Coachman, Touchstone Transportation Services and Oxford International Management have something in common. I have stepped up my investigation a notch and have a bevy of information. To refresh your memory Touchstone help over 5% ownership of ziasun stock and also was a Titan Motorcycle Franchise that showed up on ziasuns searchdragon. Dynatec named
Katori Consultants, Ltd. as a third party defendant Please look at this address that I found and some blurbs.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Its the same address as Oxford International Management, its at the bottom of the Cragun letter fortunecity.com
Touchstone Transport Services 457,660 12.2%
5% Beneficial Owner
c/o Oxford International Management, Inc.
Suite 1402, 14th Floor
PDCP Bank Centre, 8737 Paseo De Roxas
Cor. Makati Avenue, Makati City
Philippines
tenkwizard.com.
The following table sets forth, as of December 8, 1999, the number of
shares of Common Stock of the Company beneficially owned by all persons known to
be holders of more than five percent of the Company's Common Stock and by the
executive officers and directors of the Company individually and as a group.
Unless indicated otherwise, the address of the shareholder is the Company's
principal executive offices, 3820 West Great Lakes Drive, Salt Lake City, Utah
84120.
Name, Title, and Address of Common Stock Percent of Class as of
Beneficial Owner Beneficially Owned September 30, 1999
---------------- ------------------ ------------------
Touchstone Transport Services 457,660 12.2%
5% Beneficial Owner
c/o Oxford International Management, Inc.
Suite 1402, 14th Floor
PDCP Bank Centre, 8737 Paseo De Roxas
Cor. Makati Avenue, Makati City
Philippines
==================================================
On April 27, 1998, the Enforcement Division of the Securities and
Exchange Commission notified the Company that the SEC was anticipating filing an
administrative proceeding in the later part of calendar year 1998 against
various individuals and entities who had engaged in transactions with a Canadian
corporation. The SEC Enforcement Division further indicated that the Company may
be named as a defendant in such administrative action. In July 1998, the Company
submitted a Wells Submission to clarify why, in the Company's estimation, it
should not be named in the administrative proceeding, if any. The Company
suggested in the Wells Submission that it should not be named in any
administrative proceeding because the Company never consummated either of the
two transactions with the subject Canadian company that the Company was
considering, and the Company received no consideration in connection with those
aborted transactions. Moreover, the Company believes that its conduct in
connection with those proposed but aborted transactions met applicable legal
requirements. As of September 30, 1999, the Company had received no response
from the Enforcement Division about whether the SEC plans to name the Company in
any administrative action.
In addition, the Company has previously disclosed that it has been
informed of an investigation by the Enforcement Division of the Securities and
Exchange Commission. The Company believes this investigation concerns certain
trading activity in the Company's common stock and other transactions involving
the Company's securities, however, the Company has not been informed of the
specifics of such investigation. The Company is cooperating fully with these
administrative proceedings. Any finding or order of the Commission adverse to
the Company or any judgment against the Company in any of the pending litigation
matters, would have an adverse effect on the business, financial condition or
results of operations of the Company, or the market for its common stock.
=================================================
In July 1998, the Company's Board of Directors commenced an internal
investigation into the facts and circumstances of a number of transactions
between the Company and its former Chairman and Chief Executive Officer as well
as several general corporate and management concerns brought to the attention of
the Company's independent directors. The Company engaged an unrelated third
party to conduct the investigation, which terminated in January 1999.
Thereafter, the Company's former Chairman and CEO resigned and retired from the
Company. The Company does not anticipate taking further action, legal or
otherwise, with respect to the matters and individuals investigated, although
the Company, through its new management, has identified several areas in which
=====================================================
(10) STOCKHOLDERS' EQUITY
On March 11, 1997, the Company's Board of Directors approved Regulation
S offerings of its common stock to raise three to five million dollars in
working capital. The stock was offered to non U.S. persons at a price of
approximately 50% of the then-prevailing market value, which was $3.88 on March
11, 1997. As a result, 881,836 shares of restricted common stock was issued.
======================================================
As of December 31, 1998, $1,000,000, which is included in deposit for
stock issuance in the accompanying balance sheet, was received as a deposit. On
February 4, 1999, the Company entered into a deposit payable conversion
agreement, whereby a $1,000,000 deposit received by the Company in early 1998
and is recorded as a liability in the accompanying balance sheet, was cancelled
and the Company issued 500,000 shares of restricted common stock under
Regulation D to the depositor.
The Company is a party to pending litigation with a Canadian brokerage
firm captioned as Canaccord Capital Corporation ("Canaccord") vs. Dynatec
International, Inc., Civil No. 2:98-cv-420C, and filed in the United States
District Court for the District of Utah. Canaccord initially sued seeking
injunctive relief and money damages stemming from the Company's allegedly
wrongful cancellation of 125,000 shares of the Company's common stock in January
1998. Canaccord claimed that it suffered damage from a market shortage and
deficiency to various accounts which had previously been sold by Canaccord as a
result of the allegedly wrongful cancellation of shares. On July 17, 1998 the
District Court entered a preliminary injunction requiring the Company to reissue
125,000 shares in the name of CEDE & Company, as the market clearing house, to
replace the alleged market shortage. The court preserved Canaccord's remaining
claims for money damages and the return of an additional block of shares alleged
to have been wrongfully
====================================================
DYNATEC INTERNATIONAL, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) STOCKHOLDERS' EQUITY (Continued)
cancelled, which are still pending. The Company has named various third party
defendants to whom it believes the shares may have been improperly issued and is
seeking either recovery of the shares or the recovery of damages. At present,
the Company is engaged in negotiations with representatives of various of the
third parties and Canaccord, and believes that a resolution of the outstanding
claims, in whole or in part, will be reached
===================================================
DYNATEC INTERNATIONAL, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) STOCKHOLDERS' EQUITY (Continued)
cancelled, which are still pending. The Company has named various third party
defendants to whom it believes the shares may have been improperly issued and is
seeking either recovery of the shares or the recovery of damages. At present,
the Company is engaged in negotiations with representatives of various of the
third parties and Canaccord, and believes that a resolution of the outstanding
claims, in whole or in part, will be reached.
Related to the Canaccord litigation, a claim for an additional 125,000
shares of the stock of the Company had been made by Katori Consultants, Ltd., a
Philippines corporation. The answer and third party complaint of Dynatec named
Katori Consultants, Ltd. as a third party defendant so that such additional
claim could be addressed as part of the Canaccord legal action. On October 21,
1998, Katori Consultants, Ltd. gave written notice to Dynatec that it
relinquished any claim to additional shares of common stock of the Company.
In March 1998, the Company received $580,000 as a nonrefundable payment
under an agreement with a third party pursuant to which the third party acquired
nonexclusive rights to market certain of the Company's products internationally.
The cash paid to the Company was obtained from the sale of the Company's common
stock by such third party. The Company is therefore of the opinion that the
proceeds of such transaction were not attributable to the culmination of an
earnings process. Consequently, such proceeds have been accounted for as an
addition to capital in the accompanying consolidated financial statements.
============================================
Item 26. Recent Sales of Unregistered Securities.
Within the past three calendar years, the Registrant has issued
securities in transactions summarized below:
Restricted Stock
The Company entered a "Deposit Payable Conversion Agreement" dated
February 4, 1999 between the Company and Touchstone Transport Services, Inc., an
entity located in the Philippines. During the first quarter of 1998, in
connection with an ongoing offering of the Company's common stock to offshore
investors under Regulation S of the Securities Act of 1933, the Company received
a wire transfer in the amount of $1,000,000. However, no specific subscription
agreement or other contract was ever prepared or executed in connection with
this wire transfer, and the Company never issued any securities in conjunction
with the transfer. Subsequently, the wire transfer was recorded as a payable.
II-1
The Company had the use of the transferred funds for approximately ten months,
in exchange for which it neither issued any securities nor paid any principal or
interest in respect of the payable. In January 1999, the Company requested that
the depositor of the $1,000,000 wire transfer agree to convert the payable that
had been recorded into shares of the Company's restricted common stock. The
depositor agreed to convert the payable into 500,000 shares of the Company's
restricted common stock, which were issued to an entity affiliated with the
depositor. The Company issued such shares without registration under the
Securities Act of 1933 in reliance on Section 4(2) of the Securities Act, and
the rules and regulations promulgated under that section including Regulation D.
Such shares of common stock were issued as restricted securities and the
certificate representing such shares was stamped with a standard legend to
prevent any resale without registration under the Securities Act or pursuant to
an exemption.
==================================================
Stock Options to Related Parties
Muito Bem Options. In 1996, the Company granted options to Muito Bem,
an entity owned by Donald M. Wood, the Company's former Chairman and Chief
Executive Officer, to purchase 537,500 shares of common stock at an exercise
price of $2.00 per share. The shareholder and former executive officer of the
Company who owns Muito Bem agreed in 1999 to cancel all such stock options. The
Company issued all such options without registration under the 1933 Act in
reliance on Section 4(2) or Regulation D.
===============================================
DYNATEC INTERNATIONAL, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(12) RELATED PARTY TRANSACTIONS (Continued)
During 1997 the Board of Directors authorized grants of various options
under both non-qualified and incentive stock options plans. These options are
described in detail in Note 14. The non-qualified plans included 537,500 options
granted to Muito Bem Ltd., an entity controlled by a shareholder and former CEO
of the Company, at an exercise price of $2.50 per share. The shareholder and
former executive officer of the Company who owns Muito Bem agreed in 1999 to
cancel all stock options issued to Muito Bem. Additionally, in 1997, 200,000
options were granted to WAC, at an exercise price of $2.50 per share in
consideration for certain royalty reductions and abatements. |
