-----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, G050x6vVrMwW5mr7LHY4+6razKlGyueTcUukwuMIj64qIwffKgwZN3BQlmxDrcm0 azk5OdJjV/l4PMxbuMbrfA== 0000909143-96-000110.txt : 19961010 0000909143-96-000110.hdr.sgml : 19961010 ACCESSION NUMBER: 0000909143-96-000110 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960722 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961009 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENVIRONMENTAL PLUS INC /TX/ CENTRAL INDEX KEY: 0000759401 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 751939021 STATE OF INCORPORATION: TX FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13041 FILM NUMBER: 96641160 BUSINESS ADDRESS: STREET 1: 2995 LBJ FREEWAY STREET 2: SUITE 200 CITY: DALLAS STATE: TX ZIP: 75234 BUSINESS PHONE: 2144040270 MAIL ADDRESS: STREET 1: KINLAW ENERGY PARTNERS CORP STREET 2: 2995 LBJ FREEWAY SUITE 200 CITY: DALLAS STATE: TX ZIP: 75234 FORMER COMPANY: FORMER CONFORMED NAME: KINLAW ENERGY PARTNERS CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HAS OIL & GAS INC DATE OF NAME CHANGE: 19910114 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 8-KSB CURRENT REPORT Pursuant to Sections 13 of 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 22, 1996 ENVIRONMENTAL PLUS, INCORPORATED -------------------------------- (Exact name of registrant as specified in its charter) Texas 0-13041 75-1939021 - ----------------------------------------------------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification incorporation Number) 2995 LBJ Freeway, Suite 200, Dallas, Texas 75234 ------------------------------------------------ (Address of Principal Executive offices) Registrant's telephone number, including area code (214) 481-1211. ITEM 2. Acquisition or Disposition of Assets. As previously reported in the Company's Quarterly Report on Form 10-QSB, filed on August 13, 1996, the Company acquired substantially all the assets of Gulf Coast Cooling Tower Services, Inc. from the Company's director and Secretary, George Davis. Mr. Davis abstained from voting as a director of the Company in the transaction. The value of the assets according to the agreement between the parties is approximately $574,000. The acquisition resulted in the continuation of the business underlying the assets (through the Company's subsidiary, Gulf Coast Towers, Inc.), which is the construction and repair of industrial cooling towers primarily in Texas, Louisiana and Arkansas for electric utility companies, and related consulting services. The purchase price for the assets was 574,000 shares of the Company's subsidiary's preferred stock, par value $1.00 per share, convertible on a one-for-one basis into the Company's common stock. The Company hereby files this Current Report on Form 8-KSB to submit the most recent audited financial statements of Gulf Coast Cooling Tower Service, Inc., for the year ended December 31, 1995 and proforma financial statements of the Company for the nine (9) months ended May 31, 1996. ITEM 7. Financial Statements and Exhibits. (a) Financial Statements of Businesses Acquired. Audited Balance Sheet of Gulf Coast Cooling Tower Service, Inc. as of December 31, 1995, and related statements of income, retained earning and cash flows for each of the two (2) years then ended. (b) Unaudited Proforma Condensed Balance Sheet of Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation as of May 31, 1996 and the related pro forma statement of operations for the nine (9) months ended May 31, 1996. (c) Exhibits Exhibit No. Document Description ----------- -------------------- 2.1 Asset Purchase Agreement, dated as of June 15, 1996, between Environmental Plus, Incorporated (formerly known as Kinlaw Energy Partners Corporation) and Gulf Coast Cooling Tower Service, Inc. SIGNATURE 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. ENVIRONMENTAL PLUS, INCORPORATED By: /s/ J.D. Davenport ------------------------------ J.D. Davenport, President Date: September 22, 1996 EXHIBIT INDEX ------------- Exhibit No. Document Description - ----------- -------------------- 2.1 Asset Purchase Agreement, dated as of June 15, 1996, between Environmental Plus, Incorporated (formerly known as Kinlaw Energy Partners Corporation) and Gulf Coast Cooling Tower Service, Inc. INDEX TO FINANCIAL STATEMENTS AND UNAUDITED PRO FORMA FINANCIAL INFORMATION ----------------------------------------- Financial Statements: Page Gulf Coast Cooling Tower Service, Inc. Independent Auditor's Report F-2 Balance Sheet as of December 31, 1995 F-3 Statement of Income and Retained Earnings for the Years Ended December 31, 1995 and 1994 F-4 Statement of Cash Flows for the years ended December 31, 1995 and 1994 F-5 Notes to Financial Statements F-6 Unaudited Pro Forma Financial Statements: Environmental Plus, Inc. (p/ka/ Kinlaw Energy Partners Corporation Letter from Gregory Wayne Guinn, Certified Public Accountant F-10 Pro Forma Condensed Balance Sheet as of May 31, 1996 F-11 Pro Forma Condensed Statement of Operations for Nine Months Ended May 31, 1996 F-12 Notes to Pro Forma Financial Statements F-13 GULF COAST COOLING TOWER SERVICE, INC. FINANCIAL STATEMENTS DECEMBER 31, 1995 INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Stockholders of Gulf Coast Cooling Tower Service, Inc. We have audited the accompanying balance sheet of Gulf Coast Cooling Tower Service, Inc. (a Texas corporation) as of December 31, 1995, and the related statements of income, retained earnings, and cash flows for each of the two years 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 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 Gulf Coast Cooling Tower Service, Inc. as of December 31, 1995, and the results of its operations and its cash flows for the two years then ended in conformity with generally accepted accounting principles. /s/ Little, Walker & Company Little, Walker & Company Certified Public Accountants Longview, Texas May 9, 1996 F-2 GULF COAST COOLING TOWER SERVICE, INC. BALANCE SHEET DECEMBER 31, 1995
ASSETS Current Assets Cash $ 19,950 Accounts receivable - trade 17,487 Accounts receivable - shareholder 134,076 Notes receivable - current maturities 55,924 Deferred income tax benefit 12,929 --------- Total Current Assets 240,366 --------- Property and Equipment Land and buildings 164,708 Machinery and equipment 581,616 Vehicles 43,724 Office equipment 11,069 --------- Total Property and Equipment 801,117 Less accumulated depreciation 615,074 --------- Net Property and Equipment 186,043 --------- Other Assets Notes receivable 198,514 --------- Total Assets $ 624,923 $========= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 2,232 Accrued expenses 2,740 Notes payable 120,000 --------- Total Current Liabilities 124,972 Long-Term Liabilities -0- --------- Total Liabilities 124,972 --------- Stockholders' Equity - Common stock ($10 par value, 10,000 shares authorized; 1,000 shares issued and outstanding) 10,000 Additional paid-in capital 97,188 Retained earnings 392,763 --------- Total Stockholders' Equity 499,951 --------- Total Liabilities and Stockholders' Equity $ 624,923 =========
The accompanying notes are an integral part of these statements. F-3 GULF COAST COOLING TOWER SERVICE, INC. STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994 ----------- ----------- Sales $ 261,267 $ 240,835 Cost of Sales Materials 68,163 71,364 Labor 51,697 39,031 Consulting and contract services 60,528 25,897 Other costs 28,182 33,484 ----------- ----------- Total Cost of Sales 208,570 169,776 ----------- ----------- Gross Profit 52,697 71,059 Operating Expenses Advertising 77 978 Auto and truck 6,986 8,747 Aviation 3,205 5,282 Bad debts 1,612 1,024 Depreciation 5,973 6,550 Equipment rental 4,046 3,229 Insurance 7,727 5,583 Interest 3,277 2,340 Office expense 3,373 1,259 Professional fees 2,587 1,128 Repair and maintenance 12,363 16,365 Safety 600 -0- Small tools and supplies 2,161 8,202 Taxes and licenses 7,632 8,228 Travel and entertainment 3,783 8,138 Utilities and telephone 8,823 9,159 Other operating expense 208 330 ----------- ----------- Total Operating Expenses 74,433 86,542 ----------- ----------- Net Income (Loss) From Operations (21,736) (15,483) ----------- ----------- Other Income and (Expense) Interest income 18,868 14,690 Rent - real estate 4,550 6,500 Gain (loss) on sale of assets (6,613) 760 Litigation settlement (30,000) -0- Sales tax audit assessment (12,030) -0- Prior year insurance refund 9,988 8,912 ----------- ----------- Total Other Income and (Expense) (15,237) 30,862 ----------- ----------- Net Income (Loss) Before Income Taxes (36,973) 15,379 Provision for Income Tax Expense (Benefit) (5,452) 2,361 ----------- ----------- Net Income (Loss) (31,521) 13,018 Retained earnings, beginning 424,284 411,266 Retained earnings, ending $ 392,763 $ 424,284 =========== ===========
The accompanying notes are an integral part of these statements. F-4 GULF COAST COOLING TOWER SERVICE, INC. STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994 ----------- ----------- Cash Flows From Operating Activities: Net income (loss) (31,521) 13,018 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 19,249 24,123 Deferred income taxes (5,452) 2,361 (Gain) loss on sale of assets 6,613 (760) (Increase) decrease in: Accounts receivable - trade (7,840) (1,732) Inventory 10,828 (666) Increase (decrease) in: Accounts payable 181 (1,393) Accrued expenses 2,552 (1,392) ----------- ----------- Net Cash Flow Provided By (Used In) Operating Activities (5,390) 33,559 ----------- ----------- Cash Flows From Investing Activities: Proceeds from sale of assets -0- 96,500 Advances on notes receivable (50,000) -0- Collection on notes receivable 35,552 23,618 Loans to shareholder -0- (127,500) Collection of shareholder loans 31,659 -0- Cash from surrender of life insurance -0- 28,342 Purchase of property and equipment (107,106) (18,500) ----------- ----------- Net Cash Flow Provided By (Used In) Investing Activities (89,895) 2,460 ----------- ----------- Cash Flows From Financing Activities: Increase (decrease) in operating line of credit 120,000 -0- Retirement of debt (14,202) (26,582) ----------- ----------- Net Cash Flows Provided By (Used In) Financing Activities 105,798 (26,582) ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents 10,513 9,437 Cash and cash equivalents - beginning 9,437 -0- ----------- ----------- Cash and cash equivalents - ending $ 19,950 $ 9,437 =========== =========== Other Cash Flow Information Interest Paid $ 2,186 $ 2,340 Income Taxes Paid $ -0- $ -0-
The accompanying notes are an integral part of these statements. F-5 GULF COAST COOLING TOWER SERVICE, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 1 - Operations and Significant Accounting Policies This summary of significant accounting policies of Gulf Coast Cooling Tower Service, Inc.(the Company) is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, who is responsible for their integrity and objectivity. These accounting policies, with the exception of property and equipment, conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. Business Activities - The Company, located in Overton, Texas, is engaged in the business of constructing and repairing industrial cooling towers primarily in Texas and Arkansas. The Company extends credit to customers primarily in utility, petro-chemical and oil refining industries. Effective September 1, 1993, the Company entered into a consulting agreement with Utility Engineering Corporation (UEC) of Amarillo, Texas. The agreement provides for a monthly base fee of $1,500 for a period of forty-eight months. In addition, the contract with UEC contains a non-competition agreement, restricting the ability of the Company and its majority shareholder to compete with UEC within a 250 mile radius of Amarillo, Texas during the term of the contract. The agreement may be terminated by UEC under a buy out provision or by the Company upon proper notice. Company management elected, for 1995 and 1994, not to pursue major cooling tower construction and repair contracts. Sales for the respective years included the following components:
1995 1994 ----------- ----------- Material sales $ 75,168 $ 92,728 Labor sales 119,216 99,618 Consulting 22,361 19,605 Equipment rental 41,270 28,884 Other operating income 3,252 -0- ----------- ----------- Total $ 261,267 $ 240,835 =========== ===========
Accounts Receivable/Revenue Recognition - Trade accounts receivable and revenue are recognized as jobs are completed for contracts of short duration, and the " percentage of completion " method is used for long term contracts. Accounts which, in the opinion of management, are doubtful of collection, are charged against current operations. Trade accounts written off for 1995 and 1994 totalled $1,612 and $1,024, respectively. Inventories - Inventories consist of jobsite materials and supplies and are valued at cost. F-6 GULF COAST COOLING TOWER SERVICE, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 1 - Operations and Significant Accounting Policies (Continued) Property,Plant and Equipment - Property, plant and equipment are stated at cost. Management has elected to calculate depreciation using the accelerated cost recovery system (ACRS) and the modified accelerated cost recovery system (MACRS). These are not acceptable methods for financial statements under generally accepted accounting principles. Generally accepted accounting principles require depreciating cost over an asset's estimated useful life using an acceptable method. Due to the age of significant assets, the effect of this departure from generally accepted accounting principles on financial position, results of operations, and cash flows is not material. Expenditures for maintenance and repairs and minor renewals are charged to operations, whereas, betterments which significantly extend the useful lives of individual assets are capitalized. Depreciation expense for the years ended December 31, 1995 and 1994, was $19,249 and $24,123, respectively. Federal Income Tax - Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to effect taxable income. Income tax expense is the tax payable or refundable for the period plus or minus the change in deferred tax assets and liabilities. Cash and Cash Equivalents - Cash and cash equivalents include cash on hand and on deposit and highly liquid debt investments with maturities generally of three months or less. Note 2 - Related Party Transactions George R. Davis is the majority shareholder of the Company. Loans are made from the Company to Davis and from Davis to the Company as needs arise. During 1995 the Company purchased, from Davis, a building and land located in Borger, Texas for $82,500 and equipment at a cost of $19,500. The following net transactions and balances are included in the accompanying financial statements: 1995 1994 ----------- ----------- Loans to shareholder $ -0- $ 127,500 Retirement of shareholder debt 31,659 -0- Accounts receivable - shareholder 134,076 N/A F-7 GULF COAST COOLING TOWER SERVICE, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 3 - Notes Receivable Notes receivable at December 31, 1995 consisted of the following:
Balance Due in One 12-31-95 Year ---------- ---------- Tri State Construction, Unsecured, interest at prime plus 1%, due on demand. The Company does not expect to make demand in 1996. $ 76,010 $ -0- Brett and Dana Newton, Secured by real estate, due in monthly installments of $587.37 including interest at 9% through December 15, 2019. 69,258 861 Clyde Davis, Real estate contract for deed, due in monthly installments of $430.04 including interest at 8% through September 1, 2008. 41,168 1,937 Environmental Plus, Inc., Unsecured, interest at 10.5%, due December 28, 1996. 50,000 50,000 Paul W. Lucas, Secured by real estate, final installment due January 2, 1996. 27 27 James R. Black, Secured by real estate, due in monthly installments of $409.18 including interest at 11% through July 15, 2000. 17,975 3,099 ---------- ---------- Total $ 254,438 $ 55,924 ========== ==========
In the opinion of management, no impaired notes receivable existed at December 31, 1995. Note 4 - Notes Payable The Company is obligated on notes payable as of December 31, 1995, in the amounts and under terms as follows; Balance Current Creditor/Description 12-31-95 Maturity - -------------------- -------- -------- First State Bank, Overton, Texas Secured by deed of trust, interest due quarterly at TCB prime plus 3/4%, due August 16, 1996. $ 120,000 $ 120,000 --------- --------- F-8 GULF COAST COOLING TOWER SERVICE, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 Note 5 - Provision for Income Taxes The provision for income tax expense (benefit) for the years ended December 31, 1995 and 1994 consists of the following components:
1995 1994 ------------ ------------ Current $ (4,809) $ -0- Deferred income tax (benefit) (643) 2,361 ------------ ------------ Provision for Income Taxes $ (5,452) $ 2,361 ============ ============ Income Tax Reconciliation: Federal income tax on current operations at current rates $ (5,546) $ 2,307 Effect of temporary differences 643 (2,250) Effect of permanent differences 94 54 General business credits utilized -0- (111) ------------ ------------ Current income tax (benefit) $ (4,809) $ -0- ============ ============ The net deferred tax assets (liabilities) in the accompanying balance sheet include the following components: 1995 1994 ------------ ------------ Deferred tax assets arising from: Net operating loss $ 4,809 $ -0- General business tax credits 9,727 9,727 Deferred tax liabilities arising from: Depreciation (IRC Section 179) (1,607) (2,250) ------------ ------------ Net deferred tax asset $ 12,929 $ 7,477 =========== ============ The Company has a tax net operating loss of $32,058 available for carryforward to offset future taxable income through 2010. In addition, the Company has unused general business tax credits available for carryforward to offset future tax liabilities which will expire as follows: 1996 - $222, 1998 - $568, 1999 - $3,515, 2000 - $72, 2001 - $5,350. Note 6 - Litigation During 1995, the Company settled litigation relating to a dispute over prior year worker's compensation insurance premiums. The claim was settled upon the Company's payment of $30,000. This amount is presented in the income statement under other income and expense. Note 7 - Leasing Activities The Company is currently under contract to lease equipment to a customer for monthly rentals of $3,000 for a period of thirty-six months beginning October 1, 1994. Due to terms of cancellation and purchase provisions, this lease is accounted for as an operating type lease and income is recognized as monthly rentals are billed. The equipment is fully depreciated and has an original cost of $105,000. F-9 Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation Pro Forma Financial Statements May 31, 1996 Gregory Wayne Ginn, P.C. Certified Public Accountants Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation To the Board of Directors: We have compiled the accompanying pro forma condensed balance sheet of Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation as of May 31, 1996 and the related pro forma statement of operations for the nine months ended May 31, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of management. We have not audited or reviewed the accompanying financial statements, and accordingly, do not express an opinion or any other form of assurance to them. The pro forma information is presented for informational purposes only and is not necessarily indicative of the operating results that would have occurred had the described acquisition been consummated as of the report dates, nor are they necessarily indicative of future operating results. May 31, 1996 F-10 Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation Pro Forma Condensed Balance Sheet May 31, 1996
ASSETS Pro Forma Historical Adjustment Pro Forma ------------ ------------ May 31, 1996 (Note 1) May 31, 1996 ------------ ----------- ------------ Current assets $ - $ 325,000 $ 325,080 Property and equipment, net of accumulated depreciation - 248,670 248,670 Other assets - 250 250 ------------ ----------- ------------ $ - $ 574,000 $ 574,000 ============ =========== ============ LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current Liabilities $ 6,835 $ - $ 6,835 Stockholder's equity (deficit): (6,835) 574,000 567,165 ------------ ----------- ------------ $ - $ 574,000 $ 574,000 ============ =========== ============
F-11 Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation Pro Forma Condensed Statement of Operations Nine Months Ended May 31, 1996
Historical Pro Forma Pro Forma ------------ ------------ Nine months ended Adjustment Nine months ended May 31, 1996 (Note 1) May 31, 1996 ------------ ----------- ------------ Sales $ - $ 253,191 $ 253,191 Cost of sales - 194,847 194,847 ------------ ----------- ------------ Gross profit - 58,344 58,344 Operating expenses 4,000 98,225 102,225 ------------ ----------- ------------ Income (loss) from continuing operation (4,000) (39,881) (43,881) Other income 4,603 14,910 19,513 ------------ ----------- ------------ Income (loss) before federal income tax 603 (24,971) (24,368) Provision for federal income taxes - - - Net income (loss) $ 603 $ (24,971) $ (24,368) ============ =========== ============ Income (loss) per share $ - $ - $ - ============ =========== ============ Weighted average common shares outstanding (Note 2) ########### 574,000 ########### ============ =========== ============
F-12 Environmental Plus, Inc. p/k/a Kinlaw Energy Partners Corporation Notes to Pro Forma Financial Statements May 31, 1996 Note 1 - ------ These financial statements are intended to present the pro forma results of the acquisition of certain operating assets of Gulf Coast Cooling Tower Service, Inc. by Environmental Plus, Inc. The pro forma information combines the assets, liabilities, equity and results of continuing operations of the Corporation and the company whose assets were acquired as if the acquisition had occurred at the beginning of the nine month period ended May 31, 1996. This pro forma summary does not necessarily reflect the results of operations as they would have been if the Corporation and the named company constituted a single entity during such period and is not necessarily indicative of results which may be obtained in the future. Note 2 - ------ The preferred stock issue resulting from the asset acquisition includes a convertible feature which allows the holder, at his option, to convert each preferred share into one share of common stock. Therefore these preferred shares have been included in determining all pro forma per share results. F-13 EX-2 2 Exhibit 2.1 ENVIRONMENTAL PLUS, INCORPORATED (Formerly known as Kinlaw Energy Partners Corporation) PURCHASE OF ASSETS OF GULF COAST COOLING TOWER SERVICE, INC. __________________________________________ JUNE 15, 1996 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made and entered into effective the 15th day of June, 1996, by and between ENVIRONMENTAL PLUS, INCORPORATED (Formerly Known as Kinlaw Energy Partners Corporation, a public Texas corporation ("Purchaser"), and GULF COAST COOLING TOWER SERVICE, INC., a Texas corporation (" Seller"'); WITNESSETH: WHEREAS, subject to the terms and conditions contained in this Agreement, Seller desires to sell, and Purchaser desires to purchase, certain assets specified herein; WHEREAS, the parties wish to make certain agreements related to such purchase and sale and certain other agreements; NOW THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereto, intending to be legally bound, hereby agree as follows: Section I. Purchase and Sale of Assets 1.1 Purchase and Sale. Subject to the terms and conditions contained herein, Seller hereby sells, assigns, transfers, conveys, and delivers to Purchaser, and Purchaser hereby purchases from Seller, all of Seller's right, title, and interest in and to the following of Seller's assets (all of such assets being referred to herein collectively as the "Assets"): 1.2 Assets. Without limiting the generality of Section 1.1 hereof, the Assets include the following: (a) All of Seller's equipment, furniture, fixtures, computer software, shop inventory, and leasehold improvements, including but not limited to those listed on Exhibit "A" hereto; (b) All technical data, customer lists and records, customer credit information, computer printouts, correspondence, documentation relating to Seller's business; and copies of all accounting records, inventory records, and all other files and records of Seller's business; (c) All of Seller's good-will, including the right to use the current name and telephone number of "GULF COAST COOLING TOWER" (Seller agrees to execute any documents required to transfer said name and telephone number to Purchaser); and (d) All of Seller's rights under the "Assumed Contracts" (as herein defined). Section 2. Assumption of Liabilities 2.1 Limit on Assumed Obligations. Except as expressly provided in Section 2.2, no obligation or liability of Seller or relating to Seller's business or the Assets, of any nature whatsoever (whether express or implied, fixed or contingent, liquidated or unliquidated, known or unknown, accrued, due or to become due), is being assumed by Purchaser, nor shall Purchaser be liable to pay, perform or discharge any such obligation or liability, nor shall the Assets be subject to any such obligation or liability. Without limiting the generality of the foregoing, except as expressly provided in Section 2.2, Purchaser has not assumed or become liable to pay, perform or discharge, and Seller warrants that no Asset is subject to: (a) Any mortgage, security interest, lien or encumbrance of any kind, other than as expressly assumed pursuant to Section 2.2; (b) Any obligation or liability arising from the relationship between Seller and any of its employees or based upon termination of such employees by Seller, including, without limitation, any severance or vacation pay obligation of Seller existing at the "Effective Time" (as herein defined) or arising by reason of the termination of Seller's employees by Seller; (c) Any obligation or liability of Seller for or relating to taxes of any nature or description, whenever incurred or accrued, including, without limitation, any tax liability for any period prior to the Effective Time; (d) Any obligation, liability or expense arising out of any claim made or suit brought for personal injury, death, property damage, tortious injury or damage, breach of fiduciary duty or trust, or errors or omissions, in any case attributable to a cause of action arising prior to the Effective Time; (e) Any obligation or liability arising from a violation or alleged violation of law, rule or regulation prior to the Effective Time, including, without limitation, any claim, obligation, liability, loss, damage or expense, of whatever kind or nature, contingent or otherwise, known or unknown, incurred or imposed or based upon any provision of federal, state or local law or regulations or common law applicable to Seller's business, and arising out of any act or omission of Seller, or Seller's employees, agents or representatives occurring prior to the Effective Time; (f) Any obligation or liability to any shareholder of Seller, however arising; (g) Any obligation or liability relating to any act or omission of Seller under, or breach by Seller of, any Assumed Contract prior to the Effective Time; (h) Any liability arising from the assignment to Purchaser of any Assumed Contract without having obtained any required consent to such assignment; or (i) Any liability or obligation arising in connection with any litigation, claim or proceeding to which Seller is or becomes a party. 2.2 Assumed Obligations. Purchaser hereby assumes the following, and only the following, liabilities and obligations of Seller (the "Assumed Obligations"): (a) Seller's obligations arising after, and properly accruable to periods subsequent to, the Effective Time under the terms of those contracts, agreements and leases listed on Exhibit "B" hereto (the "Assumed Contracts"), to the extent, and only to the extent, such obligations and liabilities are set forth in the copies of the Assumed Contracts delivered to Purchaser; and (b) The liabilities, if any, listed on Exhibit "C" hereto. Section 3. Purchase Price. The purchase price (the "Purchase Price") for the Assets shall be Five Hundred Seventy-Four Thousand (574,000) shares of Purchaser's Series A Convertible Preferred Stock ($1.00 par value) ("Preferred Stock"), and shall be paid at the time of Closing. Purchaser shall make an allocation (the "Allocation") of the Purchase Price among the Assets within a reasonable period alter the Closing Date and promptly notify Seller in writing thereof Purchaser and Seller shall use the Allocation in filing Form 8594 with the Internal Revenue Service, as required by Section 1060 of the Internal Revenue Code of 1986, as amended, and in filing all relevant federal and state income tax returns. Seller agrees to cooperate with Purchaser to the extent necessary to comply with any documentation or other requirements that may arise in conjunction with filing Form 8594. Each share of Preferred Stock will, at the option of Seller be convertible into one share of Purchaser's common stock. Purchaser may, upon written thirty (30) day notice delivered to Seller prior to the time of conversion of such Stock into Purchaser's common stock, repurchase such preferred Stock for cash equal to 200% of the par value of such preferred stock. Seller may convert the Preferred Stock into shares of common stock of Purchaser at any time alter the date of issue. In the event Purchaser delivers written notice to Seller of it's intent to repurchase the Preferred Stock, Seller will have twenty (20) days to deliver written notice of it's desire to convert the Preferred Stock into Purchaser's common stock. Section 4. Closing. The closing (the "Closing") of the transactions contemplated hereby will occur simultaneously with the completion and delivery thereof to Joel Held, Esquire, in Dallas, Texas audited financial statements (in a form acceptable for S.E.C. purposes) of the Assets being purchased hereunder. June 15, 1996 is herein sometimes referred to as the "Effective Time." Section 5. Representation and Warranties of Seller. Seller hereby represents, warrants, covenants, and agrees to and with Purchaser as follows: 5.1 Due Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas. Seller has the corporate power and authority to own the Assets, to conduct its business as it is now being conducted, and to enter into and perform its obligations under this Agreement and all other documents, instruments and agreements delivered by Seller pursuant hereto (collectively, with this Agreement, the "Seller Agreements"). 5.2 Approval and Effect of Sale. The execution and delivery of the Seller Agreements by Seller, the sale and delivery of the Assets, and the performance by Seller of all obligations under the Seller Agreements have been duly authorized by all necessary corporate action on the part of Seller. The Seller Agreements have been duly executed and delivered by Seller, and the Seller Agreements constitute valid and legally binding obligations of Seller, enforceable against Seller in accordance with their respective terms (subject to limitations on enforceability under normal equity principles and by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the rights of creditors generally), and the consummation of the transactions contemplated herein and therein will not violate or result in a default under the terms or provisions of Seller's charter or bylaws. No consent or approval of any governmental authority is required in connection with the execution and delivery by Seller of the Seller Agreements or the consummation of the transactions provided for herein and therein. 5.3 Title to Assets. Seller has, and has conveyed to Purchaser pursuant hereto, good title to all of the Assets, free and clear of any pledge, lien, security interest, encumbrance or restriction whatsoever. 5.4 Contracts. A true, correct, and complete copy of each of the Assumed Contracts is included in the business records located at Seller's business. Seller has duly performed in all material respects all obligations to be performed by it under the Assumed Contracts at or prior to the Effective Time and has received no notice from any other party thereto that it is in default in any material respect under any of its obligations thereunder. To the best knowledge of Seller, no other party to any Assumed Contract is in default in any material respect under any of its obligations thereunder. No condition or state of facts exists that with notice or the passage of time, or both, would constitute a default by Seller under any Assumed Contract, and each Assumed Contract is in full force and effect and enforceable by Seller (and, after assignment to Purchaser at the Effective Time, by Purchaser) against all other parties thereto in all material respects. 5.5 Litigation: Claims. There is no ligation, action, suit, proceeding or governmental investigation arising out of the operations of Seller that is pending or, to the best of Seller's knowledge, threatened, against Seller or affecting Seller or Seller's business or any of the Assets, at law or in equity, or before any federal, state, municipal, local, or other governmental authority, nor does Seller know or have reason to know of any ground for any such litigation, action, suit, proceeding, or investigation. Seller is not subject to any order, writ, or decree of any court or other governmental authority arising out of Seller's business and Seller is not involved in any material controversy with any of its employees. 5.6 Compliance with Law. Seller is in compliance in all material respects, and has complied in every material respect, with all laws, regulations, rules, and decrees of all governmental authorities whatsoever that are applicable to the conduct of its business. 5.7 Finder's Fee. Seller has done nothing to cause Purchaser to incur any liability to any party for any brokerage or finder's fee or agent's commission, or the like, in connection with this Agreement or any transactions provided for herein. 5.8 Taxes. All tax returns of Seller of every kind, including, without limitation, returns of all income taxes, real and personal property taxes, intangibles taxes, withholding taxes, employee compensation taxes and all other applicable taxes, due to have been filed prior to the Effective Time have been duly filed in accordance with applicable law. No deficiencies for any taxes have been asserted or, to the knowledge of Seller, threatened, and no audit of such returns is currently underway or, to the knowledge of Seller, threatened. There are no outstanding agreements by Seller for the extension of time for the assessment of any tax. 5.9 Material Misstatements or Omissions. No representation or warranty made by Seller in any Seller Agreement, and no written statement or exhibit that has been furnished to Purchaser pursuant hereto or thereto, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained herein or therein not misleading. Section 6. Further Assurances. Each of the parties shall promptly and duly execute, acknowledge and deliver such assignments, documents, instruments and other assurances, and shall take such other actions, as may be from time to time reasonably necessary or desirable to carry out more effectively the provisions of this Agreement and to establish and protect the rights created or intended to be created in favor of the parties hereunder. Section 7. Survival of Representations. All representations, warranties and covenants of Seller contained in this Agreement shall survive the Closing Date and shall be fully applicable and effective whether or not Purchaser relies in fact thereon or has knowledge, acquired either before or after the date hereof and whether from Seller or from its own investigation, of any fact at variance with, or of any breach of, any such representation, warranty or covenant. Section 8. Indemnification. 8.1 Indemnification by Seller. Seller shall defend, indemnify, and hold Purchaser wholly harmless from and against any and all liability, loss, cost and expense whatsoever (including reasonable fees of legal counsel and related disbursements, whether such fees and disbursements are incurred in connection with trial or appellate proceedings or otherwise) that may be incurred by Purchaser as a result of, or arising out of, or attributable to, or based upon: (a) Seller's failure to perform any of its agreements contained in any Seller Agreement or Seller's failure to pay any of its liabilities or to perform any of its obligations other than the Assumed Obligations; (b) Noncompliance with the Bulk Sales Article of the Uniform Commercial Code of any applicable jurisdiction; (c) Any breach of any representation, warranty, covenant or agreement of Seller set forth herein; (d) Any claim, obligation, liability, loss, damage or expense, of whatever kind or nature, contingent or otherwise, known or unknown, incurred or imposed or based upon any provision of federal, state or local law or regulations or common law, applicable to Seller's business or any similar business and arising out of any act or omission of Seller, its employees, agents or representatives occurring prior to the Closing Date; or (e) Any liability arising from the assignment to Purchaser of any Assumed Contract without having obtained any required consent to such assignment. 8.2 Manner of Payment of Finally Determined Claims. The amount of any liability, loss, cost, or expense for which Seller shall be finally determined, pursuant to the provisions of Section 8.3 hereof, to have an obligation to indemnify Purchaser pursuant to this Section 8, shall be paid to Purchaser in immediately available funds no later than ten (10) days after such final determination. 8.3 Procedure for Obtaining Indemnification. (a) In the event that Purchaser shall claim that it is entitled to be indemnified pursuant to the terms of this Section 8, it shall so notify Seller in writing of such claim. Such notice shall specify the breach of representation, warranty or agreement claimed by Purchaser and the liability, loss, cost or expense incurred by, or imposed upon, Purchaser on account thereof if such liability, loss, cost or expense is liquidated in amount, the notice shall so state and such amount shall be deemed the amount of the claim of Purchaser. If the amount is not liquidated, the notice shall so state and, in such event, a claim shall be deemed asserted against Seller on behalf of Purchaser, but no payment shall be made on account thereof until the amount of such claim is liquidated and the claim is finally determined. (b) If Seller shall not, within twenty (20) days alter the receipt of such notice, advise Purchaser, in writing, that it denies the right of Purchaser to indemnity in respect to a claim, then the amount of such claim, at once if said claim is liquidated, or subsequently at such time as any unliquidated claim has become liquidated, shall be deemed to be finally determined between the parties hereto. (c) If Seller shall notify Purchaser that it disputes any claim made by Purchaser, then the parties hereto shall endeavor to settle and compromise said claim, or may agree to submit the same to arbitration, and if unable to agree on any settlement or compromise or submission to arbitration, such claim for indemnification shall be settled by appropriate litigation, and any liability established by reason of such settlement, compromise, arbitration or litigation shall be deemed to be finally determined and shall be paid and satisfied in accordance with this Section 8. (d) Purchaser shall promptly give written notice to Seller of any claim of a third party that may reasonably be expected to result in a claim for indemnification hereunder. Seller may elect to settle the claim, and such settled claim shall be deemed to be finally determined and shall be paid and satisfied in accordance with this Section 8. If Seller does not settle the claim, Seller shall then defend such claim at its expense with counsel selected by Seller and reasonably satisfactory to Purchaser. Counsel for Seller and Purchaser shall consult and cooperate at all times in defending against such a claim, but if the proceeding involves claims against Purchaser in addition to the claim for which indemnification under this Section 8 is being sought, the defense of those claims shall be within the sole discretion of Purchaser and its counsel. Section 9. Miscellaneous. 9.1 Notices. All notices or other communications required or permitted to be given hereunder shall be, as elected by the person giving such notice, personally delivered or transmitted by postage prepaid certified mail, to the parties as follows: (i) If to Purchaser: J. D. Davenport, President P.O.Box 795517 Dallas, Texas 75379-5517 with a copy to: Joel Held Hill, Held & Metgzer L.L.P. One Turtle Creek Village 3878 Oak Lawn - Fourth Floor Dallas, Texas 75219 (ii) If to Seller: George Davis, President Gulf Coast Cooling Tower Service, Inc. Rt. I, Box 41 Overton, Texas 75284 Except as otherwise specified herein, all notices and other communications shall be deemed to have been duly given on (i) the date of receipt if delivered personally, or (ii) five (5) days after posting if transmitted by mail. Any party hereto may change its address for purposes hereof by notice to all other parties hereto. 9.2 Publicity. Except as required by law, Seller will not make any announcement of the transactions provided for herein except in a manner acceptable to Purchaser. 9.3 Expenses. Each party shall pay all fees for legal and accounting services incurred by such party in connection with the transactions provided for in this Agreement. 9.4 Binding Effect. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the successors, legal representatives, and assigns of the parties hereto. 9.5 No Third Party Beneficiaries. Nothing in this Agreement, whether expressed or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any persons other than the parties to it and their respective successors and assigns. Nothing herein is intended to relieve or discharge the obligation or liability of any third person to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action over or against any party to this Agreement. 9.6 Construction. This Agreement shall be deemed to be made in Texas and shall in all respects be interpreted, construed, and governed by and in accordance with the laws of the State of Texas. No provision of any Seller Agreement shall be construed against or interpreted to the disadvantage of any party hereto or thereto by any court or other governmental or judicial authority by reason of such party's or its counsel's having or being deemed to have structured or drafted such provision. 9.7 Headings. The headings and subheadings hereof are inserted for convenience of reference only and shall not affect the interpretation of this Agreement. 9.8 Amendment. This Agreement may be amended only in a writing signed by all of the parties hereto. 9.9 Entire Agreement. This Agreement (together with the Disclosure Schedule and the Seller Agreements, all of which are hereby incorporated herein by reference) merge all prior negotiations between the parties and collectively embody the entire agreement of the parties with respect to the subject matter hereof 9.10 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute and be the same instrument. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement under seal on this 15th day of June, 1996. ENVIRONMENTAL PLUS, INCORPORATED By: J. D. Davenport, President GULF COAST COOLING TOWER SERVICE, INC. By: George Davis, President EXHIBIT "A" TRANSFERRED ASSET VALUE ----- ----------- N/R - TRI STATE CONST. $ 76,000 N/R - LEWIS INDUSTRIES 201,369 INVENTORY 47,711 BLDG & LAND-BORGER 75,000 BLDG & LAND-LA MARQUE 30,000 22'GOOSENECK JOB TRAILER 7,425 TRI TAN 4,200 CFM AIR COMPRESSOR 1,500 125 CFM AIR COMPRESSOR 1,800 15 TON LORAIN CRANE 1,200 SIMON MANLIFT 15,000 SKY WITCH SCISSOR LIFT 7,500 CLARK LIFT TRUCK 6000# 6,000 CLARK LIFT TRUCK 6000# 6,000 TOYOTA FORK TRUCK 9000# 4,200 CHEVROLET 3/4 TON-DIESEL 18,000 KUBOTA TRACTOR 2,100 HYDRO BLASTER 10-20 NLB 9,000 CAT MOTOR GRADER 3,000 INDUMA MILLING MACHINE 1,740 BAND SAW 14" 450 BAND RESAW 36" 6,000 I8' UTILITY TRLR 10,000# 1,080 MACK DUMP TRUCK 7,000 MACK WINCH TRUCK 8,000 CASE 580D BACKHOE 12,000 TRAILER 20,000# 1,800 JOHN DEER 450 DOZER 6,000 FIAT ALLIS 21B DOZER 6,000 1991 BUICK LeSABRE 7,200 1993 FORD F-150 7,200 1993 FORD RANGER 2,700 CESSNA 182 15,000 ------ TOTAL $599,185 EXHIBIT "B" All uncompleted work and/or service contracts, if any, between Seller and customers of Seller (work in process). All information and records regarding same, if any, will be delivered to Purchaser on the effective date. End of Exhibit "B" EXHIBIT "C" NONE. -----END PRIVACY-ENHANCED MESSAGE-----