ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1998, Mr. Dror was issued 100,000 shares of Common Stock in exchange for services rendered. In May 1998, Mr. Dror was granted 100,000 shares of Common Stock, pursuant to an employment agreement. In May 1998, Mr. Dror was issued an option to purchase 2,000,000 shares of Common Stock at an exercise price of $0.12 per share, which expires in May 2001, pursuant to an employment agreement. During fiscal year 1998, the Company advanced Mr. Dror a total of $74,404, and in November 1998 Mr. Dror executed a promissory
note payable to the Company in the amount of $74,404 payable on demand at prime interest rate. In September 1997, Elk International Corporation, Ltd., which is controlled by Mr. Dror's brother, was issued an option to purchase 2,000,000 shares of Common Stock at a purchase price of $0.02 per share, which was exercised in June 1998. In September 1997, Elk International Corporation, Ltd., which is controlled by Mr. Dror's brother, was issued 5,000,000 shares of Common Stock at a purchase price of $0.03 per share. In May 1998, Elk International Corporation, Ltd., which is controlled by Mr. Dror's brother, was issued 3,500,000 shares of Common Stock for an aggregate
purchase price of $300,000. In December 1998, Daniel Dror II was employed by the Company at a monthly salary of $750. In November 1998, Mr. Dror purchased GCA, Inc., a Texas corporation from the Company for $100. GCA, Inc. was purchased by the Company in December 1997 from a former director of the Company for 6,000,000 shares of Common Stock. Prior to Mr. Dror's acquisition of GCA, Inc., and as of November 1998, all assets of GCA, Inc. had been transferred to TRE and GCA, Inc. was not in good standing with the State of Texas. See "Item 1. escription of Business -- General" for further discussion.
In September 1998, Mr. Friedberg was issued an option to purchase
400,000 shares of Common Stock at an exercise price of $0.20 per share, which expires in September 2003. See "Item 1. Description of Business -- General" for further discussion.
In September 1997, Mr. Hartis was issued an option to purchase 500,000
shares of Common Stock at an exercise price of $0.02 per share, which expires in December 2002. In January 1998, Mr. Hartis was issued 100,000 shares of Common Stock in exchange for management services rendered. Based upon the market value of the restricted Common Stock ($.05 per share), $5,000 of compensation expense was recorded. In May 1998, Mr. Hartis was issued 250,000 shares of Common Stock at an aggregate purchase price of $25,000. As of November 9, 1998, the Company had not received payment. See "Item 1. Description of Business -- General" for further discussion.
In September 1997, Mr. Whitworth was issued an option to purchase 500,000 shares of Common Stock at an exercise price of $0.02 per share, which expires in December 2002. In January 1998, Mr.
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Whitworth was issued 100,000 shares of Common Stock in exchange for
management services rendered. Based upon the market value of the restricted Common Stock ($.05 per share), $5,000 of compensation expense was recorded. In May 1998, Mr. Whitworth was issued 250,000 shares of Common Stock at an aggregate purchase price of $25,000. As of November 9, 1998, the Company had not received payment. See "Item 1. Description of Business -- General" for further discussion.
In January 1998, Mr. Talan was issued 100,000 shares of Common Stock in exchange for services rendered.
In January 1998, Mr. Dartmouth was issued 100,000 shares of Common Stock in exchange for services rendered.
In May 1998, Ms. Laird-Ruthstrom was issued 50,000 shares of Common Stock in exchange for services rendered.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue up to 200,000,000 shares of Common Stock, of which 110,877,321 shares are issued and outstanding as of October 28, 1998 and 7,720,000 shares are reserved for issuance pursuant to the exercise of outstanding options and 2,000,000 for stock subscribed but not issued. In addition and as of December 1, 1998, the Company has not issued approximately 7,500,000 shares of Common Stock relating to the acquisition of Acqueren, Inc. because these shares have not been exchanged. Further as of December 1, 1998, 1,000,000 shares of Common Stock are authorized but not issued relating to the purchase of Midtowne Properties, Inc.
The holders of shares of Common Stock are entitled to one vote per share on each matter submitted to a vote of stockholders. In the event of liquidation, holders of Common Stock are entitled to share ratably in the distribution of assets remaining after payment of liabilities. Holders of Common Stock have no cumulative voting rights, and, accordingly, the holders of a majority of the
outstanding shares have the ability to elect all of the directors. Holders of Common Stock have no preemptive or other rights to subscribe for shares. Holders of Common Stock are entitled to such dividends as may be declared by the Board of Directors out of funds legally available therefor.
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 shares of Preferred Stock, $.001 par value per share of which none are presently outstanding. The Preferred Stock may be issued in one or more series, the terms of which may be determined at the time of issuance by the Board of Directors, without further action by stockholders, and may include voting rights (including the right to vote as a series on particular matters), preferences as to dividends and liquidation, conversion, redemption rights and sinking fund provisions. The
Company has no present plans for the issuance of Preferred Stock. The issuance of Preferred Stock could adversely affect the rights of the holders of Common Stock and, therefore, reduce the value of the Common Stock. |
