continuing........
......." (a) C.E.A. LINES, INC.
On November 7, 1994, the Company entered into an agreement,
which was
amended on January 1, 1995, with Central European Subholding
Inc. to
purchase 50.1% of the common stock in C.E.A. Lines, Inc.
("CEA"). In
connection with this transaction 3,000,000 shares of common
stock
(prior to the 1 for 10 reverse split - see Note 6) were
issued. CEA
became a majority owned subsidiary of the Company. CEA's
principal
asset was an ocean shipping vessel and its main activity was
providing freight services. CEA was organized under the laws
of the
Turks & Caicos Islands, British West Indies.
On September 20, 1995, the Company entered into another
agreement
with Central European Subholding, Inc. for the purchase of
the
remaining 49.9% of the stock of CEA. Under the terms of this
agreement the Company received 100% of the stock of CEA
Traders, a
wholly owned subsidiary of CEA. In connection with this
transaction
400,000 shares of common stock were issued.
The shares were valued by the Company at $2,000,000. The
purchase
price was allocated to property, plant and equipment
($1,454,269) and
minority interest ($545,731).
The CEA acquisition was a related party transaction. Current
management has been unable to determine whether the
acquisition was
made at "arms length" and therefore whether amounts recorded
in the
financial statements properly reflect the fair values of the
assets
acquired.
On January 8, 1996 the Company's chief executive officer
resigned.
Since his resignation the Company has had several chief
executive
officer's. Current management joined the Company on July 15,
1996.
Current management has had communications with the officer
that
resigned to compel him to return the following to the
Company: (1)
the assets of CEA (including the ocean shipping vessel), (ii)
the
books and records of CEA, and (iii) the books and records of
the
Company from inception through December 31, 1995. To date,
current
management has been unable to reach an agreement with the
former
chief executive for the return of the above. Management is
currently
investigating its legal options, but believes that it may not
be
practicable or economically reasonable to further pursue this
matter.
________________________________________________
........"Pending the conclusion of its investigation, management has
instructed the Company's transfer agent to stop the transfer
of the
400,000 common shares issued in the second CEA transaction.
Additionally, since the Company is unable to secure the
assets of
CEA, management has determined that the Company's investment
in CEA
which amounted to $3,354,068 should be and was written off as
of June
30, 1996................."
RB |
