-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PkauL4Cl3D39tFPBruQdsZ6n37HEE4cQfQMqcPrJtScUGrxofoVYm7I2GFXWebDb 0xxIPR7snNZb0b0HfFxmMQ== /in/edgar/work/20000530/0001025894-00-000160/0001025894-00-000160.txt : 20000919 0001025894-00-000160.hdr.sgml : 20000919 ACCESSION NUMBER: 0001025894-00-000160 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000430 FILED AS OF DATE: 20000530 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX RESOURCES TECHNOLOGIES INC CENTRAL INDEX KEY: 0000808575 STANDARD INDUSTRIAL CLASSIFICATION: [2400 ] IRS NUMBER: 841034982 STATE OF INCORPORATION: NV FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-19708 FILM NUMBER: 646059 BUSINESS ADDRESS: STREET 1: 15945 QUALITY TRAIL NORTH CITY: SCANDIA STATE: MN ZIP: 55073 BUSINESS PHONE: 6514335735 MAIL ADDRESS: STREET 1: 15945 QUALITY TRAIL NORTH CITY: SCANDIA STATE: MN ZIP: 55073 FORMER COMPANY: FORMER CONFORMED NAME: HUGHES RESOURCES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FIRMA INC DATE OF NAME CHANGE: 19910618 10QSB 1 0001.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB (Mark one) XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT - ---- OF 1934 For the quarterly period ended April 30, 2000 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934 - ---- For the transition period from ______________ to _____________ Commission File Number: 000-19708 Phoenix Resources Technologies, Inc. (Exact name of small business issuer as specified in its charter) Nevada 84-1034982 (State of incorporation) (IRS Employer ID Number) 15945 Quality Trail North, Scandia MN 55073 ------------------------------------------- (Address of principal executive offices) (888) 709-3975 -------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: May 26, 2000: 9,665,100 Transitional Small Business Disclosure Format (check one): YES NO X --- --- Phoenix Resources Technologies, Inc. Form 10-QSB for the Quarter ended April 30, 2000 Table of Contents Page Part I - Financial Information Item 1 Financial Statements 3 Item 2 Management's Discussion and Analysis or Plan of Operation 16 Part II - Other Information Item 1 Legal Proceedings 19 Item 2 Changes in Securities 19 Item 3 Defaults Upon Senior Securities 22 Item 4 Submission of Matters to a Vote of Security Holders 22 Item 5 Other Information 22 Item 6 Exhibits and Reports on Form 8-K 22 Signatures 22 2 S. W. HATFIELD, CPA certified public accountants Member: American Institute of Certified Public Accountants SEC Practice Section Information Technology Section Texas Society of Certified Public Accountants Item 1 - Part 1 - Financial Statements Accountant's Review Report Board of Directors and Shareholder Phoenix Resources Technologies, Inc. We have reviewed the accompanying balance sheets of Phoenix Resources Technologies, Inc. (a Nevada corporation) as of April 30, 2000 and 1999 and the accompanying statements of operations and comprehensive income for the six and three months ended April 30, 2000 and 1999 and statements of cash flows for the six months ended April 30, 2000 and 1999. These financial statements are prepared in accordance with the instructions for Form 10-QSB, as issued by the U. S. Securities and Exchange Commission, and are the sole responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression on an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A to the financial statements, the Company has no viable operations or significant assets and is dependent upon significant shareholders to provide sufficient working capital to maintain the integrity of the corporate entity. These circumstances create substantial doubt about the Company's ability to continue as a going concern and are discussed in Note A. The financial statements do not contain any adjustments that might result from the outcome of these uncertainties. S. W. HATFIELD, CPA Dallas, Texas May 26, 2000 Use our past to assist your future sm P. O. Box 820395 9002 Green Oaks Circle, 2nd Floor Dallas, Texas 75382-0395 Dallas, Texas 75243-7212 214-342-9635 (voice) (fax) 214-342-9601 800-244-0639 SWHCPA@aol.com 3
Phoenix Resources Technologies, Inc. Balance Sheets April 30, 2000 and 1999 (Unaudited) April 30, April 30, 2000 1999 ------------ ------------ ASSETS ------ Current Assets Cash on hand and in bank $ 15,922 $ - ------------ ------------ Other Assets Option to acquire an unrelated entity 264,871 - ------------ ------------ Total Assets $ 280,793 $ - ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities Accounts payable to related party $ 10,097 $ - Judgment payable - 306,621 ------------ ------------ Total current liabilities 10,097 306,621 ------------ ------------ Commitments and Contingencies Shareholders' Equity Preferred stock - $0.001 par value. 50,000,000 shares authorized. Series A - 5.0% annual dividend, non- cumulative. Convertible into 1,000,000 shares of common stock after March 29, 2000. -0- and 200,000 shares issued and outstanding, respectively - 200 Common stock - $0.001 par value. 100,000,000 shares authorized. 9,665,100and 272,400 shares issued and outstanding, respectively 9,665 272 Additional paid-in capital 17,483,322 13,338,940 Accumulated deficit (16,418,291) (12,672,633) ------------ ------------ 1,074,696 666,779 Stock subscription receivable (70,600) (240,000) Treasury stock - at cost (560,000 shares) (733,400) (733,400) ------------ ------------ Total shareholders' equity 270,696 (306,621) ------------ ------------ Total Liabilities and Shareholders' Equity $ 280,793 $ - ============ ============
See Accountant's Review Report. The accompanying notes are an integral part of these financial statements. 4
Phoenix Resources Technologies, Inc. Statements of Operations and Comprehensive Income Six and Three months ended April 30, 2000 and 1999 (Unaudited) Six months Six months Three months Three months ended ended ended ended April 30, April 30, April 30, April 30, 2000 1999 2000 1999 ---------- ---------- ---------- ---------- Revenues $ - $ - $ - $ - ---------- ---------- ---------- ---------- Expenses Consulting, legal and professional fees 2,154,185 - 2,139,252 - Management fees to related party 210,000 - 105,000 - Other general and administrative fees 53,031 - 48,900 - Compensation expense for issuances of common stock at less than "fair value" 1,320,075 - 1,177,325 - ---------- ---------- ---------- ---------- Total expenses 3,737,291 - 3,470,477 - ---------- ---------- ---------- ---------- Loss from continuing operations before income taxes and other income (expenses) (3,737,291) - (3,470,477) - Other income (expenses) Interest income and other 12 - 12 - Interest on judgment payable - (13,310) - (6,555) ---------- ---------- ---------- ---------- Loss before income taxes (3,737,279) (13,310) (3,470,465) (6,655) Income tax expense - - - - ---------- ---------- ---------- ---------- Net Loss (3,737,279) (13,310) (3,470,465) (6,655) Other comprehensive income - - - - ---------- ---------- ---------- ---------- Comprehensive Loss $(3,737,279) $(13,310) $(3,470,465) $ (6,555) ========= ========== =========== ========== Loss per share of common stock outstanding, computed on net loss - - basic and fully diluted $(0.40) $(0.01) $(0.37) $(0.02) ==== ==== ==== ==== Weighted-average number of shares outstanding 9,301,281 272,400 9,466,156 272,400 ========= ========== =========== ==========
See Accountant's Review Report. The accompanying notes are an integral part of these financial statements. 5
Phoenix Resources Technologies, Inc. Statements of Cash Flows Six months ended April 30, 2000 and 1999 (Unaudited) Six months Six months ended ended April 30, April 30, 2000 1999 ----------- ----------- Cash Flows from Operating Activities Net loss $(3,737,279) $ (13,310) Adjustments to reconcile net income to net cash provided by operating activities Compensation expense for issuances of common stock at less than "fair value" 1,320,075 - Common stock issued for consulting expenses 2,090,175 - Increase (decrease) in Accounts payable to a related party 10,097 - Judgment payable - 13,310 ----------- ----------- Net cash provided by operating activities (316,932) - ----------- ----------- Cash Flows from Investing Activities Cash advanced for option to acquire an unrelated entity (261,646) - ----------- ----------- Cash Flows from Financing Activities Payment of judgments payable (300,000) - Cash received on stock subscription receivable 300,000 - Cash received on sales of common stock and exercise of stock options 911,000 - Cash paid to facilitate sale of common stock (16,500) - ----------- ----------- Net cash provided by financing activities 594,500 - ----------- ----------- Increase in Cash and Cash Equivalents 15,922 - Cash and cash equivalents at beginning of period - - ----------- ----------- Cash and cash equivalents at end of period $ 15,922 $ - =========== =========== Supplemental Disclosures of Interest and Income Taxes Paid Interest paid during the period $ - $ - =========== =========== Income taxes paid (refunded) $ - $ - =========== =========== Supplemental Disclosure of Non-Cash Investing and Financing Activities Common stock issued for option to acquire an unrelated entity $ 3,225 $ - =========== ===========
See Accountant's Review Report. The accompanying notes are an integral part of these financial statements. 6 Phoenix Resources Technologies, Inc. Notes to Financial Statements Note 1 - Basis of Presentation Phoenix Resources Technologies, Inc. (Company) was originally incorporated in 1986 as Firma, Inc. under the laws of the State of Colorado as a corporation organized to take advantage of unspecified business opportunities. Pursuant to a plan of merger and reorganization, the Company, as a Colorado corporation, merged into Hughes Resources, Inc., a Nevada corporation, on June 27, 1995. The purpose of this merger was to redomicile the Company from Colorado to Nevada. The Nevada corporation had been formed solely for this reorganization purpose and had no assets, liabilities or operations prior to the merger. The Articles of Incorporation of the surviving Nevada corporation were amended to increase the authorized number of common shares to 100,000,000 with a par value of $0.001 each and to increase the authorized number of preferred shares to 50,000,000 with a par value of $0.001 per share. The Company has had no operations since the year ended October 31, 1996 and no operating assets since the year ended October 31, 1997. Accordingly, the Company became solely dependent upon management and/or significant shareholders to provide sufficient working capital to preserve the integrity of the corporate entity at this time. If feasible, it is the intent of management and significant shareholders to provide sufficient working capital, if needed, necessary to support the working capital needs of the Company until adequate financing is in place. On November 3, 1999, the Company acquired an option to purchase up to 100% of HHPN Development Corporation (HHPN), an unrelated company located in San Diego, California. HHPN has developed a software program that is used to develop database applications on the Internet. On February 10, 2000, the Company exercised its option to purchase 50.0% of HHPN and has options to purchase the remaining 50.0% through February 10, 2002. During interim periods, the Company follows the accounting policies set forth in its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 on Form 10-KSB filed with the U. S. Securities and Exchange Commission. The information presented herein does not include all disclosures required by generally accepted accounting principles and the users of financial information provided for interim periods should refer to the annual financial information and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim financial results presented herein. In the opinion of management, the accompanying interim financial statements, prepared in accordance with the instructions for Form 10-QSB, are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending October 31, 2000. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 7 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 2 - Summary of Significant Accounting Policies 1. Cash and cash equivalents ------------------------- The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. Cash overdraft positions may occur from time to time due to the timing of making bank deposits and releasing checks, in accordance with the Company's cash management policies. 2. Income taxes ------------ The Company utilizes the asset and liability method of accounting for income taxes. At April 30, 2000 and 1999, the deferred tax asset and deferred tax liability accounts, as recorded when material, are entirely the result of temporary differences. Temporary differences represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily the allowance for doubtful accounts, accumulated depreciation and certain liability items. A 100% valuation allowance was provided against deferred tax assets, where applicable. 3. Earnings (loss) per share ------------------------- Basic earnings (loss) per share is computed by dividing the net income (loss) by the weighted_average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later. As of April 30, 2000 and 1999, the Company's outstanding warrants and/or options are deemed to be anti_dilutive due to the Company's net operating loss position. Note 3 - Option to Acquire an Unrelated Entity On November 3, 1999, the Company acquired an option to purchase up to 100% of HHPN Development Corporation (HHPN), an unrelated company located in San Diego, California. HHPN has developed a software program that is used to develop database applications on the Internet. On February 10, 2000, the Company exercised its option to purchase 50% of HHPN for $2,500,000. The Company also has options to purchase an additional 25% interest in HHPN for $50,000,000 and the remaining 25% interest for $125,000,000. These options expire on February 10, 2002. The Company is also required to make minimum payments of $17,000.00 per month, up to a maximum of $200,000.00 per month pursuant to a budget acceptable to the board of HHPN and the Company. The Company can at any time, and at its sole discretion, elect to increase its monthly payments and/or pay HHPN in full. As of April 30, 2000, the Company has paid a total of approximately $265,000 towards its obligations under this acquisition agreement. 8 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 4 - Loan payable In November 1999, the Company executed a $150,000 US$ revolving demand note payable to it's President and Chief Executive Officer. The note bears interest at 6.5%. At April 30, 2000, there is no outstanding balance on this note payable. Note 5 - Preferred Stock Transactions On October 4, 1999, a former officer of the Company and controlling party of an entity owning approximately 200,000 shares of Class A Preferred Stock tendered 100% of the issued and outstanding shares of Class A Preferred Stock to the Company for cancellation with no further consideration being due to the tendering party. The par value of these issued and outstanding shares was credited to additional paid-in capital upon their cancellation. Note 6 - Common Stock Transactions On October 15, 1999, at a Special Meeting of the Shareholders, a 100 for 1 reverse split of the issued and outstanding common stock was approved. The effects of this action are reflected in the accompanying financial statements as of the first day of the first period presented. In September 1997, the Company, in an effort to seek and obtain a suitable merger or acquisition agreement with an on-going privately owned business, issued 15,000,000 pre-split shares (150,000 post reverse split shares) of unregistered, restricted common stock into the escrow account of the Company's then corporate attorney under a subscription agreement. The attorney was responsible for reviewing the Company's books and records, reviewing and updating the Company's corporate status, procuring the services of a qualified independent certified accounting firm to audit the Company's financial statements, facilitating the filing of all delinquent reports with the U.S. Securities and Exchange Commission and evaluating potential private companies for either merger or acquisition. The Company's common stock had an estimated market trading price of approximately $0.04 per share on the date of the issuance of these shares. Due to the restricted nature of the shares issued into escrow, the Stock Subscription Agreement was valued at approximately $0.016 per share, or approximately $240,000 in total, as the "fair value" of this transaction. The Stock Subscription Agreement was settled upon the successful merger with or acquisition of a suitable private company. In September 1999, in anticipation of a transaction involving a change in control of the Company, the Company's Board of Directors and the Company's former corporate attorney agreed to reprice this stock subscription agreement to $0.001 per share, which equals the stated par value of the common stock, as there had been a deterioration in the quoted price of the Company's common stock and approximately two (2) years of no operations in the Company. The final settlement of the stock subscription agreement was a charge of approximately $15,000 to operations for the various services performed by the Company's former corporate attorney. 9 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 6 - Common Stock Transactions - continued On October 27, 1999, the Company entered into a Stock Acquisition Agreement with Ben Traub, a related third party for the purchase of 9,000,000 post-reverse split shares of restricted, unregistered common stock for total proceeds of $300,000. The proceeds, when received, were allocated to settle the outstanding judgment against the Company for $200,000 and to pay $100,000 to retire the Forbearance Agreement with the Agricultural Production Credit Association (AgPCA), which was triggered by the execution of the Stock Acquisition Agreement. As of April 30, 2000, all amounts due under this Agreement have been received by the Company and the related obligations have been satisfied. On February 10, 2000, the Company sold 80,000 shares at a price of $2.50 per share for total gross proceeds of $200,000. As part of the placement, 6,000 warrants were issued and fees of $16,500 were paid. The holder of the warrant is entitled to purchase the common stock of the Company at a price of $3.00 subject to adjustment, through February 10, 2001. Note 7 - Stock Options On December 17, 1999, the Company filed a Form S-8 Registration Statement under The Securities Act of 1933 with the U. S. Securities and Exchange Commission to register 900,000 post-reverse split shares of common stock pursuant to the Company's 1999 Nonqualifying Stock Option Plan (1999 Plan). As stated in the 1999 Plan document, "This [1999 Plan is] for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interest of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company." On December 17, 1999, the Company granted options to purchase 200,000 shares of the Company's common stock at an exercise price of $3.00 per share under the 1999 Nonqualifying Stock Option Plan to its President. The options were granted in consideration of the value the President and his Board brought to the Company since their takeover on October 30, 1999. Additionally, the Company granted options to purchase 100,000 shares each to board members, Judee Fayle and Robert Seitz, at an exercise price of $3.00 per share. The decision of where to set the exercise price was based on the pre-determined plan (prior to takeover) to grant options to the board as close as possible to the going rate for the Company's stock prior to takeover. The average closing price of the Company's stock for the ten month period prior to takeover was $2.27, after taking the reverse stock split into consideration. On April 28, 2000, Ben Traub, Robert Seitz, and Judee Fayle, all officers and directors of the Company, rescinded an aggregate total of 298,000 of these unexercised options. On January 5, 2000, options to purchase 2,000 common shares were exercised by Ben Traub, an officer and a director of the Company, and the shares issued for total proceeds of $6,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $8.625. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. 10 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 7 - Stock Options - continued On January 24, 2000, options to purchase 5,000 common shares were exercised by Rob Seitz, an officer and a director of the Company, and the shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On January 24, 2000, options to purchase 5,000 common shares were exercised by Judee Fayle, an officer and a director of the Company. The shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On January 28, 2000, options to purchase 5,000 common shares were exercised by Rob Seitz, an officer and a director of the Company, and the shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.75. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On January 28, 2000, options to purchase 5,000 common shares were exercised by Judee Fayle, an officer and a director of the Company. The shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.75. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 2, 2000, options to purchase 40,000 common shares were exercised by Ben Traub, an officer and a director of the Company; and the shares issued for total proceeds of $120,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $13.125. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 3, 2000, the Company granted options to purchase 25,000 shares of the Company's common stock at an exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option Plan to employee, Peter Somogyi. On February 7, 2000, options to purchase 10,000 common shares were exercised by Ben Traub, an officer and a director of the Company; and the shares issued for total proceeds of $30,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $12.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 11, 2000, options to purchase 30,000 common shares were exercised by Ben Traub, an officer and a director of the Company; and the shares issued for total proceeds of $90,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $15.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. 11 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 7 - Stock Options - continued On February 16, 2000, the Company granted options to purchase 5,000 shares of the Company's common stock at an exercise price of $0.01 per share under the 1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris & Heckscher for continued legal guidance. On February 17, 2000, options to purchase 5,000 common shares were exercised by Duane Morris Heckscher; and the shares issued for total proceeds of $50 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $16.25. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On March 6, 2000, options to purchase 1,500 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 10,500 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $19.75. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On March 20, 2000, options to purchase 10,000 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $17.125. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options On March 29, 2000, options to purchase 3,500 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 24,500 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $15.50. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On April 18, 2000, the Company granted options to employee, Peter Somogyi, to purchase an additional 50,000 shares of the Company's common stock at an exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option Plan. On April 18, 2000, the Company granted options to purchase 100,000 shares of the Company's common stock at an exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option Plan to employee, Jason Lee. On April 26, 2000, options to purchase 10,000 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $12.50. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. 12 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 7 - Stock Options - continued On April 28, 2000, the Company granted options to purchase 5,000 shares of the Company's common stock at an exercise price of $0.01 per share under the 1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris & Heckscher. On April 28, 2000, options to purchase 160,000 common shares were granted to and exercised by Ben Traub under the 1999 Nonqualifying Stock Option Plan. These options were exercised for cash proceeds of $550 and the reimbursement to Mr. Traub for the payment of consulting fees to M. D. Price, Jr., the Company's former corporate legal counsel, paid on behalf of the Company by Mr. Traub in the amount of $1,959,450. The quoted market price of the Company's stock at the date of exercise was approximately $12.25. There was no difference between the exercise price and the market price of the Company's stock on the exercise date of the stock options; therefore no charge was made to operations. The following table summarizes all options granted from December 31, 1999 through April 30, 2000: Options Options Options Options Exercise price granted exercised terminated outstanding per share ------- --------- ---------- ----------- -------------- 745,000 292,000 298,000 155,000 $0.01 - $7.00 ======= ======= ======= ======= The weighted average exercise price of all issued and outstanding options at April 30, 2000 was approximately $6.77. Note 8 - Litigation Agricultural Protection Credit Association The Company was a co-maker on a loan payable to Agricultural Production Credit Association (AgPCA) along with its former subsidiaries, Hughes Wood Products, Inc. and Houston Woodtech, Inc. On March 17, 1997, AgPCA foreclosed on the underlying assets collateralizing the loan and was subsequently granted an approximate $3,236,048 judgment collectively against the Company, Hughes Wood Products, Inc. and Houston Woodtech, Inc. On August 21, 1998, AgPCA filed litigation titled "Petition to Enforce Final Judgment" for collection of an unsatisfied balance of approximately $1,092,100, as of May 6, 1998, in Texas District Court against 17 named co-defendants, including the Company and its former officers. The litigation alleged various actions on behalf of the Company, its former officers, including Racketeering, Influence and Corrupt Organization (RICO) statute violations. 13 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 8 - Litigation - continued Agricultural Protection Credit Association - continued On July 27, 1999, the Company entered into a Forbearance Agreement with AgPCA whereby the Company will pay AgPCA the total sum of $100,000 cash prior to the effective date of its merger or combination with a Private investor in full settlement of the Company's participation in the litigation discussed above. In the event that a merger or combination with a Private investor does not occur within one (1) year of the execution of the Agreement, the Agreement shall immediately and automatically terminate. The October 27, 1999 execution of the Stock Acquisition Agreement triggered the liability to pay the $100,000 in settlement of this Forbearance Agreement and the amount was accrued at the date of the Forbearance Agreement. The liability under this Agreement is was paid from the proceeds collected from the Stock Acquisition Agreement related to the sale of 9,000,000 shares of the Company's common stock. On March 15, 2000, AgPCA executed a "Receipt and Acknowledgment of Payment in Full" for the $100,000 obligation. The Company has no further obligation under this obligation. Garnishment payable On March 20, 1997, the Company was named as the Garnishee in the settlement of a judgment rendered against Mr. James R. Ray, the Company's former president and chief executive officer. The garnishment placed against the Company by the Superior Court of the State of Arizona, Maricopa County, was in the amount of $266,205.91, plus interest at 10.0% per annum until paid in full. The Company accrued this garnishment as a current liability and accrued the requisite interest on the unpaid balance through October 27, 1999. On October 27, 1999, the garnishment was settled for by agreement with the Company to pay the claimant $200,000 cash. The difference between the accrued amount and the $200,000 was credited to operations as forgiveness of debt. As of April 30, 2000, the Company has paid this obligation in full and has no further liability to the claimant. Note 9 - Related Party Commitments The Company has executed a management agreement with Cyclone Financing Group, Inc. of 2nd Floor, 827 West Pender Street, Vancouver, British Columbia, Canada V6C 3G8, an entity related through common management personnel who are also shareholders of the Company, at the amount of $35,000 (US Dollars) per month, effective November 1, 1999. This amount represents a management fee payable for the management of the company's affairs including: acquisition of projects, raising monies, administration (i.e. bookkeeping, photocopying, faxing, office space, telephone charges, supplies, news dissemination) and other related operational costs. Cyclone has billed the Company a total of $210,000 for the period from November 1, 1999 through April 30, 2000 and the Company has an outstanding balance due Cyclone of approximately $10,000 as of April 30, 2000. 14 Phoenix Resources Technologies, Inc. Notes to Financial Statements - Continued Note 9 - Related Party Commitments In October 1999, in connection with a Stock Acquisition Agreement, the Company agreed to issue 300,000 post-reverse split shares of restricted, unregistered common stock in April 2000 to the Company's Company's former corporate attorney for services rendered in connection with the Stock Acquisition Agreement. This obligation was satisfied on behalf of the Company by the Company's President and Chief Executive Officer with the transfer of 300,000 restricted, unregistered shares of the Company's common stock owned by the Company's President and Chief Executive Officer. The Company recognized a charge to operations of approximately $1,959,450 for the fair value of these shares, as calculated on the discounted (50.0%) value of the quoted closing price of the Company's common stock on the date of settlement and the Company's President and Chief Executive Officer was given credit for this payment against the amount due from the President on the exercise of options to purchase 160,000 shares of stock. Note 10 - Financing Agreements On April 12, 2000, the Company entered into a $10 million equity investment line agreement with Eurofund Derivatives Ltd. This agreement replaces one dated January 25, 2000 for a $4 million equity investment line. The Company issued to Eurofund Derivatives a Class A Warrant with an aggregate warrant exercise price of $10,000,000. The proposed maximum amount which can be exercised at any one time is $1,000,000. Eurofund may not exercise the warrant until the Company notifies Eurofund Derivatives to do so by issuing notice in writing. Eurofund may then exercise the warrant but such exercise is dependent on market conditions and therefore there is no guarantee that the warrant will ever be exercised. Note 11 - Subsequent Events On May 2, 2000, the Company granted options to purchase 500 shares of the Company's common stock at an exercise price of $0.01 per share under the 1999 Nonqualifying Stock Option Plan to consultant, Patrick McEvoy. On May 4, 2000, options to purchase 500 common shares were exercised by Patrick McEvoy; and the shares issued for total proceeds of $ 5 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $13.25. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On May 5, 2000, the Company sold 30,000 shares at a price of $5.00 per share for total gross proceeds of $150,000. As part of the placement, 15,000 warrants were issued and no commissions or fees paid. 15 Part I - Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (1) Caution Regarding Forward-Looking Information This quarterly report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of the Company or management as well as assumptions made by and information currently available to the Company or management. When used in this document, the words "anticipate," "believe," "estimate," "expect" and "intend" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current view of the Company regarding future events and are subject to certain risks, uncertainties and assumptions, including the risks and uncertainties noted. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. In each instance, forward-looking information should be considered in light of the accompanying meaningful cautionary statements herein. (2) Plan of Operations The Company has been reorganized and its operations to date have been in the areas of setting up its organization and financing. The Company has exercised an option to acquire a 50% interest in HHPN Development Corp. and its products. HHPN Development Corp., has created a suite of Web development tools, also known as a web application server, code named DBPanacea, which are designed to increase the flexibility while lowering the cost of developing Web sites that require database functionality, e.g. Internet based business applications and Web sites used for e-commerce transactions. The Company's goals are to develop HHPN or DBPanacea, retain a senior management team for The Company and ultimately acquire 100% of HHPN. As a result, the Company's personnel and related costs are anticipated to increase in future periods. The Company needs to raise capital to continue its operations. In the six months of fiscal year to date, the Company has continued substantial operating losses which utilize most of its available cash reserves. The Company anticipates that it will continue to incur net losses for the foreseeable future. The Company had no operating revenue in the last two years. The Company has incurred aggregate general and administrative expenses of approximately $2,417,216. Further, the Company has charged operations approximately $1,320,000 for the difference between the "fair value" of its common stock at the date of the exercise of granted stock options and the actual cash proceeds received. Total loss per share for the six months ended April 30, 2000 was $(0.40). On November 3, 1999, Cyclone Financing Group, Inc. transferred its rights in an Assignment Agreement to the Company. Cyclone transferred all of its rights in the HHPN Option Agreement, to purchase 100% of HHPN Development Corporation. This Option Agreement may be executed in three stages. On February 10, 2000, The Company exercised Option 1 of the Option Agreement. The Company has agreed to pay HHPN $2,500,000 for a 50% interest in HHPN.. As of May 19, 2000, the Company had paid approximately $265,000 either directly to HHPN or on behalf of HHPN. The Company is required to make minimum payments to HHPN of $17,000.00 per month, up to a maximum of $200,000 per month. The Company also has the option to acquire a further 25% of HHPN for $50 million and the remaining 25% of HHPN for a further investment of $125 million. Mr. Ben Traub is an officer of both Cyclone Financing Group Inc. and the Company. Mr. Traub agreed to transfer the HHPN Option Agreement to the Company for $10.00. Cyclone formerly had the right to either cancel the Assignment Agreement to The Company or claim from the Company restricted shares to make up for the difference in value enjoyed by Mr. Traub that would have resulted if certain deficiencies in the Company had not existed. Cyclone may only have exercised these rights if certain deficiencies resulted in the reduction of value of Mr. Traub's ownership in the Company Deficiencies were defined in the Agreement as material deficiencies in information supplied to Mr. Traub by the former board of the Company. These rights were to expire once the $2.5 million had been paid in full to HHPN. During the second quarter of Fiscal 2000, Mr. Traub waived these rights and the Company's option to purchase HHPN is now irrevocable by Mr. Traub under any circumstances. In February and March 2000, the Company received favorable independent evaluations of HHPN's principal product and believes that positive market acceptance of HHPN's internet web application software product could generate revenues for the Company. 16 The Company believes that websites developed with the HHPN software product will be able to operate on WindowsNT, UNIX, LINUX or MAC without recoding, using SQL, Sybase, Oracle and most other database engines. Further, the software is anticipated to run on any webserver including Apache, Netscape Server or any other server that supports servlets. The software is in its first edition and although early testing has provided positive feedback, the Company acknowledges that it will have to invest heavily in ongoing development to continue maintain and create ongoing technological advantages and there is no guarantee that it will be able to do so. Most of the Company's existing competitors have more resources, which will make it difficult for the Company to compete. (3) Liquidity and Capital Resources The reports of our independent certified public accountants on the accompanying interim financial statements and our annual year end financial statements, as of October 31, 1999, contain an explanatory paragraph indicating factors which create substantial doubt about our ability to continue as a going concern. These factors include recurring net losses for fiscal year 1999 and uncertainty surrounding future equity financing through anticipated offerings. As of the date of each respective report, the Company was without viable operations or significant assets and was dependent upon certain significant shareholders to provide sufficient working capital. The Company's ability to implement its business plan is dependent upon obtaining adequate financial resources. The Company has been engaged in various exploratory discussions with prospective investors. While no specific terms have been negotiated, a due diligence process has begun on behalf of some investors who are considering a equity investment in the company. No assurance can be made that a private placement or public offering of Company's equity will be successful. In such an instance the Company intends to rely upon certain shareholders to meet future financing needs for the remainder fiscal year 2000 while the Company pursues other financing alternatives. At April 30, 2000, the Company had cash and cash equivalents of approximately $16,000 compared to $-0- at April 30, 1999. Working capital, defined as current assets less current liabilities, was approximately $6,000 at April 30, 2000 as compared to $-0- at April 30, 1999. The Company had current assets of approximately $16,000 and cumulative stockholders' equity of $270,696 at April 30, 2000 compared to current assets of $-0- and cumulative stockholders' deficit of $(306,621) at April 30, 1999. The Company had no capital expenditures for the six months ended April 30, 2000. However, t he Company anticipates that it will need to purchase equipment in the near future to implement the launch of its products. Net cash flow provided by financing activities increased from $-0- at April 30, 1999 to $594,500 for the period ended April 30, 2000. The increase is primarily due to the proceeds from exercised stock options and a private placement of restricted stock. Initial working capital during Fiscal 2000 was provided by a loan from the Company's President and Chief Executive Officer, which was subsequently repaid during the first six months of Fiscal 2000. The Company has not paid dividends in prior periods and does not intend to pay cash dividends in the foreseeable future. On February 10, 2000, as part of a private placement, the company issued 80,000 shares at a price of $2.50 per share for total gross proceeds of $200,000. As part of the placement, 6,000 warrants were issued with a strike price of $3 and a term of one year, and fees of $16,500 were paid. On May 5, 2000, as part of a private placement, the company issued 30,000 shares at a price of $5.00 per share for total gross proceeds of $150,000. As part of the placement, 15,000 warrants were issued with a strike price of $10 and a term of two years. No fees were paid. On April 12, 2000, the Company entered into a $10 million equity investment line agreement with Eurofund Derivatives Ltd., 17 which replaced a January 25, 2000 agreement for a $4 million equity investment line. The Company issued to Eurofund Derivatives a Class A Warrant with an aggregate warrant exercise price of $10,000,000. The proposed maximum amount which can be exercised at any one time is $1,000,000. Eurofund may not exercise the warrant until the Company notifies Eurofund Derivatives to do so by issuing notice in writing. Eurofund may then exercise the warrant but such exercise is dependant on market conditions and therefore there is no guarantee that the warrant will ever be exercised. On April 19, 2000, the Company was granted a listing by the Deutsche Boerse AG to begin trading on the Third Market Segment of the Frankfurt Stock Exchange. The trading symbol is "PHU" and the German securities code is 898 258. The Company's trades are facilitated by Berliner Freiverkehr AG, a major German investment banking and brokerage firm. The Geneva Group Inc. facilitated the Frankfurt listing and, in conjunction with Teamwork Kommunikations Gmbh., will act as a consultant to the Company concerning investor relations, introductions to strategic partners and corporate financing activities in Europe. (4) Year 2000 Considerations The Year 2000 (Y2K) date change was believed to affect virtually all computers and organizations. The Company undertook a comprehensive review of its information systems, including personal computers, software and peripheral devices, and its general communications systems during 1999 and made all necessary modifications, upgrades or replacements that it believed were necessary to address its potential internal Y2K exposures. The Company also held discussions with its significant suppliers, shippers, customers and other external business partners related to their readiness for the Y2K date change. The costs associated with the Y2K date change compliance did not have a material effect on the Company's financial position or its results of operations. The Company has experienced no negative impact from any potential Y2K issues through March 31, 2000. However, there can be no continued assurance that all of the Company's systems and the systems of its suppliers, shippers, customers or other external business partners will continue function adequately. (Remainder of this page left blank intentionally) 18 Part II - Other Information Item 1 - Legal Proceedings See Notes to the Financial Statements Item 2 - Changes in Securities On October 4, 1999, a former officer of the Company and controlling party of an entity owning approximately 200,000 shares of Class A Preferred Stock tendered 100% of the issued and outstanding shares of Class A Preferred Stock to the Company for cancellation with no further consideration being due to the tendering party. The par value of these issued and outstanding shares was credited to additional paid-in capital upon their cancellation. On October 15, 1999, at a Special Meeting of the Shareholders, a 100 for 1 reverse split of the issued and outstanding common stock was approved. The effects of this action are reflected in the accompanying financial statements as of the first day of the first period presented. On December 17, 1999, the Company filed a Form S-8 Registration Statement under The Securities Act of 1933 with the U. S. Securities and Exchange Commission to register 900,000 post-reverse split shares of common stock pursuant to the Company's 1999 Nonqualifying Stock Option Plan (1999 Plan). As stated in the 1999 Plan document, "This [1999 Plan is] for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interest of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company." On December 17, 1999, the Company granted options to purchase 200,000 shares of the Company's common stock at an exercise price of $3.00 per share under the 1999 Nonqualifying Stock Option Plan to its President. The options were granted in consideration of the value the President and his Board brought to the Company since their takeover on October 30, 1999. Additionally, the Company granted options to purchase 100,000 shares each to board members, Judee Fayle and Robert Seitz, at an exercise price of $3.00 per share. The decision of where to set the exercise price was based on the pre-determined plan (prior to takeover) to grant options to the board as close as possible to the going rate for the Company's stock prior to takeover. The average closing price of the Company's stock for the ten month period prior to takeover was $2.27, after taking the reverse stock split into consideration. On April 28, 2000, Ben Traub, Robert Seitz, and Judee Fayle, all officers and directors of the Company, rescinded an aggregate total of 298,000 of these unexercised options. On January 5, 2000, options to purchase 2,000 common shares were exercised by Ben Traub, an officer and a director of the Company, and the shares issued for total proceeds of $6,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $8.625. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On January 24, 2000, options to purchase 5,000 common shares were exercised by Rob Seitz, an officer and a director of the Company, and the shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On January 24, 2000, options to purchase 5,000 common shares were exercised by Judee Fayle, an officer and a director of the Company. The shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. 19 On January 28, 2000, options to purchase 5,000 common shares were exercised by Rob Seitz, an officer and a director of the Company, and the shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.75. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On January 28, 2000, options to purchase 5,000 common shares were exercised by Judee Fayle, an officer and a director of the Company. The shares were issued for total proceeds of $15,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $11.75. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 2, 2000, options to purchase 40,000 common shares were exercised by Ben Traub, an officer and a director of the Company; and the shares issued for total proceeds of $120,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $13.125. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 3, 2000, the Company granted options to purchase 25,000 shares of the Company's common stock at an exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option Plan to employee, Peter Somogyi. On February 7, 2000, options to purchase 10,000 common shares were exercised by Ben Traub, an officer and a director of the Company; and the shares issued for total proceeds of $30,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $12.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 10, 2000, the Company sold 80,000 shares at a price of $2.50 per share for total gross proceeds of $200,000. As part of the placement, 6,000 warrants were issued and fees of $16,500 were paid. The holder of the warrant is entitled to purchase the common stock of the Company at a price of $3.00 subject to adjustment, through February 10, 2001. On February 11, 2000, options to purchase 30,000 common shares were exercised by Ben Traub, an officer and a director of the Company; and the shares issued for total proceeds of $90,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $15.00. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On February 16, 2000, the Company granted options to purchase 5,000 shares of the Company's common stock at an exercise price of $0.01 per share under the 1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris & Heckscher for continued legal guidance. On February 17, 2000, options to purchase 5,000 common shares were exercised by Duane Morris & Heckscher; and the shares issued for total proceeds of $50 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $16.25. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On March 6, 2000, options to purchase 1,500 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 10,500 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $19.75. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On March 20, 2000, options to purchase 10,000 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $17.125. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options 20 On March 29, 2000, options to purchase 3,500 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 24,500 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $15.50. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On April 18, 2000, the Company granted options to employee, Peter Somogyi, to purchase an additional 50,000 shares of the Company's common stock at an exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option Plan. On April 18, 2000, the Company granted options to purchase 100,000 shares of the Company's common stock at an exercise price of $7.00 per share under the 1999 Nonqualifying Stock Option Plan to employee, Jason Lee. On April 26, 2000, options to purchase 10,000 common shares were exercised by Peter Somogyi; and the shares issued for total proceeds of $ 70,000 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $12.50. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. On April 28, 2000, the Company granted options to purchase 5,000 shares of the Company's common stock at an exercise price of $0.01 per share under the 1999 Nonqualifying Stock Option Plan to the law firm, Duane Morris & Heckscher. On April 28, 2000, options to purchase 160,000 common shares were granted to and exercised by Ben Traub under the 1999 Nonqualifying Stock Option Plan. These options were exercised for cash proceeds of $550 and the reimbursement to Mr. Traub for the payment of consulting fees to M. D. Price, Jr., the Company's former corporate legal counsel, paid on behalf of the Company by Mr. Traub in the amount of $1,959,450. The quoted market price of the Company's stock at the date of exercise was approximately $12.25. There was no difference between the exercise price and the market price of the Company's stock on the exercise date of the stock options; therefore no charge was made to operations. On May 2, 2000, the Company granted options to purchase 500 shares of the Company's common stock at an exercise price of $0.01 per share under the 1999 Nonqualifying Stock Option Plan to consultant, Patrick McEvoy. On May 4, 2000, options to purchase 500 common shares were exercised by Patrick McEvoy; and the shares issued for total proceeds of $ 5 to the Company. The quoted market price of the Company's stock at the date of exercise was approximately $13.25. The difference between the exercise price and the market price of the Company's stock was charged to operations on the exercise date for the above exercise of stock options. Item 3 - Defaults on Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders The Company has held no regularly scheduled, called or special meetings of shareholders during the reporting period. Item 5 - Other Information None Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 10.5 Equity Line Agreement by and between Phoenix Resources Technologies, Inc. and Eurofund Derivatives Ltd. on April 12, 2000 10.6 Investor Relations Agreement by and between Phoenix Resources Technologies, Inc. and Teamwork Kommunikations, GmbH 10.7 Consulting Agreement by and between Phoenix Resources Technologies, Inc. and The Geneva Group, Inc. 27.1 Financial Data Schedule 21 (b) Reports on Form 8-K None - -------------------------------------------------------------------------------- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PHOENIX RESOURCES TECHNOLOGIES, INC. May 30 , 2000 /s/ Benjamin E. Traub -------- ----------------------- Benjamin E. Traub President and Director 22 EX-10.5 2 0002.txt EQUITY LINE AGREEMENT Exhibit 10.5 EQUITY INVESTMENT LINE AGREEMENT PART ONE EUROFUND DERIVATIVES LIMITED 24-26 CALTON ROAD EDINBURGH EH8 9DP U.K INTL TEL: 0044 131 622 7415 INTL FAX: 0044 131 662 0210 EMAIL: info@eurofund.8m.com WEBSITE: www.eurofund.8m.com Equity Investment Line Agreement Dated as of the 12th day of April 2000. This Equity Investment Line Agreement relates to the purchase and sale from time to time by Eurofund Derivatives Limited (the "Selling Investor") of an indeterminate number of Shares of Common Stock, $0.001 par value per share (the "Common Stock"), of Phoenix Resources Technologies, Inc., a Nevada corporation (the "Company") issuable upon exercise of a Class A Warrant. The actual number of Shares of Common Stock into which the Class A Warrant is exercisable will depend upon whether the Company requires the holder of the Class A Warrant to exercise all or part of such Class A Warrant and will also depend upon future market conditions. If the Company were to require the holder of the Class A Warrant to fully exercise such warrant, based upon current market conditions, as of March 3, 2000, the Class A Warrant being registered hereunder would be exercisable into approximately 569,152 Shares of Common Stock. In accordance with Rule 415 under the Securities Act of 1933, Common Stock offered hereby shall also be deemed to cover an indeterminate number of securities to be offered or issued to reflect adjustments resulting from stock splits, stock dividends or similar transactions, as well as an indeterminate number of Shares of Common Stock issuable upon exercise of the Class A Warrant, and is deemed to include any additional Shares of Common Stock that may be issuable upon such exercise as a result of any adjustment to the exercise price. It is anticipated that the Shares will be offered from time to time in brokerage transactions (which may include block transactions), in the over-the-counter market or negotiated transactions at prices and terms prevailing at the time of such sales, at prices related to such market prices or at negotiated prices. The Selling Investor has not held any position, office or other material relationship with the Company, or had any such position, office or material relationship within the past three (3) years. Because the number of Shares into which the Class A Warrant is exercisable depends upon whether the Company requires the Selling Investor to exercise all or part of the Class A Warrant issued to it, and will also depend upon the market price of the Company's Common Stock from time to time, it is not possible to calculate the number of Shares of Common Stock which will be ultimately issued upon exercise of the Class A Warrant. Therefore the aggregate exercise price of the Class A Warrant subscribed for by the Selling Investor is listed below in place of the number of Shares beneficially owned by such Selling Investor prior to this offering and in place of the number of Shares offered by such Selling Investor. Because of this it is not possible to calculate the percentage of the Company's outstanding Common Stock beneficially owned by the Selling Investor. Under the terms of the Class A Warrant, the total number of Shares of Common Stock of the Company deemed beneficially owned by the Selling Investor, together with all Shares of the Common Stock of the Company deemed beneficially owned by the Selling Investor's affiliates as defined in Rule 144 of the Securities Act of 1933, as amended, may never exceed 9.9% of the total issued and outstanding Shares of the Common Stock of the Company. SECURITIES OFFERED ON A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF 1933. Beneficial Owner: Eurofund Derivatives Limited Aggregate Warrant Exercise Price: (Class A Warrant) $10,000,000 Title of each class of securities to be offered: CLASS A WARRANT Title of each class of securities to be registered: COMMON STOCK Proposed Amount to be registered: $10,000,000 Maximum Amount per Put Notice/Notice of Exercise: $1,000,000 Proposed Maximum Aggregate Value of Common Stock to be issued: $10,000,000 II The Company will only receive the aggregate Exercise Price if the Selling Investor exercises the Warrant. Such exercise may depend upon whether the Company requires the Selling Investor to exercise all or part of the Class A Warrant issued to it, and will also depend upon future market conditions. The Company has agreed to bear all of the expenses in connection with the registration of the Shares. The Company expects that any net proceeds from the exercise of the Warrants will be used for research and development, working capital, acquisitions, and for general corporate purposes, in such amounts, as the Company, in its discretion, deems appropriate. Pending utilisation, the Company may invest such funds in money market funds and other interest-bearing obligations. Authorisation of Additional Securities. The Company is authorised to issue 100,000,000 Shares of Common Stock. As of the date of this Equity Investment Line Agreement, there were 9,458,900 Shares of Common Stock issued and outstanding. The Company's Board of Directors has the power to issue any and all unissued Shares and, to the extent that additional Shares of Common Stock are issued, dilution to the interests of the Company's stockholders will occur. The Company's Common Stock trades on the National Association of Securities Dealers Bulletin Board under the symbol, "PRTI". On March 3, 2000 as reported by NASD the last sale price of a share of Common Stock was $19.25 Description of Securities Offered Pursuant to Equity Investment Line Agreement Between Eurofund Derivatives Limited and Phoenix Resources Technologies, Inc. The Company is authorised to issue 100,000,000 Shares of Common Stock, $0.001 par value per share, of which 9,458,900 Shares were outstanding as of the date of this Equity Line Agreement. The Company is obligated to file a registration statement, at the latest within ten business days after the end of the one-month period stipulated in any Put Notice (the Exercise Period), for all Shares of Common Stock issued upon exercise of the Warrant during such Exercise Period. Under the terms of their agreement with the Company, at no time will the Selling Investor and their affiliates own in excess of 9.9% of the total issued and outstanding Shares of the Common Stock. The Class A Warrant, which expires on April 12, 2002, entitles the Selling Investor to purchase from the Company at the Exercise Price a certain number of Shares based upon an amount set by the Company from time to time over the life of the Class A Warrant. 30 days before the beginning of each Exercise Period specified by the Company, the Company will determine the maximum dollar amount of Common Stock that the Company wishes to issue to the Selling Investor during such Exercise Period. The actual dollar amount that may be issued will be based upon the trading volume of the stock during the 20 trading days prior to the first day of the Exercise Period in question according to the following table of values: - ---------------------------------------------------------------- --------------- 20-Day Average Daily Trading Volume (1) Maximum Amount to be Issued - -------------------------------------------------------------------------------- $25000 - $50,000 $100,000 - -------------------------------------------------------------------------------- $50,000 - $100,000 $200,000 $100,000 - $200,000 $350,000 $200,000 - $300,000 $500,000 $300,000 - $400,000 $750,000 $400,000 - $500,000 $1,000,000 - -------------------------------------------------------------------------------- (1) The 20-Day Average Daily Trading Volume shall be equal to: the sum of (the daily closing price on each of the 20 trading days immediately preceding the first day of the Exercise Period multiplied by the volume on each of those same 20 trading days) divided by 20. III 30 days before the beginning of each Exercise Period specified by the Company, the Company will issue a Put Notice, requiring the Selling Investor to exercise a portion of the Class A Warrant during such Exercise Period, to purchase a sufficient number of Shares to realise the maximum amount to be issued as stipulated in the Put Notice, to be adjusted later, if required, to reflect the calculation set out in the above table. In the Put Notice, the Company will also set, in agreement with the Selling Investor, the minimum price or "Floor Price" per share at which such Common Stock is to be issued. Therefore, before the beginning of each Exercise Period, the Company stipulates, in agreement with the Selling Investor, the maximum aggregate amount of Common Stock to be issued pursuant to exercise of the Class A Warrant (which can range from $0 USD to $1,000,000 USD during such Exercise Period), and the minimum price per share for such issuance. The Company may also choose not to require the Selling Investor to purchase any Shares of Common Stock pursuant to the Class A Warrant. If the Company decides to require the Selling Investor to purchase the amount specified by the Company, in accordance with the aforementioned table of values, the Selling Investor must then exercise the Class A Warrant during such Exercise Period into the number of Shares that equals the amount specified by the Company divided by the applicable Exercise Price. On a date or dates during such Exercise Period in which the Selling Investor is obligated to exercise all or part of the Class A Warrant, the Selling Investor is required to send a Notice of Exercise to the Company. The "Exercise Price" per share shall mean: The greater of: (i)The Floor Price to be set by the Company, in agreement with the Selling Investor upon issuance of the Put Notice. (ii) 90% of the average 5-day closing price of the Company's stock on the Nasdaq National Market, Nasdaq Small Cap Market, OTCBB or other exchange or market if the Shares are traded thereon, for the five trading days preceding the date that a Notice of Exercise is given. The Exercise Price in effect during any Exercise Period, specified by the Company may never be lower than the Floor Price (to be negotiated by the Company and Selling Investor) specified by the Company in the Put Notice, and the Selling Investor's obligation to exercise the Class A Warrant during such Exercise Period shall be waived whenever the Exercise Price is lower than the Floor Price. Likewise, the Company's obligation to issue Common Stock against a Notice of Exercise from the Selling Investor shall be waived if, at any time during the Exercise Period, or during the 30-day notice period immediately preceding such Exercise Period, the Company's stock trades below the Floor Price. Unless otherwise agreed to by the Company and the Selling Investor, no more than $10 million USD may be raised by the Company pursuant to the exercise of the Class A Warrant. Because the number of Shares into which the Class A Warrant is exercisable depends upon whether the Company requires the Selling Investor to exercise all or part of the Class A Warrant issued to it, and will also depend upon the market price of the Company's Common Stock from time to time, it is not possible to calculate the number of Shares of Common Stock which will be ultimately issued upon exercise of the Class A Warrant. Holders of Common Stock are entitled (i) to receive rateable dividends from funds legally available for distribution when and if declared by the board of directors; (ii) to share rateably in all of the Company's assets available for distribution upon liquidation, dissolution or winding up of the Company; and (iii) to one vote for each share held of record on each matter submitted to a vote of stockholders. All outstanding Shares of Common Stock are fully paid for and non-assessable. The Selling Investor is entitled to distribute from time to time the Common Stock issuable upon exercise of the Warrant. Based upon current market conditions, as of the 3rd. March, 2000, the outstanding Warrant would have been exercisable for an aggregate exercise price of $10,000,000 into approximately 569,152 Shares of Common Stock, representing approximately 5.7% of the issued and outstanding Common Stock of the Company after taking into account the issuance of such Common IV Stock upon exercise of the Warrants. The Company will not receive any proceeds from the sale of Common Stock by the Selling Investor. The Company will only receive the aggregate Exercise Price of the Warrants if the Selling Investor exercises such Warrants. Such exercise may depend upon whether the Company requires the Selling Investor to exercise all of part of the Class A Warrant issued to it, and will also depend upon future market conditions. To comply with certain states' securities laws, if applicable, the Common Stock will not be offered or sold in a particular state unless the Common Stock has been registered or qualified for sale in such state or an exemption from registration or qualification is available and complied with. This Agreement supersedes all previous agreements between the parties, whether verbal or written. The provisions hereof are severable, and if any one or more provisions shall be determined to be unenforceable, the remaining provisions shall remain as binding between the parties. This Equity Investment Line Agreement Part Two and Exhibit 1, both attached, form part of this Agreement and are subject to all terms and conditions contained herein. Read and Agreed to this 12th. Day of April 2000: Eurofund Derivatives Limited, (the "Investor") Signed By: /s/ Roger Green ----------------------------------- Name & Title: Roger Green, Managing Director Phoenix Resources Technologies, Inc. (the "Company") Signed By: /s/ Ben Traub ----------------------------------- Name & Title: Ben Traub, President V EQUITY INVESTMENT LINE AGREEMENT PART TWO EUROFUND DERIVATIVES LIMITED 24-26 CALTON ROAD EDINBURGH EH8 9DP U.K INTL TEL: 0044 131 622 7415 INTL FAX: 0044 131 662 0210 EMAIL: info@eurofund.8m.com WEBSITE: www.eurofund.8m.com EQUITY INVESTMENT LINE AGREEMENT PART TWO CONTENTS Equity Investment Class A Warrant Page III Form of Notice of Exercise Page VII II CLASS A WARRANT THIS CERTIFIES that, for value received, EUROFUND DERIVATIVES LIMITED hereinafter called "Warrant holder"), is entitled and required to purchase at the Exercise Price from Phoenix Resources Technologies, Inc., a Nevada corporation (hereinafter called the "Company"), the number of Shares of Common Stock, par value $0.001 per share (hereinafter called the "Shares") of the Company calculated in accordance with Section 1.1 below, at any time on or before 4:30 p.m. Eastern Standard Time on April 12, 2002 (the "Expiration Date"), all in accordance with the terms hereof. 1. Exercise of Warrants. 1.1 During any one-month period, specified by the Company in a Put Notice (The Exercise Period), delivered to the Warrant holder, and prior to 4:30 p.m. Eastern Standard Time on the Expiration Date, the Warrant holder shall, during such Exercise Period exercise the Outstanding Amount of this Warrant by delivering to the Company a Notice of Exercise duly executed and completed by Warrant holder, at the office of the Company, attention: Ms. Judee Fayle, Secretary/Treasurer, together with payment in full in lawful money of the United States, of the portion of the Outstanding Amount of the Warrant being exercised by such Notice of Exercise. Such payment shall be made by wire transfer of immediately available funds to the account of Phoenix Resources Technologies, Inc. at Whatcom State Bank, Point Roberts Branch, 480 Tyee Drive, Point Roberts, WA 98281 Account No.: 3903006518 ABA Wire Code No: 125107765. Upon exercise, the Warrant holder shall receive the number of Shares equal to the Outstanding Amount being exercised divided by the applicable Exercise Price. Upon receipt of the aforesaid payment, the Company shall issue instructions to its transfer agent to issue such Shares to the Warrant holder within five (5) business days of the Company's receipt of such payment. Provided that the entire Outstanding Amount during any Exercise Period is exercised, and subject to the other restrictions contained in this Warrant or in the Equity Line Agreement dated April 12, 2000 between the Company and the Warrant holder, the timing and number of Notices of Exercise delivered by the Warrant holder to the Company shall be at the discretion of the Warrant holder. The Company may treat any Notice of Exercise received by it by facsimile after 4:30 p.m. Eastern Standard Time to be received on the next business day. Any Outstanding Amount that is not exercised during the relevant Exercise Period shall not be carried forward and may not be exercised at a later date without the prior written approval of the Company. 2 The following definitions shall apply: 2.1 The "Exercise Price" shall mean the greater of (i) The Floor Price specified by the Company, in agreement with the Warrant holder, in a Put Notice or (ii) 90% of the average 5 day bid price on the Nasdaq National Market or other exchange or market if the Shares are traded thereon for each of the five trading days preceding the date that a Notice of Exercise is given. The Exercise Price in effect during a Exercise Period specified in a Put Notice may never be lower than the Floor Price specified by the Company, In agreement with the Warrant holder, in such Put Notice, and the Warrant holder's obligation to exercise this Warrant shall be waived whenever the Exercise Price is lower than the Floor Price. Likewise, the Company's obligation to issue Common Stock against a Notice of Exercise from the Warrant holder shall be waived if, at any time during any Exercise Period, or during the 30 day notice period immediately preceding such Exercise Period, the Company's stock trades below the Floor Price set by the Company, in agreement with the Warrant holder, for that Exercise Period. Nothing contained in the preceding sentences shall prevent the Warrant holder from voluntarily electing to exercise this III Warrant at a price per Share equal to or greater than the Exercise Price, provided that such price is at least as high as the Floor Price. 2.2 "Notice of Exercise" shall mean a notice or notices delivered by the Warrant holder to the Company indicating (A) the portion of the Outstanding Amount of this Warrant being exercised, (B) the Warrant holder's Deposit/Withdrawal At Custodian (DWAC) instructions for delivery of the Shares, and (C) specifying the Warrant holder's calculation of (1) the number of Shares to be issued to such Warrant holder, (2) the Exercise Price in effect for such Notice of Exercise, and (3) the remaining balance of the Outstanding Amount. Notwithstanding anything to the contrary contained herein, unless otherwise agreed to by the Company in writing, each Notice of Exercise shall be deemed to contain a representation by the Warrant holder that, after giving effect to the Shares to be issued pursuant to such Notice of Exercise, the total number of Shares of Common Stock of the Company deemed beneficially owned by the Warrant holder, together with all Shares of the Common Stock of the Company deemed beneficially owned by the Warrant holder's affiliates as defined in Rule 144 of the Act, will not exceed 9.9% of the total issued and outstanding Shares of the Common Stock of the Company. 2.3. The "Outstanding Amount" of this Warrant shall be the dollar amount specified in any Put Notice given by the Company from time to time, reduced by the amount of this Warrant exercised by the Warrant holder during the Exercise Period specified in such Put Notice to which the Put Notice relates. Should the company's share price be subject to the SEC penny stock rules and unless waived by the Company and the Warrant holder, the Outstanding Amount in any Exercise Period shall automatically be reduced to equal the lesser of: an amount equal to (A) 7% of the average daily dollar trading volume in the Company's Common Stock for the one month period ending on the day prior to the beginning of the Exercise Period specified in the Put Notice multiplied by (B) the number of trading days in the Exercise Period specified in the Put Notice. Unless waived by the Company in writing, on the last day of the Exercise Period specified in any Put Notice and on the Expiration Date, the Warrant holder shall be deemed to have given a Notice of Exercise for any Outstanding Amount remaining on such date. 2.4. "Put Notice" shall mean the notice given to the Warrant holder or its specified agent by the Company and signed by an executive officer of the Company setting forth: (A) the maximum amount chosen by the Company (which may be any amount from $0.00 to $1,000,000) to be the Outstanding Amount of this Warrant to be exercised by the Warrant holder during the Exercise Period and to be determined at the beginning of the Exercise Period in question by reference to the Table of Values set out in the Equity Investment Line Agreement Part One on Page III, and according to the formula set out in the Equity Line Investment Agreement Part One on Page III (B) the exact dates of the Exercise Period which shall be specified by the Company, (C) the Floor Price specified by the Company, in agreement with the Warrant holder. The Company shall give the Warrant holder a Put Notice at least 30 days prior to the beginning of any Exercise Period specified in such Put Notice. The Company may amend any terms specified in such Put Notice, (except that the Floor Price may not be increased by the Company without the Warrant holder's consent), by delivery of an amendment to such Put Notice to the Warrant holder at any time prior to the beginning of such Exercise Period. Unless mutually agreed to in writing, the Company may not specify a total Outstanding Amount which, when exercised in full, would result in the Warrant holder having exercised more than $10 million USD. As of the date of this Warrant, the maximum sum of all Outstanding Amounts specified in each of the Put Notices during the term of this Agreement shall be $10 million. 2.5 "Exercise Period" shall mean any Exercise Period specified in a Put Notice. 2.6 Certificates representing Shares issued hereunder shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under any applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES IV ACT HAVE 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE IS A REGISTRATION STATEMENT THEN IN EFFECT COVERING SUCH SHARES OR AN EFFECTIVE EXEMPTION FROM SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT UNDER THE CIRCUMSTANCES REGISTRATION IS NOT NECESSARY. Provided, however, that if the issuance of the Shares pursuant to the exercise of this Warrant are subject to an effective registration statement pursuant to Section 5 of the Securities Act of 1933, as amended, certificates representing the Shares shall not bear any restrictive legend. The Floor Price specified in any Put Notice, and the daily trading price of the Common Stock of the Company for any trading day used to calculate the Exercise Price, shall be adjusted proportionally to reflect any stock splits, stock dividends, reclassifications, combinations and similar transactions involving the Common Stock. No fractional Shares of Common Stock shall be issued upon the exercise of any Warrants evidenced hereby, but in lieu thereof the number of Shares of Common Stock that are assumable upon any exercise shall be rounded up or down to the nearest whole share. 2.7 Either party may terminate this Warrant prior to the Expiration Date if there has been a change in management of the other party by providing such party with written notice of such election to terminate. 2.8 Prior Notice as to Certain Events. The Company shall mail to Warrant holder not less than ten (10) days prior to the date on which (a) a record will be taken for the purpose of determining the holders of Capital Stock entitled to subscription rights, or (b) a record will be taken (or in lieu thereof, the transfer books will be closed) for the purpose of determining the holders of Capital Stock entitled to notice of and to vote at the meeting of stockholders at which any consolidation, merger, dissolution, liquidation, winding up or sale of the Company shall be considered and acted upon. 3. Reservation and Issuance of Shares. 3.1 The Company covenants and agrees that all Shares which may be issued upon the exercise of the rights represented by this Warrant will be duly authorised, legally issued and when paid for in accordance with the terms hereof, fully paid and non-assessable, and free from all liens and charges with respect to the issue thereof to the Warrant holder. 3.2 The Company will reserve at all times such number of Shares as may be issuable pursuant to the exercise of Warrants evidenced by this Warrant Certificate. 4. Investment Representation. By accepting delivery of this Warrant Certificate and by exercising any Warrants evidenced hereby, the Warrant holder represents that the Warrant holder is acquiring the Warrants and the Shares issuable upon the exercise of the Warrants for investment. 5. Miscellaneous. 5.1 The Warrant holder shall not be entitled to any rights whatsoever as a stockholder of the Company by virtue of its ownership of this Warrant. 5.2 This Warrant is being executed and delivered in the State of Nevada. This Warrant Certificate shall be interpreted under the laws and jurisdiction of the state and federal courts in the State of Nevada, United States of America. The parties hereby consent to such jurisdiction. V 5.3 Subject to the provisions hereof, this Warrant may be exercised at any time after the date hereof and prior to its expiration as of 4:30 p.m. Eastern Standard Time on the Expiration Date, and shall be void and of no effect after 4:30 p.m. Eastern Standard Time on the Expiration Date. 5.4 By accepting delivery of this Warrant, the Warrant holder acknowledges that the Warrant granted hereunder shall be in full satisfaction of all obligations to issue Class A Warrants to the Warrant holder pursuant to the Agreement dated April 12, 2000 between the Company and the Warrant holder IN WITNESS WHEREOF, The Company and the Warrant holder have executed this Warrant on This Twelfth day of April 2000 by each of their duly authorised officers. PHOENIX RESOURCES TECHNOLOGIES, INC Signed By: /s/ Ben Traub -------------------------- Name & Title: Ben Traub, President EUROFUND DERIVATIVES LIMITED Signed By: /s/ Roger Green -------------------------- Name & Title: Roger Green, Managing Director VI Form of Notice of Exercise The undersigned hereby irrevocably elects to exercise the warrants we currently hold to purchase ____________ Shares of Common Stock, $0.001 par value per share, of Phoenix Resources Technologies, Inc. (the "Company") at an exercise price of $__________per share. Attached to this notice is the original Warrant certificate evidencing the aforementioned warrants. We have delivered to the Company US$_______________ representing the aggregate exercise price for the warrants exercised hereunder. A certificate representing the Shares issuable upon exercise should be issued in the undersigned's name. The undersigned hereby represents and warrants to the Company that the representations and warranties and acknowledgements made by the undersigned in the Equity Line Agreement dated April 12, 2000 between the undersigned and the Company are still true and correct as if made on the date of this Notice of Exercise, and that the undersigned has carefully read any reports or statements filed with the Securities and Exchange Commission regarding the Company after April 12, 2000, and that the Company has also made available to the undersigned all other documents and information that the undersigned has requested relating to an investment in the Company. Dated: ________, ___ EUROFUND DERIVATIVES LIMITED. Signed By: __________________________ Name: _______________________________ Title: ______________________________ VII EX-10.6 3 0003.txt INVESTOR RELATIONS AGREEMENT Exhibit 10.6 INVESTOR RELATIONS AGREEMENT Between Phoenix Resources Technologies, Inc. (hereafter "Company") 15945 Quality Trail North Scandia, MN 55073 United States and Teamwork Kommunikations, GmbH (hereafter "Teamwork") Grosse Bleichen 32 D-20354 Hamburg, Germany Whereas, the Company desires investor relations representation in Germany, once it has achieved listing approval for the Third Segment of the Frankfurt Stock Exchange (Freiverkehr); and, Whereas, Teamwork desires to enter into an Investor Relations Agreement for disseminating investor relations (I.R.) information and creating awareness of the Company exclusively in the European financial community. None of these services will be performed in the US or any US territories. NOW THEREFORE, in consideration of the foregoing and the mutual promises herein set forth, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Once the Company has achieved listing approval on the Third Segment of the Frankfurt Stock Exchange (Freiverkehr), Teamwork will distribute and disseminate information provided by the Company to existing and potential shareholders in Europe. 2. The Company will make a good faith effort to keep Teamwork informed and advised about all public information available about the Company which information will be the source of information will be used for dissemination and translation to shareholders or other interested parties in Europe. 3. The Company agrees to inform Teamwork of all relevant filings made by the Company with the Securities and Exchange Commission, NASD or other Stock Exchanges, immediately upon filing and to provide an online link to the entire filing to Teamwork which can then be downloaded or printed. 4. Teamwork will provide such services during the twelve-month period following the approval of the listing which services shall include: (a) Creating and increasing exposure to the European community through stories and editorial articles which may be placed in newspapers, business publications and financial media. (b) Translating and distributing the Company's press releases to target groups such as: communication publications, journalists from software/Internet- 1 technical publications (if applicable), business press, press agencies, free editors, Web editors and institutional and private investors. (c) Creating an Internet presence in Europe by disseminating the Company's research reports, press releases and Website location to various financial and industry-related directories including one of Germany's most popular portals (over 800,000 registered European subscribers). (d) Creating a research report, in German, explaining the facts and vision of the company. This research report will be distributed in hard copy to over 1500 sophisticated investors. The research report will also be posted and available to download on www.germany.net along with a graphic supplied by the Company's, which will be a link to the Company's corporate Website. (e) Handling European investor and potential investor calls and inquiries about the company. (f) Generating awareness and understanding of the Company among members of the European financial community -- traders, analysts, press editors, portfolio managers, brokers and individual investors; the business community and the general public. (g) Advertorials: Several "Tombstone-Ads" will be booked to create interest in the Company in a way that investors can get a free copy of the research report mentioned above. This will be done in several different media and will be over a period of 16 weeks. These ads will be run in the following 4 German media: (DER AKTIONAR, BorseOnline, Das Wertpapier, Euro am Sonntag for a total of 4 targeted ads (approximately (1) ad every week for the first four week of this contract). 5. The Company's personnel will be available to representatives of Teamwork for periodic updates, upon reasonable notice. 6. Teamwork's remuneration for the above services outlined will be as follows: (a) Upon approval of listing on the Third Segment of the Frankfurt Stock Exchange (Freiverkehr), $10,000 USD in cash and, (b) $3,000 USD per month thereafter commencing on the first business day of the month following listing approval and continuing for a total of ten consecutive months making the total payment to Teamwork $40,000 USD. All payments must be wired on the first business day of the month and wired to: Bank of New York, New York ABA # 021000018 For Account: 8900266988 Hamburger Bank Further credit to: TeamWork Kommunikations, GmbH Account # 1022504 2 7. Special Optional Services: All road show presentations will be at the Company's request and billed separately at $4,500 USD per location (Germany/Switzerland). Each presentation is usually a luncheon for up to approximately 40 invited guests/investors. Also, related cost such as travel and expenses are approximately $1,500 USD per presentation, for a total cost to the Company of $6,000 per location. We highly recommend at least two (2) road-show presentations per year. 8. Indemnification. The Company agrees to indemnify and hold Teamwork, its attorneys and all of its officers, directors, employees, affiliates and agents harmless from and against any and all manner of actions, causes of action, claims, demands, costs, damages, liabilities, losses, obligations and expenses (including actual attorneys' fees) arising or resulting from or related to Teamwork's performance of the services pursuant hereunder, unless they are due to breach of this agreement or gross negligence or willful misconduct of Teamwork. Teamwork agrees to indemnify and hold the Company, its attorneys and all of its officers, directors, employees, affiliates and agents harmless from and against any and all manner of actions, causes of action, claims, demands, costs, damages, liabilities, losses, obligations and expenses (including actual attorney's fees) arising or resulting from or related to Teamwork's performance of the services pursuant hereunder, unless they are due to misrepresentations or breach of this agreement by the Company. 9. Teamwork agrees to use a disclaimer, similar to the disclaimer set forth below, as may be required by German law in the research report, Advertorials and other investor relations materials it disseminates. - -------------------------------------------------------------------------------- This material is provided for informational purposes only and is not an offer or solicitation to sell or purchase securities and should not be construed as investment advice. Distribution or duplication of this material is strictly prohibited in the United States. This information is not for distribution or release in the United States and is restricted to distribution in Germany to German residents and citizens only. This information is not for distribution or release to U.S. residents or citizens. - -------------------------------------------------------------------------------- 10. Law, Forum and Jurisdiction. This agreement shall be construed and interpreted in accordance with the laws of the state of Minnesota. The parties agree that any dispute arising under or with respect to or in connection with this agreement, whether during the term of this agreement or at any subsequent time, shall be resolved fully and exclusively by binding arbitration or litigation proceedings taking place in a court of competent jurisdiction in Minnesota. 11. Attorneys' Fees. In the event that any party institutes any action to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be entitled to reimbursement from the non-prevailing party for all costs, including reasonable attorney's fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein. 3 12. Confidentiality. The Company and Teamwork agree that unless and until mutually agreed upon, they and their representatives will hold in strict confidence all data and information obtained with respect to the other party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except: (i) to the extent such data or information are a matter of public knowledge or are required by law to be published; and, (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement. 13. Entire Agreement. This agreement represents the entire agreement between the parties hereto relating to the subject matter hereof. This agreement alone fully and completely expresses the agreement of the parties relating to the subject matter hereof and there are no other courses of dealing, understandings, agreements, representations or warranties, written or oral, except as set forth herein. This Agreement may not be amended or modified, except by a written agreement signed by all parties hereto. This agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. 14. Teamwork acknowledges that it is solely responsible to be aware of all laws applicable to the fulfilling of this Agreement and to abide by those laws. Wherefore, the parties have executed this Agreement this 21st day of April, 2000. TeamWork Kommunikations, GmbH Phoenix Resources Technologies, Inc. By: /s/Sven Joesting By:/s/ Ben Traub ------------------- ------------------- Sven Joesting Ben Traub Its: Managing Director Its: President 4 EX-10.7 4 0004.txt CONSULTING AGREEMENT Exhibit 10.7 CONSULTING AGREEMENT Between Phoenix Resources Technologies, Inc. (Hereafter "Company") 15945 Quality Trail North Scandia, MN 55073 United States and The Geneva Group, Inc. (Referred to as "Geneva") 600 Brickell Avenue, Suite 400 Miami, FL 33131 Whereas, The Company desires to retain the services of Geneva to secure Dual-listing on the Third Segment of the Frankfurt Stock Exchange (Freiverkehr) and have Geneva provide related consulting services; and, Whereas, Geneva desires to enter into a consulting agreement to assist the Company in listing its shares on the Third Segment of the Frankfurt Stock Exchange (Freiverkehr). NOW THEREFORE, in consideration of the foregoing and the mutual promises herein set forth, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Geneva, upon receipt of escrow deposit referenced in section 3(a) and all documentation listed in Exhibit "A" attached hereto, Geneva will use its best efforts to seek a listing of the Company's shares on the Third Segment of the Frankfurt Stock Exchange (Freiverkehr). These listing services shall include the following: (a) Exchange Listing: Listing the Company's shares on the Third Segment of the Frankfurt Stock Exchange (Freiverkehr) including all application and filing fees and the initial cost to the Specialist firm that will act as the Company's local Market Maker on the Exchange. (b) Announcement: in German of your listing approval to all Free Brokers admitted to the Frankfurt Stock Exchange and a brief summary of the Company's business. (Usually under 400 words.) (c) Full Press Release: Translated in German, announcing the listing approval that is distributed through BusinessWire's European Financial Network and our network of money managers, research firms, investors and institutional brokers throughout the European Financial Community. 2. Geneva shall also provide consulting services during the twelve month period following the approval of the listing which services may include: (a) Acting as the liaison for the Company with the Specialist in Germany concerning the listing and any follow-up matters. (b) Introduction to an established investor relations firm in Germany and helping structure the services that firm will provide in Europe. (c) At Geneva's sole cost and expense it will have its attorney prepare this consulting agreement between Geneva and the Company as well as a public relations/investor relations contract to be executed by the Company and the IR firm in Germany (TeamWork Kommunikations, GmbH). (d) Evaluating and advising the Company concerning any European financing proposals, strategic relationships and business opportunities the Company may receive. If the Company is interested in pursuing any of the above proposals, then a separate fee agreement for such consulting services shall be mutually agreed upon between the parties in advance. Any additional consulting agreements to be entered into by the parties shall be drafted by Geneva's attorney at Geneva's sole cost and expense. 1 3. Geneva's remuneration for the above listing services outlined will be as follows: (A) (i) Upon the signing of this agreement the Company shall wire $10,000 USD in cash to Joseph B. LaRocco, Esq., as Escrow Agent. Once the Company has been approved for listing on the Freiverkehr, Joseph B. LaRocco, Esq. shall release the $10,000 per Geneva's instructions. (ii) Within five (5) business days after approval of listing on the Freiverkehr, the Company shall deliver to Geneva per its written instructions 20,000 shares of restricted (Rule 144 of the Securities Act of 1933) common stock (the "Shares") of the Company. The Shares shall be issued to "The Geneva Group, Inc." (or its assigns) with piggyback registration rights. Once the Shares have been registered, or after the one year period applicable under Rule 144, which ever shall occur first, the Company shall, at its sole cost and expense, have its attorney issue an opinion letter for the removal of the legend and release all stop transfer instructions on the Shares. (iii) 30 days after approval of listing on the Freiverkehr, Company shall wire to Geneva, per its written instructions, an additional $10,000 USD. (B) In the event the Company has not been approved for listing on a German Stock Exchange within 45 calendar days from the date the escrow agent receives the $10,000 then this agreement may be canceled by the Company and the $10,000 received in escrow shall be returned in full, without interest, by Joseph B. LaRocco, Esq. to the Company. 4. Indemnification. The Company agrees to indemnify and hold the escrow agent, Geneva, its attorneys and all of its officers, directors, employees, affiliates and agents harmless from and against any and all manner of actions, causes of action, claims, demands, costs, damages, liabilities, losses, obligations and expenses (including actual attorney's fees) arising or resulting from or related to Geneva's performance of the services pursuant hereunder, unless they are due to breach of this agreement or gross negligence or willful misconduct of Geneva. Geneva agrees to indemnify and hold the Company, its attorneys and all of its officers, directors, employees, affiliates and agents harmless from and against any and all manner of actions, causes of action, claims, demands, costs, damages, liabilities, losses, obligations and expenses (including actual attorney's fees) arising or resulting from or related to Geneva's performance of the services pursuant hereunder, unless they are due to misrepresentations or breach of this agreement by the Company. 5. Law, Forum and Jurisdiction. This agreement shall be construed and interpreted in accordance with the laws of the State of Florida. The parties agree that any dispute arising under or with respect to or in connection with this agreement, whether during the term of this agreement or at any subsequent time, shall be resolved fully and exclusively by binding arbitration in accordance with the commercial rules then in force of the American Arbitration Association and the proceedings taking place in Miami, Florida. 6. Attorney's Fees. In the event that any party institutes any action to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be entitled to reimbursement from the non-prevailing party for all costs, including reasonable attorney's fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein. 7. Confidentiality. The Company and Geneva agree that unless and until mutually agreed upon, they and their representatives will hold in strict confidence all data and information obtained with respect to the other party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except: (i) to the extent such data or information are a matter of public knowledge or are required by law to be published; and, (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement. 2 8. Entire Agreement. This agreement represents the entire agreement between the parties hereto relating to the subject matter hereof. This agreement alone fully and completely expresses the agreement of the parties relating to the subject matter hereof and there are no other courses of dealing, understandings, agreements, representations or warranties, written or oral, except as set forth herein. This Agreement may not be amended or modified, except by a written agreement signed by all parties hereto. This agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Wherefore, the parties have executed this Agreement this 24th day of March 2000. The Geneva Group, Inc. Phoenix Resources Technologies, Inc. By: /s/ Michael Bardakjy By: /s/ Ben Traub --------------------- --------------------- Michael Bardakjy Ben Traub Its: President Its: President /s/ Joseph B. LaRocco, Esq. - --------------------------------------- Joseph B. LaRocco, Esq. as Escrow Agent 3 EXHIBIT "A" Information required for listing approval on the Third Segment of the Frankfurt Stock Exchange: 1. The Company's latest Form 10K or Annual Report 2. Corporate brochure or corporate overview (if available) 3. Last 6 months press releases 4. Copies of any media or analyst reports (if available) 5. Standard & Poor listing sheet (if available) 6. A letter on the Company's letterhead addressed to the specialist firm in Germany indicating the Company's agreement for listing their shares on a German Stock Exchange. A sample letter will be sent to the Company after execution of this agreement. 4 EX-27 5 0005.txt
5 3-MOS OCT-31-2000 APR-30-2000 15,922 0 0 0 0 15,922 0 0 280,793 10,097 0 0 0 9,665 261,031 280,793 0 0 0 3,737,291 0 0 0 (3,737,291) 0 (3,737,291) 0 0 0 (3,737,291) (0.40) (0.40)
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