understand that this purchase offer is subject to each of the following terms and conditions: (A) The Company may reject this purchase for any reason, and this offer shall become binding upon the Company only when accepted, in writing, by the Company. (B) This offer may not be withdrawn by me. (C) The share certificates to be delivered with executed Stock Powers pursuant to this purchase will be delivered to M.A. Littman, attorney at law as Escrow Agent and delivered to the Company upon payment of $163.69 per share tendered to me, by check. (D) Upon payment for the shares, I waive and release all interest in Advanced Ceiling Supplies, Inc. common shares. 2 5. The Addendum, upon acceptance by the Company, shall be binding upon the heirs, executors, administrators, successors, and assigns of mine. 6. I further represent and warrant: (A) That the shares being sold by me are free and clear of all liens and encumbrances, and no consent of any third party is necessary for me to transfer unencumbered ownership of my Advanced Ceiling Supplies, Inc. shares. (B) That I hereby agree to indemnify the Company and hold the Company harmless from and against any and all liability, damage, cost, or expense incurred on account of or arising out of: (1) Any inaccuracy in my declarations, representations, and warranties hereinabove set forth; (2) Any action, suit or proceeding based upon the claim that said declarations, representations, or warranties were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company. 7. This Agreement shall be construed in accordance with and governed by the laws of the State of Wyoming, except as to the manner in which the subscriber elects to take title to the shares in the Company which shall be construed in accordance with the State of his principal residence. 8. I hereby agree to convey title to all of my interest in common shares of Advanced Ceiling Supplies, Inc. upon receipt of $163.69 per share. DATED THIS __DAY OF _______2000. - -------------------------------- NAME OF SELLER - -------------------------------- Signature of Seller: - -------------------------------- 3 Residence Address ( ) ---- -------------------------- Business Telephone - --------------------------------- Mailing Address (if different) THIS OFFER IS ACCEPTED THIS _____ day of _______________, 2000. ADVANCED CEILING SUPPLIES, INC. by: Its: ------------------------------- 4 SUBSCRIBER ACKNOWLEDGMENT FORM TO BE USED IF SUBSCRIBER IS AN INDIVIDUAL STATE OF _________________ SS. COUNTY OF ________________ } On this __day of ______, 2000, before me, the undersigned Notary Public, duly commissioned and sworn, personally appeared _________________known to me to be the person(s) whose name is (or whose names are) subscribed to the within instrument, and acknowledged that he (or she or they) executed the same. IN WITNESS WHEREOF, I have hereunto set my and affixed my official seal the day and year in the certificate above written. My Commission expires: ________ _________________________________Notary Public _________________________________Address ------------- NOTARY: Please complete state, county, date and names of all persons signing, and affix notarial seal. EX-99.1 5 0005.txt FINANCIALS UNITED VENTURES GROUP, INC. AND SUBSIDIARIES REPORT ON AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999 AND 1998 UNITED VENTURES GROUP, INC. AND SUBSIDIARIES -------------------------------------------- INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ PAGE NUMBER ------ Independent Auditors' Report F-2 Consolidated Financial Statements: Balance Sheet F-4 Statements of Operations F-5 Statements of Stockholders' Equity (Deficit) F-6 Statements of Cash Flows F-7 Notes to Financial Statements F8 - F16 INDEPENDENT AUDITORS' REPORT ---------------------------- To the Board of Directors and Stockholders United Ventures Group, Inc. Long Island City, New York We have audited the accompanying consolidated balance sheet of United Ventures Group, Inc. and Subsidiaries as of December 31, 1999 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended December 31, 1999 and 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts 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 United Ventures Group, Inc. and Subsidiaries as of December 31, 1999 and the results of its operations and its cash flows for the years ended December 31, 1999 and 1998 in conformity with generally accepted accounting principles. As discussed in Note 4 to the financial statements, United Ventures Group, Inc. and subsidiaries have reserved $1,840,000 of accounts receivable as allowance for doubtful accounts, since they were deemed uncollectible. If any collection is received subsequent to December 31, 1999, they will be recorded as income. Furthermore, non-trade receivables of $3,000,000 have also been written-off. F-2 The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements the Company has a working capital and stockholders' deficiency of approximately $1,376,000 and $831,000, respectively at December 31, 1999, and has incurred significant recurring operating losses which raise substantial doubt about its ability to continue as a going concern without the raising of additional debt and/or equity financing to fund operations. Management's plans in regard to these matters are described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/Feldman Sherb Horowitz & Co., P.C. ------------------------------------- Feldman Sherb Horowitz & Co., P.C. Certified Public Accountants New York, New York June 5, 2000 F-3 UNITED VENTURES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET December 31, 1999
ASSETS ------ CURRENT ASSETS: Cash $ 97,465 Accounts receivable-net of allowance for doubtful accounts of $ 1,840,000 3,972,855 Inventories 8,285,730 ------------------- TOTAL CURRENT ASSETS 12,356,050 PROPERTY AND EQUIPMENT, net 273,303 OTHER ASSETS : Deferred financing cost 551,354 Other 17,625 ------------------- $ 13,198,332 =================== LIABILITIES AND STOCKHOLDERS' DEFICIT ------------------------------------- CURRENT LIABILITIES: Accounts payable and accrued expenses $ 1,740,366 Loans payable 4,310,688 Convertible debentures 1,300,000 Notes payable - financial institutions 6,380,538 ------------------- TOTAL CURRENT LIABILITIES 13,731,592 DUE TO STOCKHOLDERS 297,636 STOCKHOLDERS' DEFICIT : Common Stock, $.001 par value - 35,000,000 shares authorized, 24,930,992 shares issued and outstanding 24,931 Preferred stock, $.001 par value - 5,000,000 shares authorized, 200,000 Series A shares issued and outstanding 200 Additional paid-in capital 10,520,067 Stock subscription receivable (957,578) Deferred compensation expense (136,667) Accumulated deficit (10,281,849) ------------------- TOTAL STOCKHOLDERS' DEFICIT (830,896) ------------------- $ 13,198,332 ===================
See notes to consolidated financial statements F-4 UNITED VENTURES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, ----------------------- 1999 1998 ------------------ ----------------- Net sales $ 8,580,670 $ 10,564,598 Cost of goods sold 8,355,358 7,165,065 ------------------ ----------------- Gross profit 225,312 3,399,533 Selling, general and administrative expenses 1,706,549 2,920,953 Bad debts 4,165,058 3,192,050 ------------------ ----------------- Loss from operations (5,646,295) (2,713,470) Interest expense 312,616 1,094,959 Interest expense - Non-cash 2,494,147 - ------------------ ----------------- Income (loss) before extraordinary items (8,453,058) (3,808,429) Extraordinary items - loss on early extinguishment of debt, net of taxes 640,402 58,613 ------------------ ----------------- Net loss $ (9,093,460)$ (3,867,042) ================== ================= Pro forma net loss (unaudited): Historical income before income taxes and extraordinary items $ (8,453,058)$ (3,808,429) Historical income taxes - - Pro forma income taxes (unaudited) - - ------------------ ----------------- Pro forma loss before extraordinary income (unaudited) (8,453,058) (3,808,429) Extraordinary item net of pro forma tax benefit (unaudited) 640,402 58,613 ------------------ ----------------- Pro forma net loss (unaudited) $ (9,093,460)$ (3,867,042) ================== ================= Basic and diluted pro forma net loss per common share (unaudited): Before extraordinary item $ (1.27)$ (2.45) Extraordinary item (0.10) (0.04) ------------------ ----------------- Pro forma net loss $ (1.37)$ (2.49) ================== ================= Weighted average common shares outstanding 6,643,326 1,555,488 ================== =================
See notes to consolidated financial statements F-5
UNITED VENTURES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Preferred Stock, Series A ($.001 par value) ($.001 par value) Additional ---------------- ---------------- Paid-In Shares Amount Shares Amount Capital ------ ------ ------ ------ ------- Balance, December 31, 1997 702,350 702 - - 7,399,298 Issuance of common stock pursuant to acquisition 3,750,000 3,750 - - (3,750) Cancellation of common stock (699,218) (699) - - 699 Sale of common stock 646,878 647 - - 649,353 Forgiveness of notes payable by stockholders - - - - 500,000 Officers' compensation contributed to capital - - - - 454,000 Interest expense due shareholders - - - - 38,373 Net loss - - - - - Termination of S Corporation status - - - - (2,531,002) ------------ ------------- ------------ ------------- ------------ Balance, December 31, 1998 4,400,010 4,400 - - 6,506,971 Issuance of stock 20,350,982 20,351 200,000 200 1,634,727 Issuance of common stock for compensation 100,000 100 - - 204,900 Amortization of deferred compensation - - - - - Issuance of common stock for financing 80,000 80 - - 208,420 Issuance of warrants - - - - 1,349,286 Subscription received - - - - - Beneficial conversion features of convertible debentures - - - - 132,000 Officers' compensation contributed to capital - - - - 454,000 Interest due to shareholders contributed to - - - - 29,763 capital Net loss - - - - - ------------ ------------- ------------ ------------- ------------ Balance, December 31, 1999 24,930,992 $ 24,931 200,000 $ 200 $ 10,520,067 ============= ============= ============ ============= ============
Subscription Accumulated Deferred Stockholders' Receivable deficit Compensation Equity ---------- ------- ------------ ------ Balance, December 31, 1997 - 147,651 - 7,547,651 Issuance of common stock pursuant to acquisition - - - - Cancellation of common stock - - - - Sale of common stock (250,000) - - 400,000 Forgiveness of notes payable by stockholders - - - 500,000 Officers' compensation contributed to capital - - - 454,000 Interest expense due shareholders - - - 38,373 Net loss - (3,867,042) - (3,867,042) Termination of S Corporation status - 2,531,002 - - ------------ ------------ ------------ ------------ Balance, December 31, 1998 (250,000) (1,188,389) 5,072,982 Issuance of stock (957,578) - 697,700 Issuance of common stock for compensation - - (205,000) - Amortization of deferred compensation - - 68,333 68,333 Issuance of common stock for financing - - - 208,500 Issuance of warrants - - - 1,349,286 Subscription received 250,000 - - 250,000 Beneficial conversion features of convertible debentures - - - 132,000 Officers' compensation contributed to capital - - - 454,000 Interest due to shareholders contributed to - - - 29,763 capital Net loss - (9,093,460) - (9,093,460) ------------ ------------ ------------ ------------ Balance, December 31, 1999 $ (957,578)$ (10,281,849) $ (136,667)$ (830,896) ============ ============ ============ ============
See notes to consolidated financial statements F-6 UNITED VENTURES GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, ----------------------- 1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES : Net loss $ (9,093,460) $ (3,867,042) ------------ ------------ Adjustment to reconcile net income to net cash provided by (used in) operating activities: Depreciation 319,326 447,648 Amortization 117,048 325,451 Bad debts 4,165,058 3,192,050 Officers' compensation 454,000 454,000 Imputed interest on loan from shareholders 238,263 38,373 Interest expenses on conversion benefit 132,000 - Amortization of deferred compensation 68,333 - Extinguishment of debt 640,402 - Write-off of deferred financing and offering costs 460,530 159,672 Change in assets and liabilities; Increase in accounts receivable (3,006,264) (444,508) (Increase) decrease in inventories 3,005,219 (368,156) Decrease in prepaid expenses 2,613 97,247 Increase in accounts payable and accrued expenses 889,078 209,199 ------------ ------------ Total adjustments 7,485,606 4,110,976 ------------ ------------ Net cash provided by (used in) operating activities (1,607,854) 243,934 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES : Acquisition of property and equipment - (90,229) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of notes payable - financial institutions (1,036,816) - Repayment of notes payable - line of credit - (756,312) Repayment of notes payable - term loan - (320,831) Proceeds from convertible debentures 997,000 Proceeds from loans payable 1,310,688 - Increase (decrease) in cash overdraft (146,065) 146,065 Stock subscription received 250,000 Proceeds from issuance of stock 697,700 400,000 Borrowings from (repayment to) stockholders (380,216) 383,731 ------------ ------------ Net cash (used in) provided by financing activities 1,692,291 (147,347) ------------ ------------ Net increase in cash 84,437 6,358 Cash - beginning of year 13,028 6,670 ------------ ------------ Cash - end of year $ 97,465 $ 13,028 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION : Interest paid $ 312,616 $ 1,055,328 ============ ============ Taxes paid $ 3,596 $ 14,248 ============ ============ OFFICERS' COMPENSATION CONTRIBUTED TO CAPITAL $ 454,000 $ 454,000 ============ ============ IMPUTED INTEREST ON LOANS AND CONVERTIBLE DEBENTURES $ 1,078,998 $ 38,373 ============ ============ NON-CASH FINANICING AND INVESTING ACTIVITIES: Write-off of deferred financing and offering costs $ 460,530 $ 159,672 ============ ============ Increase in deferred financing costs 708,884 - ============ ============ Forgiveness of notes payable by related party $ - $ 500,000 ============ ============
See notes to consolidated financial statements F-7 UNITED VENTURES GROUP, INC. AND SUBSIDIARIES -------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ DECEMBER 31, 1999 AND 1998 -------------------------- 1. THE COMPANY ----------- United Ventures Group, Inc. ("UVGI"), formerly known as Travelnet International, Corp., was organized in May 1996. In 1998, UVGI discontinued its operations as a tour organizer and changed its name to United Ventures Group, Inc. In October 1998, UVGI acquired all of the issued and outstanding shares of Shilaat Corp. ("Shilaat"), a New York shell corporation formed on August 1998, which acquired all of the shares of Jarnow Corporation ("Jarnow"), a company which was incorporated in 1993 and manufactures and distributes gold jewelry, in exchange for 3,750,000 shares of UVGI's common stock (the "Exchange"). The Exchange was completed pursuant to the Stock Exchange Agreement between UVGI, Shilaat and Odyssey Acquisition Corp, in which 1,500,000 shares were issued to Odyssey Acquisition Corp, which owned 40% of Shilaat and 2,250,000 shares were issued to the two other stockholders who owned the remaining 60% of Shilaat. The Exchange has been accounted for as a reverse acquisition under the purchase method for business combinations. Hereinafter, UVGI, Shilaat, and Jarnow are collectively referred to as the "Company". 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ Use of Estimates - The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Inventories - Inventories consisting mainly of gold are stated at the lower of cost, determined by the first-in first-out method, or market. Allowance for Doubtful Accounts and Returns - Provisions for losses on accounts receivable are made in amounts required to maintain an adequate allowance for doubtful accounts. Accounts receivables are written off against such allowance when it is determined by the Company that collection will not be received. F-8 Property and Equipment - Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over their estimated useful lives of 5 years. Depreciation expense for December 31, 1999 and 1998 is $ $319,326 and $447,648, respectively. Income Taxes - Income taxes are accounted for under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Impairment of Long-Lived Assets - The Company reviews long-lived assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recovered. At December 31, 1999, the Company believes that there has been no impairment of its long-lived assets. Fair Value of Financial Instruments - The carrying amounts reported in the balance sheet for cash, receivables, and accounts payable approximate their fair market value based on the short-term maturity of these instruments. New Accounting Pronouncement - The Company will adopt Statement of Financial Accounting Standard No. 133 ("SFAS No. 133"), "Accounting for Derivative Instruments and Hedging Activities" as amended by SFAS No. 137 for the year ended December 31, 2000. SFAS No. 133 establishes a new model for accounting for derivatives and hedging activities and supersedes and amends a number of existing standards. The application of the new pronouncement is not expected to have a material impact on the Company's financial statements. Earnings Per Share - The Company has adopted the provisions of Financial Accounting Standards No. 128, "Earnings Per Share". Basic earnings per share is based on the weighted average number of shares outstanding. Potential common shares included in the computation of diluted earnings per share are not presented in the financial statements as their effect would be anti-dilutive. Stock based compensation - The Company accounts for stock transactions in accordance with APB Opinion No. 25, "Accounting For Stock Issued To Employees." In accordance with Statement of Financial Accounting Standards No. 123 (SFAS 123"), "Accounting For Stock - Based Compensation," the Company adopted the pro forma disclosure requirements of SFAS 123. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated. F-9 3. BASIS OF PRESENTATION --------------------- The Company has a working capital and stockholders' deficiency of approximately $1,376,000 and $831,000 respectively at December 31, 1999, and has incurred significant recurring operating losses which raise substantial doubt about its ability to continue as a going concern without the raising of additional debt and/or equity financing to fund operations. Management is actively pursuing new debt and/or equity financing and continually evaluating the Company's profitability, however any results of their plans and actions cannot be assured. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 4. ALLOWANCE FOR DOUBTFUL ACCOUNTS ------------------------------- The Company determined that for December 31, 1999, $1,840,000 of its accounts receivable were uncollectible and fully reserved them as an allowance for doubtful accounts. Collections received subsequent to December 31, 1999, will be recorded as income. Furthermore, non-trade receivables of $3,000,000 have also been written-off to bad debt expense. 5. PROPERTY AND EQUIPMENT ---------------------- Property and equipment at December 31, 1999 consists of the following: Factory machinery and equipment $2,040,648 Furniture and fixtures 27,781 Leasehold improvements 43,267 Computer software 194,004 Computer equipment 126,554 ------------------ 2,432,254 Less : Accumulated depreciation 2,158,951 ------------------ $ 273,303 ================== Substantially, all of the Company's property and equipment are collateral for its debt obligations. 6. GOODWILL - NET -------------- Goodwill of $1,627,261 relates to the prior years' acquisition by Jarnow of stock and assets of other companies and has been fully amortized. Amortization expense of goodwill amounted to $117,048 and $325,451 for the years ended December 31, 1999 and 1998 respectively. F-10 7. LOANS PAYABLE ------------- During the year ended December 31, 1999, the Company borrowed money from unrelated third parties on an informal basis. Such loans have been classified as current. Imputed interest at a rate of 10% per annum has been accrued on the outstanding loan balances. 8. NOTE PAYABLE ------------ In June 1998, the Company entered into a financing agreement with a financial institution ("Finance Company") which provided initial funding of $6,500,000 based upon certain levels of accounts receivable, inventory and equipment, and secured by the Company's assets. The proceeds of this loan were used to repay the Company's existing line of credit and term loan with a bank. Additional advances were made to the Company based on additional sales and other requirements, as defined. In September 1999, the Company entered into an arrangement with the Finance Company to settle the obligation by executing the following: (i) the issuance of a $2,000,000 note payable to the Finance Company with an annual interest rate of 10% due September 2000 and guaranteed by the principal shareholders of the Company; (ii) the payment of $500,000 (see below), and (iii) the transfer of the remaining balance of the existing line of credit at September 30, 1999 of $3,477,460, to the principal shareholders of the Company. Concurrent with the above financing, the Company entered into a separate financing agreement with another financial institution which provided for payment of $500,000 to the Finance Company. Funds are advanced directly to the Company based on sales and levels of accounts receivable, as defined, and collateralized by the Company's assets. Such advances bear interest at the rate of 10% per annum. As of December 31, 1999 the amount owed under such loan is $963,551. On April 5, 2000 a settlement agreement was reached in consideration for the Finance Company canceling: (a) a Term Promissory Note dated September 30, 2000, in the original principal amount of $2,000,000, from Jarnow to the Finance Company; and (b) a Term Promissory Note dated September 30, 2000, in the original principal amount of $3,477,460 (the "Jarnow Note"), from principal shareholders of the Company to the Finance Company by the Company making the following payments and accepting certain covenants. a) Jarnow made a payment of $1,200,000 to the Finance Company in immediately available funds. b) Principal shareholders of the Company will assign the Jarnow Note to the Finance Company. Finance Company will cancel the Jarnow Note in return for the principal shareholders of the Company's covenant not to receive any consideration whatsoever in connection with this transaction and the canceling of the Jarnow Note. F-11 c) Finance Company and Company will amend the existing Warrants (see Note 13) to provide for Finance Company's right to purchase a maximum of four million shares of the Company common stock at a price of $.001 per share, and Finance Company shall exercise such right by tendering payment of $4,000. Finance Company will retain all other existing rights under the Warrants (i.e., piggy-back registration rights), except as modified by point "d" below. d) Finance Company shall not retain its existing anti-dilution rights under the Warrant, and shall not have the right under the Warrant or otherwise to buy additional shares at any set price, other than the same right as members of the general public to purchase such shares as may become available through the public markets at the prevailing price; and e) Finance Company will return to the principal shareholders of the Company all previously pledged shares of the Company, and will release and return all corporate and personal guaranties and pledge agreements of any nature. As a result of this settlement the Company will recognize an extraordinary gain from the extinguishment of debt of $4,216,987 less the value assigned to the warrants of $1,000,000. 9. UNPAID PAYROLL TAXES -------------------- The Company has been delinquent on its payment of payroll taxes aggregating approximately $189,482 at December 31, 1999. The Company has reached an agreement for a payment plan with the Internal Revenue Service and as of April 25, 2000 has fully satisfied this obligation. 10. DUE TO STOCKHOLDERS ------------------- Money due to stockholders in the aggregate amount of $297,636 represents advances from stockholders of the Company. Interest is imputed on such loans at the rate of 10% per annum. 11. COMMITMENTS AND CONTINGENCIES ----------------------------- The Company leases space for its administrative offices, showrooms and its manufacturing facility on a month to month basis. The Company is currently negotiating a lease for new premises of approximately 8,000 square feet for $20,000 per month. For the years ended December 31, 1999 and 1998, the Company incurred total rent expenses amounting to $150,992 and $118,377 respectively. The Company is involved in various following lawsuits and claims: F-12 a) The Company is one of several defendants in a case filed on December 27, 1999, collectively alleging various causes of action which, in summary, alleges that, in connection with a New Jersey real estate transaction that occurred in the later part of 1993, the Company and/or its principals were the recipients of certain sums of money that were initially fraudulently obtained (by a third-party) from complainant. The petition seeks damages in the amount of $6,200,000. On or about March 3, 2000, the Company, its principals and certain other defendants filed a motion to dismiss the Petition for lack of subject matter jurisdiction. No decision has been rendered on this motion. At this incipient stage of the litigation it is too premature to evaluate the likelihood of an unfavorable outcome in the event this matter should go to trial or the likelihood of a favorable settlement prior to trial. The foregoing notwithstanding, management and the principals are of the belief that at least fifty-percent of the six million dollars in damages sought by the complainant are susceptible to dismissal by motion for summary judgement prior to completion of discovery and significantly before trial. b) On or about February 4, 2000 a Preliminary Order of forfeiture (the "Order") was filed by the US government pursuant to a Special Verdict of Forfeiture rendered by the jury. The Company is among the sixty-two items/entities listed in the Order to which the government asserts an entitlement and/or (undefined) ownership interest. Pursuant to the Order, the Company has thirty days from the final date of publication of the notice in a newspaper or receipt of actual notice from the government, by which to file a petition asserting claims to any right title or interest in the properties listed in the order. Management will timely file a Petition establishing the Company's prior right, title and interest to Jarnow Corporation, and will vigorously contest the (as of yet) undisclosed/unarticulated allegations underlying the Order. At this time it is premature to proffer an evaluation of the likelihood of an unfavorable outcome or to estimate the amount or range of potential loss. The Company believes that the disposition of these matters will not have a material adverse effect on the Company's financial position and intends to vigorously defend its position. 12. ECONOMIC DEPENDENCY AND CREDIT RISK ----------------------------------- The Company's net sales derived 10% from customers were as follows: 1999 1998 ---- ---- A 16% 12% B 13% 27% C 10% F-13 13. STOCKHOLDERS' EQUITY -------------------- Common Stock and Preferred Stock : ---------------------------------- In January 2000, the Company approved an amendment to its Article of Incorporation to raise the authorized shares of its common stock to 125,000,000 shares of which 120,000,000 shall be designated as common stock with a par value of $.001 per share, and 5,000,000 shall be designated as preferred stock with a par value of $.001 per share. In March 1999, the Company issued 200,000 shares of Series A Preferred Stock at $.001 per shares to two of the Company's principal shareholders, which gave them 54% of the votes on any matter that requires a vote of shareholders. Convertible Debentures: ---------------------- In January 1999, the Company authorized the issuance of up to $10,000,000 of convertible debentures. In April 1999, the Company entered into a Securities Purchase Agreement ("Agreement") for the sale of debentures for an aggregate purchase price of $1,300,000. Such debentures are due in 2002 and bear an interest rate of 8% per annum. The debentures are convertible into shares of the Company's common stock based on the lower of $ 2.318 or 70% of the market price of the Company's common stock at the time of conversion. The net proceeds from this agreement were $997,000. Pursuant to the Agreement, the Company agreed to issue warrants to purchase up to 300,000 shares of the Company's common stock at $.70 per share and up to 1,114,285 shares at $3.325 per share. In September 1999, the Company issued warrants (the "Warrants") to the financial institution described in Note 6 to purchase 645,501 shares of the Company's common stock at $.01 per share. The warrants were issued in connection with the settlement of debt described in Note 8 and will expire in September 2004. On February 1, 2000, the Company converted $100,000 debentures to 1,359,148 shares and on February 8, 2000, debentures for $591,760 were converted to 5,995,541 shares. In May 2000, the Company entered into a settlement agreement for the remaining balance of the obligation to the financial institution by paying back $650,000 within thirty days of execution of the settlement agreement. Contemporaneously with the delivery of the F-14 $650,000, the Company shall issue lender 1,000,000 warrants to purchase common stock of the Company at $.23 per warrant. The warrants shall expire three years from the date of execution of the settlement agreement and otherewise be governed by the same term as those found in the earlier warrants issued to them in April, 1999. Stock Warrants: --------------- In Fiscal Year 1999, the Company issued 2,059,786 warrants. The Company recognized compensation cost for the warrants issued of $798,000. The following table summarizes information about stock warrants at December 31, 1999:
Warrants Outstanding and Exercisable ---------------------------------------------------------------------------- Range of Exercise Price Number Outstanding Remaining Contractual Life Average Exercise Price --------------------------- ------------------------------------------------ ------------------------ $.01-$3.00 2,059,786 2 $1.90
Stock Option Plan: ------------------ In December 1998, The Company approved the establishment of a stock option plan for the issuance of 600,000 shares of its common stock. At December 31, 1999 there were no options outstanding. Deferred Compensation: ---------------------- During the year ended December 31, 1999 an advisory fee was paid to consultants retained by the Company to provide certain advisory services via the issuance of 100,000 common shares. The common shares were valued at their approximate fair market value on the dates of issuance less 20% discount. Stock subscription receivable: ------------------------------ During the year ended December 31, 1999 the Company sold 12,852,237 shares of common stock for which money is not yet received. 14. INCOME TAXES ------------ The Company accounts for income taxes under the provisions of SFAS 109. SFAS No. 109 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. SFAS 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. At December 31, F-15 1999, the Company had net deferred tax assets of approximately $2,400,000. The Company has established a valuation allowance for the full amount of such deferred tax assets at December 31, 1999, as management of the Company has not been able to determine that it is more likely than not that the deferred tax assets will be realized. The following table reflects the Company's deferred tax assets and (liabilities) at December 31, 1999: Net operating loss deduction $2,400,000 Valuation allowance (2,400,000) ------------- Net deferred asset $ -- ============= The provision for income taxes (benefits) differs from the amount computed by applying the statutory federal income tax rate to income loss before income taxes as follows:
1999 1998 ---- ---- Income tax (benefit) computed at statutory rate $(2,100,000) $(415,000) Effect of permanent differences 875,000 415,000 Tax benefit not recognized (1,225,000) - ------------------- ------------------ Provision for income taxes (benefit). $ - $ - =================== ==================
The net operating loss carryforward at December 31, 1999 was approximately $7,000,000 and expires in the years 2012 to 2019. 15. SUBSEQUENT EVENTS ----------------- On April 11, 2000, United Ventures Group, Inc., ("UVGI") completed a merger with Advanced Ceiling Supplies Corp. ("ACSC"). The transaction was consummated pursuant to a share purchase agreement that was entered into by and among UVGI, a Delaware corporation, ACSC, a Colorado corporation and certain shareholders of ACSC. ACSC was subsequently merged with and into UVGI. F-16 PRO FORMA FINANCIAL DATA INTRODUCTION The following financial data is based upon the historical financial statements of United Ventures Group, Inc. ("UVGI" or the "Company") and has been prepared to illustrate the effects on such historical data of the Advanced Ceiling Supplies Corp. ("ACSC") acquisition. The unaudited pro forma consolidated balance sheet as of March 31, 2000 gives effect to the ACSC acquisition as if such transaction had been completed on March 31, 2000. The pro forma financial data is provided for comparative purposes only and does not purport to represent the actual financial position of the Company that actually would have been obtained if the ACSC acquisition had been consummated on the date specified. The pro forma financial data are based on certain assumptions and adjustments described in the notes thereto and should be read in conjunction therewith. F-17 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000
Historical Pro Forma ------------------------------------- ------------------------------- Advanced Adjustments (A) As Adjusted United Ventures Ceiling Group, Inc. Supplies Corp. ----------------- ----------------- --------------- ------------- Current assets: Cash $ 398,337 $ 205 $ (200,000) $ 198,542 Cash - Escrow 1,200,000 1,200,000 Accounts receivable, net 4,392,016 4,392,016 Inventory 6,408,001 6,408,001 Prepaid expenses 10,961 10,961 ----------------- ----------------- --------------- ------------- Total current assets 12,409,315 205 (200,000) 12,209,520 Property and equipment, net 238,303 238,303 Other Assets: Deferred financing cost 492,281 492,281 Other 17,625 17,625 ----------------- ----------------- --------------- ------------- Total assets $ 13,157,524 $ 205 $ (200,000) $ 12,957,729 ================= ================= =============== ============= Current liabilities: Accounts payable and accrued expenses $ 1,650,321 1,650,321 Loans payable 4,180,688 4,180,688 Convertible debentures 608,240 608,240 Notes payable - financial institution $ 5,714,958 $ $ $ 5,714,958 ----------------- ----------------- --------------- ------------- Total current liabilities 12,154,207 12,154,207 ----------------- ----------------- --------------- ------------- Due from shareholder 381,728 381,728 Stockholders' equity: Common stock, $.001 par value 35,000,000 shares authorized, 51,974,393 (actual) and 52,374,393 (pro forma) shares issued and outstanding 51,974 300 100 52,374 Preferred stock, $.001 par value - 5,000,000 shares authorised, 200,000 Series A shares 200 200 issued and outstanding Additional paid-in capital 11,624,702 (200,195) 11,424,507 Stock subscription receivable (799,996) (799,996) Deferred compensation expense (85,418) (85,418) Accumulated deficit (10,169,873) (95) 95 (10,169,873) ----------------- ----------------- --------------- ------------- Total stockholders' equity 621,589 205 (200,000) 421,794 ----------------- ----------------- --------------- ------------- Total liabilities and stockholders' equity $ 13,157,524 $ 205 (200,000) $ 12,957,729 ================= ================= =============== =============
See notes to unaudited pro forma consolidated financial statements F-18 UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT AS OF MARCH 31, 2000
Historical Pro Forma --------------------------------- ----------------------------- Advanced Adjustments As Adjusted United Venture Ceiling Group, Inc. Supplies, Inc. -------------- -------------- ------------ -------------- Net sales $ 3,448,850 $ $ $ 3,448,850 Cost of goods sold 2,586,638 2,586,638 -------------- -------------- ------------ -------------- Gross profit 862,213 862,213 Selling, general and administrative expenses 357,403 357,403 -------------- -------------- ------------ -------------- Income from operations 504,810 504,810 Interest expense 47,412 47,412 Interest expense - Non-Cash 345,422 345,422 -------------- -------------- ------------ -------------- Net income $ 111,976 $ $ $ 111,976 ============== ============== ============ ==============
See notes to unaudited pro forma consolidated financial statements F-19 NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS 1. The following unaudited pro forma adjustments are included in the unaudited pro forma balance sheet at March 31, 2000: To record the acquisition of ACSC by UVGI. On April 11, 2000, UVGI completed the acquisition of ACSC under an agreement dated as of April 3, 2000. As part of the acquisition, the UVGI acquired 666 shares of ACSC's common stock in exchange for 400,000 shares of the capital stock of UVGI and $200,000 in cash. As a result of this transaction, the UVGI received 100% of the total outstanding common stock of ACSC, and at the completion of the transaction there were 52,374,393 shares of common stock of UVGI issued and outstanding. ACSC was merged with and into UVGI on April 7, 2000. F-20 EX-27 6 0006.txt FINANCIAL DATA SCHEDULE
5 0001098332 UNITED VENTURES GROUP, INC. 1 U.S.DOLLARS 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 1 97,465 0 5,812,855 (1,840,000) 8,285,730 12,356,050 2,432,254 (2,158,951) 13,198,332 13,731,592 0 0 200 24,931 (856,027) 13,198,332 8,580,670 8,580,670 8,355,358 8,355,358 6,512,009 0 2,806,763 (8,453,058) 0 (8,453,058) 0 640,402 0 (9,093,460) (1.37) (1.37)
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