Little Engine (and ALL), Here's what I've found out in reference to the Preferred Shares and Dingaan Holdings...
Originally, Teletek (a Las Vegas company) was a significant shareholder in the Company.
The Company issued Preferred Shares to Teletek in June 1994 "in consideration for cash advances and the settlement of certain litigation involving the Company."
In 1996, former officers/directors of the Company got into trouble. So, by August 1996, David Westfere had become CEO and had the task of cleaning things up.
At that time, Teletek was still the holder of the Preferred shares.
On August 27, 1996, Dingaan Holdings made a loan to Teletek of $2 million. Later that year, for whatever reason, Dingaan agreed to accept the DDEQ Preferred Shares, including unpaid dividends, as payment in full for Teletek's indebtedness to Dingaan. The assignment was to close on December 1, 1996, and was approved by DDEQ in March, 1997. Prior to this time, Dingaan did not beneficially own any equity interest in the Company.
The Preferred Shares required the Company to pay a 6% annual dividend but the Preferred Holders never made any demand for payment and no payment was made until 1997, when the Company DID pay back dividends for 1994 and 1995 of $113,760. However, no demands for payment have been made by Dingaan since then either and NO FURTHER dividends are accruing since the Class A Preferreds were converted to Class B Preferred Shares, however, the $194,023 of previous unpaid dividends remains payable as it shows in the 10Q.
The Class B Preferred Shares are NON-Voting shares, but would be voting shares if they were converted to common.
Paragraph 4.7 of the Agreement between Teletek and Dingaan says...
"INVESTMENT INTENT
Purchaser is acquiring the Shares for its own account for investment and not with a view to the resale or distribution thereof, and Purchaser understands the nature and effect of this representation. {Purchaser has been informed by Seller that the Shares have not been registered under the Securities Act of 1933 or the securities laws of any state, and may not be offered, sold or transferred in the absence of such registration or an exemption from such registration}."
As of the 10Q filed 5-17-99, I have found no recorded evidence of demands for payment, nor any record of direct involvement in the business by Dingaan Holdings. However, the 10K's also state the obvious that conversion by Dingaan Holdings could cause a change in control of the Company. But, according to what I have found, the shares would have to be converted and registered before they could be sold.
All of this information can be found in SEC filings. |
