Lest we not forget DYNATEC INTERNATIONAL INC, Touchstone Transport Services, Inc ( A titan motorcycle franchise and one time over 5% holder of Ziasun stock) and Katori Consultants, Ltd. ( a holder of Ziasun stock, LCAI stock as well tenkwizard.com
Form: SB-2/A Filing Date: 7/2/99 Filing Index
A few blurbs;
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
II-1<PAGE>
with the transfer. Subsequently, the wire transfer was recorded as a payable.
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.
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(*) Estimated.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
=========================
(3) STOCKHOLDERS' EQUITY-(CONTINUED)
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 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. (See
Part II - Other Information; Item 1. "Legal Proceedings").
=======================================
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 consolidated
balance sheet, was cancelled and the Company issued 500,000 shares of restricted
common stock under Regulation D to the depositor.
On February 22, 1999, the Company received a demand letter from counsel
for Mag Instrument, Inc., a manufacturer and distributor of flashlights and one
of the Company's competitors ("Mag"). In the letter, Mag accuses the Company of
infringing certain of Mag's patents and committing false advertising and unfair
competition. Attached to the demand letter was a copy of a complaint filed in
the U.S. District Court for the Central District of California on February 19,
1999. The complaint alleges that the Company has infringed three patents owned
by Mag, and seeks (i) an order enjoining the Company from infringing Mag's
patents, (ii) the delivery to the Court of all flashlights which infringe Mag's
patents, (iii) that the Company identify all entities who have purchased,
distributed or sold any infringing products, (iv) that the Company deliver to
the Court all documents reflecting or relating to the purchase, sale or
distribution of any flashlights which infringe Mag's patents, (v) money damages
sustained by Mag by reason of the alleged patent infringement, including
interest, costs, and attorney's fees. The demand letter specified that the
complaint was filed as a "precaution," and that Mag will refrain from serving
the complaint on the Company pending the receipt of certain assurances from the
Company. The Company has engaged patent litigation counsel and commenced its
preliminary assessment of the claims asserted in the complaint.
(17) CONTINGENCIES
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 December 31, 1998, the Company had received no response from
the Enforcement Division about whether the SEC plans to name the Company in any
administrative action.
============================================
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 certain of its officers and directors 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 the Company eventually 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
new corporate governance policies have been adopted or old policies changed. In
connection with the ongoing investigation, several of the Company's directors
engaged independent legal counsel. An aggregate of $230,000 of such legal fees
were reimbursed by the Company pursuant to action by the Company's Board of
Directors at the commencement of the investigation.
==========================
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 April 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.
freeedgar.com
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Possible Adverse Effect of Pending Litigation and Administrative Proceedings
The Company is presently engaged in litigation outside the ordinary
course of its business, the effect of which on its business condition or results
of operations could be materially adverse. See "Legal Proceedings." 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. |
