What do you believe the market value should be for this company?
Is the company currently trading at a premium to market value?
The following is part of the 8K filed by the company:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 29, 1998, AmeriResource Technologies, Inc. (the "Company")entered into an Agreement For the Exchange of Stock (the "Agreement") with First Americans Mortgage Corporation, a Missouri Corporation ("FAMC") and its shareholders. The Company issued a total of Seventy Million (70,000,000) shares
of its common stock $.0001 par value, in exchange for 100% of FAMC's issued and outstanding shares of common stock.
The FAMC shareholders included Delmar Janovec, the Company's president, Tomahawk Construction Company, a wholly owned subsidiary of the Company and Dustan Shepherd. On July 20, 1998, the Company delivered Twenty-Five Million (25,000,000) shares to Dustan Shepherd in exchange for Fourteen Thousand Seven Hundred (14,700)FAMC shares, One Million (1,000,000) shares to Tomahawk
Construction Company in exchange for Seventy (70) FAMC shares and Forty Four Million (44,000,000) shares to Delmar Janovec in exchange for Fifteen Thousand Two Hundred Thirty (15,230) FAMC shares. The Company did not rely on any specific principle in determining the amount of consideration paid for its 100% interest in FAMC.
The Company considered the potential earnings of FAMC, its current financial condition FAMC's ability to secure funding in order to process mortgages and many other factors regarding the Company's current capitalization in determining the consideration it paid for the FAMC shares. The Company's beliefs concerning FAMC's ability to obtain funding came to fruition subsequent to the signing of the Agreement when FAMC secured Ten Million ($10,00,000)
dollars in funding through a pilot program with the Chickasaw Nation, PMI Mortgage Insurance Co., Freddie Mac and FT Mortgage Companies. The Company also has reason to believe that FAMC is within 30 to 60 days of obtaining $20,000,000 in additional funding through two other tribes. The above factors are believed to be worth the market value of the Seventy Million (70,000,000) shares of the
Company's common stock as quoted on the NASDAQ Bulletin Board on June 29, 1998. On June 29, 1998, the Company's shares were trading at approximately $.02 per share while the Company's book value per share was $0. The Company's Board of Directors believes that the acquisition of FAMC is worth about $1,400,000 based upon its potential to generate revenues and supplement the Company's current construction services which target Native Americans.
The Company acquired FAMC in an effort to supplement its construction services. FAMC is a mortgage company specializing in providing financing for Native Americans to purchase new or existing housing and for rehabilitating housing projects. The Company's plans include building homes for Native
Americans through its construction subsidiaries and providing financing through FAMC. The Company's intentions are to provide all the necessary services to enable Native Americans to obtain affordable housing which will include both construction and financing. The Company anticipates that the acquisition of FAMC
may enable the Company to increase revenues, generate earnings and increase shareholder value.
The Company acquired effective control of FAMC at closing. The Company closed on the transaction on August 6, 1998, after the delivery and receipt of all the respective shares and documentation as required by the Agreement.
2
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
Financial Statement
The Company has provided the audited financial statement for the quarter ended June 30, 1998 for the First Americans Mortgage Corporation. The Company is currently evaluating whether further financial statements need to be disclosed depending on how the transaction should be treated; i.e., as a pooling of interest versus a purchase. The Company will file a supplementary financial
statement if necessary, within 60 days of this transaction.
FIRST AMERICANS MORTGAGE CORP.
Financial Statements
June 30, 1998 and 1997
TABLE OF CONTENTS
Independent Auditors' Report F-2
Financial Statements:
Balance Sheets F-3
June 30, 1998 and 1997
Statements of Accumulated Deficit F-5
Years ended June 30, 1998 and 1997
Statements of Operations F-6
Years ended June 30, 1998 and 1997
Statement of Cash Flows F-7
Years ended June 30, 1998 and 1997
Notes to the Financial Statements F-8
F-1
<PAGE>
Bateson & Wiederholt, P.C.
Certified Public Accountants
1900 Erie, Suite 140
North Kansas City, Missouri 64110
(816) 842-1177
FAX (816( 842-5577
JOHN B. BATESON, CPA RANDALL J. WIEDERHOLT, CPA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
First Americans Mortgage Corp.
Lenexa, Kansas
We have audited the accompanying balance sheet of First Americans
Mortgage Corp. as of June 30, 1998 and 1997 and the related statements of accumulated deficit, operations and cash flows for the 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 audit 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 included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides 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 First Americans Mortgage Corp. at June 30, 1998 and 1997, and the results of its operations and its cash flows for the years then ended, in conformity with Generally Accepted
Accounting Principles.
/s/ Bateson & Weiderholt PC
August 17, 1998
F-2
<PAGE>
FIRST AMERICANS MORTGAGE CORP.
Balance Sheets
June 30, 1998 and 1997
1998 1997
ASSETS
Current Assets:
Cash ................................................ $ 2,308 $ 353
Accounts receivable ................................. 9,250 --
-------- --------
Total current assets ............................ $ 11,558 $ 353
-------- --------
Property and Equipment:
Office equipment .................................... $ 15,754 $ 15,754
Less: Accumulated depreciation ...................... 6,748 3,644
-------- --------
$ 9,006 $ 12,110
Other Assets:
Marketable equity securities (Note 2) ............... $264,000 $100,000
Stockholder note receivable (Note 3) ................ 165,068 159,487
Organization costs, net of amortization ............. 600 900
-------- --------
$429,668 $260,387
$450,232 $272,850
======== ========
F-3
<PAGE>
FIRST AMERICANS MORTGAGE CORP.
Balance Sheets
June 30, 1998 and 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
1998 1997
Current Liabilities:
Accounts payable $ 5,805 $ 28,979
Payroll taxes withheld and accrued 17,289 2,595
Accured interest payable 9,237 1,916
Accrued salaries 34,157 6,147
Accrued reporting fees 3,157 4,437
Loan from stockholder (Note 4) 3,530 616
Short term debt (Note 5) 188,027 201,314
------------- -----------
Total current liabilities $ 261,202 $ 246,004
------------- -----------
Stockholders' Equity:
Common stock - $.01 par value;
authorized,issued and outstanding
30,000 shares $ 300 $ 300
Additional paid-in capital 936,929 826,929
Accumulated deficit (748,199) (800,383)
------------- -----------
Total $ 189,030 $ 26,846
$ 450,232 $ 272,850
============= ============
F-4
<PAGE>
FIRST AMERICANS MORTGAGE CORP.
Statements of Accumulated Deficit
Years ended June 30, 1998 and 1997
1998 1997
Accumulated Deficit, beginning of year $ (800,383) $ (302,045)
Net loss for the year (122,767) (148,338)
Decrease (increase) in unrealized losses on
marketable equity securities 174,951 (350,000)
---------------- -------------
Accumulated deficit, end of year $ (748,199) $ (800,383)
================ ==============
F-5
<PAGE>
FIRST AMERICANS MORTGAGE CORP.
Statements of Operations
Years ended June 30, 1998 and 1997
1998 1997
Sales .......................................... $ 86,515 $ 126,116
Cost of sales .................................. 4,227 48,583
--------- ---------
Gross profit ................................... $ 82,288 $ 77,533
General and administrative expenses ............ 102,833 200,570
--------- ---------
Loss from operations ........................... $ (20,545) $(123,037)
--------- ---------
Other Income (Expense):
Interest income ........................... $ 5,581 $ --
Loss on sale securities ................... (85,025) (4,345)
Interest expense .......................... (22,778) (20,956)
--------- ---------
Total other income (expense) .......... (102,222) $ (25,301)
--------- ---------
Net loss ....................................... $(122,767) $(148,338)
========= =========
F-6
<PAGE>
FIRST AMERICANS MORTGAGE CORP.
Statements of Cash Flows
Years ended June 30, 1998 and 1997
1998 1997
Cash Flows from Operating Activities:
Net loss ................................ $(122,767) $(148,338)
--------- ---------
Adjustments to Reconcile Net Loss to Net
Cash Used in Operating Activities:
Depreciation and amortization ....... $ 3,404 $ 2,898
Loss on sale of securities .......... 85,025 4,345
Increase in accounts receivable ..... (9,250) --
Increase in accounts payable and
accrued expenses .................... 25,571 42,548
--------- ---------
Total adjustments ....................... $ 104,750 $ 49,791
--------- ---------
Net cash used in operating activities $ (18,017) $ (98,547)
--------- ---------
Cash Flows from Investing Activities:
Proceeds from sale of securities ........ $ 35,926 $ --
Capital expenditures .................... -- (5,055)
Increase in stockholder note receivable . (5,581) --
Decrease in deposits .................... -- 3,500
--------- ---------
Net cash provided by (used in)
investing activities ................ $ 30,345 $ (1,555)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from short-term debt ........... $ 2,914 $ 94,803
Repayment of short-term debt ............ (13,287) (2,054)
--------- ---------
Net cash provided by (used in
financing activities .............. $ (10,373) $ 92,749
--------- ---------
Net increase (decrease) in cash and cash
equivalents ................................. $ 1,955 $ (7,353)
Cash and cash equivalents, beginning of year . 353 7,706
--------- ---------
Cash and cash equivalents, end of year ....... $ 2,308 $ 353
========= =========
F-7
<PAGE>
FIRST AMERICANS MORTGAGE CORP.
Notes to the Financial Statements
June 30, 1998 and 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - The Company is a mortgage company specializing in providing Native Americans financing for new, existing and rehabilitated housing projects. The Company was incorporated on July 31, 1995, in Missouri. Corporate officers are located in Lenexa, Kansas.
Revenue and Cost Recognition - The Company recognizes revenues from its customers on the accrual basis. Revenue is recognized when billed.
Property and Equipment - Property and equipment are carried at cost. Depreciation of property and equipment is provided using the straight-line method for financial reporting purposes at rates based on the following estimated useful lives:
YEARS
Office equipment 5-7
For federal income tax purposes, depreciation is computed using the modified accelerated cost recovery system. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.
Allowance for Doubtful Accounts - No allowance for doubtful accounts has been made. Receivables are written off when they are determined uncollectible. At year-end all receivables are considered to be fully collectible.
Cash and Cash Equivalents - For purposes of the statement of Cash Flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.
Compensated Absences - The Company's policy is to recognize the costs of compensated absences for vacations and sick days when paid to employees. It is impracticable to estimate the amount of compensation for future absences and, accordingly, no liability has been recorded in the accompanying financial statements.
F-8
<PAGE>
2. MARKETABLE EQUITY SECURITIES
Marketable equity securities are carried at the lower of aggregate cost
of quoted market value of the securities. The securities consists of
the following:
1998 1997
----------- --------
5,000,000 shares Amerisource Technologies, Inc.
Quoted market price $ 100,000
Original cost of securities 650,000
---------
Unrealized loss to date $ (550,000)
----------
13,200,000 shares Amerisource
Technologies, Inc.
Quoted market price $ 264,000
Original cost of securities 639,050
----------
Unrealized loss to date $(375,050)
----------
The company issued 70,000,000 more shares, many going to Dusten and Delmar. Value of $1,400,000 was placed on the company at that time. It does appear excessive. Actual revenues and profits from this acquisition will determine whether or not it is for sure.
This may or may not be a reason for the stock action. |
